Ontex Aktie

Good morning, everyone, thank you for joining us today. I'm Geoffroy Raskin from Investor Relations. I'm pleased to have with us Laurent Nielly, our CEO; and Geert Peeters, our CFO, to present the results for the first quarter of 2026.

Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read it out loud, but I will assume you will have duly noted it.

With that cleared up, Laurent, over to you.

Thanks, Geoff. Good afternoon, everyone. I will provide a few introductory comments on the quarter. Geert will cover the financial analysis. And then I will come back to give you a few thoughts on what we see and also on our strategic review progress.

Overall, Q1 was a relatively soft quarter. Not a surprise, as we had indicated in February that our results this quarter would be in line with Q4 of last year and thereby down versus a relatively strong first quarter in '25. And importantly, we delivered on what we expected.

Revenue was down like 4% like-for-like compared to a year ago because of weaker market demand in Baby and Feminine Care, even if in retailer brands, we slightly outperformed the market overall, and because of some lower sales in contract manufacturing, especially in the U.S., as we had expected.

The adjusted EBITDA was in line with Q4, but lower than the previous year. Margin came down by 2 percentage points due to the impact of lower volumes and higher net costs, which we partially mitigated through continued savings efforts in operation and in SG&A. The lower adjusted EBITDA this quarter drove the last 12 months adjusted EBITDA down, which led to a slight increase in the leverage ratio despite the reduction in net debt.

Now, if one looks at the past 5 quarters, reported revenue on the left of the slide and adjusted EBITDA on the right of it, it is fair to say that our performance is still not where we expect it to be. Yet we see a few encouraging signs on our journey to stabilize the business.

Adult Care, our largest category, continues to grow, and we are ramping up more capacity to fuel future growth. Even in this quarter, Adult Care growth was not enough to offset decline in Baby and Fem care demand. With this lower demand versus Q4 and the geopolitical instability started early March, delivering stable adjusted EBITDA is a good sign of our resilience and an important consideration to face the rest of the year.

I'll come back to this later, and we'll pass now over to Geert for more detailed financial analysis.

Thanks a lot, Laurent. And also from my side, good morning to everyone. In the following slides, I will focus on the year-on-year evolution of revenue and adjusted EBITDA, and will, of course, also comment on the debt and leverage evolution over the quarter.

But first, the revenue on the next slide. The waterfall shows the evolution of revenue from Q1 2025 to Q1 2026. The combined price and mix impact was largely stable, meaning that the 4% like-for-like decrease is entirely linked to lower volumes.

Let's then look at Baby, Feminine Care, and Adult Care. First, the Baby Care volumes, they were down 11% versus a strong Q1 2025. You might remember that last year, the Q1 sales were pushed up in the first quarter due to concerns on U.S. tariffs, which then reversed in Q2. The market demands in Baby Care also decreased by mid-single digits in Europe and even by high single digits for retailer brands. And also that's the case in North America.

Overall, we did somewhat better than the market in this market segment, thanks to growth in baby pants in Europe and also new and previously secured contracts that are ramping up in North America. We could then say in North America that the Baby Care retailer sales, they were growing year-on-year.

And then on contract manufacturing, you remember from February that the sales in North America came down, and this is as we anticipated, and that's due to the mix of market share losses by our customers and some contract exits. We also -- in our sales in overseas markets, they were substantially lower, but this is largely because of planned contract exits.

And then Feminine Care, that volume reduced by 4%. This is largely in line with the market evolution. And then as Laurent said, Adult Care volumes were positive. They were growing again 2%, reflecting sustained growing demand in the retail channel and stable demand in healthcare in Europe, where we have a very strong position. Forex had a 1% adverse impact, mainly due to the U.S. dollar depreciation of about 10% year-on-year.

Let's now explore the evolution of the adjusted EBITDA as compared to last year. So on the next slide, you'll find a bridge that shows the decrease of adjusted EBITDA from Q1 2025 to Q1 2026, which is a drop of more than 20%. The largest impact comes from the previously discussed lower revenue, which led to a decrease of EUR 8 million.

Including this volume effect, the net costs increased by EUR 5 million with different net of saving initiatives. And let me take each of them step-by-step. First of all, the index, although the index evolution had a positive impact on fluff, SAP, and non-woven, backsheets and packaging materials were more expensive and that's on the year-end resulting in slightly negative impact.

If we then look to the other operating costs, they increased as well, linked to the continued inflation of salaries and services, but we are making good progress on gradually improving the supply chain efficiencies, which impacted Ontex from Q2 last year onwards with still some limited leftover impact. And then, of course, the rising oil prices, they have resulted in higher transportation costs, which is a cost category where the cost pass-through occurs almost immediately. But I should say in Q1, the impact was still very limited.

Then we have the operating efficiency programs that we run. They continue with the full year impact of initiatives launched last year and several new ones. Also this quarter, a large part of the cost increases were offset by initiatives in procurement, manufacturing, logistics, and innovation. And then we started up a specific saving program to streamline the SG&A organization. The first results already materialized and they offset the inflationary pressure on salaries and services.

You will see in the bridge also the forex. There is a translational forex impact, but this is very limited and positive. That results in an adjusted EBITDA of EUR 30 million, which is identical to Q4 2025. The margin thereby stands at 9.1%, which is 2.2 percentage points lower than last year, reflecting less fixed cost absorption due to lower volumes and net inflation of costs.

Let's now move from the P&L to the balance sheet on the next slide. Our net financial debt reduced over the quarter from EUR 577 million to EUR 550 million. We finally managed to repatriate the cash that we held in Algeria following the divestment of our activities there in 2024. You remember at the end of 2025, that cash amount had to be reclassified from cash to financial assets on the balance sheet, but they are now back to us and in the cash pool and used to repay part of the RCF because this allowed us then to significantly reduce the position of RCF below 30%, while keeping an amount of cash of a bit more than EUR 70 million.

Our liquidity position, and we define it as the sum of the cash and the undrawn parts of the RCF, thereby strengthened further from EUR 240 million to EUR 262 million over the quarter. And then the leverage ratio ended at 3.36. This is, of course, within the agreed covenant level. And as Laurent will explain in the outlook, we expect it to gradually decrease in the coming quarters.

Laurent, now back to you.

Thanks, Geert. Let me now come back on some of the elements impacting our business and what we expect and will do in the coming months. On the demand side, while slightly worse than expected in Q1, the assumptions are largely the continuity of what we discussed in the past few quarters. Adult Care remains robust. Growth in the past 6 months is a bit lower than in recent years in both retail and healthcare institutional channels, which indicates that the economic reality also has an impact on the category, but we do not think it changed the mid to long-term attractiveness of it.

On the other hand, demand in Baby is to continue to be relatively weak in Europe and North America, the combination of demographics and lower income consumer sentiment. We also see high activity from branded players in Baby, exacerbating the effect on the retailer brands, whether promotional pressure in Europe or new players growing fast in the U.S. Although it is fair to say that we do not see that worsening. And even in Europe, we see a little bit less pressure as of April. Overall, Ontex's market share opportunity, which we had identified and already started to address last year, remain.

On the cost side, however, the geopolitical situation is likely to put temporary pressure on margins. The energy crisis drive oil, energy, transport, and raw material prices up, partially from supply pressure on some materials, especially for oil derivatives, which are very present in our product.

We have strong supply chain and strong procurement teams. We have protections for strategic suppliers relation, long-term contract, and we can count on a broad base of supplied -- of qualified suppliers. And like in 2022, we are taking actions to mitigate the impact of this new disruption. We have several levers, whether volume and mix where we can, cost-out initiative, and also by working with our customers on pass-through pricing actions. We will fully recover the cost impact over time, yet with some timing delay.

The situation is relatively fluid, all of you can read every day, which changes by the day, by the week. So based on our current assumption and despite the adverse market events, we are maintaining our outlook at this stage as presented on the next slide. As I just mentioned, we're maintaining our outlook on the basis of our latest projections, which assume a gradual deescalation of the energy crisis in the following months.

Adjusted EBITDA to improve 10% for the full year with an improvement expected quarter-by-quarter. We expect to turn free cash flow positive again and the combination of both is to lead our leverage ratio down from the current about 3.4x at the end of March to a lower level, not to exceed 3x by the end of the year.

Finally, before we take your questions, I wanted to spend a moment on our strategic review and some of the initiatives we are accelerating. As you remember, we launched a strategic review last January. The Board formed a strategy committee with clear objective to drive sustained value creation. External advisers have been appointed to help review our businesses in North America and Europe. The diagnostic phase is mostly complete. It is helping solidify some of the elements we set in our 3-year plan, yet it's also identifying opportunity to accelerate execution, especially in cost improvement areas. We aim to finalize the strategic review in the coming months, and we will share more by our next earnings call.

But in parallel, we're already moving in execution mode on several work streams. First, we have accelerated the plan to streamline the organization, aligning it with the current scope of our business and the market perspective. We aim to reduce the number of positions in SG&A by 15% and this within the next 12 to 18 months.

Second, we are rightsizing our production capacity faster, adapting it to the new demand reality in both Europe and North America, including investing in training and setup to increase flexibility of the workforce, allowing us to redeploy our staff where capacity is added, namely in adult and in baby pants. The rightsizing includes our decision to cease baby diaper production in Australia by the end of the year.

Third, we have launched a new set of initiatives to improve working capital management, aiming to drive the working capital percentage of revenue down by another 50 basis points while, of course, preserving our service level to customers.

As you can see, our clear focus is on the short-term priorities and challenges. The initiative I just mentioned are continuous efficiency improvements, the management of our supply and pricing actions. But we're also working to complete our strategic review in order to position our portfolio back to profitable growth in the years to come. You will hear more of that again by our Q2 results call.

