Ontex Group Nv Ord

Good afternoon, everyone, and thank you for joining us today. This is Jeff Raskin from IR. I'm pleased to have Gustavo Calvopas, our CEO, and Geert Peters, our CFO, with us today to present the 2024 full year results. Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read them out loud, but I will assume you will have duly noted them. You're well aware that since 2022, our P&L is based on continuing operations, which consists of our core market activities only, while the emerging markets are reported as discontinued operations. These continue to contribute to our results and to the presented debt and cash flow figures in particular. As we're close to concluding the divestment of all of the emerging activities, this should be the last year I have to say this. With that cleared up, Gustavo, over to you.

Thanks, Geoff. Looking back, On 2024, the second year of our transformation journey, we can see the delivery of our efforts in our financial results, building on the solid delivery in 2023. Let's look into them on the next page, please. 2024 marked yet again a noticeable improvement in our performance. First, with continued revenue growth of 3.5% like for like. While in 2023, this was largely thanks to price increases, this year it was entirely the result of volume growth of 6%, growing by double-digit growth in North America, in adult care category, in baby pants, and in other selective categories. Our EBITDA margin has recovered to 12%, back to our historic levels, thanks to relentless focus on the cost transformation program which allow us to gain competitiveness, thereby supporting growth and improve profitability. While we continue to make substantial investments in our growth and in our transformation efforts, we deliver a strong free cash flow of 48 million euros, a strong improvement versus 2023. Finally, thanks to the strong EBITDA improvement by 28%, we have reduced our leverage ratio further, to just below 2.5 times. This reduction in indebtedness give us greater financial flexibility. I will pass you over to Geert for more details analysis on our 2024 performance.

Thanks a lot, Gustavo. Let me start explaining the like for like revenue growth of 3.5%. This growth is driven by strong volume and mixed growth and largely upsets the anticipated lower prices. Our volumes grew in all categories, 5.7% overall. We thus outperformed the growth in the market demand in Europe and especially North America. Let's have a look at the volume development of our three product categories in Europe and then also baby care in the US. First of all, adult care in Europe. Market demand was up by mid to high single digits, supported by societal trends with an increasing and more active elderly population. Moreover, retailer brands gained market share. OnTax volumes grew by double digits, mainly thanks to market share gains in the healthcare channel. Secondly, feminine care in Europe. Demand was largely stable, but we benefited from market share gains in retailer brands. And then baby care in Europe. Market demand decreased by low single digits, reflecting the decreasing birth rate. Retailer brands, however, consolidated their market share gains made in 23. Consequently, our baby care volumes in Europe were lower as well, but we continued to strengthen in higher added value products like baby pants, where we grew volumes by double digits. And then last, baby care in North America. Demand was largely stable, but A-brands lost some market shares to retailing and lifestyle brands. Ontex grew by strong double digits, boosted by the contract gains we secured with major retailers. Let's then go to the sales prices. These were lower across the categories, down 2.2% overall, investing in competitiveness and reflecting lower raw material prices. This explains a revenue decrease in feminine care and stable performance in baby care. In adult care, volume growth was more than compensated for the price decrease. This resulted in a strong 9% like-for-like revenue growth. Let's have a look at the adjusted EBDA. we increased by 28% to reach 223 million euro. At the same time, our margin rose to 12%, up 2.3 percentage points. As explained on the revenue graph, the volume mix improved significantly, contributing 21 million euro to the EBITDA. The cost transformation program delivered 70 million euro of net operating savings. That means that the operating cost base thereby shrunk by close to 5% again, with strong initiatives in purchasing the supply chain, manufacturing and innovation. As you can see, we partially reinvested this improvement in sales price decreases. Raw material prices had 39 million euro positive impact, in particular for super absorbent polymers and for fluff. In Q4, raw material prices have been flattening out, Other operating and G&A costs were up by 38 million euro, largely due to inflation of salaries, as well as energy and distribution costs, but also include temporary inefficiencies consequent to our asset and footprint transformation. Then on the next slide, we go to the full P&L, which I compare to the previous year. Let's start first with the core markets. The increase in the adjusted EBITDA almost fully translates in an increase of adjusted profits to 76 million euro, which is close to double as compared to the last year. In this amount, depreciations were slightly up, reflecting the higher investment level, and that finance costs ended higher than in 23, despite lower indebtedness. This was due to negative forex impacts. Adjusted income taxes were stable, but the effective tax rate improved thanks to the recognition of historic impact deferred tax assets in the period. That brings the net profit in the core markets a bit lower at €21 million positive. And that's due to the important post-tax non-recurring costs of €55 million. On one hand, these non-recurring costs include €62 million restructuring provisions related to the Belgian footprint. On the other hand, also €11 million impairments on redundant assets. Then we go to the discontinued operations, what we call the emerging markets. They ended at a loss of €11 million. In this, the adjusted MBDA ended positive at €29 million, which is lower than last year due to the reduction of scope with the divestments we did and more challenging market contexts in Brazil. It also included significant one-time divestment-related costs. In total, 27 million Euro related to the divestments of Algeria, Pakistan, Brazil, and Turkey, of which main part is non-cash cumulative translation adjustments on Algeria. Adding then up those continuing and the discontinued operations, the profit of the period for the total group came at a positive of 10 million Euro. Then on the next slide, we go to the cash side. Starting from the adjusted EBITDA for the group of 25, sorry, 252 million euro, which includes a contribution of the emerging markets of 29 million. Solid working capital management contributed 9 million euro, despite higher inventories due to transformation in efficiencies and thus are temporary in nature. Net financing cash out totaled 31 million euro, substantially lower than in 23. as the interest payments decreased thanks to lower indebtedness. CAPEX amounted to 112 million euro, representing close to 6% of the core market's revenue. This reflects a step up in investments for growth and transformation of the group. One-time restructuring and divestment related cash out ended at 39 million euro, of which 29 million euro is the first payment of the restructuring of the Belgian operations. If we then add up everything, free cash flow ended at €48 million positive, which is very solid and well up compared to the €9 million in the previous year. Now we move to the balance sheet with the evolution of net debt, which reduced 8% over the year from €665 million to €612 million. Besides the €48 million free cash flow, M&H proceeds added to 10 million euro. This mainly consists of the divestment proceeds of Algeria and Pakistan netted with costs and taxes, as well as some upfront costs on the Brazilian divestment. Gross financial debt of the total group reduced even more, from 834 to 736 million euro, thanks to the continuing cash management optimization. Besides lease liabilities, our debt consists primarily of €580 million bonds at a fixed 3.5%, maturing in July 26, and €24 million drawn on the revolving credit facility. The latter was reduced end of the year and has a maximum capacity... Sorry, the latter was renewed, of course, at the end of last year, and has a maximum capacity of €270 million for a period of five years. We're currently looking into refinancing the high-yield bonds in the course of 2025. Then our leverage ratio. The leverage ratio decreased significantly from 6.4 at the end of 2022 to 3.3 at the end of 2023 to just below 2.5 at the end of 2024. That is a combination of the net financial debt reduction, which is presented as a light blue line on the graph, and mostly thanks to the divestment proceeds, but also, and that's the dark blue line at the top, due to the fast improvement of adjusted EBITDA of core markets. which more than offset the impact of the scope reduction consequent to the divestments. The available liquidity of the total group increased from €322 million to €370 million, consisting of €124 million cash and the undrawn part of the revolving credit facility. The strengthening of the balance sheet and continually improving profitability and cash flow was also recognized by the rating agencies, which both upgraded on tax in the course of the year. Let me hand you back over to Gustavo for what 25 and beyond will bring us.