Regulated information
- Revenue up 3% like for like, driven by 5% volume growth;
- Adjusted EBITDA rose by 31%, lifting margin up to 12%, on continued delivery of the cost transformation program, strengthening competitiveness and profitability;
- Net debt dropped 12%, thanks to strong FCF delivery and M&A proceeds, contributing to leverage ratio improvement to 2.5x;
- Full year outlook revised upward, with higher expected revenue growth, adjusted EBITDA margin and FCF, and with leverage down further.
CEO quote
Gustavo Calvo Paz, Ontex's CEO, said: "We have achieved several key strategic milestones in the first half year. Two divestments were successfully completed, sharpening our focus on Core Markets further, and our cost transformation program delivered solid efficiency gains yet again. This consistent delivery, coupled with our sustainable innovation pipeline, allows us to grow our business in North America and strengthen it in Europe, which gives me confidence to deliver a strong year. Aiming to further strengthen our competitive position, we announced the intention to restructure our Belgian production and distribution activities. These measures will allow us to further reinforce and grow our business sustainably, while driving profitability and cash flow generation up."
H1 2024 results
- Revenue [1] was €916 million, up 3% like for like. Volumes were up 5%, including mix effects, driven by double-digit volume growth in North America and in selected product categories. Prices were 2% lower, as expected, in view of the evolution of raw material price indices.
- Adjusted EBITDA [1] was €110 million, up 31% year on year. The cost transformation program continued to deliver 5% operational efficiencies, strengthening profitability and competitiveness. Meanwhile, volume growth and mix improvement contributed €6 million. Index-driven lower raw material costs offset most of the continued inflation impact on other operating and SG&A costs. The adjusted EBITDA margin thereby rose to 12%, up 2.6pp year on year.
- Operating profit [1] was €31 million, €4 million lower than last year, as one-time provisions and impairments of €(42) million were taken primarily for the intended Belgian footprint restructuring.
- Adjusted profit from continuing operations, excluding the restructuring costs, was €41 million, well up versus €12 million the year before.
- Loss of the period for the Total Group was €(6) million, compared to €(19) million the year before. It includes the €10 million profit from continuing operations, up versus €2 million in 2023, and the €(15) million loss from discontinued operations. Solid operational results of these, were offset by non-cash currency translation adjustments related to the recent divestments.
- Free cash flow amounted to €43 million, a significant increase compared to the €(29) million outflow in 2023, reflecting the strong operational delivery and helped by capex payment phasing in the year, while still allowing for working capital investments to support the Group's expansion and the cost transformation program.
- Net financial debt for the Total Group dropped €77 million to €588 million over the half year, thanks to the solid free cash flow and inflow from recent divestments. Combined with the EBITDA improvement, the leverage ratio fell from 3.3x at the start of the year to 2.5x at the end of June.
Q2 2024 results
- Revenue [1] was €456 million, up 2% like for like. Volume growth and mix effects contributed 5%, driven by volume growth in North America and in selected product categories. Prices were down 3% year on year.
- Adjusted EBITDA [1] was €57 million, up 32% year on year. Relentless focus on the cost transformation program delivered yet again 5% operational efficiency savings, which more than covered for the price decrease. Volume growth and mix improvement contributed €5 million. Lower raw material costs more than offset other operating and SG&A cost inflation. The adjusted EBITDA margin rose to 12.5%, up 2.8pp year on year.
- Operating loss [1] was €(3) million, post the one-time provisions and impairments of €(42) million. These were taken primarily for the intended Belgian footprint restructuring.
2024 outlook
Based on the solid delivery in the first half of 2024, and further progress made on Ontex's structural transformation, Ontex's management revises its previously iterated guidance upward, expecting:
- Revenue [1] to grow in a range of 4% to 5% like for like (previously: by low-single-digit);
- Adjusted EBITDA margin [1] of 12% (previously: in a range of 11% to 12%);
- Free cash flow higher than €20 million (previously: to improve year on year);
- Leverage ratio to reduce further to below 2.5x by year end (previously: to below 2.8x).
[1] Reported P&L figures, represent continuing operations, i.e. Core Markets, only. As from 2022, Emerging Markets are reported as assets held for sale and discontinued operations, following the strategic decision to divest these businesses.
Unless otherwise indicated, all comments in this document are on a year-on-year basis and for revenue specifically on a like-for-like (LFL) basis (at constant currencies and scope and excluding hyperinflation effects). Definitions of Alternative Performance Measures (APMs) in this document can be found on page 9.
