Ontex Group Nv Ord

Good noon, everyone, and thank you for joining us today. I'm Geoff Raskin from IR. I'm pleased to have with us Laurent Nilly, our new CEO, and his CFO to present the 2025 results. Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read it out loud, but I will assume you will have duly noted it. With that cleared up, Laurent, over to you.

Thanks, Geoff. And before I dive into the results, allow me to say some words about me. First of all, let me share my appreciation for the board and for former CEO Gustavo Calvapaz for the trust and the support in this transition. I'm honored to take over and realize the challenges ahead to both rebuild trust fast and to continue to work to unlock the intrinsic value of ONTEX. I joined ONTEX eight years ago. to help turn around the just acquired business in Brazil, then move to Europe with a mission to bring strategic discipline, drive the business back to growth, and to rebuild profitability after the inflationary shock in 22. I have a deep understanding of our company, and I share the passion for our purpose, mission, and people. We have strong assets, potential, and I take on the assignment with high energy, but obviously also at a time of big disappointment after a challenging 25. As you know, the year did not evolve as we had anticipated at the start of 25, and we had to revise our outlook twice. The final results should be of no surprise to any of you, being in line with the outlook we communicated early December. Revenue was 5% lower like for like, in a challenging market, and the adjusted EBITDA came down by two percentage points, mainly due to the impact of lower volume. The 10% margin level is still demonstrating resilience of the business in a difficult year. We did better than we anticipated for free cash flow, ending with a negative 25 million euro. Net debt benefited from the divestment proceeds with lower adjusted EBITDA, our leverage rose to 3.3 times. Let me expand a bit on the main elements that drove our results in the year on the next slide. Clearly, our volumes, which are the backbone of our business, did not meet our ambition with three key factors. We faced a softer demand in 25, especially in baby care. We could not pivot on some of the growing segment as fast as we wanted in the midst of our transformation in Europe that limited temporarily our flexibility. And this was amplified by some disruption in supply that we had discussed in previous quarters. And in North America, we experienced much more repeat decline in our contract manufacturing sales. Against this backdrop, we continued to preserve our competitive position signing and starting delivery of new contract, thereby maintaining our positive contract gain and loss balance for the year. We also continue to innovate in all three categories and are recognized on our sustainability performance as illustrated recently with an A score from CDP. Most importantly, we reach some key milestones in our transformation journey. We completed the divestment of our emerging business. Our Belgium footprint work is progressing well. And in North America, we added production line in our North Carolina factory. Before I pass over to Hirth on the financial analysis of the year, I'll quickly touch base on the fourth quarter performance. Our revenue came down by 7.6% like-for-likes in Q4 versus a strong quarter last year. This is 2% lower than our third quarter of 25, with demand softening further, especially in baby care, both in Europe and North America. You can see in the chart that the decrease and the volatility of revenue in the last eight quarters is mostly linked to our baby care business, whereas adults as constantiously grown, and in the last quarter represent 47% of our revenues. The lower volume in Q4 impacted the profitability, especially as we had anticipated growth, and the adjusted EBITDA margin, therefore, dropped three percentage points versus last year to 9%, which is 2.4 points decline quarter on quarter. While Q4 was again below our expectation, It is important for me to stress the many progress is made on our transformation journey, which are strengthening the company and which will bear fruits in the months and years to come. Yet it is equally clear that more is needed to improve back our trajectory. With this, I pass over to Geert for a more detailed analysis on our full year results.

