Ontex Group Nv Ord

Good afternoon, everyone, and thank you for joining us today. I'm Geoff Raskin from IR, and I'm pleased to have with us Laurent Nielly, our CEO, and Geert Peeters, our CFO, to present the outcome of our strategic review and the results of the first half year of 2026. 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.

Thank you, Geoff, and good afternoon, everyone. Today, we have several key messages to share. Of course, our H1 results and our outlook revision, but also the change of CFO we just announced. And I want to take the opportunity to thank him not only for his numerical contribution in the last 2.5 years, but also to be there with me today as we guide you through some of the key changes at Antex. And in fact, today, I will spend my comments on the strategic review first before moving to highlights of H1 and our outlook. Then Geert will cover the financial analysis of the half year. I will come back to give you our priorities for the remainder of the years. When I took the helm of the company, my first mission was to ensure we would stabilize our business. This task will stay with us as we face a difficult environment. We've been very fast in deploying pricing actions while at the same time pushing for more cost initiatives. In parallel, my first six months as CEO have been dedicated to taking a fresh and objective look at every aspect of our business. With the support of the board, we did deep review in both North America and Europe, leveraging external advisor and our full team. The outcome of this work is leading to a fundamental transformation of the company to resume both top and bottom line. We have not waited to enter into execution mode. Actually, the consequences of the Middle East crisis made it all the most urgent for us to act. And as you can see here, we have taken already many steps. Finally, I have made several changes in our leadership team in addition to the new CFO we announced today, We have backfilled the head of Europe and have a new head of North America. But let me now explain a little bit more what is behind our fundamental transformation. It is articulated around four measureships. First shift is to increase structural productivity by launching an ambitious, expanded program which we label Focus to Value. It will be a central pillar of the transformation, and I'll come back on the next slide with more details. Second, We are resetting our approach in North America to transition from volume-led expansion to a disciplined value creation model focused on profitability, asset efficiency, and returns. Third and fourth relate to Europe, where we will both accelerate adult care, the cornerstone of our future profitable growth, while adopting a more targeted approach to protect our important baby and feminine care positions. So let me expand on the Focus to Value program, which encompasses all productivity initiatives of the company. Reflecting on what we experienced in the past few years and building on the work with advisors, we have set clear and ambitious targets with a scope that goes deeper and broader, including cross-functional initiatives to further reduce complexity and waste and with a focus on performance-driven culture. We aim to deliver €240 million of savings over 26-28 versus our 25 baseline, which represents €40 million more than the €200 million we had committed for. Actions have already started to further adjust the cost base, amplify product and logistics savings with simplification, lean manufacturing and network optimization, a streamlined organization across white-collar functions. There, at the end of the program, we aim to reduce white-collar position outside manufacturing by more than 20%. To achieve the incremental 40 million euros identified, it will require additional restructuring costs of about 30 to 35 million euros, leading to a total of about 60, 65 million restructuring for the total program to be phased over the next 24 months, of which about 20 million impacting the second half of 20C. To ensure we don't lose any time and are able to adjust as the business evolves, we have put in place a transformation management office, which is operational today. Let me now take you to our changes in North America. There, we have a clear case for change. Market dynamics have evolved in the past few years in the baby market. We have a complex setup that is suboptimal to drive cost leadership. combined to a business that does not deliver the returns expected on the high investment we realized. This is leading us to fundamentally reset the approach to prioritize profitability. We have a new leadership in place. We've already adjusted our plans and have started to simplify our operational setup, which includes a thorough review of our assets and capacity. This resulted to a significant non-cash impairment to adjust both the historical goodwill and the Asset Base. What we're pursuing? Progressively shift our portfolio where we can generate profit, and we believe there are