(ABM FN) Ontex presented mixed figures for the third quarter, with disappointing sales, but a better-than-expected profit. This emerged from the figures of the diaper manufacturer on Wednesday.
Sales declined 12 percent year-on-year from EUR 574 million to EUR 508 million, including a negative exchange rate effect of EUR 43 million. On a comparable basis, sales decreased by 4.6 percent. This is due to the lower market demand for personal hygiene and increased competition, the manufacturer stated.
With this, Ontex is just below expectations. The average analyst counted on 510 million euros in turnover.
Recurring EBITDA went from EUR 61 million to EUR 57 million, including a negative currency effect of EUR 17 million.
The associated margin was 11.3 percent. That was an increase of 57 basis points year-on-year. Ontex said it has benefited from additional gains from T2G and lower commodity indices.
For this, the analyst consensus had expected 55.6 million euros and 10.8 percent.
“In light of the unprecedented market conditions resulting from the COVID-19 pandemic, Ontex has seen a sequential improvement in sales in the third quarter and profitability has benefited from ongoing T2G-driven profits,” said CEO Thierry Navarre from Ontex.
“Even taking into account these market conditions, however, we are not satisfied with the current level of performance and recognize that it needs to be stepped up,” the CEO further emphasized.
That is why Ontex also announced a series of new measures to restore growth and profitability.
An in-depth strategic review is underway, while a strategy committee has also been established.
Furthermore, Ontex will intensify its Transform2Grown efforts to safeguard operating and commercial profits.
Ontex is also planning an additional plan to save an additional 11 million euros per year. The first savings will start in the current fourth quarter.
The variable compensation of management will also be reduced in 2020.
Ontex has decided not to distribute a dividend for 2020.
“The Board of Directors has now decided that it would not be appropriate to pay a dividend in 2020 in light of the current uncertainties related to the pandemic and continued focus on preserving the cash position,” said Ontex
The resurgence of the pandemic in many regions, including Europe, which has already led to new lockdown measures, will have an impact on Ontex’s sales. However, Ontex does not know whether this impact is negative or positive.
Without this impact, Ontex expects revenue for the whole of 2020 to show a similar evolution as in the first nine months of the year.
The impact of fourth quarter exchange rate movements on both sales and REBITDA is expected to be the highest of the year, Ontex added.
ABM Financial News; [email protected]; Redactie: +31(0)20 26 28 999.
Share this article via: