JANUARY 1 SEPTEMBER 30, 2018

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2 JANUARY 1 SEPTEMBER 30, 2018 (compared with the corresponding period a year ago) Net sales increased 8.4% to SEK 87,388m (80,601) Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.4% Organic net sales increased 2.8%, excluding the lower sales of mother reels due to production closures Operating profit before amortization of acquisition-related intangible assets (EBITA) declined 10% to SEK 8,085m (8,953) Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) decreased 3% to SEK 9,484m (9,786) Higher raw material and energy costs had a negative impact of SEK 3,268m on earnings Adjusted EBITA margin decreased 1.2 percentage points to 10.9% (12.1) Adjusted profit before tax decreased 6% to SEK 8,026m (8,562) Profit for the period decreased 14% to SEK 4,935m (5,719) Earnings per share decreased 14% to SEK 6.38 (7.44) Adjusted earnings per share decreased 5% to SEK 8.35 (8.77) Cash flow from current operations decreased 6% to SEK 5,714m (6,055) During the third quarter a Group-wide cost-savings program was launched. The expected annual cost savings amount to approximately SEK 900m. EARNINGS TREND % 2018:3 2017:3 % Net sales 87,388 80, ,647 27,178 9 Adjusted operating profit before amortization of acquisitionrelated intangible assets (EBITA) 1 9,484 9, ,016 3, Operating profit before amortization of acquisition-related intangible assets (EBITA) 8,085 8, ,005 3, Amortization of acquisition-related intangible assets Adjusted operating profit 1 8,947 9, ,829 3, Items affecting comparability -1, , Operating profit 7,543 8, ,813 3, Financial items Profit before tax 6,622 7, ,481 2, Adjusted profit before tax 1 8,026 8, ,497 2, Tax -1,687-1, Profit for the period 4,935 5, ,078 2, Earnings per share, SEK Adjusted earnings per share, SEK Excluding items affecting comparability; for amounts see page Excluding items affecting comparability and amortization of acquisition-related intangible assets. Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

3 SUMMARY OF THIRD QUARTER OF 2018 The Group s net sales increased 9.1% for the third quarter of 2018 compared with the corresponding period a year ago and earnings per share amounted to SEK The third quarter of 2018 was challenging as the negative impact from raw material and energy costs has accelerated further. On the whole, these factors negatively impacted our margins in the short term, despite higher selling prices, a better mix and costs savings in all business areas. To increase profitability, we are implementing measures in several areas: We continue to invest in our strong brands and launched 13 innovations during the quarter that strengthened our customer and consumer offering. Within Consumer Tissue, we have initiated negotiations regarding further price increases that are primarily expected to impact For some contracts in Europe, additional price increases have already been implemented with gradual effect in the fourth quarter of Activities to increase prices are also ongoing in Personal Care and Professional Hygiene. We are intensifying our efficiency improvements and restructuring of the business. We have decided on further restructuring measures as part of Tissue Roadmap and are continuing our work with Cure or Kill. During the quarter, we launched a Group-wide cost-savings program that is in addition to the ongoing efficiency activities in the company. As a result of further measures within the scope of this program, the expected annual cost savings are being increased by approximately SEK 100m to approximately SEK 900m, with full effect at the end of The program includes headcount reductions of approximately 1,000 positions. The restructuring costs are expected to amount to approximately SEK 700m. The costs are expected to impact cash flow and be recognized as an item affecting comparability in To strengthen competitiveness and increase efficiency, we are also making changes to the company s organizational structure and Executive Management Team. The two units, Global Hygiene Supply Tissue and Global Hygiene Supply Personal Care, will be merged into one unit under the name Global Manufacturing with responsibility for production and technology. A new unit under the name Global Operational Services will be created with the purpose to further strengthen the Group s overall work related to operational and cost efficiency. The unit will encompass sourcing, logistics, business services and digitalization. The number of corporate functions will be reduced from six to four. Organic net sales, excluding the lower sales of mother reels, increased 2.5%, of which volume accounted for -0.1% and price/mix for 2.6%. Including the lower sales of mother reels, organic sales increased 1.6%, of which volume accounted for -1.0% and price/mix for 2.6%. Organic net sales was positively impacted by higher prices and a better mix in all business areas. In emerging markets, which accounted for 35% of net sales, organic net sales increased 4.3% while the decrease in mature markets was 0.1%. The Group s adjusted EBITA in the third quarter of 2018 declined 12% compared with the corresponding period a year ago. Earnings were positively impacted by higher prices and a better mix in all business areas, higher volumes and cost savings amounting to SEK 180m. Our work to achieve cost savings continued but the high level of cost savings in the year-earlier period impacted the reported increase in the quarter. Higher raw material and energy costs had a negative impact of SEK -1,418m on earnings, which corresponds to a negative impact on the adjusted EBITA margin of -5.1 percentage points. The market price for pulp is about 30% higher compared with the corresponding period a year ago. The market price of oil-based raw materials has also increased significantly. Furthermore, higher distribution costs had a negative impact on earnings. The Group s adjusted EBITA margin decreased 2.4 percentage points to 10.2%. The adjusted return on capital employed was 11.0%, and adjusted return on equity was 13.7%. Operating cash flow increased 4%. Essity has been included in the Dow Jones Sustainability Index, one of the world s most prestigious sustainability indices. Essity has qualified for inclusion in both the Dow Jones Sustainability World Index and the Dow Jones Sustainability Europe Index, and has also been named industry leader in the Household Products sector. Net sales 40,000 30,000 20,000 10,000 Adjusted EBITA 4,000 3,000 2,000 1,000 Earnings per share SEK :3 2017:3 2018: :3 2017:3 2018: :3 2017:3 2018:3 Excluding items affecting comparability; for amounts see page 12. Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

