Ontex FIRST LOOK: 4Q EBITDA +31%, FY23 guidance of 2-4pp margin increase
4Q22 adjusted EBITDA for the Core jumped by 31% y/y (and by 67% vs 3Q22), which was in line with consensus (and 7% above KBCS) and a clear sign that the accelerating pricing is increasingly compensating for inflation headwinds. FY23 guidance calls for c 2-4pp adj EBITDA margin progression and is a testimony of further earnings recovery. After a difficult period whereby the long duration of contracts with customers did not allow Ontex to swiftly react to steepening inflation, we believe we have now reached the inflection point. The proceeds from the sale of the Mexican business are expected to come in over the next few months while discussions with AIP have been terminated. On the back of the attractive intrinsic forward valuation, we maintain our BUY rating.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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