Ontex - Drastic decisions but also bigger short term raw materials inflation impact ONTEX BB
Ontex’ decision to focus on Europe & North America brings finally clarity on the future scope. Short term earnings momentum is tough, with supply chain disruptions forcing a 2021 guidance cut while the impact of raw materials price inflation will clearly still be felt in 1H22 as well. Unfortunately, due to the nature of contracts Ontex cannot quickly adjust selling prices to sudden raw materials swings. The upgraded savings target to € 300m in total by 2025 gives some confidence that margins have significant upside from current levels, and we keep faith in management’s ability to optimize the business. As we continue to see value in the story, we maintain our BUY rating on Ontex, with a €12 TP.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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