4 ADJUSTED EARNINGS TREND % 2018:3 2017:3 % Net sales 87,388 80, ,647 27,178 9 Cost of goods sold 1-62,484-56,663-21,416-18,949 Adjusted gross profit 1 24,904 23, ,231 8,229 0 Sales, general and administration 1-15,420-14,152-5,215-4,797 Adjusted operating profit before amortization of acquisition-related intangible assets (EBITA) 1 9,484 9, ,016 3, Amortization of acquisition-related intangible assets Adjusted operating profit 1 8,947 9, ,829 3, Financial items Adjusted profit before tax 1 8,026 8, ,497 2, Adjusted tax 1-2,092-2, Adjusted profit for the period 1 5,934 6, ,827 2, Excluding items affecting comparability; for amounts see page 12. Adjusted margins (%) Gross margin EBITA margin Operating margin Financial net margin Profit margin Tax Net margin Excluding items affecting comparability; for amounts see page 12. ADJUSTED EBITA BY BUSINESS AREA % 2018:3 2017:3 % Personal Care 4,702 4, ,565 1,556 1 Consumer Tissue 2,491 3, , Professional Hygiene 2,756 2, ,023-5 Other Total 1 9,484 9, ,016 3, Excluding items affecting comparability; for amounts see page 12. ADJUSTED OPERATING PROFIT BY BUSINESS AREA % 2018:3 2017:3 % Personal Care 4,193 4, ,387 1,404-1 Consumer Tissue 2,490 3, , Professional Hygiene 2,729 2, ,014-5 Other Total 1 8,947 9, ,829 3, Excluding items affecting comparability; for amounts see page 12. OPERATING CASH FLOW BY BUSINESS AREA % 2018:3 2017:3 % Personal Care 4,329 4, ,755 1,699 3 Consumer Tissue 1,858 2, Professional Hygiene 2,678 2, ,352 1, Other Total 8,401 8, ,455 3,337 4 Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

5 Net sales 30,000 28,000 26,000 24,000 22,000 20,000 Essity Aktiebolag (publ) Interim Report Q Adjusted EBITA and margin 4,000 3,000 2,000 1,000 0 Excluding items affecting comparability Change in net sales (%) 1809 vs :3 vs 17:3 Total Price/mix Volume Currency Acquisitions Divestments Change in adjusted EBITA (%) 1809 vs :3 vs 17:3 14% 12% 10% 8% 6% 4% 2% 0% Total Price/mix Volume 4 1 Raw materials Energy -1-4 Currency 4 9 Other 8-2 % GROUP MARKET/EXTERNAL ENVIRONMENT January September 2018 compared with the corresponding period a year ago The European and North American markets for incontinence products in the healthcare sector displayed higher demand, although with continued price pressure as a result of fierce competition. The retail markets showed good growth but with a continued high level of competition. Emerging markets noted higher demand. The global market for medical solutions demonstrated stable growth. In Europe, demand for baby care and feminine care was stable. In emerging markets, demand increased for baby care and feminine care. The global market for baby care and several markets for feminine care were characterized by increased competition and campaign activity. The European market for consumer tissue demonstrated low growth. The Chinese consumer tissue market noted higher demand. The European and North American markets for professional hygiene displayed low growth. NET SALES AND EARNINGS January September 2018 compared with the corresponding period a year ago Net sales increased 8.4% compared with the corresponding period a year ago to SEK 87,388m (80,601). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.4%, of which volume accounted for 0.4% and price/mix for 2.0%. Organic net sales increased 0.8% in mature markets and increased 4.9% in emerging markets. Emerging markets accounted for 35% of net sales. Exchange rate effects increased net sales by 3.0%. Acquisitions increased net sales by 3.0%, of which the acquisition of BSN medical accounted for 2.4% and acquisitions relating to the increase in the shareholding in associates in Latin America accounted for 0.6%. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) declined 3% (12% excluding currency translation effects and acquisitions) to SEK 9,484m (9,786). Higher prices, a better mix, higher volumes, cost savings and the acquisition of BSN medical had a positive impact on earnings. Cost savings amounted to SEK 767m. Higher raw material and energy costs had a negative earnings effect of SEK -3,268m. Furthermore, higher distribution costs had a negative impact on earnings. The acquisition of BSN medical increased profit by 3%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased profit by 1%. Items affecting comparability amounted to SEK -1,404m (-919) and include costs of approximately SEK -1,370m related to restructuring measures at production facilities in Professional Hygiene and Consumer Tissue. Impairments in the associate Asaleo Care had an impact of SEK -260m on items affecting comparability. Acquisitions relating to the increase in the shareholding in associates in Latin America positively impacted items affecting comparability by SEK 165m. A reversal of a provision for foreign tax of a non-recurring nature on non-current assets outside Sweden had a positive impact of SEK 260m on items affecting comparability. Other costs negatively impacted items affecting comparability by SEK -199m. Financial items increased to SEK -921m (-845). The increase is primarily due to higher average net debt. Lower interest had a positive impact on financial items during the period. Adjusted profit before tax 3,500 3,000 2,500 2,000 1,500 1, Excluding items affecting comparability Adjusted profit before tax decreased 6% (15% excluding currency translation effects and acquisitions) to SEK 8,026m (8,562). The tax expense, excluding effects of items affecting comparability, was SEK 2,092m (2,165). Adjusted profit for the period decreased 7% (16% excluding currency translation effects and acquisitions) to SEK 5,934m (6,397). Profit for the period decreased 14% (23% excluding currency translation effects and acquisitions) to SEK 4,935m (5,719). Earnings per share were SEK 6.38 (7.44). The adjusted earnings per share were SEK 8.35 (8.77). The adjusted return on capital employed was 12.4% (15.3). The adjusted return on equity was 17.6% (18.7). Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

