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Introduction & Market Context
Ontex Group (BR:ONTEX) reported its third quarter 2025 results on October 30, showing signs of sequential improvement despite continued year-over-year revenue decline. The company’s stock remained stable at €6.3 following the announcement, reflecting investor neutrality toward the mixed results.
The hygiene products manufacturer faces ongoing challenges in a soft market environment across Europe and North America, particularly affecting its baby care segment. However, management highlighted several positive developments that suggest an improving trajectory heading into the final quarter of the year.
Quarterly Performance Highlights
Ontex reported Q3 2025 revenue of €445 million, representing a 3.8% like-for-like decline year-over-year but a 3.7% sequential improvement compared to Q2. The adjusted EBITDA margin stood at 11.4%, down 0.6 percentage points from the previous year but up 3.0 percentage points quarter-over-quarter.
As shown in the following key financial indicators:
The company’s leverage ratio remained stable at 2.7x compared to Q2 2025, though higher than the 2.5x reported at the end of 2024. This financial metric reflects Ontex’s debt position relative to its earnings capacity.
Detailed Financial Analysis
The year-over-year revenue decline was primarily driven by volume decreases, particularly in the baby care segment. The breakdown shows stable pricing year-over-year, with volume impact of -€22 million and a negative forex impact of -€5 million.
The following chart illustrates the components of the revenue change:
On a more positive note, the sequential quarterly comparison shows improvement, with Q3 revenue growing by €15 million from Q2 2025. This growth was driven by both positive price/mix (+3%) and volume (+4%) effects, suggesting potential stabilization in the business.
Adjusted EBITDA for Q3 2025 was €51 million, down from €56 million in the same period last year. The company’s cost transformation program delivered €16 million in net operating savings, which helped offset some of the negative impacts from lower revenue (-€6 million) and increased raw material costs (-€10 million).
The following waterfall chart breaks down the EBITDA change factors:
Segment Performance
Ontex’s product categories showed divergent performance in Q3. Baby care volumes declined significantly, down 11% year-over-year, continuing a challenging trend for this segment. In contrast, Adult care and Feminine care segments showed positive momentum, with volumes up 1% and 5% respectively.
The company noted that additional adult care production capacity started at the end of Q3 and is expected to further ramp up in Q4 and 2026, potentially supporting continued growth in this segment.
Financial Position
Ontex’s net financial debt stood at €543 million at the end of Q3, representing a €9 million improvement from the previous quarter. The company maintained its leverage ratio at 2.7x but expects this to improve to approximately 2.5x by year-end.
The following chart shows the debt and leverage evolution:
Management highlighted a solid liquidity position, which provides financial flexibility as the company navigates through its operational challenges and improvement initiatives.
Strategic Initiatives
Ontex identified several adverse factors that affected performance in the first half of 2025 and outlined improvements that began materializing in the second half. These factors provide important context for understanding the company’s performance trajectory.
As shown in the following comparison:
Key improvements in H2 include stabilized pricing, new contracts in Europe and North America that started at the end of Q3, resolution of supply chain disruptions, and stabilization of raw material prices. These factors are expected to contribute to continued improvement in Q4.
Forward-Looking Statements
Despite the challenges, Ontex maintained its full-year outlook, projecting:
- Revenue down by low single digits on a like-for-like basis
- Adjusted EBITDA between €200-210 million
- Free cash flow of approximately €0 million
- Leverage ratio of approximately 2.5x
For Q4 specifically, management expects revenue growth of approximately 5% and an adjusted EBITDA improvement of more than €13 million compared to Q3.
The following slide outlines the full-year outlook:
Executive Commentary
During the earnings call, CEO Gustavo Calvo Paz emphasized the sequential improvement, stating, "While we are turning the tide sequentially getting back to growth, we have continued to build on our foundations of our operations."
CFO Geert Peeters provided additional context on the company’s cost structure, noting, "Our SG&A is not that if we sell more contracts we have more SG&A. Our SG&A is a rather fixed amount."
Conclusion
Ontex’s Q3 2025 results present a mixed picture, with continued year-over-year declines but clear signs of sequential improvement. The company faces ongoing challenges in its baby care segment while seeing growth in adult and feminine care. Management’s maintained guidance and projected Q4 improvement suggest confidence in the company’s recovery trajectory, though execution will be critical in a soft market environment.
Investors will be watching closely to see if the positive momentum continues into Q4 and whether Ontex can deliver on its full-year targets, particularly regarding leverage reduction and free cash flow generation.
Full presentation:
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