This closes our prepared remarks. Geert and I are now ready to take your questions.

[Operator Instructions] The first question comes from Karine Elias.

I had 2, but they're kind of linked in a way. I'm just looking at your guidance for the full year. And obviously, the EBITDA growth of 10% is based on a largely stable sales volume. I was wondering whether if you could comment on that for Q2? Is that what you're seeing at the moment? And maybe if you could provide a little bit more color on how you expect Q2 to shape up, would be very helpful.

Thank you, Karine. This is Laurent here. Obviously, we cannot and we will not provide guidance for Q2 per se. But on your question on the top line, we see relatively stable sales in Europe. So we feel pretty confident on the side. And you remember as well that because of the phasing of some of the sales we have quarter-by-quarter, we also see a good opportunity to have higher sales in Q2 in North America versus what we had in Q1. So overall, the statement of full year stable revenue, we feel is the right basis for the construction of our full year outlook.

The next question comes from Wim Hoste from KBC.

Two questions then from my side, please. First, on cost savings. I was wondering if you could provide a little bit more granularity on the mentioning of 15% job cuts in SG&A. How much savings does that represent? How much positions will be cut? Will there be other savings beyond -- additional savings beyond this SG&A exercise, if you can offer a little bit of clarity on that?

And then another question would be on the evolution of the raw material basket and energy prices. If you can provide a bit of granularity on how we should expect that to evolve in Q2, Q3 specifically? And what kind of pricing increases have you announced in the market or implemented in the market and how fast will these come? If you can talk a little bit around that, that would be also helpful.

Okay. Wim, this is Laurent. I will address your first question on the SG&A, and then Geert will provide you more granularity on the cost side on the materials. Our goal from an SG&A -- our organization perspective is to adjust our organization to the new scope of our business after all the divestments that we've done, and also to reflect what we see in the market reality of where we have the growth and where we need to invest and where we have less demand and maybe we have to streamline our organization.

When we presented last December the ambition to generate a new total cost saving program over the next 3 years, we had indicated that it will be broadened from just cost of sales to also include SG&A. And so what you see here more is a little bit more transparency on what we aim at doing. But at this stage, you will understand that we are not going to translate that into a number of people, a number of position, or by country because this is something that we deploy in our organization, and we want to do it in a way that is respectful for all our employees.

Now on the cost, Geert will provide some more.

Yes. Hello, Wim. On the raw material cost and the overall cost increases, a couple of elements. First of all, yes, of course, mainly in the raw materials, we will have quite some impact. We have a lot of the input material that we use are oil derivatives. So that means they're based on polyethylene, polypropylene. And that means that the oil price impact the indices. And as you know, the indices are the driver of our contracts. Of course, that always comes with a delay. Typically, it's a quarter delay. So that means timing is very important in the whole story.

I come back to timing immediately because apart from raw materials, there's, of course, other categories like mainly transport costs. Of course, we're talking about a much smaller amount because the percentage of our cost of goods sold is much more limited as compared to the raw materials. And then there might be some indirect impacts on salary and which is not yet -- not at all clear at this moment.

We added up all that based on the latest visibility we have in the market and made our new projections. Yes, the timing is very important. As I said, first of all, transport, it kicks in immediately because you have immediately surcharges on your fuel. Raw materials, it's -- has not had an impact on Q1. We expect it will start having an impact from mid-Q2, mainly also from having a more full impact in June, July.

And as you have seen in our outlook, which is important, we noticed that the market in general, and we follow that expectation is that the crisis will ease, will deescalate during the summer. That means that in Q4, and that's also what we see in the forecast we get on indices that we see some easing of those indices. Of course, not to the normal level yet, but definitely not to the level of Q3.

We took all that together. And yes, we mentioned about pricing actions we're going to take, yes, we're not going to mention, of course, any percentages there. For us, most important is that we align that increase with the size of the cost, and that means we have to be very agile because that cost is constantly evolving on a weekly basis. So we will adapt to that so that we can keep the net impact as low as possible. And the net impact will, of course, mainly be a time delay, which we try to keep as limited as possible. I hope that answers your question.

The next question comes from Rebecca Clements from JPMorgan.

Mine are kind of more cash flow related. How committed are you to your CapEx for the year? And would you be able to pull back on that if you felt like free cash flow was starting to look weak or pressured a bit around your leverage covenant? That's my first question.

And the second question is around, you alluded to working capital improvements. I was wondering what levers you're going to be pulling or how you would be improving that working capital? What mechanism you'd be using for that?

Thanks, Rebecca, for that question. Cash flow is for us crucial, as you know, we put also a guidance on it that we -- our guidance is set to be above 0, and that's -- and of course, for the coming years, it should become positive again and create value. Short-term, because of the pressure we have, we still believe that we will be close to 0 with the cash flow.

But what are the levers we have because that's more or less the question you're asking. Of course, in CapEx, we always have a lever because it's -- we, as a management, we decide what's needed in CapEx or not. I should say, nevertheless, we -- at the same time, we continue to ramp up capacity in adults, as Laurent explained during the presentation. So there are some commitments that we have taken, which are important for the growth of the company that we will continue. And there, we might reduce CapEx a little bit. We want to keep it limited.

For us, the more important lever is the one of the working capital, as you mentioned, because there, we still see that we -- mainly in inventory, we still have quite some room. Where does it come from? Yes, different things. First of all, in North America, of course, we had the business that we ramped up with 2 big contracts after summer last year that came with quite some inventory, and we are now stabilizing that the inventory level and going to a more normal level. We took already some -- quite some correction in Q1 because we take it as an important action to bring the level of inventory in the U.S. to a target level, which is for us in line with Europe.

And then we have structural continuous improvement programs. For example, there are all different type of things on complexity of material, on phasing in of new projects and phasing out of old products. So there's a whole team working on it, and we have quite some working capital focus throughout the organization and a dedicated team to look at all the improvements we can do.

And can I just clarify what your -- you had a footnote on your slide about the RC -- your test where the covenant is 3.5x leverage, but you have a note about 3.75x at the bottom of that slide.

Yes.

What was the 3.75 note referring to, please?

So the covenant is 3.5, and we believe in our guidance is to be below the 3.5. But from the position we have now, the 3.36 to gradually decrease further towards the end of the year. So covenants is -- we're based on the current information, comfortable on that. But what we mentioned is in our contract, we have a semiannual test of covenants. So at half year and at the end of the year, and we have one possibility to breach the covenant until the level of 3.75. We don't believe we need it. But if it would happen, then it can go up one time until 3.75. So that's the meaning.

Was that always in your covenant? Or was that something that you negotiated for this year, the 3.75 one time?

No, it's not separately negotiated. It was part of the refinancing. So the refinancing we did at end of 2024 on the RCF, it was included in that contract. So it's not something we specifically negotiated for the current year. It's part of the overall contract.

[Operator Instructions] And the next person on the line is Maxime Stranart from ING.

Two questions from my side. First, looking at volume growth, I think it's the fifth quarter in a row now that volume growth is negative. How confident are you that you're now turning the tide? Obviously, Baby Care is still in the doldrums and Q2, you're lacking [indiscernible]. So I just want to feel your confidence in being back to volume growth in Q2.

And secondly, I think echoing some questions already, but just coming back on that. How confident are you in the phasing of the EBITDA guidance for the full year. Obviously, if I understand you correctly, you expect short-term margin pressure. So I guess Q2 will still be pressurized. So I just want to understand how back-end loaded the guidance is? That would be all for me.

All right. Maxime, Laurent, thank you for your questions. On the volume growth, there was 2 factors impacting it in the first quarter, right, versus prior year. There was baby, as you mentioned, and which has been declining for a number of quarters, you're absolutely correct, because of the overall category being in decline in Europe as well as some lower sales in our contract manufacturing business in North America that more than offset the growth that we had in retail brand, right?

So we are ending that cycling through the decline -- the sharp decline in contract manufacturing in Europe. So we are going to be in the U.S., sorry. So we're going to be now in a position where it was already in our base. And so therefore, we should not see the same level of decline sequentially from a baby perspective.

And then the way we built our perspective is that then after that, this growing exposure to Adult Care, which is structurally exposed to growth would allow us to offset maybe some structural decline in Baby. In order to not decline in Baby, you would have to go and be much more aggressive on share gains, which we have the plan, but we are very careful on how we look at it because obviously, we want to be careful about gaining profitable contract and not contract that don't lead to the good use of employed assets or capital.

The second factor that impacted our volume specifically for Q1 is on Feminine Care, we exited some contract in North America on the back half of last year. And so we still had this year-on-year decline based on contract manufacturing, right? So those are the 2 ones. So we're -- based on those, we are confident that as the year progress, the evolution of our volume will become more favorable. And that's one of the key factor behind our EBITDA progression as we progress in the year because obviously, when you can go back and produce more volume and you have the set capacity, then you become much more efficient in the way you can absorb fixed cost.

But you raised the point, which is on Q2, which we are not going to provide any specific guidance because, frankly, we are -- the cost evolution evolves. But if you listen to what he had said, which is there is usually a small gap into our pricing versus cost, then yes, we think that there might be some margin pressure on Q2, and that's what we're working through. I hope I helped on your questions.

The next question comes from Fernand de Boer from Degroof Petercam.

I would like to come back on the cost acceleration because you're mentioning 15%, which I think is more than some average around EUR 600 million. And if you then look at your cash out for this year, and you actually said an incremental EUR 10 million, but that's then only for this year? And could you expect much more restructuring charges and then the cash outflow in 2027, 2028?