6 Third quarter of 2018 compared with the corresponding period a year ago Net sales increased 9.1% compared with the corresponding period a year ago to SEK 29,647m (27,178). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 1.6%, of which volume accounted for -1.0% and price/mix for 2.6%. Higher prices and a better mix in all business areas had a positive impact on organic net sales. Volumes increased in Personal Care and Professional Hygiene. In Consumer Tissue, volumes declined partly due to restructuring measures within the scope of the Tissue Roadmap, entailing lower sales of mother reels, and partly due to lower volumes in Asia due to price increases. Organic net sales decreased 0.1% in mature markets and increased 4.3% in emerging markets. Emerging markets accounted for 35% of net sales. Exchange rate effects increased net sales by 6.8%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 0.7%. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) decreased 12% (22% excluding currency translation effects and acquisitions) to SEK 3,016m (3,432). Earnings were positively impacted by higher prices and a better mix in all business areas, higher volumes and cost savings amounting to SEK 180m. Our work to achieve cost savings continued but the high level of cost savings in the year-earlier period impacted the reported increase in the quarter. Higher raw material and energy costs had a negative impact of SEK -1,418m on earnings, which corresponds to a negative impact on the adjusted EBITA margin of -5.1 percentage points. The market price for pulp is about 30% higher compared with the corresponding period a year ago. The market price of oil-based raw materials has also increased significantly. Furthermore, higher distribution costs had a negative impact on earnings. Adjusted profit before tax declined 17% (28% excluding currency translation effects and acquisitions) to SEK 2,497m (2,996). Profit for the period declined 51% (62% excluding currency translation effects and acquisitions) to SEK 1,078m (2,222). Earnings per share were SEK 1.41 (2.98). The adjusted earnings per share were SEK 2.67 (3.17). The adjusted return on capital employed was 11.0% (13.8). The adjusted return on equity was 13.7% (20.0). 3,500 3,000 2,500 2,000 1,500 1, Cash flow from current operations CASH FLOW AND FINANCING January September 2018 compared with the corresponding period a year ago The operating cash surplus amounted to SEK 13,624m (13,512). The cash flow effect of changes in working capital was SEK -1,671m (-1,150). Current capital expenditures amounted to SEK -2,863m (-2,670). Operating cash flow was SEK 8,401m (8,835). Financial items increased to SEK -921m (-845). The increase is primarily due to higher average net debt. Lower interest had a positive impact on financial items during the period. Income tax payments totaled SEK 1,851m (2,110). Cash flow from current operations amounted to SEK 5,714m (6,055) during the period. Strategic capital expenditures amounted to SEK -1,746m (-1,383). The net sum of acquisitions and divestments was SEK -681m (-25,907). Dividends to shareholders impacted cash flow by SEK -4,354m (-220). Net cash flow totaled SEK -1,064m (-20,590). Net debt increased by SEK 1,383m compared with the same point in time last year and amounted to SEK 54,495m. The increase is attributable to exchange rate movements that increased net debt by approximately SEK 2.9bn. During the January-September 2018 period, net debt has increased by SEK 2,028m. Excluding pension liabilities, net debt amounted to SEK 52,420m. Net cash flow increased net debt by SEK 1,064m. Fair value measurement of pension assets and updated assumptions and assessments that affect measurement of the net pension liability, together with fair value measurement of financial instruments, reduced net debt by SEK 1,159m. Exchange rate movements increased net debt by SEK 2,123m. The debt/equity ratio was 1.02 (1.17). Excluding pension liabilities, the debt/equity ratio was 0.98 (1.10). The debt payment capacity was 25% (24). Net debt in relation to adjusted EBITDA amounted to 2.95 (2.94). Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

