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1. Company Snapshot

1.a. Company Description

Ontex Group NV provides personal hygiene solutions for baby, feminine, and adult care in Western Europe, Eastern Europe, the Americas, Mexico, the United Kingdom, Italy, France, and internationally.It offers baby care products, such as baby diapers and pants, and wet wipes under the Baby Pants, Bbtips, Bio Baby, Chicolastics, Canbebe, Cremer Disney, Helen Harper, Kiddies, Little Big Change, Moltex, Pom Pom, Sapeka, and Mônica brands; and feminine care products, including sanitary towels, panty liners, and tampons under the Fiore, Mia, NAT, Sincere, and Silhouette brand names.The company also provides adult incontinence products comprising adult pants and diapers, incontinence towels, and bed protection products under the A Lovely Day, Adultmax Maturidade, Affective, Bigfral, iD, Canped, Affective, Lille Healthcare, Kylie, Serenity, Orizon, and Moviment brands; and as produces and sells face masks.


It sells its products to consumers, retailers, and institutional and private healthcare providers, as well as offers products under retailer brands.Ontex Group NV was founded in 1979 and is headquartered in Aalst, Belgium.

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1.b. Last Insights on ONTEX

Ontex Group NV's recent performance was negatively impacted by a 2.8% lower like-for-like (LFL) revenue in Q1 2025, driven by soft market demand. The company's revenue of €451 million was partly offset by a mix improvement in Europe and double-digit volume growth in North America.

1.c. Company Highlights

2. Ontex's Q3 Earnings: A Step in the Right Direction

Ontex reported Q3 revenue of €445 million, down 5% year-on-year, but with a 4% sequential growth from Q2. The EBITDA margin improved by 3 percentage points to 11.4%, indicating a positive trend in operational efficiency. The EPS came out at €0.666, significantly beating estimates of €0.04. The company's leverage ratio remained stable at 2.7x, and net debt reduced by €9 million to €543 million. The company produced positive free cash flow in the quarter, a welcome sign after a challenging period.

Publication Date: Nov -23

📋 Highlights
  • Q3 Revenue Performance: Revenue declined 5% YoY to €445M, but rose 4% sequentially, with volumes down 4% and price/mix impact negligible.
  • EBITDA Margin Expansion: EBITDA margin improved 300 bps to 11.4%, driven by cost discipline and favorable raw material pricing, with Q4 guidance of ~13.5% margin.
  • Q4 Growth Drivers: Expected 5% revenue growth from new contract wins (€30M+ EBITDA sequential boost) and stable leverage at 2.7x, despite soft U.S. contract manufacturing.
  • Segment Contrasts: Adult Care retail volumes up high single digits, Baby Care down 11%, and private label growth offsetting declining contract manufacturing in the U.S.
  • 2026 Outlook: New contracts (€63M Q4 EBITDA run rate) and €10M+ restructuring costs anticipated, with free cash flow improving due to lower CapEx and inventory releases.

Revenue Performance

The Q3 revenue decrease was mainly due to lower volumes, with a 4% drop, while price and mix impact was almost nil. Volumes in Adult Care grew by high single digits in the retail channel, while Baby Care volumes declined by 11%. The company expects revenue growth to be driven by new contracts in Q4, with no assumed improvement in underlying markets. For 2026, new contract wins will contribute to growth, with some contracts already started in Q4 and more to come online next year.

Margin Expansion

The company's EBITDA margin improved significantly, driven by cost consciousness, efficiency gains, and favorable raw material pricing. Ontex guides for a Q4 margin of around 13.5%, driven by volume growth and better absorption of fixed costs. This guidance may be perceived as aggressive, but the company views it as sustainable in the long run. The expected restructuring costs of over €5 million in Q4 and over €10 million in total for 2026 will likely be offset by the margin expansion.

Valuation and Outlook

Ontex's current valuation metrics indicate a relatively low P/E Ratio of -4.99 and a P/S Ratio of 0.27. The EV/EBITDA ratio stands at 7.58, indicating a moderate valuation. Analysts estimate next year's revenue growth at 2.6%. With a stable leverage ratio and improving EBITDA margin, the company's financial health is expected to improve. The expected growth in revenue and margin expansion should help the stock perform better in the long run.