And I'm a little bit puzzled about your remark on Australia to cease production because I thought that actually all the production was produced for Australia was produced in Europe and then exported to Australia. So could you elaborate a little bit on that one?

Yes. Fernand, let me take your Australia point, and then Geert will come back and clarify the other questions. So in Australia, we were producing baby diapers, and only this category were produced locally. So it was a small operation, and we were no longer competitive from a cost side versus some of the alternative sourcing for some of the customers.

So what we've decided is to cease operation of baby diaper, but to continue with the business, absolutely. And that business is focused on growing categories where we have a right to win and sourced from our European factories. So your understanding is correct on that front.

Now I'm going to pass it on to Geert on your cost question.

Yes. On the restructuring charges, I don't know if I fully understood your question, but on restructuring, what I can say, we -- last time, we explained that we have another EUR 10 million we expect as restructuring costs in 2026. I can go to 2027, 2028 afterwards, but on 2026, an extra EUR 10 million apart from the cost we still has related to the Belgium footprint, which had already an accrual 2 years before. In summer of 2024, we took that accrual. So that extra EUR 10 million that I already explained a couple of months before, which is in our budgets, in our plans, that we maintain. That also means that the streamlining of the organization, as Laurent said, it's something we were already working on. For us, it's becoming more concrete, and we give more information about it now. But it's part of that restructuring cost.

Also the other element that Laurent mentioned on rightsizing of plants, it's included in that EUR 10 million. For 2027, 2028, we don't give any guidance, but what we mentioned before on the restructuring, what we see over a longer period, based on what we know now, we're talking about the same numbers, and we will see from the strategic review that on which we give more information after Q2, if there's anything more specific we have to tell about that to clarify. Does it answer your question, Fernand?

Yes, pardon me, because if I understand correctly, you say at the end of this year, of 2025, you had around 4,900 employees active. And now you say the coming 18 months, 15% will go. So let's say 700.

No, it's 15%. Fernand, the 15% is on SG&A. That's what we specified, right? So it's not on the total population. That's maybe where the misunderstanding is.

Yes. Okay. The press release says number of SG&A positions. Okay. Fine. Fine then. All right. Thank you.

Yes. Yes. Yes. Yes. Otherwise, it would be another magnitude. You're absolutely correct.

And the last question comes from Charles Eden from UBS.

It's just a bit of a clarification on the free cash flow and more specifically, the net working capital comments. Obviously, there's going to be a sharp amount of inflation in the oil derivatives already coming through, and obviously, that will sit into the inventories at year-end. Are we right to assume what you're saying is you should be able to make improvements sufficient enough to mean that your absolute working capital is lower year-on-year despite that inflation? Or is that not the correct way of interpreting the sort of Slide 12 that shows the net working capital management sort of contributing to positive free cash flow? I'm just trying to -- it seems quite ambitious in the context of the magnitude of oil-based inflation, which we may be seeing if the conflict is sustained.

Okay. The 0.5% as compared to sales, you have to see it. Yes. You can translate it as in an absolute impact. So that means that the current level we have of working capital, it amounts typically around EUR 100 million that we believe, if you take that percentage as compared to sales, that we can reduce it with 0.5%.

If you refer to the inflation, we took that assumption into account. So if we look at how our working capital is organized, we also believe we can manage that within that percentage.

Yes. So it's quite ambitious, you're right. But remember also that we're deploying pricing actions, and so what you see on inflation from an inventory perspective, you should see it capture into sales uplift as well, right?

I just -- from previous cycles, sometimes the pricing is quite difficult and the inflation in the inventories is unavoidable. So I'm just trying to sort of get a sense of where you're coming from. That was clear. Thank you.

All right. That ends up the questions. Laurent, over to you.

All right. Well, thank you, everyone for attending our call and for your questions. I want to summarize a couple of key themes that were presented. We had a relatively soft quarter as we expected. Importantly, we were able to deliver on what we had said, and a bit softer demand and some new geopolitical disruptions didn't get in the way of our ability to deliver, which I take it as an encouraging sign.

This give us confidence that we will be able to navigate the coming few months of inflation and pass through pricing with all the uncertainties that it entails, of course. But we have demonstrated that we could do it in 2022 to 2023, and I'm confident we will do it again.

The strategic review is progressing with focus on cost, but also on completing our plans to return the portfolio to a profitable growth and to secure sustained value creation. And more of that will be shared in our Q2.

Finally, I am thankful to our team for their hard work and the commitment that they show to our company. Have a great rest of the day. Thank you.

Good noon, everyone, and thank you for joining us today. I'm Geoff Raskin from IR. I'm pleased to have with us Laurent Nielly, our new CEO; and Geert Peeters, our CFO, to present the 2025 results. Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read it out loud, but I will assume you will have duly noted it. With that cleared up, Laurent, over to you.

Thanks, Geoff. And before I dive into the results, allow me to say some words about me. First of all, let me share my appreciation for the Board and for our former CEO, Gustavo Calvo Paz, for the trust and the support in this transition. I'm honored to take over and realize the challenges ahead to both rebuild trust fast and to continue to work to unlock the interesting value of Ontex. I joined Ontex 8 years ago to help turn around the just acquired business in Brazil, then moved to Europe with a mission to bring strategic discipline, drive the business back to growth and to rebuild profitability after the inflationary shock in '22. I have a deep understanding of our company, and I share the passion for our purpose, mission and people.

We have strong assets, potential, and I take on the assignment with high energy, but obviously also at a time of big disappointment after a challenging '25. As you know, the year did not evolve as we had anticipated at the start of '25, and we had to revise our outlook twice. The final results should be of no surprise to any of you being in line with the outlook we communicated early December. Revenue was 5% lower like-for-like in a challenging market and the adjusted EBITDA came down by 2 percentage points, mainly due to the impact of lower volume. The 10% margin level is still demonstrating resilience of the business in a difficult year. We did better than we anticipated for free cash flow, ending with a negative EUR 25 million. Net debt benefited from the divestment proceeds with lower adjusted EBITDA, our leverage rose to 3.3x.

Let me expand a bit on the main elements that drove our results in the year on the next slide. Clearly, our volumes, which are the backbone of our business, did not meet our ambition with 3 key factors. We faced a softer demand in '25, especially in Baby Care. We could not pivot on some of the growing segment as fast as we wanted in the midst of our transformation in Europe that limited temporarily our flexibility, and this was amplified by some disruption in supply that we had discussed in previous quarters. And in North America, we experienced much more repeat decline in our contract manufacturing sales. Against this backdrop, we continue to preserve our competitive position, signing and starting delivery of new contracts, thereby maintaining our positive contract gain and loss balance for the year.

We also continue to innovate in all 3 categories and are recognized on our sustainability performance, as illustrated recently with an A score from CDP. Most importantly, we reached some key milestones in our transformation journey. We completed the divestment of our emerging business. Our Belgium footprint work is progressing well. And in North America, we added production line in our North Carolina factory. Before I pass over to Geert on the financial analysis of the year, I'll quickly touch base on the fourth quarter performance. Our revenue came down by 7.6% like-for-like in Q4 versus a strong quarter last year. This is 2% lower than our third quarter of '25 with demand softening further, especially in Baby Care, both in Europe and North America. You can see in the chart that the decrease and the volatility of revenue in the last 8 quarters is mostly linked to our Baby Care business. whereas Adult has consistently grown and in the last quarter, represents 47% of our revenues.

The lower volume in Q4 impacted the profitability, especially as we had anticipated growth and the adjusted EBITDA margin, therefore, dropped 3 percentage points versus last year to 9%, which is 2.4 points decline quarter-on-quarter. While Q4 was again below our expectation, it is important for me to stress the many progresses made on our transformation journey, which are strengthening the company and which will bear fruits in the months and years to come. Yet it is equally clear that more is needed to improve back our trajectory. With this, I pass over to Geert for a more detailed analysis on our full year results.

Thanks a lot, Laurent, and hello, everyone. In the financial review, I will focus on the full year results and start, of course, with the revenue. On this slide, you will find the full year revenue bridge showing the 5% revenue decrease, which was almost entirely due to the volume decline by EUR 93 million. As Laurent already explained, this was caused mainly by the lower demand for retailer brands in Baby Care and specifically in North America, the decline of contract manufacturing causing Baby Care volumes to drop by 12%. Feminine Care sales volumes were 2% lower, which largely reflects the market trends. We benefited from the continuing growth of the adult care market, albeit with a modest 1% volume growth Reason is that we have a large exposure to the more stable healthcare channel. To capture further growth in the retail channel, we're currently ramping up the capacity.

Our sales prices were slightly lower, reflecting the carryover from the lower sales price in '24 as well as some targeted price investments and our product mix improved at the same time and more than compensated for this. ForEx fluctuations had a small negative impact, mostly linked to the depreciation of the British pound, the Australian dollar and especially the U.S. dollar. Let's move now to the adjusted EBITDA bridge on the next slide. On the EBITDA bridge, you can see that EUR 40 million impact of the lower revenue on adjusted EBITDA. It includes also lower absorption of fixed costs. Positive is that our cost transformation journey continues. And this year, we generated EUR 69 million net savings, creating a 5% efficiency gain on our operating base.

This encompasses efforts across the organization and includes the first benefits from the Belgium footprint transformation. We could have done more had volumes been higher. These continued efforts compensated most of the cost increases but leaving an EUR 8 million negative net cost impact. Raw materials prices rose by about 4%, mainly driven by higher indices. The impact was across inputs, but especially in packaging, superabsorbent polymers and fluff. Raw material price indices spiked in H1, but came down since, but on average, they're still higher than in '24. Other operating costs rose by about 8%. A large part is linked to inflation of salaries, logistics and other services. some were also caused by the supply chain inefficiencies we faced mainly in the first half of the year, think for example, outage of our Segovia plants. Despite all these challenges in '25, we managed to keep an adjusted EBITDA margin of 10%, which is 2 percentage points lower than last year.

