Ontex Group Revises Annual Projections Downward Amid Sales Weakness
Belgian hygiene product manufacturer Ontex Group has revised its annual forecasts downward following weak baby product sales in October and November, with significant stock price decline and adjusted EBITDA expectations.
Significant Decline in Stock Price and Adjusted EBITDA Projections
The Belgian hygiene product manufacturer Ontex Group revised its annual forecasts this Wednesday, December 11, due to weak sales of baby products in October and November. The stock fell by 20.34% at midday, trading at 5.13 euros compared to 6.44 euros the previous day. This drop represents a traded capital share of 1.02%, reflecting a strong investor reaction. The adjusted EBITDA is now expected to be between 175 and 180 million euros, compared to a previous forecast of 200 to 210 million euros, marking a revision of about 13% at the midpoint. Over a week, the stock now shows a decline of 17.11%, amplifying a downward trend already marked over three months with a decline of 17.24%. Over a year, the performance becomes decidedly negative with a fall of 34.33%, reflecting the structural difficulties encountered by the group. The consumption of private label brands has decreased sequentially in the fourth quarter, both in Europe and North America, as consumer demand weakens further while the promotional activity of major brands remains intense.
CEO Acknowledges Weakened Consumer Demand and Announces Efficiency Improvement Initiative
CEO Gustavo Calvo Paz acknowledged that consumer demand weakened throughout the year, particularly for baby diapers in key markets, despite progress in strategic and operational transformation. In response, Ontex has announced an efficiency improvement initiative targeting 200 million euros in savings in operations and overhead costs over three years, with implementation costs under 40 million euros. Concurrently, Laurent Nielly, currently President of the Europe division, will succeed Gustavo Calvo Paz as CEO starting May 5, 2026. Technically, the RSI stands at 64, slightly retreating from the overbought level of 70 observed last Monday, suggesting a rebalancing of forces without signaling an imminent reversal. The price is now significantly below the 200-day moving average set at 7.03 euros, confirming the long-term downward trend. Bollinger Bands frame the evolution between 6.02 euros and 6.68 euros, but the sharp drop of the day has moved the stock well below the lower bound, signaling a major technical break. The financial leverage ratio is expected to reach about 3.2 times compared to previously expected 2.5 times, increasing concerns about the group's financial solidity.
Revised Revenue Expectations for Q4 Based on Lower-than-expected Sales Volumes
Based on lower-than-expected sales volumes, Ontex now anticipates a decline in comparable revenue of about 8 to 9% in the fourth quarter compared to the same period in 2024, whereas a largely stable performance was expected. This revision comes as new contracts, which began in the third quarter, are now fully operational in Europe and North America, but at volumes lower than anticipated. The Chaikin Money Flow (CMF) at 0.14 indicates moderate buying pressure, insufficient to offset the severity of the day's correction. The technical support identified at 6.08 euros has been breached, potentially paving the way for further declines if the stock does not quickly regain ground. The 50-day moving average, positioned at 6.29 euros, now represents the first resistance to be reclaimed in hopes of stabilizing the stock. In this deteriorated context, investors will await concrete signs of demand improvement and execution of the savings plan to consider a return of confidence.