Business Segment Performance

In Adult Care, the growth of retail brands is high single-digit, outpacing market growth, while healthcare channel growth is measured on a yearly basis due to long-term contracts. In Baby Care, the European market faces challenges, with volumes down around 10%, and the company is focused on innovation, sustainability, and customer service to maintain competitiveness. The contract manufacturing business in the US is declining due to the soft market situation, while the private label segment is growing significantly.

3. NewsRoom

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Ontex enhances its North American Baby Pants Capabilities to Meet Rising Demand

Dec -03

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Ontex launches Dreamshield® 360 Night Pants concept with extra absorbency for long nights - driving growth in the baby pants segment.

Nov -26

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Ontex completes the divestment of its Turkish business

Nov -03

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Ontex reports sequential improvement across key financial indicators in Q3

Oct -30

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Ontex announces details for its Q3 2025 results publication

Oct -06

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Transparency Declaration Notification

Aug -22

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Ontex confirms H1 results with revenue and margin decrease in a weaker-than-expected market, while investing significantly and reaching key transformation milestones

Jul -31

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Ontex pre-announces results, reflecting revenue and margin decrease in a weaker-than-expected market, leading to a review of full year guidance

Jul -16

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.16%)

6. Segments

Baby Care

Expected Growth: 3.5%

Ontex Group NV's Baby Care segment growth of 3.5% is driven by increasing demand for eco-friendly and sustainable products, expansion in emerging markets, and strategic partnerships. Additionally, the company's focus on innovation, such as the introduction of new diaper formats and absorbent materials, contributes to its growth.

Adult Care

Expected Growth: 2.8%

Ontex Group NV's Adult Care segment growth of 2.8% is driven by increasing demand for incontinence products among the aging population, expansion in emerging markets, and strategic partnerships to enhance product offerings and distribution channels.

Feminine Care

Expected Growth: 3.2%

Ontex Group NV's Feminine Care segment growth of 3.2% is driven by increasing demand for eco-friendly and sustainable products, expansion in emerging markets, and rising awareness about menstrual health and hygiene. Additionally, the segment benefits from Ontex's strategic partnerships and investments in digital marketing, enhancing customer engagement and loyalty.

Other

Expected Growth: 2.5%

Ontex Group NV's 2.5% growth in 'Other' segment is driven by increasing demand for adult incontinence products, expansion in emerging markets, and strategic partnerships. Additionally, the company's focus on innovation, cost savings initiatives, and operational efficiencies have contributed to this growth.

7. Detailed Products

Babycare

Ontex Group NV offers a range of babycare products, including diapers, training pants, and baby wipes, designed for comfort, protection, and convenience.

Feminine Hygiene

Ontex Group NV provides a variety of feminine hygiene products, including sanitary pads, panty liners, and tampons, designed for comfort, protection, and discretion.

Adult Care

Ontex Group NV offers adult care products, including incontinence products, designed for comfort, protection, and independence.

Light Incontinence

Ontex Group NV provides light incontinence products, including pads and shields, designed for comfort, protection, and confidence.

Medical Disposables

Ontex Group NV offers medical disposables, including surgical masks, gloves, and aprons, designed for healthcare professionals and medical facilities.

8. Ontex Group NV's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Ontex Group NV is moderate due to the presence of alternative products in the market, but the company's strong brand recognition and customer loyalty mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the market and the lack of concentration among buyers, giving Ontex Group NV a relatively strong position.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but Ontex Group NV's large scale of operations and long-term contracts help to mitigate this threat.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the market, including significant capital requirements and regulatory hurdles, which make it difficult for new companies to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to a highly competitive environment and a need for Ontex Group NV to continuously innovate and differentiate itself.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.40%
Debt Cost 6.37%
Equity Weight 52.60%
Equity Cost 6.37%
WACC 6.37%
Leverage 90.12%

11. Quality Control: Ontex Group NV passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.69$

Current Price

6.69$

Potential

-0.00%

Expected Cash-Flows