How this revenue and margin translates in net profit and also including the divested emerging markets can be seen on the next slide. Adjusted EBITDA -- sorry, adjusted profit from continuing operations was EUR 34 million as compared to EUR 76 million in '24. The decline can be fully explained by the lower adjusted EBITDA. In '25, we had much lower restructuring costs as compared to '24. This represented some EUR 19 million and were mostly noncash caused by impairments of obsolete assets and intangibles. Profits from continuing operations, which includes also the nonrecurring costs, thereby amounted to plus EUR 60 million and is, therefore, more or less in line with '24, which ended at EUR 21 million. As to the emerging markets, we posted EUR 190 million loss for Brazil and Turkey, and this loss is entirely caused by the noncash accounting impact from currency translation reserves.

These were accumulated over the many years in the past, and these are recycled through the P&L once the divestment is completed, and this caused EUR 210 million combined loss in '25. But as I repeated already, it's noncash. With the last divestments executed only the core business is left. The result is much stronger -- is a much stronger balance sheet with lower debt, which we will discuss later. Let's now move to the cash flow on the next slide. Here, you'll find the bridge explaining how the adjusted EBITDA of EUR 184 million translates in a free cash flow of minus EUR 25 million. Net working capital changes were largely neutral, with an increase in discontinued operations, offset by an improvement in our core business. That latter core business improved from 5.4% to 5.1% over sales, mainly thanks to lower inventories, lower receivables and higher factoring.

We have a EUR 12 million negative impact from employee liability changes as we accrued lower variable remuneration in the EBITDA of '25, which will lead, of course, to lower cash payout in '26. CapEx was EUR 81 million, representing 4.5% of the revenue of our core business and a nonrecurring cash out amounted to EUR 30 million mainly due to the already provisioned Belgium footprint restructuring. This brings the free cash flow before financing to plus EUR 18 million. Cash out related to financing was EUR 43 million, higher than in '24 due to the high-yield bond refinancing and a favorable interest rate swap, which came at maturity end of '24. This brings the free cash flow to equity holders to the minus EUR 25 million, as I told you before.

Let me go to the net debt. Our net debt reduced by 6% from EUR 612 million end '24 to EUR 577 million end '25. Apart from the free cash flow, which I explained on the previous slide, we finalized the divestments of the Brazilian and Turkish business, which brought EUR 131 million net proceeds. We, however, had to reclassify EUR 34 million of cash residing in Algeria, dating from the divestment in '24, and it was reclassified as a financial asset. But currently, we're making good progress in repatriating this money. We also had an increase in lease liabilities and some other noncash elements, which amounted to EUR 27 million and relates to future commitments related to the renewal of some real estate leases.

Next, we have the share buyback program, which was launched in '24 whereby we acquired 1.5 million shares to cover the future potential option plans with an impact of EUR 11 million in '25. This brings us thus year-on-year to the reduction of net debt by 6% and gross debt by 12%. And just to summarize, if we look at our gross debt, which is EUR 647 million, it's at the right side of the slide, you can see it consists of EUR 145 million of leases, of course, a EUR 400 million of high-yield bonds. And then we have the revolving credit facility, of which we had drawn EUR 100 million, which is a bit more than 1/3 of the total facility. And then before I pass the word back to Laurent, we can have a look at the leverage ratio. And in this graph, you can see the evolution since the end of '22. The net debt you can find in the middle in green and has reduced year-over-year by constantly deleveraging the net debt.

The last 12 months adjusted EBITDA, which is at the top in blue, improved consistently year-over-year until the end of '24. In '25, we have the decline because of the challenging year, but also, of course, the scope reduction following the different divestments. In yellow then at the bottom, you find the ratio of both representing the leverage ratio. It improved from 6.4x at the end of 2022 to 3.3x at the end of '23, 2.5x the end of '24, and now we returned back just above 3x at 3.3x at the end of '25. Nevertheless, the balance sheet remains healthy. The leverage ratio remains below the 3.5x covenant, which is a threshold in the RCF, and important to stress is that we have ample liquidity, namely EUR 240 million, which is the cash of EUR 70 million and about 2/3 of the RCF, which is undrawn. The maturity of our debt is extended to at least '29. Now I'm very pleased to pass the word back to Laurent.

Thanks, Geert. After 2 solid years in '23 and '24, '25 was more difficult. So how do we see '26. And I will start with the overall market conditions, that we anticipate to remain pretty similar to '25 overall with low consumer confidence and continued promotional activity by A brands. Yet we equally expect the Adult Care momentum to continue and overall retail brand to remain a compelling consumer proposition with opportunity to grow share. On top of this general setting, the following elements are reflected in our assumptions. We expect birth rates in Europe to drive overall Baby Care demand slightly lower as they did in '25. In North America, worth mentioning that our contract manufacturing current sales level will create a negative comparison in the first half of '26 and especially in the first quarter, whereas you might remember, we had anticipated shipments at the end of Q1 '25 ahead of the trade buyer threats between the U.S. and Mexico.

And in the other smaller overseas business that we have, we continue to review our portfolio with targeted exits of unprofitable contracts. So let me now share how this will translate to our ambition for '26 year. We target adjusted EBITDA to improve by 10% as we accelerate our extended cost transformation program throughout the year, and progressively return to more stable operations. This EBITDA improvement will be gradual, starting from a soft first quarter which is expected in line with the fourth quarter of '25, but therefore, lower than the strong first quarter that we had in '25. This improvement is underpinned by overall largely stable revenue for the full year. And here again, you should expect a lower Q1 versus prior years for the reason that I just explained. And then volume growth to pick up in subsequent quarters.

We expect free cash flow after financing to be back in positive waters, driven by this higher adjusted EBITDA, lower restructuring charges and a continued effort to drive our working capital down. This, in turn, will lead leverage down to 3x or better by the end of the year. To deliver this plan, our priorities are clear as presented in the next slide. First, resume volume growth. This includes ramping up the existing and newly secured contract as well as the benefit of the additional capacity we have added in Adult. Second, continue our productivity program with an extended cost transformation initiative which includes an adjustment of our organization to our new scope of business. And third, a laser focus on improving cash conversion.

In parallel, we started a strategic review with a clear focus on value creation. We want to go fast, whether by improving delivery and speed of our current plan or by adding new elements to create incremental opportunities and we will update you on a regular basis as progress is being made. This closes our prepared remarks. Geert and I are now ready to take your questions.

[Operator Instructions] And the first question is coming from Wim Hoste. Your line is open. Please go ahead.

I have a couple of ones. First one on the U.S. market. How should we think about revenue evolution in '26? You explained the situation with the contract manufacturing drop in preceding quarters. But will this contract manufacturing further drop in '26? How much support can you get from recently signed or started up contracts? Can you offer a little bit of clarity on that as well, please? So that's the first question. The second one is a more general one, pricing versus raw material evolution, if you can elaborate on that as well. And then a third and smaller one is how much CapEx budget have you included in the free cash flow guidance? That would also be helpful.

All right. Thank you, Wim, for your questions. I'll take on the first 2 questions and then Geert will address the third one. So on the U.S. market growth, as you know, we don't provide guidance of expected growth by region, but the dynamic that was described is what you should continue to expect, which is we're continuing to grow on our retail brand business. And yearon-over-year, our contract manufacturing sales in '26 will be lower than the full year '25. Overall, with the 2 blocks, we expect the U.S. to contribute more growth in Europe in '26. That's for your first question.

On the second question on pricing versus raw material, we expect stable to slightly positive contribution of raw material in '26 versus '25. And at the same time, we expect that as we have some contract renewal or tenders that we participate to, we might strategically invest on targeted customers to secure our gains. So this is the dynamic that we always have, where we try to remain competitive as we see raw material cost evolution. And on CapEx, I will pass it on to Geert.

On CapEx, yes, we keep, in fact, to the guidance we gave several times that at the end of '25, we wanted to go back to a level of 3.5% to 4.5% of CapEx to revenue. So that's what we're heading for and which is sufficient to execute our plans.

The next question comes from Karine Elias from Barclays.

Just going back to your -- the guidance on the full year EBITDA. Obviously, Q1 has been a tough comp. So I understand the decline that you mentioned, which would be similar to Q4. But just as we think through the year, what's your visibility like into Q2? Should we expect the EBITDA improvement to start showing from Q2 onwards? Because on my numbers, if we've got a EUR 50 million decline in Q1, that means a EUR 37 million improvement in Q2 through to Q4 to get to your guidance. Just wondering a little bit how we should think about the of the EBITDA.

Thanks Karine, for your question. So the way we look at it and you phrased it well. So we expect Q1 in line with the last quarter of last year of '25 and then indeed, as we said in our guidance, we expect gradual improvements throughout the year. What are the drivers? Of course, there are different elements. First of all, it's the continuous productivity improvement, which we're constantly working on with the cost transformation program which we also had last year, but this year, we project a much more stable year because there was quite some instability coming from external factors that happened, but also the changes we did in our organization. So we have the Belgium footprint reorganization that we were executing that's ending at the end of Q1, so that's finalized, so that will bring a lot more stability. And also in North America, we had an important ramp-up as well in production as in sales and also there, we see much more stability, which will help us to drive that EBITDA growth.

Great. But just to clarify, so we would expect to start seeing that from Q2 onwards? Or is it going to be more back-ended?