7 EQUITY January September 2018 The Group s equity increased by SEK 4,068m during the period, to SEK 53,638m. Net profit for the period increased equity by SEK 4,935m. Equity decreased by SEK 4,354m on account of the dividend to shareholders. Equity increased net after tax by SEK 877m as a result of fair value measurement of pension assets and updated assumptions and assessments that affect the valuation of the pension liability. Fair value measurement of financial instruments increased equity by SEK 304m after tax. Exchange rate movements, including the effect of hedges of net foreign investments, after tax, increased equity by SEK 2,300m. Other items increased equity by SEK 6m. TAX January September 2018 A tax expense of SEK 2,092m was reported, excluding items affecting comparability. The reported tax expense corresponds to a tax rate of about 26.1% for the period. The tax expense including items affecting comparability was SEK 1,687m, corresponding to a tax rate of 25.5% for the period. EVENTS DURING THE QUARTER Essity restructures in France On July 31, 2018, Essity announced that the company is restructuring its Consumer Tissue production in France in order to further strengthen competitiveness and increase efficiency. Essity is closing a converting facility for retail branded products in Saint-Etienne-du-Rouvray and investing in the remaining integrated production facilities in France. The closure is expected during the fourth quarter of These measures are aligned with the company s strategy to optimize the production footprint to increase cost and capital efficiency and further increase value creation in the Consumer Tissue business area. The restructuring costs of SEK 495m were recognized as an item affecting comparability in the third quarter of Essity associate Asaleo Care recognizes impairments in half-year report On August 21, 2018, Essity announced that Asaleo Care Ltd, a hygiene company listed on the Australian Securities Exchange, published its 2018 half-year report. Essity owns about 36% of Asaleo Care, with the holding recognized as an associate. Impairments were recognized in Asaleo Care s half-year report As a result, Essity recognized an item affecting comparability of approximately SEK -260m in the third quarter of Essity industry leader in Dow Jones Sustainability Index On September 13, 2018, Essity announced that the company had been included in the Dow Jones Sustainability Index, one of the world s most prestigious sustainability indices. Essity has qualified for inclusion in both the Dow Jones Sustainability World Index and the Dow Jones Sustainability Europe Index, and has also been named industry leader in the Household Products sector. Essity received high scores for its brand work, its innovations, its environmental and social reporting, its work with suppliers and its strategy for emerging markets. Essity continues the optimization of its production in the United States On September 18, 2018, Essity announced that the company would be closing its converting facility in Bellemont, Arizona, United States, in order to further increase the efficiency of the Professional Hygiene business. The closure will be completed in the second half of 2019 without any disruption to customers. Production will be reallocated to other Essity production facilities in the United States. The measures are aligned with the company s strategy to optimize the production footprint to improve cost and capital efficiency and further increase value creation in the Professional Hygiene business area. The restructuring costs amounted to approximately SEK 125m and were recognized as an item affecting comparability in the third quarter of Essity reduces costs to increase profitability and competitiveness On September 28, 2018, Essity announced that the company would be introducing a Groupwide cost-savings program to increase profitability and strengthen the Group s long-term cost efficiency. As a result of further measures within the scope of this program, the expected annual cost savings are being increased by approximately SEK 100m to about SEK 900m, with full effect at the end of The cost savings are compared with the cost level of September 30, The program includes headcount reductions affecting approximately 1,000 positions. The Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

8 restructuring costs are expected to amount to approximately SEK 700m. The costs are expected to impact cash flow and be recognized as an item affecting comparability in The cost-savings program is being implemented in all parts of the Group to reduce the cost base related to cost of goods sold and sales, general and administration costs. The program will include headcount reductions and reduced costs for projects, consultants and travel. The program that is now being launched is in addition to the efficiency initiatives already in progress in the Group, such as Tissue Roadmap and Cure or Kill. EVENTS AFTER THE QUARTER Essity presents new organization On October 29, Essity announced that the company to strengthen its competitiveness and increase its efficiency, implements the following changes to the company s organizational structure and Executive Management Team: The two units Global Hygiene Supply Tissue and Global Hygiene Supply Personal Care will be merged into one unit under the name Global Manufacturing, with responsibility for production and technology. The unit Global Hygiene Category, with responsibility for customer and consumer brands as well as innovation, will also encompass sustainability and public affairs. The unit will be renamed Global Brand, Innovation and Sustainability. A new unit, Global Operational Services, is being created that will encompass sourcing, logistics, business services and digitalization. Group Function Sustainability & Public Affairs is being integrated with Global Brand, Innovation and Sustainability. Group Function Strategy & Business Development is being integrated with Group Function Finance. The changes entail that the number of members of the Executive Management Team is being reduced from 14 to 12 and that the number of staff functions is being reduced from six to four. The organizational changes will take effect on December 31, Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

