Ontex Group, a leading international developer and producer of personal care products, has revised its full year expectations for revenue growth, following decreased baby care sales in October and November, amidst weaker-than-expected consumer demand. This revision also impacts Ontex’s adjusted EBITDA, free cash flow and leverage ratio expectations. The consumption of retailer brands dropped sequentially in the fourth quarter, both in Europe and North America, as consumer demand weakened further and promotional activity by A-brands created more intense competition.

Based on the lower-than-expected sales volumes, Ontex now anticipates a high-single digit like-for-like revenue drop in the fourth quarter compared to the fourth quarter of 2024, whereas a largely stable performance had been expected, with newly gained contracts offsetting the soft market conditions. Ontex had planned for continued quarter-on-quarter improvement, so the revenue decrease impacted margins negatively and thereby amplified the short-term effect on adjusted EBITDA and free cash flow delivery in the fourth quarter.

New contracts, which started delivery in the third quarter, are now fully operational both in Europe and North America, however the volumes of these deliveries are than anticipated. While growth in these contracts was not sufficient to compensate for the overall decline in consumer demand, it demonstrates that Ontex is well positioned to continue gaining market share.

Ontex thereby revises its full year outlook, and now expects:

• Revenue to reduce by mid-single digit like for like (previously by low single digit);
• Adjusted EBITDA in a range of €175 to €180 million (previously €200 to €210 million), representing a margin of around 10%;
• Free cash flow of around €(35) million (previously around zero);
• Leverage ratio to end at around 3.2x (previously around 2.5x).

Given the evolving market environment and following the completion of the non-core business divestment, Ontex’s management is now accelerating an efficiency improvement initiative across operations and SG&A of €200 million over the next three years. The required one-off implementation costs are expected to remain below €40 million. The aim of the initiative is to strengthen Ontex’s competitiveness and support margin improvement and cash flow generation. More details will be shared in February with Ontex’s full year results and 2026 outlook publication.

Gustavo Calvo Paz, Ontex’s CEO, says: “Consumer demand has softened throughout the year, in particular for baby diapers in our key markets, which has led us to revise our full-year outlook. This is disappointing, especially as we have made strong progress on our strategic portfolio and operational transformation, and have been gaining contracts over the period. Maintaining a double-digit margin for 2025, while facing strong market headwinds, demonstrates, however, that Ontex has strengthened its foundations in the last few years. Nevertheless, the current market conditions and recent results call for action, and we are thereby accelerating a three-year efficiency improvement initiative across operations and SG&A.”