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

Core Insights - The company reported disappointing second quarter results, primarily due to a decline in consumer demand in the baby care segment, which fell at a high single-digit rate [1][5][6] - The full-year outlook has been revised, now expecting low single-digit revenue contraction and adjusted EBITDA in the range of €200-210 million [5][10] - Despite the weak performance, the adult care business is growing, and the company is making progress in its strategic initiatives [3][8] Financial Performance - Revenue for H1 2025 was €880 million, reflecting a 4.0% like-for-like decrease, with baby care revenue down by 9.8% [5][6][12] - Adjusted EBITDA for H1 2025 was €86 million, down from €110 million in 2024, resulting in a margin contraction of 2.2 percentage points to 9.8% [5][12] - Free cash flow was negative at €(40) million, impacted by lower EBITDA and increased capital expenditure [9][12] Market Dynamics - The baby care category experienced a 9.8% revenue decline, attributed to weak consumer demand and heavy promotional activity from branded players [6][12] - The adult care segment saw a 2.6% revenue increase, driven by stable demand in both retail and healthcare channels [6][12] - Temporary supply chain disruptions in Europe affected production and distribution, but these issues are being resolved [6][8] Strategic Initiatives - The company is focused on a cost transformation program that delivered €34 million in net savings, reducing operating costs by 5% despite lower volumes [9][12] - New contracts in North America and Europe are expected to contribute to revenue growth in the second half of 2025 [2][8] - The company is reshaping its portfolio and strengthening its balance sheet, which is anticipated to improve resilience to market fluctuations [3][8]