Personal hygiene products maker Ontex has published its results for the first quarter of its financial year, which includes an increase in revenue that will be offset by rising inflation.
Group revenue for continuing markets amounted to €385 million, up 13% on a like-for-like basis compared to the same period last year.
Growth was driven by 11% increase in volume on the back of significant contract wins, solid momentum from high-growth products, and the first benefits from pricing increase, which were up 2%.
Revenue, including discontinued emerging markets, was €553 million, up 15% on a like-for-like basis, with volume and mix up 9%, fuelled primarily by core markets.
Pricing was up 7%, mainly as a result of the double-digit growth in the discontinued emerging markets, the company added.
From 2022, emerging markets, representing 30% of revenue in 2021, will be reported as assets held for sale and discontinued operations, following the decision to divest these businesses.
Continuing operations encompass core markets, which accounted for 70% of the company's revenue in 2021.
The company's adjusted EBITDA for continuing operations amounted to €21 million during the quarter, down 49% year on year, as a result of the impact of cost inflation.
However, revenue growth and continued cost reduction delivery had a positive impact, driving EBITDA up 46% and 30%.
These benefits were offset by the unprecedented raw material and operating cost increase as well as forex, which impacted EBITDA negatively by 118% and 7% respectively.
Adjusted EBITDA margin was 4%, down 6.7 percentage points year on year, and 2.9 percentage points sequentially versus the last quarter of 2021.
Additional price increases have already been agreed to take effect in the coming months, the company noted.
Esther Berrozpe, Ontex CEO said, "It is very encouraging to deliver top line growth, particularly in Europe. This is a direct result of the significant efforts by our teams to rebuild customer confidence, improve service reliability and propose high growth products.
"We have continued to roll out our cost reduction programs and these are delivering a solid momentum of structural savings. These are key building blocks to turn around our financial performance."
However, Berrozpe warned of rising costs, saying, "the results of the quarter show the full extent of the unprecedented raw material and input cost inflation causing a significant decline in margins. As a consequence, we have put in place price rises to help offset this unprecedented situation and we will continue to do so step by step throughout the year."
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According to Ontex, the uncertain geo-political environment and inflationary macro-economic situation with continued volatility in commodity and energy prices, visibility for the group remains low in terms of full year outlook.
The group expects revenue from continuing operations to grow by high single digits, on a like-for-like basis, while adjusted EBITDA margin is expected to improve sequentially in the second half.
Raw material and operating costs for the year are expected to increase by around €200 million year on year, compared to €160-170 million as expected earlier.
The step-up is expected to impact the group from the second quarter, Ontex added.
Its cost reduction programme is expected to generate more than €60 million of savings in continuing operations.
© 2022 European Supermarket Magazine – your source for the latest A-Brands news. Article by Conor Farrelly. Click subscribe to sign up to ESM: European Supermarket Magazine.