9 12,000 11,000 10,000 9,000 8,000 7,000 6,000 Share of Group, net sales 1809 Change in net sales (%) 1809 vs :3 vs 17:3 Total Price/mix Volume Currency Acquisitions Divestments Change in adjusted EBITA (%) 1809 vs % Share of Group, adjusted EBITA 1809 Net sales 47% Adjusted EBITA and margin 2,000 1,500 1, :3 vs 17:3 Total 7 1 Price/mix -1 5 Volume 10 7 Raw materials Energy 0-1 Currency 6 11 Other 10 1 % PERSONAL CARE % 2018:3 2017:3 % Net sales 33,639 29, ,408 10,449 9 Adjusted EBITA* 4,702 4, ,565 1,556 1 Adjusted EBITA margin, %* Adjusted operating profit* 4,193 4, ,387 1,404-1 Adjusted operating margin, %* Adjusted return on capital employed, %* Operating cash flow 4,329 4,013 1,755 1,699 *) Excluding restructuring costs, which are reported as items affecting comparability outside of the business area. January September 2018 compared with the corresponding period a year ago Net sales increased 13.0% to SEK 33,639m (29,755). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.9%, of which volume accounted for 2.5% and price/mix for 0.4%. Organic net sales in mature markets increased 2.3%. In emerging markets, which accounted for 37% of net sales, organic net sales increased 3.9%. Acquisitions increased net sales by 7.6%, of which the acquisition of BSN medical accounted for 6.6% and acquisitions relating to the increase in the shareholding in associates in Latin America accounted for 1.0%. Exchange rate effects increased net sales by 2.5%. For Incontinence Products, with the globally leading TENA brand, organic net sales increased 4.3%. Growth was related to emerging markets, North America and Western Europe. For Baby Care, organic net sales decreased 2.4%. The decrease was related to emerging markets. Organic net sales increased in Western Europe. For Feminine Care, organic net sales increased 8.1%. The increase was related to both emerging markets and Western Europe. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA), increased 7% (declined 8% excluding currency translation effects and acquisitions) to SEK 4,702m (4,398). The increase was mainly related to higher volumes, cost savings and the acquisition of BSN medical. Higher raw material and energy costs, lower prices and higher distribution costs negatively impacted earnings. Acquisitions increased profit by 9%, of which the acquisition of BSN medical accounted for 8% and acquisitions relating to the increase in the shareholding in associates in Latin America accounted for 1%. The operating cash surplus amounted to SEK 5,758m (5,290). Third quarter of 2018 compared with the corresponding period a year ago Net sales increased 9.2% to SEK 11,408m (10,449). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.2%, of which volume accounted for 1.2% and price/mix for 1.0%. Organic net sales in mature markets increased 0.8%. In emerging markets, which accounted for 37% of net sales, organic net sales increased 4.1%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 1.1%. Exchange rate effects increased net sales by 5.9%. For Incontinence Products, with the globally leading TENA brand, organic net sales increased 4.1%. Growth was related to emerging markets, North America and Western Europe. Growth in Europe and North America was attributable to both the retail trade and the healthcare sector. For Medical Solutions, organic net sales decreased 0.9%. The decrease was mainly related to inventory adjustments among customers in North America. For Baby Care, organic net sales decreased 2.7% mainly related to emerging markets. Organic net sales increased in Western Europe. For Feminine Care, organic net sales increased 7.6% mainly related to higher prices and higher volumes in Latin America. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA), increased 1% (decreased 12% excluding currency translation effects and acquisitions) to SEK 1,565m (1,556). Higher volumes, higher prices and a better mix as well as cost savings positively impacted earnings. Higher raw material and energy costs negatively impacted profits by SEK -346m, which corresponds to a negative impact on the adjusted EBITA margin of -3.2 percentage points. Market prices for pulp and oil-based raw materials increased substantially. Higher distribution costs also negatively impacted earnings. Acquisitions relating to the increase in the shareholding in associates in Latin America increased profit by 1%. Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