From Q2. So it's really throughout, it's step-by-step, quarter-by-quarter.

The next question comes from Usama Tariqfrom ABN AMRO ODDO BHF.

I just have one set of questions. Could you provide some view on the nonrecurring cash outflow for next year. So this year was around EUR 30 million. So any guidance there or pointer there would be very helpful. And just my second question would be it's a bit more general, but please correct me if I'm wrong, Ontex still has some exposure to Russian assets. Would that also be considered into the strategic review going forward? Or if you could provide any pointers there, that would be really grateful.

I take your first question on the nonrecurring. There, as a management, we have always had the intention to decrease our nonrecurring. So we also keep to that intention. That means that based on the plans we have at this moment, we still have about EUR 10 million of the last phase of the footprint in Belgium. So that's the big provision we made in '24 and what we gradually executed over the 1.5 years more or less. So there is EUR 10 million, but it's already in the P&L. So it's a cash out. And based on the current plans we have and the further transformation, we foresee more or less another EUR 10 million.

All right. And Usama, Laurent, I will tackle your second question. Yes, we still have our assets in Russia. You know our Russian business is about 5% of our total revenues. The strategic review is actually a pretty broad exercise where we're going to review where we compete in different categories, different markets and where we should allocate our resources to maximize value creation. And as part of this, if it's relevant to review our position with this market, we will, but it's way too early to preclude any conclusion.

[Operator Instructions] The next question comes from Fernand de Boer from Degroof Petercam.

Actually, I have one question. So you're guiding for a lower EBITDA in Q1 versus last year. So that means that on a 12-month basis, your EBITDA also comes down. What is your cash flow outflow expected for Q1 or first half because I think then you still are within the covenants, but if you look at that, then you could be very close. And what happens if you would drop below the -- above the 3.5x?

Okay, Fernand. I will answer on that question. Yes, we're not giving guidance by quarter that you know on cash flow. But of course, we are very aware on the quarter-to-quarter. We have a slow onset, a very clear cash focus, so that will be -- it's something not we look at on a quarterly basis. It's on a weekly basis that we're on top of that. As to covenants, you know that we guide to the -- towards the end of the year to go below 3x. That will not be in the first half of the year. But the purpose is to go down. It's also for us, the covenant testing. I want to stress that one. It's always coming at the end of half year. So we feel confident that we are -- yes, we're doing well and we are within the target set.

Okay. Maybe I missed it, but did you give an amount of factoring?

Yes, it's in the press release, but I can tell you, of course, it's EUR 185 million.

Yes. Sorry.

No sorry. It's normal. You couldn't read everything. That's perfectly normal.

The next question comes from Rebecca Clements from JPMorgan.

Can you hear me? .

Yes, we hear you well.

Okay. Okay. Great. Just following up on the accounts receivable factoring. You said it was EUR 185 million used at year-end. Is that correct?

Yes, that's right.

Okay. I think you had said last year that you expected some working capital pressure because of reduced receivables. It -- and I think that was related to the securitization facility. Could you just talk us through -- is that still the case? Or do you expect there to be some negative impact on the receivables side through at least part of 2026 due to the lower sales? That's my first question.

Yes. Good question, Rebecca. But of course, working capital, we look to the total. So it's for us inventory accounts, payable accounts receivable. Factoring at year-end, it was a bit higher than normal because there was quite some invoicing just at the end of the year. So it's a bit accidental. That's also one of the reasons where our free cash flow was somewhat better than the guidance. But for the rest of our accounts payable, yes, you have seen we don't give guidance on revenue, but we expect it to stabilize, and that means that our accounts receivable will be following the same pattern and with a close follow-up, of course, on our DSO. Does it answer your question?

Okay. Sort of. I was just wondering, because of, I guess, reduced -- given who you're selling to and which receivables go into that facility. I just wasn't sure if there would be some sort of temporary potentially negative impact of not being able to submit receivables to that facility that could impact you midyear? .

Not really. No, it's -- no, it's normal operation.

Okay. Okay. And then my second question is related to your visibility. So you said things are more stable now. I know last year, one of the challenges in the second half was that circumstances changed more quickly than you could react to and you ended up having some cost absorption issues from a manufacturing perspective. What gives you comfort that you feel the situation is more stable, whether it's North America Baby Care or European Baby Care? What gives you that sort of confidence in it being more stable because it seemed last year that it was quite difficult for you guys to predict kind of where volumes were going and plan accordingly.

Yes, Rebecca, thanks for the question. This is Laurent. I think when we talked about stability here, we were referring to our operations, not necessarily the sales pattern. We fundamentally -- what we're doing to be better prepared because we expect that there will still be some volatility from time to time in our sales, is to improve forecast accuracy and our ability to anticipate with leading indicators that would allow us to adjust our operation and our production ahead of time. And as at the same time, we're going to have less movements of start-up of new lines, relocation of lines from one factory to the other, et cetera, it will be in the context of a more stable operational framework, which will help us to be much more fluid and to create less inefficiency when you have some volatility in the demand pattern.

Okay. That's helpful. Can I get one more question in or no? Is that okay?

Yes, sorry.

Do you -- was most of the issues around not being able to react as quickly enough, was that North American Baby Care? Or was that across Baby Care globally for you?

It was across the care on both sides. Proportionately, obviously, it was a bigger impact on the U.S., but Europe also, we observed a change in behavior in the market. And our role is to partner with our customers to help them adapt to that situation. So we saw a much greater promotional activity from a brand in Europe. And we're talking to our key partners to share analysis with them and come up with ideas and proposition for them how best to be competitive in this new market reality to protect their position and for them to win on the marketplace. So on both sides.

The next question comes from Charles Eden from UBS. Charles, we are listening.

Two for me, please. Just firstly, on the EBITDA bridge, that 10% growth, which is what, EUR 17 million, EUR 18 million year-on-year. I hear you flat revenue. So I guess no real drop-through from the top line fluff and other inputs broadly stable, maybe EUR 1 million or EUR 2 million contribution. Is there anything else in the bridge? Or are you basically saying EUR 15 million of cost savings year-on-year gives you the growth? And maybe if that is true, where exactly are the cost savings coming from? Is it headcount reduction? Is it efficiencies? Is it a combination? Any color you could give us there would be appreciated.

And then my second question is just on the strategic review and Laurent, firstly, welcome. But secondly, just in terms of expectations on the strategic review, obviously, the business has changed a lot over the last few years. What can we expect you to be focusing on doing a strategic review? I assume there's not change your portfolio top of the list. But what are the areas that are top of that list for that strategic review?

Sure. I'll address quickly your first question on the EBITDA. I think that you're right that our continued productivity will be the key driver of our margin expansion and therefore, EBITDA growth and the second element that you need to keep in mind is mix, we benefit from a favorable mix. So even within stable sales environment, the mix will be a positive contributor. On the building block of this cost productivity, they are the usual suspects in terms of we work with procurement on improving the mix of our suppliers. We work on manufacturing, on the efficiency of our lines. We are doing some re-networking analysis on logistics. We have the design-to-value initiative where we always cost optimize our product, and we're extending that in '26 to also include some adjustments on our organization design to generate additional savings.

So those would be the key building blocks. On the strategy review question. It is a pretty broad effort, as you could have read in our press release in January, where we basically are stepping back and are looking at where best to allocate resources, capital to create maximum value for our shareholders, where we have the best chances to win and where it grows. We believe that all our categories have potential. We have already done a huge focused effort to focus on Europe and North America. There is -- both have potential. Yet what we're looking at is the new conditions to compete and how do we tweak, if you want, the formula between the focus on different categories, what it takes to compete and therefore, what is the proper footprint and organization to maximize our cost in order to be able to continue to grow volume in those categories.

So a bit long answer to your questions because this is exactly the goal of that effort. And our commitment is that as we progress, we will share our conclusions in our subsequent earnings calls with you.

And the next question comes from Maxime Stranart from ING.

Hope you can hear me well. Two questions from my side, if I may. Apologies if it has been asked already. A bit of delay here. So first of all, looking at your EBITDA guidance and the cadence throughout the year, can you elaborate on when do you see inflection point coming in? Based on your guidance, I understand that EBITDA should decline by basically almost 20% in Q1. So just a view on how we should see the work panning out. Second question would be on restructuring. I think you announced previously that you wanted to accelerate savings and productivity improvement there. I think you mentioned EUR 40 million, of which some were to be included in SG&A and some restructuring. Any view you can share on that? That would be helpful.

So Maxime, your first question, our EBITDA guidance is that our Q1 is in line with last quarter of '25, and then we see a gradual improvement quarter-by-quarter. Is that answering your question?

Yes, it does. Just want to cross check there. So basically, if I look at last year, Q1 was good, Q2 was bad, Q3 was good. So I just wanted to make sure I understand the phasing of your guidance correctly.

Yes. But indeed last year was at a quite volatile pattern. That's not what we expect. And yes, as you have seen, we give guidance on EBITDA. So we're, of course, also focused on revenue. But for us, the productivity improvements are important. The mix improvements, the stability that we've built in the business, and that's what will drive that continuous growth throughout the quarter.

The second question was on restructuring. Maybe Geert, you can add on that as well in terms of what to expect.

Yes. So restructuring, linking to what Laurent said before, for us, we have existing plans, which is on one hand a continuation of the plants in the past, but all with new initiatives because we're talking about add-on savings. And in the strategic review, they will look at what extra things they can untap as potential. But in the restructuring plan, which is part of the guidance we give, they -- yes, there's a whole bucket of savings with the restructuring costs that I mentioned before, of still above what we still have to pay on bringing out the Belgium footprint, we still have EUR 10 million of restructuring costs and there's another EUR 10 million we expect this year to execute the existing plans.

