• Reported revenue increased 16.1%
• Volume-led 4.3% LFL revenue growth, outperforming our markets with strong increases across all categories
• Adjusted EBITDA margins lower, impacted by raw materials, Brazil and FX
Aalst-Erembodegem, November 8, 2017 - Ontex Group NV (Euronext Brussels: ONTEX; ‘Ontex,’ ‘the Group’ or ‘the Company’) today announced its trading update for the three and nine months ended September 30, 2017.
Q3 2017 Highlights
• Revenue was €592.4 million, up 16.1% on a reported basis
o +4.3% on a like-for-like (LFL) basis, year-on-year (yoy)
o +0.1% pro-forma at constant currency including the impact from acquisitions
• Adjusted EBITDA increased by 7.9% yoy to €68.2 million, Adjusted EBITDA margin of 11.5%
• Net foreign exchange (FX) impacts of -€6.0 million on revenue and -€2.2 million on Adjusted EBITDA
• Net Debt was €751.1 million as of September 30, 2017, including €32.7 million of acquisition-related earn-outs, resulting in a net debt/LTM Adjusted EBITDA ratio of 2.73x
• The Board of Directors has given approval to complete refinancing of the Group’s debt, which is expected to be finalized before the end of 2017, and anticipated to reduce net finance expenses by more than €7 million per year from 2018 on a pre-tax basis
9M 2017 Highlights
• Revenue of €1.77 billion was up 19.9% on a reported basis
o +4.9% on a LFL basis
o +2.1% pro-forma at constant currency including the impact from acquisitions
• Adjusted EBITDA of €212.9 million was 14.2% higher yoy, Adjusted EBITDA margin of 12.1%
• Net FX impacts of -€6.6 million on revenue and -€2.4 million on Adjusted EBITDA
Key Financials Q3 2017 and 9M 2017 In € million, except margin & leverage data Q3 2017 Q3 2016 % Change 9M 2017 9M 2016 % Change Reported Revenue 592.4 510.2 16.1% 1,766.3 1,472.8 19.9% LFL Revenue 532.4 510.2 4.3% 1,545.3 1,472.8 4.9% Pro-forma revenue at constant currency 600.2 599.9 0.1% 1,753.5 1,717.6 2.1% Adjusted EBITDA 68.2 63.2 7.9% 212.9 186.5 14.2% Adj. EBITDA Margin 11.5% 12.4% -88bps 12.1% 12.7% -60bps
In € million, except margin & leverage data Q3 2017 Q3 2016 % Change 9M 2017 9M 2016 % Change Net Debt N.A. N.A. N.A. 751.1 691.3 8.6% Net Debt / LTM Adj. EBITDA N.A. N.A. N.A. 2.73 2.95 N.A.
Ontex Group reported revenue includes 9 months of Grupo Mabe and 7 months of Ontex Brazil in 9M 2017, and 7 months of Grupo Mabe in 9M 2016
Charles Bouaziz, Ontex CEO: “Our third quarter trading demonstrated further progress in challenging market conditions, as we delivered another quarter of strong, volume-led LFL revenue growth across all our categories, and well ahead of our markets. Continued delivery of savings and efficiencies offset higher raw material costs and the temporary pressures from our growth on manufacturing and supply chain costs. While our base business remains largely on track, foreign exchange headwinds and a temporary adverse result in our new Brazil business have led to lower margins.”
Babycare, Femcare and Adult Incontinence category growth year to date 2017 shows the same trends seen earlier this year, with pricing pressures in Babycare and good growth in Adult Inco according to third party market data. The share of retailer brands continued to increase in our Mature Market Retail Division despite high promotional activity from international diaper brands.
Indices of all our main commodity raw materials were higher in the third quarter of 2017 compared to the same period of 2016.
Foreign exchange rates were volatile in Q3 2017 versus the same period of 2016, with the British Pound, the Turkish Lira and the Brazilian Real weakening, while the Russian Rouble strengthened.
We expect to continue top-line outperformance in our markets in Q4, led by category growth in Adult Inco, which will confirm an annual run rate of €2.4 billion revenue. We anticipate pressure in Brazil will continue which, together with FX and commodities headwinds, will put our Q4 margins slightly below Q3. The actions we are taking to increase group-wide capacity of margin-accretive products, as well as to further implement our integration plan in Brazil, are expected to start showing benefits during the second half of 2018.
Overview of Ontex Performance in Q3 2017
Group revenue in Q3 2017 totaled €592.4 million, up 16.1% on a reported basis versus prior year, including the acquisition of Ontex Brazil. Revenue was +4.3% on a LFL basis, with improvements from four of our five Divisions and all three categories.
Q3 2017 Adjusted EBITDA was €68.2 million, an increase of 7.9% year-on-year, resulting in an adjusted EBITDA margin of 11.5%. The benefits of our strong top-line performance and savings actions offset headwinds from higher raw material costs and increased distribution expenses, with the margin decline mainly attributable to negative FX and the impact from Brazil. We continued to invest in our commercial capabilities to underpin future market outperformance.
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