10 Share of Group, net sales % CONSUMER TISSUE % 2018:3 2017:3 % Net sales 33,031 30, ,912 10,066 8 Adjusted EBITA* 2,491 3, , Adjusted EBITA margin, %* Adjusted operating profit* 2,490 3, , Adjusted operating margin, %* Adjusted return on capital employed, %* Operating cash flow 1,858 2, Share of Group, adjusted EBITA 1809 Net sales 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 25% Adjusted EBITA and margin 1,500 1, % *) Excluding restructuring costs, which are reported as items affecting comparability outside of the business area. January September 2018 compared with the corresponding period a year ago Net sales increased 6.6% to SEK 33,031m (30,988). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 1.9%, of which volume accounted for -1.2% and price/mix for 3.1%. The increase was mainly attributable to Asia and Europe. Organic net sales increased 0.2% in mature markets. In emerging markets, which accounted for 43% of net sales, organic net sales increased by 3.7%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 0.4%. Exchange rate effects increased net sales by 4.3%. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) decreased 22% (24% excluding currency translation effects and acquisitions) to SEK 2,491m (3,184). Higher prices and a better mix as well as cost savings positively impacted earnings. Higher raw material and energy costs, lower volumes and higher distribution costs negatively impacted earnings. The substantially higher raw material costs were mainly the result of higher pulp prices. The operating cash surplus totaled SEK 4,171m (4,720). Third quarter of 2018 compared with the corresponding period a year ago Net sales increased 8.4% to SEK 10,912m (10,066). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 0.1%, of which volume accounted for -4.1% and price/mix for 4.2%. The price/mix was positively impacted by higher prices in Asia, Europe and Latin America. The lower volumes were partly the result of restructuring measures within the scope of Tissue Roadmap, entailing lower sales of mother reels and partly lower volumes in Asia due to price increases. Organic net sales decreased 1.4% in mature markets. In emerging markets, which accounted for 44% of net sales, organic net sales increased by 2.0%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 0.6%. Exchange rate effects increased net sales by 7.7%. Change in net sales (%) 1809 vs :3 vs 17:3 Total Price/mix Volume Currency Acquisitions Divestments Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) decreased 38% (46% excluding currency translation effects and acquisitions) to SEK 635m (1,023). Earnings were positively impacted by higher prices and a better mix as well as cost savings. Selling prices were higher in Asia, Europe and Latin America. Higher raw material and energy costs negatively affected earnings by SEK -840m, corresponding to a negative impact on the adjusted EBITA margin of -8.3 percentage points. The substantially higher raw material costs were mainly the result of higher pulp prices. The market price for pulp is about 30% higher compared with the corresponding period a year ago. Higher distribution costs and lower volumes also negatively affected earnings. Acquisitions relating to the increase in the shareholding in associates in Latin America increased profit by 1%. Change in adjusted EBITA (%) 1809 vs :3 vs 17:3 Total Price/mix Volume -1-7 Raw materials Energy -2-9 Currency 2 8 Other 12 0 Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

11 Share of Group, net sales % PROFESSIONAL HYGIENE % 2018:3 2017:3 % Net sales 20,695 19, ,309 6, Adjusted EBITA* 2,756 2, ,023-5 Adjusted EBITA margin, %* Adjusted operating profit* 2,729 2, ,014-5 Adjusted operating margin, %* Adjusted return on capital employed, %* Operating cash flow 2,678 2,788 1,352 1,539 Net sales 8,000 7,000 6,000 5,000 Share of Group, adjusted EBITA 1809 Adjusted EBITA and margin 1,500 1, Change in net sales (%) 1809 vs % % :3 vs 17:3 Total Price/mix Volume Currency Acquisitions Divestments *) Excluding restructuring costs, which are reported as items affecting comparability outside of the business area. January September 2018 compared with the corresponding period a year ago Net sales increased 4.1% to SEK 20,695m (19,884). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.1%, of which volume accounted for -0.4% and price/mix for 2.5%. The increase was primarily related to Europe, Asia and Latin America. Organic net sales decreased 0.5% in mature markets. Organic net sales increased in Western Europe while it decreased in North America. In emerging markets, which accounted for 19% of net sales, organic net sales increased 12.3%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 0.1%. Exchange rate effects increased net sales by 1.9%. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) increased 4% (0% excluding currency translation effects and acquisitions) to SEK 2,756m (2,660). The increase was primarily attributable to higher prices, a better mix, higher volumes and cost savings. Higher raw material and energy costs as well as higher distribution costs had a negative impact on earnings. The operating cash surplus was SEK 4,077m (3,904). Third quarter of 2018 compared with the corresponding period a year ago Net sales increased 10.1% to SEK 7,309m (6,635). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.9%, of which volume accounted for 0.3% and price/mix for 2.6%. The increase was primarily related to Asia, Europe and Latin America. The price/mix was positively impacted by higher prices in Asia, Europe, Latin America and North America. Organic net sales increased 0.3% in mature markets. Organic net sales increased in Western Europe while it decreased in North America. In emerging markets, which accounted for 20% of net sales, organic net sales increased 13.0%. Acquisitions relating to the increase in the shareholding in associates in Latin America increased net sales by 0.1%. Exchange rate effects increased net sales by 7.1%. Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) decreased 5% (12% excluding currency translation effects and acquisitions) to SEK 970m (1,023). Higher prices, a better mix, higher volumes and cost savings had a positive impact on earnings. Higher raw material and energy costs had a negative impact on earnings of SEK -233m, which corresponds to a negative impact on the adjusted EBITA margin of -3.4 percentage points. In addition, higher distribution costs negatively impacted earnings. Change in adjusted EBITA (%) 1809 vs :3 vs 17:3 Total 4-5 Price/mix Volume 0 0 Raw materials Energy -1-4 Currency 3 7 Other -1-7 Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