Okay. Got it. I apologize, I missed the beginning of the call. I just wanted to clarify then you basically expect a EUR 20 million basically cash outflow from restructuring. Just want to make sure.

That's right. That's right. Based on the existing plans.

So there are no more questions. So I hand it back over to you, Laurent, for your closing remarks.

All right. Thank you, Geoff. 2025 was a year that did not live up to our expectations. Yet we continued to deliver on our transformation program, and we showed some solid resilience, including in our profitability and in our ability to compete in the marketplace. We remain upbeat on the potential we have in the different markets in which we participate. The strategic review is a needed step to sharpen our trajectory and focus even more on where we can create compelling value and we will share our conclusions and the year progresses.

We have very clear priorities set to deliver our '26 plan with a laser focus on financial discipline and cash. We are confident we can start to rebound even in the first part of the year will continue to be subdued. The priorities we shared today are the ones of our close to 5,000 employees who give their best every day, so we deliver great proposition to our customers. They understand the need for us to rebuild trust and to adjust our journey to best reflect the market realities. With that, thank you for joining, and have a great day.

This concludes the call. Bye-bye.

Bye-bye.

Good afternoon, everyone, and thank you for joining us today. I'm Geoff Raskin from Investor Relations, and I'm pleased to have with us san Gustavo Calvo Paz, our CEO; and Geert Peeters, our CFO, to present the third quarter results.

Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read it out loud, but I will assume you will have duly noted it. And with that cleared up, Gustavo, over to you.

Thanks, Geoff. While market conditions have not been supportive in 2025 so far, our ongoing transformation journey continues to structurally improve our competitive position in the market. You can see the benefits of this in the quarter-on-quarter results, where we turned the sequential growth.

Our revenue in quarter 3 is up 4% compared to quarter 2 driven by volumes from new contract wins in a continued soft market environment. Our EBITDA margin improved by 3 percent points, thanks to the revenue growth and net cost improvement, including continued delivery on our cost transformation program. And meanwhile, our leverage remained at 2.7 over the quarter. The soft market environment on the first half of the year did continue in the third quarter. Therefore, our results are still lower compared to last year.

Let me pass you over to Geert for a more detailed financial analysis.

Thanks a lot, Gustavo. On this slide, you will find the different components that contributed to the 5% year-on-year decrease of revenue in Q3 to reach EUR 445 million in the quarter. The price and mix impact was almost nil and contains a limited price investment and a small positive mix contribution. Since mid-last year, prices were rather stable, leading to a neutral year-on-year impact. The lower revenue is explained by lower volumes as in the previous quarters. The drop amounted to 4% and is in line with the construction of the consumer demand in private label in Europe and North America.

In Adult Care, we're growing by high single-digits in the retail channel, and we're ramping up capacity, including the healthcare channel, where Ontex has a high exposure and demand is more stable, overall growth in Adult Care was 1%. In Feminine Care, we performed strongly with a volume growth of 5%. And Baby Care volumes were down 11% as demand continued to be soft in private label, partly as promotional activities of A brands continued in certain countries.

In North America, this was exacerbated by a decline in contract manufacturing, positive was the start-up of new contracts in North America and in Europe, albeit that some started a bit later in the quarter than originally expected. We also recorded a 1% negative impact from ForEx caused by the depreciation of the British pound, Australian dollar and especially the U.S. dollar. What this means on a quarter-on-quarter basis can be seen on the next slide.

In the first 2 quarters, we have experienced sequential revenue declines by 5% each, but we are now turning the curve in quarter 3 with 4% sequential growth, including a positive price/mix contribution. Volumes dropped in the first quarter mainly due to soft consumer demand. And in the second quarter, they came down further as on top, some customers decreased inventories and Ontex faced some supply chain disruptions, amongst others, due to the outage in our Segovia plant. Although the market remains very soft in the third quarter, customer destocking is over, and capacity constraints are being solved. Moreover, we gained new contracts that mostly started up at the end of the quarter. ForEx had a positive contribution in the first quarter and turned negative afterwards, mainly due to the depreciation of the U.S. dollar.

Now let's move to the adjusted EBITDA on the next slide. On the year-on-year bridge, we find the building blocks, which led to the adjusted EBITDA of EUR 51 million. The revenue decrease has a EUR 6 million negative impact, which is the main explanation for the year-on-year adjusted EBITDA drop. Indeed, as our cost transformation journey continues, net savings for an amount of EUR 16 million in the quarter fully offset cost increases. Contributions came from optimizations in innovation, purchasing, supply chain and manufacturing, including the contribution from the ongoing Belgium footprint transformation.

Raw material costs were still up year-on-year, mainly for fluff and packaging materials, albeit less than in Q2. Actual prices for raw materials have started to stabilize after the peak, but still remain high, higher than the level of last year. Other operating costs were up largely due to inflation of salaries, logistics and other services. Furthermore, there are still some supply chain inefficiencies, which, however, are declining. Also, the increase in operating costs is partly offset by lower SG&A costs, which have been adapted to the lower volume level. The margin amounted to 11.4%, while this represents a 0.6 percentage point decrease versus last year, it's a 3 percent point improvement versus Q2. More on the quarter-on-quarter comparison can be found on the next slide.

We experienced 2 quarters of sequential adjusted EBITDA decrease, especially in the second quarter. But in Q3, we have been turning the tide from Q2 -- from the Q2 low point to return to the Q1 level. You can first notice the impact of the revenue evolution, which I described earlier. It is important to see that we have already recovered in the third quarter about 75% of the negative impact of the first half of the year. Net costs started to ease in Q3 versus Q2. Stabilization of raw material costs and improved supply chain efficiency allowed our continued cost transformation efforts and SG&A streamlining to flow through.

Before I pass the word to Gustavo, let's cover first the leverage and net debt on the next slide. With solid EBITDA delivery, no material restructuring cash outs and managing the CapEx spend, we produced positive free cash flow in the quarter. Net debt for the group thereby reduced by EUR 9 million to EUR 543 million, maintaining a solid liquidity position. The leverage ratio remained stable at 2.7x as the lower net debt was offset by slightly lower adjusted EBITDA in the last 12 months.

Gustavo will now give more insight into our expectations to further improve revenue and EBITDA in Q4.

Thanks, Geert, for this detailed analysis. I want to say in July, we have talked about the several adverse factors that affected our results in the H1. And I shared what we should expect to improve in the second half of the year. So what happened so far? Quarter 3 price is stable. Negative price carryover has stopped. New contract wins have started in North America and in Europe. Customer destocking is over. New capacity in high-growth product categories has come on stream. The Segovia plant outage as well as the packaging material shortage are over. The temporary measures to mitigate the U.S. tariffs have phased out. And finally, raw material prices stabilized.

The second half of the year has started largely as expected. And we expect this to be reflected further in the fourth quarter, as we can see on the next slide. Looking at revenue first, on the left in dark blue, we have had 4% sequential growth in quarter 3 with positive price/mix and especially thanks to volume with the new contract wins kicking in at the end of the quarter. Our current projections indicate that 5% growth in quarter 4 is realistic based mostly on volume from the new contract wins.

On the right side, in light blue, we have the quarter-on-quarter evolution of adjusted EBITDA. In quarter 3, we grew by EUR 50 million, thanks to higher revenue and improving net cost. In quarter 4, we expect cost to improve further sequentially with further raw material price stabilization and further operating and SG&A cost optimization. Combined with the positive impact of volume-driven revenue growth, we project a sequential increase in EBITDA at least EUR 30 million.

As a result, we keep our expectations for the year at the same level as in July, as shown on the next slide. Revenue for the year is expected down by low single-digit like-for-like and adjusted EBITDA in a range of EUR 200 million and EUR 210 million. Solid EBITDA generation and working capital management efforts in quarter 4 will drive positive free cash flow further in the quarter and thereby bring the free cash flow for the year to breakeven. Combined with divestments proceeds, this bring net debt down by year-end and bring back the leverage ratio to about 2.5x, which is the level at which we exited 2024.

So let me finish saying, while we are turning the high sequentially getting back to growth, we have continued to build on our foundations of our operations as stipulated in our strategic road map, resulting in Ontex becoming more strongly positioned for the future.

With that, Geert and I are ready to take your questions.

[Operator Instructions] The first question comes from Charles Eden from UBS.

I just wanted to dig a little bit deeper into the implied Q4 EBITDA because I guess to get to the bottom end of the full year guidance, that means you need to do at least EUR 63 million of EBITDA in core markets in Q4. Could you just help us in the building blocks there? Is it just that the phasing of the new contracts are not in the base in Q4 -- in Q3. So when we get to Q4, that comes in, and that's the major delta. Are you baking in an improvement in the underlying markets in Europe? And if so, is there anything you're seeing to give you confidence in that?

And then linked to that, when I think about 2026, is there anything one-off in that EUR 63 million plus you're saying for Q4? Or should we be saying that's the quarterly run rate to expect for 2026? And if so, that implies sort of EUR 250 million of EBITDA. So is that -- if that's not the right way to think about it, could you help me bridge those factors?

Charles, I'll take that question. So thanks for the 2 questions. First, on the Q4, if you look at the bridges we made, yes, first of all, your calculation is right, to enter the low end of the EBITDA, we need about EUR 63 million, which is EUR 12 million extra from the quarter 3. How do we think to achieve it? About more than -- a bit more than half, it's revenue related. As you can see, we expect about 5% at least extra revenue as compared to Q3. This is mainly related to the new contracts. As we said, those new contracts started only at the end of September as well contracts in Europe, but at the same time, 2 big ones in North America that will have a full quarter impact. That will be the main driver.

