Ontex confirms 2025 outlook with North American growth and operational transformation

Ontex released its financial results for the first quarter of 2025, reporting revenue of €451 million – a 2.8% year-over-year decline on a like-for-like basis – amid softer demand in European markets. Still, the company showed resilience, driven by double-digit volume growth in North America and an improved product mix.

Adjusted EBITDA margin remained solid at 11.2%, despite the challenging economic environment. Ontex’s cost transformation program, which includes savings from the restructuring of its Belgian plant, delivered €15 million in net savings, helping to counterbalance rising operational costs and lower average selling prices.

“These results demonstrate Ontex’s improved resilience in a more challenging economic environment, providing us confidence to confirm our full-year outlook”, said CEO Gustavo Calvo Paz. “Our focus is on achieving sustained success over the long term, and we are thereby committed to execute our strategic transformation roadmap, which fundamentally enhances our competitiveness to address the market even better”.

NORTH AMERICA LEADS VOLUME GROWTH; EUROPE SHOWS MIXED PERFORMANCE

Overall volumes fell by 1.3% in the quarter, reflecting softer demand across some regions and categories, particularly in Europe. Feminine care volumes declined due to temporary supply constraints and weaker consumer demand. In contrast, adult incontinence sales grew, fueled by solid retail momentum across Europe.

Baby care showed a mixed performance. While volumes in Europe declined – despite relatively strong performance of retailer brands – North America saw double-digit growth. The increase was driven by retail contracts secured in mid-2024, which started contributing to volume growth this quarter.

AVERAGE PRICES DOWN, BUT IMPACT ABSORBED

Average selling prices declined by 1.6%, reflecting the residual impact of price adjustments made in the first half of 2024. Foreign exchange had a positive 0.8% impact, mainly due to stronger Polish zloty, British pound, and U.S. dollar against the euro.

MARGINS PROTECTED BY EFFICIENCY GAINS

Adjusted EBITDA reached €51 million, down 4.4% year-over-year, mainly impacted by lower volumes and product mix. However, the transformation program delivered significant operational gains, with a 4.3% efficiency improvement across procurement, supply chain, innovation, and manufacturing. The closure of the Eeklo plant in Belgium marked another step in the company’s European manufacturing footprint transformation.

Raw material costs increased by €3 million, driven by higher pulp, SAP, and packaging prices. Overhead expenses rose by €5 million, reflecting wage inflation, the ramp-up of North American operations, and measures taken in response to U.S. tariff risks. Currency effects had a negative €1 million impact, mainly due to the Mexican peso.

OPERATING PROFIT AND DEBT

Operating profit was €29 million, compared to €34 million a year earlier. The decline was due to lower EBITDA, higher restructuring expenses (€3 million versus €1 million), and increased depreciation.

Net financial debt reached €656 million at the end of March, an increase of €44 million from the previous quarter. The rise was driven by higher working capital – partly as a preventive measure against U.S. tariff risks – along with capital expenditure and restructuring payments. Leverage increased from 2.5x to 2.7x LTM adjusted EBITDA.

STRENGTHENING CAPITAL STRUCTURE AND COMPLETING DIVESTMENTS

In April, Ontex completed the sale of its Brazilian operations, receiving €81 million in net proceeds. An additional €18 million remains in escrow and is expected to be received in Q2. The proceeds will be used to reduce debt.

At the same time, the company launched a new €400 million bond maturing in 2030, with a fixed coupon of 5.25%. This issuance refinances the €580 million bond originally due in 2026. Around half has already been repurchased, and the remainder will be redeemed by mid-year.

Another milestone was the completion of the share buyback program launched in December 2024, with 1.5 million shares repurchased. Ontex now holds 2.85% of issued shares in treasury, to support long-term incentive plans.

POSITIVE OUTLOOK FOR 2025

Despite a softer start to the year, Ontex reaffirmed its full-year guidance, expecting a stronger second half supported by new North American contracts. The company forecasts:

• Like-for-like revenue growth between 3% and 5%;
• Adjusted EBITDA growth between 4% and 7%, driven by scale and efficiency gains;
• Consistent free cash flow generation, even with increased investments to complete operational transformation by end of 2025;
• Leverage reduction to below 2.5x by year-end.