Ontex Successful transformation story but some uncertainty on US tariffs
The acceleration of volume growth to 9% in 4Q24 is another testimony of the potential growth in North America. After recent divestment agreements on the Brazilian and Turkish businesses, Ontex will soon complete its strategic transformation and become a private-label focussed personal hygiene player in Europe and North America. Whilst Ontex is an established market leader in Europe, it is a challenger in North America which is characterized by much lower penetration of private label products. Whilst the US is undoubtedly the biggest potential growth driver for Ontex in the coming years, a sizeable part of production for that market is delivered from the company's Mexican plant which makes it potentially exposed to import tariffs. We have reduced our adjusted EBITDA forecasts for 2025-2027 by c. 2% following a rather prudent guidance (calling for 4-7% FY25 adjusted EBITDA growth). Nevertheless, we still see significant value in Ontex and maintain our BUY rating and € 12 target price.Ontex Group NV is a Belgium-based company, which operates in the manufacturing sector of industry. The Company is a producer of disposable personal hygiene solutions for babies, women and adults. It offers a range of such products as baby diapers, baby pants, baby wet wipes, pads, pantyliners, tampons, light incontinence products, pull-ups, belt diapers, all-in-one tape systems, shaped pads and underpards. Its products are distributed through retail partner brands, as well as under its own brands (canbebe, canped, Helen Harper, Moltex, Baby Charm) across several distribution channels, such as retail trade, care institutions and pharmacies. The Company is present in Europe, Northern Africa, Australia and Asia.
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