Ontex’s revenue for its key markets in the first quarter of 2022 was €385 million, up 13% overall and like for like versus last year, supported by volume growth across Ontex’s strategic growth drivers following significant contract wins, and by the first benefits of pricing to mitigate raw material cost inflation. This marks four consecutive quarters of sequential growth and confirms the turnaround after the decline in sales in prior years.
Revenue was up double digit across most geographies, especially in North America, where these were well above 30%, strongly delivering on Ontex’s strategic growth objective of double-digit growth in the region.
Volume and mix were the main drivers with an 11% impact. Significant contract gains were secured in 2021 both in Europe and North America, which combined with healthy underlying growth drivers, represent about half of the increase. The volume growth was also boosted by some forward buying ahead of price increases and helped by a low comparison base in the first quarter of last year.
In baby care revenue grew 18% like for like, with more than half of the increase generated by baby pants, benefitting from the increased production capacities, as one of Ontex’s strategic growth axes. In an overall stable baby care market, pants continue to outperform, especially in retail brands in Europe resulting in market share gains.
In adult care revenue grew 5% like for like. While growth in the institutional channel was subdued, retail and on-line channels grew consistently double digit. Feminine care products grew 19% like for like, primarily in tampons, where retail brands also gained market share. New re-usable products were launched in this category.
Prices were up 2% on average, gradually improving over the quarter. This price increase reflects the first benefits of contract negotiations. Whilst implementation is lagging inflation, more pricing has already been secured to positively impact the coming months. Additional pricing actions are planned to respond to the continued inflation of input costs.
Esther Berrozpe, Ontex CEO, comments: “It is very encouraging to deliver top line growth, particularly in Europe. This is a direct result of the significant efforts by our teams to rebuild customer confidence, improve service reliability and propose high growth products.”
“We have continued to roll out our cost reduction programs and these are delivering a solid momentum of structural savings. These are key building blocks to turn around our financial performance. At the same time, the results of the quarter show the full extent of the unprecedented raw material and input cost inflation causing a significant decline in margins. As a consequence, we have put in place price rises to help offset this unprecedented situation and we will continue to do so step by step throughout the year,” she adds.
In the discontinued Emerging Markets revenue was up 21%, almost entirely driven by higher prices across all geographies. As Ontex serves consumers mostly through own brands in these markets, price increases to pass-through inflation are more rapid to implement. In Central America, and to a lesser extent in South America, prices were raised across categories, with little impact on volumes.
In the Middle East, volumes were up as well, despite significant price increases. The net impact from forex fluctuations was negative with the appreciation of the Brazilian real and Mexican peso more than offset by the devaluation of the Turkish lira, the latter having been compensated by price increases.
Revenue of the total Group was thereby €553 million, 15% higher like for like, with volume and mix up 9%, fueled primarily by Core Markets, and pricing up 7%, mainly from the discontinued Emerging Markets. Including forex fluctuations, revenue was up 15%.