Thanks a lot Laurent and hello everyone. In the financial review, I will focus on the full year results and start, of course, with the revenue. On this slide, you will find the full year revenue bridge showing the 5% revenue decrease, which was almost entirely due to the volume decline by 93 million euro. As Laurent already explained, this was caused mainly by the lower demand for retailer brands in baby care. and specifically in North America, the decline of contract manufacturing causing baby care volumes to drop by 12%. Feminine care sales volumes were 2% lower, which largely reflects the market trends. We benefited from the continuing growth of the adult care market, albeit with a modest 1% volume growth. Reason is that we have a large exposure to the more stable healthcare channel. To capture further growth in the retail channel, we're currently ramping up the capacity. Our sales prices were slightly lower, reflecting the carryover from the lower sales price in 24, as well as some targeted price investments. And our product mix improved at the same time and more than compensated for this. Forex fluctuations have a small negative impact, mostly linked to the depreciation of the British pounds, Australian dollar, and especially the US dollar. Let's move now to the adjusted EBDA bridge on the next slide. On the EBDA bridge, you can see the 40 million euro impact of the lower revenue on adjusted EBDA. It includes also lower absorption of fixed costs. Positive is that our cost transformation journey continues, and this year we generated 69 million euro net savings, creating a 5% efficiency gain on our operating base. This encompasses efforts across the organization and includes the first benefits from the Belgian footprint transformation. We could have done more had volumes been higher. These continued efforts compensated most of the cost increases, but leaving an €8 million negative net cost impact. Raw materials prices rose by about 4%, mainly driven by higher indices. The impact was across inputs, but especially in packaging, super absorbent polymers, and fluff. Our material price indices spiked in H1, but came down since, but on average, they're still higher than in 24. Other operating costs rose by about 8%. A large part is linked to inflation of salaries, logistics, and other services, so we're also cost by the supply chain inefficiencies we faced mainly in the first half of the year. Think, for example, at the outage of our Segovia plant. Despite all these challenges in 25, we managed to keep an adjusted EBDA margin of 10%, which is two percentage points lower than last year. How this revenue and margin translates in net profit and also including the diverse emerging markets can be seen on the next slide. Adjusted EBDA, sorry, adjusted profits from continuing operations was 34 million euro as compared to 76 million euro in 24. The decline can be fully explained by the lower adjusted EBDA. In 25, we had much lower restructuring costs as compared to 24. These represented some 19 million euro and were mostly non-cash because caused by impairments of obsolete assets and intangibles. Profits from continuing operations, which includes also the non-recurring costs, thereby amounted to plus €60 million, and is therefore more or less in line with 24, which ended at €21 million. As to the emerging markets, we posted €119 million loss for Brazil and Turkey, and this loss is entirely caused by the non-cash accounting impact from currency translation reserves. These were accumulated over the many years in the past, and these are recycled through the P&L once a divestment is completed. And this costs 210 million euro combined loss in 25, but as I repeated already, it's non-cash. With the last divestments executed, only the core business is left. The result is much stronger, is a much stronger balance sheet with lower debt, which we will discuss later. Let's now move to the cash flow on the next slide. Here you find the bridge explaining how the adjusted EBITDA of €184 million translates in a free cash flow of minus €25 million. Networking capital changes were largely neutral, with an increase in discontinued operations offset by an improvement in our core business. That latter core business improved from 5.4% to 5.1% over sales, mainly thanks to lower inventories, lower receivables, and higher factoring. We have a 12 million euro negative impact from employee liability changes as we accrued lower variable remuneration in the EBITDA of 25, which will lead, of course, to lower cash payout in 26. CAPEX was 81 million euro, representing 4.5% of the revenue of our core business. And the non-recurring cash out amounted to 30 million euro, mainly due to the already provisioned Belgian footprint restructuring. This brings the free cash flow before financing to plus 18 million euro. Cash out related to financing was 43 million euro. Higher than in 24 due to the high yield bond refinancing and a favorable interest rate swap which came at maturity end of 24. This brings the free cash flow to equity holders to the minus 25 million euro as I told you before. Then we go to the net debts. our net debt reduced by 6% from 612 million euro and 24 to 577 million euro and 25. Apart from the free cash flow, which I explained on the previous slide, we finalized the divestments of the Brazilian and Turkish business, which brought 131 million euro net proceeds. We, however, had to reclassify 34 million euro of cash residing in Algeria, dating from the divestment in 24. and it was reclassified as a financial asset. But currently, we're making good progress in repatriating this money. We also had an increase in lease liabilities and some other non-cash elements, which amount to 27 million euro and relates to future commitments related to the renewal of some real estate leases. Next, we have the share buyback program, which was launched in 24. whereby we acquired 1.5 million euro shares to cover the future potential option plans with an impact of 11 million in 25. This brings us thus year on year to the reduction of net debt by 6% and gross debt by 12%. And just to summarize, if we look at our gross debt, which is 647 million euro, it's at the right side of the slide, you can see it consists of 145 million euro of leases Of course, the 400 million euro of high-yield bonds. And now we have the revolving credit facility of which we have drawn 100 million euro, which is a bit more than one-third of the total facility. And then before I pass the word back to Laurent, we can have a look at the leverage ratio. And in this graph, you can see the evolution since the end of 22. The net debt you can find in the middle in green, and that's reduced year over year. We're constantly deleveraging the net debt. The last 12 months adjusted ABDA, which is at the top in blue, improved consistently year-over-year until the end of 24. In 25, we have the decline because of the challenging year, but also, of course, the scope reduction following the different divestments. In yellow, then, at the bottom, you find the ratio of both representing the leverage ratio. It improved from 6.4 times at the end of 22 to 3.3 at the end of 23, 2.5 the end of 24, and now we return back just above 3 at 3.3 times at the end of 25. Nevertheless, the balance sheet remains healthy. The leverage ratio remains below the 3.5 times governance, which is a threshold in the RCF. And important to stress is that we have ample liquidity, namely 240 million euro, which is the cash of 70 million, and about two-thirds of the RCF, which is underground. The maturity of our debt is extended to at least 29. Now I'm very pleased to pass the word back to Laurent.