Key business indicators
| Business results | Q2 | H1 | ||||||
| in € million | 2024 | 2023 | % | % LFL | 2024 | 2023 | % | % LFL |
| Core Markets (continuing operations) | ||||||||
| Revenue | 455.9 | 445.9 | +2% | +2% | 916.1 | 891.8 | +3% | +3% |
| Baby Care | 195.2 | 201.5 | -3% | -4% | 390.7 | 396.6 | -1% | -2% |
| Adult Care | 195.7 | 176.9 | +11% | +11% | 394.5 | 359.9 | +10% | +11% |
| Feminine Care | 60.3 | 61.7 | -2% | -3% | 120.5 | 123.0 | -2% | -3% |
| Adj. EBITDA | 56.9 | 43.2 | +32% | 109.8 | 83.8 | +31% | ||
| Adj. EBITDA margin | 12.5% | 9.7% | +2.8pp | 12.0% | 9.4% | +2.6pp | ||
| Operating profit/(loss) | (3.1) | 18.6 | -117% | 31.1 | 35.6 | -13% | ||
| Emerging Markets (discontinued operations) [2] | ||||||||
| Revenue | 74.7 | 131.3 | -10% | 165.9 | 337.1 | -5% | ||
| Adj. EBITDA | 8.3 | 7.8 | 20.0 | 22.8 | ||||
| Adj. EBITDA margin | 11.1% | 5.9% | +5.2pp | 12.1% | 6.7% | +5.3pp | ||
| Operating loss | (18.2) | (15.2) | (6.8) | (2.8) | ||||
| Total Group [2] | ||||||||
| Revenue | 530.6 | 577.3 | -0% | 1,082.0 | 1,228.9 | +1% | ||
| Adj. EBITDA | 65.2 | 50.9 | 129.8 | 106.6 | ||||
| Adj. EBITDA margin | 12.3% | 8.8% | +3.5pp | 12.0% | 8.7% | +3.3pp | ||
| Operating profit/(loss) | (21.3) | 3.4 | 24.3 | 32.8 | ||||
| Core Markets revenue | 2023 | Vol/mix | Price | 2024 | Forex | 2024 | |||
| in € million | LFL | ||||||||
| Second Quarter | 445.9 | +21.4 | -12.9 | 454.4 | +1.5 | 455.9 | |||
| First Half | 891.8 | +41.6 | -16.5 | 916.9 | -0.8 | 916.1 | |||
| Core Markets adj. EBITDA | 2023 | Vol/mix | Raw | Operat. | Operat. | SG&A/ | Forex | 2024 | |
| in € million | /price | mat'ls | costs | savings | Other | ||||
| Second Quarter | 43.2 | -8.0 | +13.0 | -5.5 | +18.8 | -5.7 | +1.1 | 56.9 | |
| First Half | 83.8 | -10.2 | +20.1 | -11.0 | +37.1 | -12.1 | +2.0 | 109.8 | |
[2] The Emerging Markets and Total Group year-on-year comparison is affected by divestments in the period, i.e. the Mexican, Algerian and Pakistani business activities. The LFL comparison is corrected for this scope reduction.
H1 2024 business review of Core Markets (continuing operations)
Revenue
Revenue was €916 million, up 3% like for like, with higher, volume-driven, adult care sales of 11%, more than compensating for a price-related decrease in baby care and in feminine care of 2% and 3% respectively. Forex fluctuations had no meaningful net effect, leaving revenue growth at 3% overall compared to the first half of 2023, and 1% compared to the second half.
Volumes were up 5%, including mix effects, driven by strong double-digit volume growth in North America and in selected product categories.
The strong increase in North America contrasted with the overall stable demand for baby care products in the region, thereby highlighting Ontex's share gains. These were based on new contracts that started during the second half of 2023, the first quarter of 2024 and at the end of the second quarter. Further volume growth in the year will be supported by additional secured contracts. The year-on-year comparison was partly helped by customer destocking in the first quarter of 2023 which depressed order levels at that time.
In Europe, overall demand for baby care products weakened, while they were stable for feminine care and growing for adult care, in line with the demographic evolution. While promotional activities by branded players, temper the previous share gains of retail brands in baby diapers, the latter continue to outperform in baby pants and in the feminine and adult category. Ontex's sales volumes in Europe overall reflected these market trends, with lower sales in baby diapers and strong increases in baby pants and in adult care, especially in the healthcare channel.