12 DISTRIBUTION OF SHARES September 30, 2018 Class A Class B Total Registered number of shares 64,082, ,259, ,342,489 At the end of the period, the proportion of Class A shares was 9.1%. The total number of votes in the company amounts to 1,279,087,806. FUTURE REPORTS The Year-end Report for 2018 will be published on January 31, Essity s Annual Report for 2018 is intended to be published in the week beginning March 11, In 2019, interim reports will be published on April 25, July 18 and October 25. INVESTOR DAY Essity has changed the date for its Investor Day in Stockholm to May 23, ANNUAL GENERAL MEETING Essity s Annual General Meeting will be held in Stockholm on April 4, INVITATION TO PRESS CONFERENCE ON INTERIM REPORT Q Media and analysts are invited to a press conference, where this interim report will be presented by Magnus Groth, President and CEO. Time: 9:00 a.m. CET, Monday, October 29, 2018 Location: Essity s headquarters, Waterfront Building, Klarabergsviadukten 63, Stockholm, Sweden The presentation will be webcast at To participate by telephone, call: +44 (0) , or Specify Essity or conference ID no Link to webcast: Stockholm, October 29, 2018 Essity Aktiebolag (publ) Magnus Groth President and CEO For further information, please contact: Fredrik Rystedt, CFO and Executive Vice President, Johan Karlsson, Vice President Investor Relations, Group Function Communications, Joséphine Edwall-Björklund, Senior Vice President, Group Function Communications, Per Lorentz, Vice President Corporate Communications, NB: This information is such information that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, at 7:00 a.m. CET on October 29, This interim report was not reviewed by the company s auditors. Karl Stoltz, Media Relations Manager, Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

13 CONDENSED STATEMENT OF PROFIT OR LOSS 2018:3 2017:3 2018: Net sales 29,647 27,178 29,721 87,388 80,601 Cost of goods sold 1,2-21,416-18,949-21,104-62,484-56,663 Items affecting comparability 1, , Gross profit 7,458 8,257 8,436 23,396 23,394 Sales, general and administration 1-5,221-4,835-5,279-15,464-14,274 Items affecting comparability Share of profits of associates and joint ventures Operating profit before amortization of acquisitionrelated intangible assets 2,005 3,396 3,320 8,085 8,953 Amortization of acquisition-related intangible assets Items affecting comparability Operating profit 1,813 3,237 3,139 7,543 8,488 Financial items Profit before tax 1,481 2,962 2,840 6,622 7,643 Tax ,687-1,924 Profit for the period 1,078 2,222 2,131 4,935 5,719 Earnings attributable to: Owners of the parent 988 2,090 2,035 4,483 5,227 Non-controlling interests Average no. of shares before dilution, millions Average no. of shares after dilution, millions Earnings per share, SEK - owners of the parent - before dilution effects after dilution effects Of which, depreciation -1,577-1,417-1,530-4,564-4,197 2 Of which, impairment Gross margin EBITA margin Operating margin Financial net margin Profit margin Tax Net margin Excluding items affecting comparability: Gross margin EBITA margin Operating margin Financial net margin Profit margin Tax Net margin Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

14 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2018:3 2017:3 2018: Profit for the period 1,078 2,222 2,131 4,935 5,719 Other comprehensive income for the period Items that may not be reclassified to the income statement Actuarial gains/losses on defined benefit pension plans ,160 1,460 Income tax attributable to components of other comprehensive income Items that have been or may be reclassified subsequently to the income statement ,067 Financial assets measured at fair value through comprehensive income Cash flow hedges Translation differences in foreign operations -1,500-1, ,639-1,563 Gains/losses from hedges of net investments in foreign operations ,379 Other comprehensive income from associated companies Income tax attributable to components of other comprehensive income ,102-1,363 1,124 2,614-2,736 Other comprehensive income for the period, net of tax ,416 1,513 3,491-1,669 Total comprehensive income for the period ,644 8,426 4,050 Total comprehensive income attributable to: Owners of the parent ,402 7,725 4,106 Non-controlling interests CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to owners of the parent Opening balance, January 1 42,289 33,204 Effect attributable to change accounting standard IFRS Tax effect attributable to change accounting standard IFRS Total comprehensive income for the period 7,725 4,106 Dividend -4,038 0 Transaction with owner (Svenska Cellulosa Aktiebolaget SCA) Private placement to non-controlling interest Private placement to non-controlling interest, dilution Closing balance 45,971 38,366 Non-controlling interests Opening balance, January 1 7,281 6,376 Total comprehensive income for the period Dividend Private placement to non-controlling interest Private placement to non-controlling interest, dilution Acquisition of non-controlling interests 0 80 Closing balance 7,667 6,936 Total equity, closing balance 53,638 45,302 1 Specification of transaction with owner (Svenska Cellulosa Aktiebolaget SCA) 1 Received contribution/given contribution Tax effects 0 49 Total Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