many opportunities to do so. Deliver a simpler operating model, all aiming to return to sustained cash flow generation. Let me now touch briefly on Europe. Adult care is a structurally attractive growing category where we already hold a strong position. It will become the cornerstone of our future growth. We will increase focus and investment in capacity, innovation and go to market. That will reinforce our leadership and allow us to grow volume and volume share across retail and healthcare channels. This is obviously a topic that we will share more elements of in the future interactions. But at the same time, We intend to protect our very important position in baby and feminine care. But we concluded here too that we had to approach it in a different way. As market declines, especially in baby, as we still have legacy assets that drive complexity despite our many recent efforts, we are reviewing our approach to ensure we allocate our resources where we can best unlock value to our customers and to us. At very specific times, it might mean to rely more on outsourcing partner. At other times, it might mean that we define our innovation strategy much more in tune with our asset capability to optimize investment. In all cases, this is to best position us to continue to serve our priority customers the best way possible. To execute this shift, we have identified selective opportunities to simplify our asset base, retire some old lines to again drive efficiency. This explains why we have recorded some non-cash impairment here as well. All that to pursue clear goals, protect our volume share by focusing where we can make the difference for our customers, unlock innovation speed and productivity to improve return on capital. To enable the transformation, we have mentioned additional restructuring costs and alluded to Non-Cash Impairment, which will total $144 million that Geert will detail more in his part. This is consistent with our ambition to simplify our operations, to focus on segments best placed to improve returns, thereby shaping a more resilient, cash-generating, and value-driven context. Let me now transition to our second key topic and share highlights of H1 and our revised outlook. Our H1 performance was mostly characterized by year-on-year lower demand leading to lower volume. It drove revenue down 2.2% like for like and adjusted EBITDA margin by 0.7% at points. The result of the lower volume? Well, cost inflation was offset by productivity. Nevertheless, we generated positive free cash flow and combined with some M&A inflows This brought our net debt down to reduce leverage over the half one to 3.2 times. Let's look at quarterly evolution on the next slide. What is encouraging to see is that we have managed to stabilize the quarterly performance since the fourth quarter last year, and this despite the more challenging environment. Well, year on year, our Q1 performance was well below last year in Q2 revenue was in line and adjusted the bid-die stable. In fact, adjusted EBITDA is stable over the last three quarters, a good outcome of our singular focus on stabilizing the business. Albeit, we all agree at a level we would like to see higher. We will keep this minor focus on stabilizing our business, yet we know that in the middle, this crisis impact will be more severe in Q3. So that leads me now to look at H2. where indeed we expect to continue to operate in an equally challenging and volatile environment. The demand side has softened a bit further compared to what we expected and we believe it's going to remain mostly unchanged with still the opportunity that we have and the headwind that we have. On the cost side however, the geopolitical situation remains uncertain and is pressuring our margin. It is fair to say that The speed and the intensity of the cost increase in Q2 was more than what we had expected. But we are taking actions, and as we explained earlier, we expect to fully recover the cost impact over time, yet with time in delay. The situation remains fluid, as all you know, with changes every day, every week. Based on the evolution so far and the latest assumption, we are revising and broadening the outlook as presented on the next slide. Adjusted the BDA to end up in the range of 165 to 180 million euros, which midpoints is broadly aligned with prior year results and latest consensus. Driving this, we expect revenue to be broadly stable and some margin recovery as we enter Q4, as the pricing actions and efficiency initiatives start to more than offset the cost inflation. We expect negative free cash flow between 10 and 25 million euros. The decrease versus the previous positive outlook is the result of the lower expected adjusted EBITDA and the higher restructuring costs partly offset by better working capital management results. The combination of both is to keep leverage below 3.5 times at the end of the year. The point that Geert will comment further. So perfect transition to our H1 financial review. Geert, up to you.