Prices were 2% lower on average. While in certain categories, such as healthcare, prices remained relatively stable, as these contracts typically have a longer term and are more rigid, prices have been coming down sequentially in other categories since the second half of 2023. This was expected, in view of the raw material price index decreases which had started earlier that year.
Adjusted EBITDA
Adjusted EBITDA was €110 million, up 31% compared to the first half of 2023, and 22% compared to the second half. Continued delivery on the cost transformation program, coupled with sustainable innovation, strengthened profitability and competitiveness, servicing customers better and managing prices to invest in further volume growth. Meanwhile, volume growth and mix improvement contributed €6 million. The net cost inflation impact was largely flat and forex effects were supportive.
The cost transformation program delivered €37 million net operating savings, leading to a reduction of the operating cost base by 4.9%. Product innovations, manufacturing and supply chain improvements, and especially procurement initiatives remain the drivers behind the structural savings. In June, Ontex announced the intention to restructure its Belgian production and distribution activities, as part of its strategic transformation to strengthen its competitive position in the European market. It would entail the closure of the Eeklo site, as well as the transformation of the Buggenhout site into a center of excellence for research, development and production of medium and heavy incontinence care products. This initiative aims at strengthening Ontex's operational cost-efficiency across Europe, allowing to pursue the structural operating efficiency gains so far.
Costs were €3 million higher on a net basis. Raw material cost decreases had a €20 million positive impact, reflecting the year-on-year lower price indices for fluff, super-absorbent polymers and non-woven materials. However, these indices have started to rise sequentially again, compared to the end of 2023. Other operating costs were up by €11 million year on year, largely due to inflation of salaries, energy and distribution costs. SG&A expenditure was up by €12 million, with wage inflation and actualization of variable remuneration in the half year.
Forex fluctuations had a €2 million net positive impact, mainly linked to the appreciation of some non-euro currencies in Europe.
The adjusted EBITDA margin rose to 12.0%, up 2.6pp compared to the first half of 2023, and 2.0pp compared to the second half.
Q2 2024 business review of Core Markets (continuing operations)
Revenue
Revenue was €456 million, up 2% like for like, with a solid volume-driven increase in adult care of 11%, more than compensating for a price-related decrease in baby care of 4% and in feminine care of 3%. Forex fluctuations had a minor positive effect, leaving revenue to grow 2% year on year overall, and to reduce 1% quarter on quarter.
Volumes, including mix effects, were up 5% year on year, driven by solid growth in selected categories, and especially in North America. The latter was largely based on contracts that kicked in in the prior quarters and to a lesser extent in the quarter. Ontex's sales volumes in Europe were up significantly in adult care, especially in the healthcare channel, and in other selected categories such as baby pants, while in baby diapers volumes were down, in line with market trends.
Prices were down across categories and 3% on average compared to last year. These decreases were expected, and in line with the raw material price index decreases during last year.
Adjusted EBITDA
Adjusted EBITDA was €57 million, up 32% year on year, and 8% quarter on quarter, mainly thanks to relentless focus on delivering on the cost transformation program, which more than covered for the price decreases. Volume growth and mix improvement contributed €5 million. Lower raw material costs more than compensated for other operating and SG&A cost inflation. Forex effects had a small positive contribution.
The cost transformation program resulted in €19 million net operating savings, leading to a reduction of the operating cost base by 5.0%. Product innovations, manufacturing and supply chain improvements, and especially procurement initiatives were the drivers behind the structural savings.
Costs decreased by €2 million net versus last year. Year-on-year decreases of the raw material price indices had a €13 million positive impact. Other operating costs were up by €5 million year on year, largely due to inflation of wages, energy and distribution costs, and SG&A expenditure was up by €6 million year on year, on wage inflation and variable remuneration actualisations as in the first quarter.
Forex fluctuations had a €1 million net positive impact, mainly linked to the appreciation of some non-euro currencies in Europe.
The adjusted EBITDA margin rose to 12.5%, up 2.8pp year on year and 1.0pp quarter on quarter.
