Essity’s Internal Leadership Shift: A Test of Continuity in Challenging Times

The Swedish hygiene and health giant Essity AB has entered a new chapter with the appointment of Ulrika Kolsrud as its next CEO, succeeding Magnus Groth, who announced his resignation in January 2024. This internal promotion marks a strategic pivot toward continuity and deep institutional knowledge, yet it arrives amid a backdrop of mixed financial performance and investor skepticism. The decision, following a reportedly “messy and sometimes slow” selection process, underscores the board’s confidence in Kolsrud’s expertise but raises questions about the balance between stability and innovation.

The Appointment: A Choice for Continuity

Kolsrud, who has led Essity’s Health & Medical division since 2019, brings over 28 years of experience at the company. Her elevation over external candidates—many of whom reportedly declined the role—reflects a deliberate focus on internal talent. This contrasts with the trend of multinational firms often favoring outsiders for top roles. The board’s rationale likely hinges on Kolsrud’s familiarity with Essity’s operations, products, and markets, particularly in high-growth areas like healthcare and sustainability.

Yet the delay in finalizing the decision and the rejection of external candidates signal potential challenges. Long-serving executives like Kolsrud may lack fresh perspectives, and the board’s preference for internal candidates could be seen as risk-averse. This is particularly pertinent as Essity navigates a competitive landscape, with rivals like Kimberly-Clark and Procter & Gamble leveraging digital innovation and sustainability-driven strategies.

Financial Performance and Market Skepticism

The appointment occurs against a backdrop of underwhelming Q1 2025 results. Essity’s shares fell 7.02% following the release of first-quarter earnings, as net sales grew just 0.4% to SEK34.98 billion, missing consensus estimates by SEK1.2 billion. Margins also contracted, with EBITA excluding IAC dropping to 13.5% from 14.0% a year earlier.

The miss stemmed largely from weak volume growth (0%) and a sharp decline in North American Professional Hygiene sales—a segment critical to Essity’s B2B portfolio. While Kolsrud’s promotion is unrelated to these results, the market’s reaction highlights lingering concerns about execution in key markets and margin resilience.

Strategic Challenges Ahead

Kolsrud inherits a company at a crossroads. Essity’s “Well-being for All” strategy prioritizes product innovation, sustainability, and operational efficiency, yet recent quarters reveal execution gaps. The Professional Hygiene division’s struggles in North America—a region accounting for ~30% of global sales—demand urgent attention. Meanwhile, the Health & Medical division, under Kolsrud’s leadership, has shown strength, with volumes rising 2.1% driven by price/mix improvements.

The board’s confidence in Kolsrud also hinges on her ability to balance growth with cost control. Despite a SEK3 billion share buyback program and a dividend hike to SEK8.25 per share, investors will scrutinize whether margins can rebound to the 14%+ levels seen in 2024.

Conclusion: The Test of Leadership Continuity

Essity’s appointment of Kolsrud represents a vote of confidence in institutional knowledge but carries risks. The data underscores the need for rapid turnaround in underperforming segments and margin recovery. With a 70% product superiority rating and a robust global footprint, the company has the tools to succeed. However, the market’s reaction to Q1 results—driven by execution, not leadership—suggests investors will judge Kolsrud’s tenure by her ability to stabilize profitability and deliver top-line growth.

The stakes are high: if Essity can align its internal strengths with external market demands, Kolsrud’s appointment may prove a masterstroke. But if the Q1 struggles persist, even the deepest institutional knowledge may falter in the face of shifting consumer preferences and cost pressures. The next 12 months will be decisive.

In a sector where sustainability and innovation are paramount, Kolsrud’s leadership must bridge the gap between continuity and change—if Essity is to thrive in the years ahead.