Thanks a lot, Laurent. Let me go through the year on year performance of the first half year results. As Laurent pointed out, revenue declined 2% like for like driven by volumes, although Q2 showed a mild growth. On top of VIX being mainly the US dollar depreciation added another 1% decrease. Baby and feminine care volumes came out 4% lower. Both can be explained by the decrease in contract manufacturing volumes as well some contract exits in overseas regions which were anticipated. When we only look at retailer brands we actually did better than the market. Our baby care volumes were largely stable in Europe and even slightly increased in North America while both markets for retailer brands actually showed a mid single digit decline. Ontex mainly benefited from a strong position in baby pants which continues to grow double digit. Adult care also continued to show growth albeit more modest by 1%. This is due to a robust performance in the healthcare channel whereas in retail volumes were down linked to on-text customer exposure and temporary capacity constraints. Although we have committed price increases in Q2 to mitigate the cost inflation, this will only impact the second half of the year. The negative price impact you notice in the revenue bridge of H1 is still a carryover from last year as a response to raw material price increases in that year. Moving to adjusted EBDA on the next page. The lower volume and revenue pushed our adjusted EBITDA 12 million euro lower. We managed, however, to reduce costs by 2 million euro net, thanks to savings offsetting the rising input price environment. Raw material prices started to go up due to the Middle East crisis, especially from June onwards, as the constructually delayed impact of indices kicked in. This was primarily the case of oil derivatives such as bag sheets and certain packaging materials. Other input costs rose as well, but earlier, from March onwards, in particular transport costs driven by the higher diesel price. Supply chain inefficiencies, which started in the second quarter of the year, are improving, but still impacted the comparison, especially in the first quarter. Our cost transformation program has been continued, but at the same time deepened and broadened under the new name Focus to Value. It contributed significant savings in cost of goods sold and SG&A. Last but not least, the translation impact was slightly positive. Altogether, adjusted EBITDA came down by 9% to 78 million euro and margin by 0.7 percentage points to 9.1%. Let's dive a bit deeper in the full P&L on the next slide. The adjusted profit for the half year was plus 9 million euro, slightly better than last year despite the lower adjusted EBDA. Main reason are the net financial costs which amounted this year to 19 million euro but were inflated last year by unrealized negative forex impacts. That's where we're temporarily and mostly recovered in the second half of 25. Adjusted tax was somewhat higher than last year due to the higher net profit before tax. The adjusted figures exclude two buckets of one-off costs being on one hand the restructuring costs and these amount to 9 million euro net and consists of partial provisions of 21 million euro for the focus to value program of which a small part was already expensed in H1. That was partly offset by a positive 12 million euro accrual for tax that we expect to reclaim in the future in Brazil. and on the other hand we have the non-cash impairments for 144 million euro triggered by the strategic review as been explained by Laurent. 51 million euro is the impairment of the goodwill on the North America business where we have reviewed our ambitions and the other 93 million euro is on assets mostly equipment in baby and feminine care categories where we adjust capacity and focus on our core assets. This brings us to a total loss for the period of €143 million, which compares also to a negative amount last year of €115 million. But last year, we also had non-cash impact, but for different reasons. Namely, due to the divestment of the Brazilian business, the cumulative translation reserves were recycled from the balance sheet into the P&L in 2025. As you notice, the P&L is impacted by several non-cash effects. Let us now look into the cash flow of the first year half, which shows a much brighter picture. We managed to realize in the first half of the year a positive free cash flow before interest of 27 million euro and including interest of 7 million euro. Our continuous focus on improving working capital delivered results. Indeed, net working capital over revenue dropped by 0.6 percentage points to 4.5%. The improvement is a combination of optimizing payment terms and inventory levels. We had a positive impact from employee benefits. This is due to the difference between the accrual for variable remuneration related to 26 and the actual lower payout on the performance of 25, which occurred in the first half of 26. As to CAPEX, that amount was 29 million euro. which is 3.4% of revenue and is relatively low but is linked to the phasing over the year because in the meantime we have commitments so that CAPEX levels will catch up in the second half of the year. We paid out €11 million restructuring costs in the first half of the year which are mostly related to the finalization of the Belgium footprint optimization. Also some initial actions have been executed on the focus to value program. and then the tax and financing cash outs were slightly lower than last year. That brings us to an overview of the net debt on the next slide. Our net debt further reduced by 6% or 37 million euro of which we cash flow contributed plus 7 million euro as explained on the previous slide. We also had 29 million euro positive impact from M&A activities mainly thanks to the repatriation of the cash in Algeria. This cash comes from the divestment of the Algerian business in 24, which took time to repatriate until Q125 and was classified as a financial asset at the end of 25. Within the M&A block, we also have some limited post-closing adjustments related to the Brazil and Turkey divestments last year. Net debt thereby amounted to €540 million at the end of June and gross debt to €619 million. Debt included 68 million euro drawn on the RCF, which represents 25% of the total capacity. And we finished the first half year with a cash position of 79 million euro. And then the last slide on finance. Our prime focus as a management remains, of course, reducing net debt and keeping sufficient leverage headroom despite pressure on the LTM EBDA. Thanks to decreasing net debt as explained before, we managed to reverse the uplift of the leverage ratio at the end of 2025 by reducing it back from 3.3 last year to 3.2 at the end of the first half of the year. This keeps us well below the 3.5 times threshold of the RCF Covenant and we expect to remain below that level going forward. Our liquidity position remains strong with about 280 million euro based on our cash position and 75% of the RCF on drone. So we can conclude that we have the financial flexibility needed to execute our plans. With that covered, I hand over to Laurent.