Key financial indicators
| Financial results | H1 | |||
| in € million | 2024 | 2023 | % | |
| Adj. EBITDA | 109.8 | 83.8 | +31% | |
| Depreciation & amortization | (36.4) | (35.7) | -2% | |
| Net finance cost | (26.5) | (24.8) | -7% | |
| Adj. income tax expense [3] | (5.4) | (11.2) | +51% | |
| Adj. profit from continuing operations | 41.4 | 12.2 | +240% | |
| EBITDA adjustments [4] | (42.2) | (12.6) | -236% | |
| Impact of EBITDA adjustments on income tax [3] [4] | 10.5 | 2.5 | +323% | |
| Profit from continuing operations | 9.6 | 2.1 | +367% | |
| Loss from discontinued operations | (15.5) | (21.2) | +27% | |
| Loss for the period | (5.8) | (19.2) | +70% | |
| Basic EPS (in €) | (0.07) | (0.24) | +70% | |
| Capex | (37.9) | (44.4) | +14% | |
| Free cash flow | 43.2 | (28.6) | +251% | |
| M&A cash flow | 33.6 | 207.2 | -84% | |
| Net working capital [5] | 150.7 | 166.5 | -9% | |
| Working capital / revenue [5] | 7.1% | 7.6% | -0.6pp | |
| Gross financial debt [5] | 748.0 | 833.5 | -10% | |
| Net financial debt [5] | 588.1 | 665.3 | -12% | |
| Leverage ratio [5] | 2.49x | 3.25x | -0.76x | |
[3] The Adjusted income tax expense consists of the income tax expense, as presented in the income statement, adjusted for the impact of EBITDA adjustments.
[4] EBITDA adjustments and their impact on income tax are subtracted from adjusted profit to obtain profit.
[5] Balance sheet data reflect the end of the period and compare to the start of the period, i.c. December 2023.
H1 2024 financial review of Total Group
P&L
Depreciation & amortization from continuing operations was slightly up at €(36) million, reflecting the higher investment level.
EBITDA adjustments of €42 million were made in continuing operations. These adjust for €(38) million restructuring provisions accounted for as "Income & expenses related to changes in Group structure", and consist primarily of €(37) million provisioned for the intended restructuring of the Belgian operating footprint. This amount reflects the potential redundancy cost for the employees concerned according to the Belgian legal requirements. As the social information and consultation round is still ongoing, and negotiations were not started up, no reliable estimate for the social plan beyond these legal requirements could be made. EBITDA adjustments were also made for €(4) million related asset impairments, accounted for as "Income & expenses related to impairments & major litigations".
Net finance cost from continuing operations was €(27) million, slightly higher than €(25) million in 2023, as forex effects offset the reduced interest charge. The latter is the result of lower indebtedness, following the repayment of the €220 million term loan mid last year.
Income tax result from continuing operations was a positive €5 million, compared to a €(9) million charge a year ago, following the recognition of deferred tax assets in the period in view of the improving profitability.
Discontinued operations, consisting of the Emerging Markets division, generated a revenue of €166 million, a 5% like for like decrease versus 2023, excluding forex and scope effects, following the divestment of the Mexican business in 2023 and the Algerian and Pakistani businesses earlier in this year. The adjusted EBITDA was €20 million resulting in a margin of 12.1%, almost double the 6.7% from a year ago, reflecting the improvement of the remaining businesses in Turkey and Brazil. The operating loss was €(7) million, compared to €(3) million last year, which still included the partial contribution from the Mexican business and the full contribution of the Algerian and Pakistani business. It includes some divestment-related costs as well as the non-cash recycling of €(20) million currency translation adjustments through the P&L, from "Cumulative translation reserves" to "Retained earnings and other reserves" in the equity. This follows the finalization of the divestment of the Algerian and Pakistani businesses in the period.
Loss of the period for the Total Group was €(6) million, compared to €(19) million the year before, and consists of the €(15) million loss from discontinued operations and the €10 million profit from continuing operations. The latter compares to €2 million in 2023, and includes the impact of restructuring and impairment related costs. Excluding these, the adjusted profit from continuing operations was €41 million, well up versus €12 million the year before. Basic earnings per share of the Total Group were €(0.07), compared to €(0.24) in 2023.
Cash flow
Capital expenditure was €(38) million, representing 3.5% of the Total Group revenue. The ratio is relatively low compared to the expected ratio for the year, due to phasing of payments, and is expected to accelerate in the second half, to support investments in the North American business expansion and the further implementation of the cost transformation program. Capital expenditure excludes financial leases which amounted to €(12) million, largely in line with 2023. The combined capital expenditure and leases represented 1.4x the depreciation.