To a certain extent, also, we're expanding the capacity in adult. So that will also help us. And on the market itself, we're not assuming an improvement on the market. So if markets would improve in the last quarter, that could bring us some upside. Then the other half, but it's a bit less than half, it will be mainly cost driven. On one hand, we said that raw material prices are stabilizing, and the impact year-on-year is still negative. But quarter-on-quarter, we have a slight improvement again in Q4. And at the same time, we're also looking at our SG&A. Our activity level is lower. So we want to keep the SG&A at a level which is in line with that lower volume level.

And then to translate it to next year, yes, we're still working on the budget. So there's not much I can tell about that. But of course, the new contracts will be a very strong basis for next year. So that will be an important driver for the budget of next year.

Okay. So nothing one-off. The cost savings in Q4 are permanent. There's not sort of you're phasing some costs into next year. I'm just trying to understand, there's nothing that you're calling out that would not suggest that EUR 63 million can be a recurring level of profitability. Is that correct?

Yes, there are no big one-offs. But at the same time, of course, we adjusted SG&A. It might be that we have to release it a bit more next year. So it's not that it just copy paste multiply by 4. So...

The next question comes from Usama Tariq from ABN AMRO ODDO BHF.

I just have 2 questions. Firstly, on pricing for Q4. So you indicate relatively stable pricing. Do you see some negative effects from promotional activities still in Q4? And do you expect that to have an impact on you? In general terms, do you think you will be forced into cutting some prices if other brands do very strong promotional activity?

And my second question would be, could you kindly also recall what is the restructuring cash out that you still have to do or expect in Q4 or in 2026? That would be my 2 questions.

All right. Usama, thank you very much. I'm going to take the first question, and Geert is going to take the second one. On the pricing front, yes, pricing is stable for us. And when we are talking about stable, it's always stable for us. And we are not expecting any changes in the quarter 4 in our front, no expectation to change the pricing -- our pricing. What can happen in the market is a competitive market at this moment because when the market is in a soft mode, definitely, there is more competition, but competition is not just on the pricing front. Competition is in promotions and A brands are defending -- for sure, defending their positions and also competition from other private labels, maybe. But our contracts, they have a pricing already, and we will continue with that pricing. There is no move for us depending on the market.

Okay. Usama on the second question on nonrecurring. Good news is that in Buggenhout, which is the plant, which we're completely upgrading, we're fully getting up to speeds. So new machines have been installed. We expect to have a fully operational plant in a very new state, best of practice states by the second quarter of '26. That means also that we will be getting the savings from that one because it will be an important contributor for the cost transformation. Last quarter, because that also means that we have now the restructuring costs kicking in. Last quarter of this year, we are expecting a bit more than EUR 5 million still as nonrecurring. And for Q1, Q2 next year, it will be a bit more than EUR 10 million related to that footprint in Belgium.

And more than EUR 10 million, I understand, is per quarter or is it EUR 10 million in total?

No, no. In total, for next year. Last quarter of this year, EUR 5 million, EUR 10 million for next year. And if you add up all the amounts that we already reported in the past year in line with the provision that we made last year because we had a P&L provision for it. So it's a cash out on a provision that we made in our books.

Our next speaker is from KBC Securities, Wim Hoste.

Two questions for me, please. Can you elaborate on the contract book for next year? Are the new recently gained contracts by now fully started up? Or are the new contracts to be expected to contribute also into next year, if you can clarify that?

And the second question would be on the contract manufacturing business. In the U.S., can you remind us how big that now is and how you expect that to further evolve in the next few quarters?

Okay. Wim, thank you for your questions. Contract wins, we do have contract wins this year that kick in at the end -- towards the end of the third quarter and will continue. And will continue for the entire 2026 and 2027 in some cases, for sure. And we have won some -- also some new contracts that are going to kick in next year. So they are not yet -- there is always a time when the tender happens, you win and then you start supplying. So we're going to have very good news next year, but the good news has happened already with the contract wins. So yes, we have in 2026 contracts coming. So our projections on gain and losses is positive throughout also 2026.

Second question, you asked about contract manufacturing. And it's an interesting question because years ago, contract manufacturing was larger -- the larger business that we had in U.S. And starting in 2023, we decided to put more strategic emphasis on retail brands on private label segment. And we started to grow significantly our private label segment, while contract manufacturing is facing more the soft market situation at the moment. So we are -- our contract manufacturing volume is declining as a result of the situation in the market, in general market. So contract manufacturing is brands that we don't control at all, while in the private label sector with the retailers, we work together with the retailers on developing their private label for the Baby Care segment in this moment. So we're growing significantly in the retail brand business, while contract manufacturing is declining at the moment.

Okay. If I can just follow-up on the first question. The contract wins you commented on for next year, are those in the U.S. market or are those in Europe?

Both. The contract wins this year, before impacting in U.S. next year and contract wins -- important contract wins in Europe impacting next year.

Our next question comes from Maxime Stranart from ING Bank.

Two questions on my end as well. First of all, looking at Adult Care, where the growth is somewhat below what Essity has reported. So if you can elaborate a bit on the reason why the growth has trailed branded products in Adult Care and how you see this evolving in the future? Secondly, looking at Q4, especially in your guidance, quick math on the bottom end would imply that your margin would jump by more than 200 basis points and then obviously to 13.5%, a level reached since the pandemic. So quite surprised about such a guidance in terms of margin. So if you could elaborate on that?

And following up on Charles' question, is it a level we should see as sustainable in the long run? That would be all for me.

All right. Maxime, thank you. On Adult Care growth -- our Adult Care growth in retail brands is high single-digit, which is, I would say that is higher than even what the market is growing. So we are very, very happy and pleased how we are performing there. And as we said before, more capacity in certain segments or categories, high-growth categories are coming into stream. So with good innovation, so we know that we are going to get -- continue getting wins in the Adult Care segment in the retail brand.

Then you have the healthcare for us, the channel -- healthcare channel, which is different because those contracts are much long-term. It's different. The big tenders with -- normally with the government or big companies in nursing homes. So those tenders are long-term contracts and sometimes happens that in one specific quarter, you can have one coming in and another one coming out and maybe the quarter is not exactly. So we need to measure healthcare more at least in a yearly basis, how we are doing. And the net result of the year is a positive result for -- also for the healthcare business. So I repeat high single-digit growth in the retail brand of Adult Care, which is higher than the market growth.

And then for the second question, Maxime, indeed, if you calculate back for Q4 based on the guidance, you arrive at about 13.5%. Of course, our margins, first of all, as you know, we are a very volume-driven company. So that means that the volume growth in Q4 and having a better absorption of our fixed costs will help us with our gross margins. So that explains the improvement. Now your question also is to what extent is that sustainable? Of course, there are several components. It's about raw material pricing. It's -- I was telling you also on the SG&A currently, we're curtailing the SG&A. We're also always every quarter, we have to take positions on what are, for example, the rebates we expect to receive. So it's a combination of all the elements that will give us the 13.5%.

So towards the future, I can say definitely a sustainable margin, which we think we can have in a sustainable way in the future, but it doesn't mean it's for the coming quarters that you can just -- the same answer as before on the revenue that you can just multiply by 4. That would be more a goal for the future, and it's now a positive combination of different components.

[Operator Instructions] And our next question is from Karel Zoete from Kepler Cheuvreux.

I have a question on the baby business and the capacity in Europe. And that kind of relates to pricing because I think the market has been difficult for a while now and volumes about 10% down, and you're probably not the only one suffering. So how do you see this with regards to capacity utilization in your European platform? And what -- how do you see price negotiations or new contracts into next year for the European baby business?

And the second question is on the reduction in SG&A in Q4. I don't completely understand why it should be down. You're landing a couple of new contracts that probably comes with more commercial efforts as well. So why would SG&A be down sequentially?

All right. Karel, I'm going to take the first one. I believe that Geert is going to answer you the second question. On the -- yes, your point is very valid, right, because the capacity installed in generally speaking, right, in the whole European market is -- now is getting idle in some cases. So -- but we should not also forget the transformation, right, of the Baby Care business. So baby diapers is going down more significantly, while baby pants, although now this past quarter slowed down the growth, but year-on-year, it's still growing baby pants. So there is a move from baby diapers to baby pants.

Also within baby diapers and baby pants and youth pants, there is a dynamic that is happening that is larger sizes. So there is a transformation between a movement -- a more consumption in larger sizes. This is due to a trend that babies are using diapers for a longer period of time. And when we see each other next, I want to explain a little bit even more because there are very interesting insights regarding that happening because that trend is happening not just here, but also in U.S. is following something about also the aging of the couples of the parents, interesting to know.

But in our case, in particular, we are renewing, as you hear from us all the time that we are doing footprint work, footprint all the time investment in efficiencies. So we use this also momentum of more capacity -- more free capacity in diapers to do the adjustments where we need to do it, thinking in the future and thinking in the trends. Then you asked about if this excess capacity cannot impact in the next future contracts and pricing in Baby Care. I'm going to say that potentially, yes, if you just play in the very, very low end of the segment, definitely.

We -- starting some years ago, we started to invest significantly in innovation, coupled with our partners or our customers, retailer customers that partner with them in innovation. We are bringing a lot of innovation into the market, which -- it's very important to take into consideration that it's not just a price type of competition. Also it's innovation, it's sustainability, it is customer service, it's quality assurance, all those things that for which we, as a company, when I mention that we are working on our foundations to structurally change our foundations and be more efficient, all of that is included. And that gives us the competitiveness into the marketplace. So we are not just competing in the pricing. We need to be more efficient. Yes, definitely, but also innovative and have high customer service and quality assurance. And of course, the patents and the regulatory is also a very important subject.

