Sweden's Essity raises margin target after Vinda sale

FILE PHOTO: Essity sign is seen in Stockholm, Sweden May 23, 2019. REUTERS/Anna Ringstrom/File Photo

STOCKHOLM (Reuters) - Swedish hygiene products maker Essity raised its core profit margin target on Monday and reiterated its core sales target after divestment of Hong Kong-listed subsidiary Vinda <3331.HK).

Essity's sale of its 51.6% stake in Vinda for about 16 billion Swedish crowns ($1.52 billion) was completed in March.

An Essity statement said the company is now aiming for an operating profit margin before amortisation (EBITA) and items affecting comparability of more than 15% on annual sales growth before acquisitions of more than 3%.

It previously targeted an EBITA margin excluding one-offs of around 13.5% and sales growth of more than 5%, with organic sales growth of more than 3%.

"The new targets are an increase in ambition with an emphasis on profitable growth," the company said.

"Favourable market trends combined with Essity’s successful innovations, strong brands and efficiency initiatives provide us with the platform to gain market shares and improve the company’s profitability."

Essity added that although acquisitions are no longer included in the sales target, they remain part of the company’s strategy.

($1 = 10.5343 Swedish crowns)

(Reporting by Anna Ringstrom; Editing by Terje Solsvik and David Goodman)