Free cash flow amounted to €43 million, well up compared to €(29) million in 2023, reflecting the strong operational delivery and helped by capex phasing. Working capital needs to support the business expansion and transformation amounted to €(12) million, while cash-out for restructuring and primarily divestment-related cash costs were €(5) million. Cash taxes were €(5) million and net financing cash-out totaled €(17) million, substantially lower than in 2023, as the interest payments decreased, and in 2023 significant transaction costs were paid related to the renegotiated revolving credit facility.
M&A cash flow totaled €34 million. Early April, Ontex completed the divestment of its Algerian business, and in June its Pakistani business. The net cash proceeds for both transactions combined so far were €25 million net of cash disposed, but remain subject to taxes, transaction costs and the customary post-closing adjustments, likely to be paid in the second half of the year. A deferred receivable related to the divestment of the Mexican business in 2023 still remained outstanding. In the first half year €8 million was received from the acquirer, and €19 million remains due within the next four years.
Balance sheet
Net working capital for the Total Group at the end of the period was €151 million, a €16 million decrease versus the end of 2023, largely linked to the divestment of the Algerian and Pakistani businesses. Net working capital in the remaining operations were largely stable, reflecting a relative improvement versus revenue. Trade receivables increased in line with the growing business, partly offset by slightly higher factoring activity, i.e. €170 million at the end of June. Inventories were up more to support the ramp-up in revenue in North America and the footprint adjustments in Europe. Increased trade payables offset these increases, however, reflecting better payment terms as a result of the cost transformation program.
Net financial debt for the Total Group dropped €77 million, from €665 million to €588 million over the half year, thanks to the solid free cash flow and the inflow from recent divestments. The leverage ratio decreased further from 3.25x at the start of the year to 2.49x end of June, as a combination of the net financial debt reduction and especially the further increase of the adjusted EBITDA of the Total Group of the last twelve months.
Gross financial debt of the Total Group reduced even more, by €86 million, from €834 million to €748 million, thanks to cash optimization. It consists primarily of the €580 million bond at fixed 3.5% rate maturing in July 2026, of €130 million of short- and long-term lease liabilities, and of €32 million drawn on the floating rate revolving credit facility with a maximum capacity of €242 million. The available liquidity of the Total Group increased from €322 million to €370 million, consisting of the €160 million cash and cash equivalents and the undrawn part of the revolving credit facility.
Assets-held-for-sale at the end of the period, i.e. the Brazilian and Turkish businesses, are valued at €141 million net on the balance sheet and include a €57 million net cash position. The balance sheet also includes €(211) million of cumulative translation reserves in equity related to these assets.
Disclaimer
This report may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management's current intentions, beliefs or expectations relating to, among other things, Ontex's future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this report regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this report.
The information contained in this report is subject to change without notice. No re-report or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it. In most of the tables of this report, amounts are shown in € million for reasons of transparency. This may give rise to rounding differences in the tables presented in the report.
Corporate information
The above press release and related financial information of Ontex Group NV for the six months ended June 30, 2024 was authorized for issue in accordance with a resolution of the Board on July 30, 2024.
Audio webcast
Management will host an audio webcast for investors and analysts on July 31, 2024 at 12:00 CEST / 11:00 BST. Click on https://channel.royalcast.com/landingpage/ontexgroup/20240731_1 to attend the presentation from your laptop, tablet or mobile device. Audio will stream through your selected device, so be sure to have headphones or your volume turned up. A full replay of the presentation will be available at the same link shortly after the conclusion of the live presentation. A copy of the presentation slides will be available on ontex.com.
Financial calendar
- October 24, 2024Q3 2024 results
- February 19, 2025Q4 & full year 2024 results
- April 30, 2025Q1 2025 results
- May 5, 20252025 Annual general meeting of shareholders
- July 31, 2025 Q2 & H1 2025 results
Enquiries
- InvestorsGeoffroy Raskin +32 53 33 37 30investor.relations@ontexglobal.com
- Media Catherine Weyne +32 53 33 36 22corporate.communications@ontexglobal.com
About Ontex
Ontex is a leading international developer and producer of care products and solutions for retailers and healthcare, with expertise in baby care, feminine care and adult care. Ontex's innovative products are distributed in around 100 countries through retailers and healthcare providers. Employing some 7,500 people, Ontex has a presence in 14 countries, with its headquarters in Aalst, Belgium. Ontex is listed on Euronext Brussels and is part of the Bel Mid®. To keep up with the latest news, visit ontex.com or follow Ontex on LinkedIn, Facebook, Instagram and YouTube.
