Ontex Group Nv Ord

Good afternoon, everyone, and thank you for joining us today and standing by while we were solving some technical issues. I'm Jeff Raskin from Investor Relations. I'm pleased to have with us Gustavo Calvopas, our CEO, and Geert Peters, our CFO, to present the first quarter 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. With that keyed up, Gustavo, over to you.

Thanks, Joff. While tense geopolitics led to a more challenging and uncertain economic environment, ONTEX showed resilience against these headwinds in the quarter. Thanks to the structural changes made in the last couple of years, and despite temporary drops in demand, we are confident and confirm our full year guidance. In quarter one, Revenue was a solid 451 million euro. Our continued positive contract gain loss balance partially upset the expected price decrease carryover and the drop in market demand, resulting in a net 10 million decrease versus last year. Adjusted EBITDA was 51 million euro, 2 million lower, reflecting the volume decrease and Forex, while our cost information program fully offset the sales price construction and higher cost. The margin thereby remained solidly above 11 percent. Let's go back to the market dynamics on the next slide. The geopolitical tense climate led to forex volatility, as well as recession and inflation fears, in particular the U.S. and reciprocal tariff threat, for which we took mitigation actions. The higher resulting cost are partially visible in our Q1 results, as Geert will discuss later. Importantly, ONTEX imports into the U.S. from its Mexican plant are manufactured under the tariff exception provided by the USMCA, thereby minimizing the direct impact from U.S. tariffs, which is very good news. However, these tensions also led to a drop in consumer demand. In Europe, overall consumer demand dropped by low single digit, especially in baby care, where demand fell by high single digit. Adult care continued to grow by mid single digit in the retail and was stable in the healthcare channel. In North America, it is overall a bit the same picture, though less pronounced, with demand down by low single digit in baby care. While these circumstances affected our quarter one results, we continue making a strong progress on our strategic journey, as summarized on the next slide. First, on the structural side, we made further progress on the portfolio refocusing with the announcement of the deal to sell our Turkish business in January and the closing of the Brazilian divestment at the end of quarter one. Both are expected to bring in around 115 million euros this year. These proceeds allow us to issue a new bond for a lesser amount than before, and we extended our debt maturity by five years. Our now strengthened and more durable balance sheet is appreciated by the rating agencies, leading to an upgrade by Moody's in the quarter by 2B1. These measures further enabled us to fuel our three value creation drivers, where also further progress was made in the quarter. We strengthened our competitive and sustainable innovation with a new feminine care lab in our Spanish plant, and we launched the DreamShield innovation for diapers across Europe. Our best-in-class initiatives continue to deliver with the initial contribution from the Belgian footprint transformation, allowing us to improve our operating efficiencies yet again with 4% year-on-year. These initiatives allow us to expand our business, and while the market is currently not favorable, our double-digit volume growth in North America continues. In Europe, we continue to improve our product mix and our gain and loss balance remains positive. With that, I leave you to Geert for the financial details.

Thank you, Gustavo. So we are now on slide six with the revenue bridge for Q1 versus last year, showing a like-for-like decrease of 2.8%. The largest part, 1.6%, is linked to pricing. Prices came down in all categories, which was expected. While our prices remained largely stable since mid-last year, they did come down in the first half of last year, reflecting investments in competitiveness and the decrease in raw material prices in the periods before. Volumes, including mix, came down 1.3%, reflecting the market evolution which Gustavo covered across categories. In Europe, our adult care sales were up, boosted by solid demand from as well the retail as the healthcare channel. This development continues to strengthen the weight of adult care as our largest category in our portfolio. In feminine care, sales volumes were lower with a weaker market demand and some temporary supply issues, which have been solved meanwhile. In baby care, volumes dropped with overall demand, but with an improving product mix. And finally, in North America, although the market was softer, we continued to generate double-digit volume growth in baby, building on our growth momentum with contracts gained last year. And in the second half of this year, we expect new contracts to kick in as well. Let's move to the next slide on EBITDA bridge. On this bridge, you can see that the slight decrease in adjusted EBITDA can be entirely explained by the lower volumes, which had a 2 million euro impact. Our cost transformation program delivered yet again and offset our previously explained sales price decrease as well as the increase of raw material prices and other operating costs. We delivered 4% operating efficiency gains in line with the delivery in the last two years, with on top of the continuous improvement initiatives, our Belgian footprint transformation starting to bear fruit after the closure of the ECLO plans. Raw material prices were up by €3 million, reflecting an increase in the indices for fluff, as well as slightly higher prices for super-absorbent polymers and packaging. The operating SG&A costs went up with salary inflation, but also with additional costs to support the expansion in North America, as well as some measures taken to mitigate the impact of the U.S. tariff threats. The combined effect led to a slight contraction of our operating margin, which remained solidly above 11%, however. And as Gustave explained, we're pleased to report that our plant in Mexico is USMCA compliant, and so we have no impact from tariffs there based on the current information. Let's now cover the net depth and leverage ratio on the next slide. On slide eight, you can see the evolution of our last 12 months adjusted to BDA. That's the light blue line, then net depth, the dark blue line, and at the bottom, in green, the leverage ratio. Our net debt rose to €656 million at the end of March. This was mainly due to higher inventories linked to the actions we took to mitigate the US tariff threat. Moreover, also our factoring was done. We've continued to invest in on-tax transformation with besides a higher capex intensity, the payout of restructuring charges related to the Belgian footprint transformation. We also had a cash out of €10 million in the quarter for the share buyback program. This program was launched in December 24 and is meanwhile finalized with 1.5 million shares bought back. The leverage ratio thereby temporarily rose above 2.5 times, but remaining well within our operating bracket of maximum three times. Early April, as you know, we finalized the divestment of Brazil. Based on the proceeds received and adjusted for the EBDA, net debt drops back to 2.5 times pro forma. All that allowed us to reshape our debt structure, as you can see on the next slide. Our main credit facilities, and as you know that the revolving credits and the high-yield bonds, which were maturing respectively N25 and N26, have been now refinanced for the coming five years. Thanks to the received and expected divestment proceeds, as well as the improving free cash flow, we've reduced gross debt by decreasing the high-yield bond from €580 to €400 million. Moreover, our improved credit profile was also recognized by a Moody's upgrade to B1 recently and a Sennert & Poos upgrade to B+, already end of last year. As a consequence, the credit spread of the high-yield bond came down from €407 to €284 basis points. Despite the higher interest environment, the lower debt quantum and this lower credit spread allow us to keep the high-yield bond interest at the same level as before. While we reduced the gross indebtedness, we increased our liquidity flexibility with the RCF limit now at €270 million, based on a syndicate of eight relationship banks. We thereby have the financing in place to support our business growth and secure our resilience going forward. With that, I hand you back over to Gustavo for the outlook.