15 CONSOLIDATED OPERATING CASH FLOW STATEMENT Operating cash surplus 13,624 13,512 Change in working capital -1,671-1,150 Current capital expenditures, net -2,863-2,670 Restructuring costs, etc Operating cash flow 8,401 8,835 Financial items Income taxes paid -1,851-2,110 Other Cash flow from current operations 5,714 6,055 Acquisitions ,932 Strategic capital expenditures in non-current assets -1,746-1,383 Divestments 1 25 Cash flow before dividend 3,287-21,235 Private placement to non-controlling interest 3 27 Dividend to non-controlling interests Dividend -4,038 0 Transactions with shareholders Net cash flow -1,064-20,590 Net debt at the start of the period -52,467-35,173 Net cash flow -1,064-20,590 Remeasurement to equity 1,159 1,462 Translation differences -2,123 1,189 Net debt at the end of the period -54,495-53,112 Debt/equity ratio Debt payment capacity, % Net debt / EBITDA Net debt / Adjusted EBITDA Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

16 CONSOLIDATED CASH FLOW STATEMENT Operating activities Profit before tax 6,622 7,643 Adjustment for non-cash items 1 5,439 4,414 12,061 12,057 Paid tax -1,851-2,110 Cash flow from operating activities before changes in working capital 10,210 9,947 Cash flow from changes in working capital Change in inventories -1,419-1,509 Change in operating receivables -1,003 1,407 Change in operating liabilities 751-1,048 Cash flow from operating activities 8,539 8,797 Investing activities Company acquisitions ,951 Divestments 1 25 Investments in intangible assets and property, plant and equipment -4,664-4,172 Sale of property, plant and equipment Loans granted to external parties Cash flow from investing activities -5,246-17,196 Financing activities Private placement to non-controlling interests 3 26 Dividend -4,038 0 Change, receivable from Group companies Loans raised 3,994 30,975 Amortization of debt -4,053-23,815 Dividend to non-controlling interests Transactions with shareholders Cash flow from financing activities -4,410 8,756 Cash flow for the period -1, Cash and cash equivalents at the beginning of the period 4,107 4,244 Exchange -differences in cash and cash equivalents Cash and cash equivalents at the end of the period 3,054 4,429 Cash flow from operating activities per share, SEK Reconciliation with consolidated operating cash flow statement Cash flow for the period -1, Amortization of debt 4,053 23,815 Loans raised -3,994-30,975 Loans granted to external parties Investment through financial lease -9-4 Change, receivable from Group companies Net debt in acquired and divested operations ,981 Accrued interest Net cash flow according to consolidated operating cash flow statement -1,064-20,590 1 Depreciation/amortization and impairment of non-current assets 5,115 4,566 Gain/loss on asset sales and swaps 32 0 Change, provision related to antitrust cases Gain/loss on divestments -4-1 Unpaid relating to efficiency program Payments related to efficiency program already recognized Change, one-time foreign tax on non-current assets Revaluation effect of previously owned holding upon acquisition Other Total 5,439 4,414 Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

17 CONSOLIDATED BALANCE SHEET September 30, 2018 December 31, 2017 Assets Goodwill 33,623 31,697 Other intangible assets 21,565 21,424 Buildings, land, machinery and equipment 51,181 48,482 Participation in joint ventures and associates 772 1,062 Shares and participation Surplus in funded pension plans 2,393 1,148 Non-current financial assets Deferred tax assets 2,285 2,232 Other non-current assets Total non-current assets 113, ,098 Inventories 15,693 13,739 Trade receivables 19,342 17,607 Current tax assets Other current receivables 2,689 2,549 Current financial assets 252 1,105 Non-current assets held for sale Cash and cash equivalents 3,054 4,107 Total current assets 41,981 39,918 Total assets 155, ,016 Equity Share capital 2,350 2,350 Reserves 5,509 3,154 Retained earnings 38,112 36,785 Attributable to owner of the Parent 45,971 42,289 Non-controlling interests 7,667 7,281 Total equity 53,638 49,570 Liabilities Non-current financial liabilities 43,223 47,637 Provisions for pensions 4,468 4,541 Deferred tax liabilities 7,553 7,090 Other non-current provisions 1,913 1,481 Other non-current liabilities Total non-current liabilities 57,247 60,828 Current financial liabilities 12,990 7,201 Trade payables 15,155 14,748 Current tax liabilities Current provisions 1,496 1,547 Other current liabilities 13,932 12,569 Total current liabilities 44,212 36,618 Total liabilities 101,459 97,446 Total equity and liabilities 155, ,016 Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No

18 CONSOLIDATED BALANCE SHEET (cont.) September 30, 2018 December 31, 2017 Debt/equity ratio Equity/assets ratio 30% 29% Equity 53,638 49,570 Equity per share Return on equity 15.6% 19.8% Return on equity excluding items affecting comparability 17.6% 21.3% Capital employed 108, ,037 - of which working capital 8,392 5,901 Return on capital employed* 11.1% 13.9% Return on capital employed* excluding items affecting comparability 12.4% 14.9% Net debt 54,495 52,467 Provisions for restructuring costs are included in the balance sheet as follows -Other non-current provisions Other current provisions Provisions for tax risks are included in the balance sheet as follows -Other non-current provisions Other current provisions *) rolling 12 months Essity Aktiebolag (publ), Box 200, SE Stockholm, Sweden. Corp. Reg. No