That's for Baby Care. Now I'm going to leave Geert on the second question.

Karel, on the question on the SG&A, first of all, to clarify, if you look to the quarter-on-quarter from Q3 to Q4, their SG&A is less an explanation because SG&A is already lower in Q3. The explanation from Q3 to Q4 in operating costs, it's more related to a stabilization of raw material prices and gaining further efficiency. Now on the SG&A itself, if we look at SG&A at a lower level in Q3 and Q4 looking at it and explaining a bit more on why SG&A is lower. For me, there are 3 components. First of all, important for you to understand our SG&A, it's not that if we sell more contracts, we have more SG&A. Our SG&A, it's a rather fixed amount. All the sales teams, all the administration, it's in place. So that means it's a rather fixed cost. It doesn't mean, of course, that there are 3 ways to bring the SG&A down. It's, first of all, cost consciousness. It's about how we function, how much we travel in an organization, all that type of stuff. So we are in a very cost-conscious mindset over the last months because of the lower results, which is also logical that we do that.

Second thing is, of course, we are looking extra to being a more efficient organization, how can we work more efficiently with the staff we have. So that's the second area. That's, of course, more sustainable towards the future. And then a third component, there's always a variable component, of course, in the SG&A because part of the remuneration of management of sales, it's a variable remuneration, which is down because of the sales and the EBITDA, which is down.

The next question comes from Markus Schmitt from ODDO BHF.

I have one just on free cash flow guidance. So you had [ EUR 9 million ] in Q3, EUR 31 million is therefore left to meet the guidance. You expect apparently strong EBITDA in Q4, and you paid the cash interest on the bond already in July. And you just mentioned that there will be some restructuring costs in Q4. This brings me to about EUR 10 million of contribution from inventory releases in Q4 to meet the guidance. Is this assumption about correct? Or do I miss something here?

Markus, I love that you already give 90% of the answer because indeed the drivers of the better free cash flow in Q4 are EBITDA. It's indeed the high-yield bond coupon. The next one is only in January. So that's an important explanation. Nonrecurring, there will be some nonrecurring, but it's limited. And then the 2 other components is CapEx. We are, of course, this year because our result is less, we're not spending the full CapEx that we intended to do without hampering the business because I can tell you the key CapEx we need to build the capacity, for example, in Adult Care, of course, that one continues. So we're also bringing down CapEx.

And the last element is like you say, on the working capital. Now in the working capital, there are always 2 elements. First of all, at the end of the year, you have the typical seasonal impact, our inventories are always down in the Christmas period towards the end of the year because we produce less at that moment. So that's one of the components. Other component is you know that we have been talking in Q3 on inefficiencies. We solved a lot of inefficiencies in Q3, but having the full impact in Q4, and that's mainly on an inventory level, we believe that we still have a step we can -- we will make in the short-term on inventory. So your conclusion is quite correct.

Almost on target. Okay.

And then our last question comes from Karine Elias.

Sorry, if you've covered that before. But just wondering if you can comment on the competitive environment. Are you seeing any changes with regards to the A brands behavior on promotional activity? That would be very helpful.

Karine, Gustavo here. The A brands, yes, are defending their volumes. And of course, as it was expected from our side. And that is in both regions where we are focusing on in Europe and in U.S. And -- but anyway, for them, also, it's an important -- the volume is important for every single company here. So -- and in Baby Care, in particular, that is a declining market at the moment. What we are expecting for the future is that we are expecting to continue competing. So private label -- private label is an important -- a very important business for the retailers. And we are not expecting that, that is strategically changing the retailers. So retailers and I, we are all constantly working together on continuously putting in place consumer-driven volume growth for the private label. So yes, we compete through to A brands through the retail brands in hand-to-hand with them. So yes, it's going to be competitive. In other words, continue to be competitive.

So there are no more questions. And thereby, I hand you back over to Gustavo for your closing remarks.

All right. Thanks all for the questions and the interest and participating in the call. So perhaps I'm going to repeat something that I said earlier during the presentation that while we are turning the tide sequentially and getting back to growth, we have continued to build our foundations of our operations as stipulated in our strategic road map, resulting in Ontex becoming more strongly positioned for the future. So thank you again. Thank you very much and see you next.

Thank you.

Thanks for joining today's call. You may now disconnect.

Good morning, everyone, and thank you for joining us today. I'm Geoff Raskin from IR. I'm pleased to have with us Gustavo, our CEO; and Geert Peeters our CFO, to discuss the first half results. We will limit this to a Q&A session. But first, I will ask Gustavo to say a few words.

Thank you, Geoff, and thank you very much for those attending this limited call in which I will not be presenting, as usual, but let me make some remarks our audited full half year results are in line with our pre-announcement. Quarter 2 and H1 results were disappointing, with weak volume caused by low customer demand and some supply chain inefficiencies.

We have revised the outlook accordingly 2 weeks ago, and it is unchanged. While we are working hard to return back to our growth plan in H2 by restoring revenue to last year levels, bringing adjusted EBITDA back to growth year-on-year and generate positive free cash flow. We remain highly committed to our strategic transformation.

Our balance sheet is now healthy, thanks to refinancing and to divestments. We have significantly improved our innovation pipeline in the last 3 years. We're in the middle of a major step up in terms of operational efficiency, improving our footprint and our portfolio. We continue growing fast in North America and our company culture is shifting towards being a leaner, more performance-driven organization.

At the same time, we are taking actions where needed accelerate targeted executional plans and by aligning cost structure to change in reality. So thank you.

So as discussed, we'd like to open it up for questions. So I'll give it over to the operator to instruct you how to do that.

[Operator Instructions] The first question comes from [indiscernible] from [indiscernible].

Yes. I have actually 1 question. And if I look at the miss in the second quarter, it's not a small miss, but I think it's huge. And if you then look at your -- I think last year, we did have a miss or 2 years ago on, let's say, more cost in the third quarter and some hiccups in the step-up in your production in the U.S. Now we have the miss and I think it's due to a lot of different things. What kind of visibility do you actually have because in that respect. That's actually my question.

Sorry, you are talking about what kind of flexibility -- feasibility.

No, feasibility because yes, it's -- also here, I think you want on July 15. But I think if you look at the significant of the miss than this must have already been known much earlier than. So I think that also here, the warning could have been lower because it's on the cost side. It's on the volume side, it's on the cost side.

Everything is different than what we should expect. So my question here is actually where does your confidence and I think it was also asked in the previous conference call, but I'm really [indiscernible] amazed about the mission and Yes.

Yes. Yes. All right. So I will try and then you tell me if you feel comfortable with my answer. We explained in 2 weeks ago in the conference call, we explained the reasons why we significantly means quarter 2 versus our expectations. And it was, as you said, now it was a combination of factors, right? It was not just 1 thing driving this. And at the same time, when we were explaining about what we are expecting now for quarter 3 and quarter 4, second half of the year, we were explaining each of these drivers of negative drivers on the Q2, how we are expecting those in these following quarters.

I'm going to try to do again the same thing. So regarding the market trends, which has been 1 of our big driver, the lower demand and we continue expecting that same level of low demand. We are not making assumptions that the demand will increase. in our projections. Another significant driver for the low quarter 2 was based on that lower demand, there were adjustments on inventories from -- done by the customers -- and we are assuming now in the second half of the year that those adjustments in inventories are done.

So we will not face again adjustments -- in some cases, those inventors, they have been reduced to a minimum level. Therefore, we are not expecting more adjustments in inventories affecting the volume. Another consequence of this lower demand has been a heavy activity from some AA level brands in an attempt to reach higher volumes and on through promotional activities, more than significant versus other years at the same period of time. We are not counting on a reduction of the A brands activities but we are assuming that the -- that it will be at the level of competitiveness for the private label as customers, retailers they don't want to go down right in market share as they are not going down in market share.

In our projections for the -- also some of the reasons, and as I explained even now, it was caused by our some supply chain challenges that we had in the quarter 2. Some of them totally unexpected, some others as a consequence of our transformational journey that we are going through all those than expected, of course, and the journey they have been solved. So we should -- we put in place severe actions to improve our customer service, our supply chain and not to have these inefficiencies. That is already in action. Another topic was the cost -- higher cost that it has impacted in our EBITDA, not just in -- not the top line as I was referring before, but in the EBITDA was the cost of raw materials and increased cost in raw materials. And that's mainly driven by the RISI index which today, we are already seeing that in the change and that it will have a positive impact in our cost, in our EBITDA, the result of that towards the fourth quarter.

And then a big important factor for the top line and creating volume is all these new contracts that we have. new contracts that we have in North America and new contracts that we have in Europe. And I can tell you that all of them, they are on track. And we already kicked off some of them right now, we are finishing in July. So we are already living our second half of the year and they have already kicked off. So that is a big portion of our -- in top line improvement. That would be almost my answer to you for I don't know if there is something else that I haven't answered, please let me know [indiscernible]

I understand you cannot predict exactly how volumes in the market operate, et cetera. But then for me, it is -- if I look at step-up in other operating operating costs, if you look, I think, in the first quarter that was minus around EUR 5 million or EUR 7 million and then EUR 22 million for the full year for the first half. There is a big delta, if I look at the cost of goods sold, minus EUR 3 million in the first quarter, minus EUR 90 million in the second -- first half, so minus EUR 16 million in the second quarter.

So I assume this is a step-up of, let's say, EUR 20 million, EUR 25 million. And I think that's when you are at the end of Q1 or the beginning of Q2 and we do have the conference calls. I think there you should already have flagged on that part that there would be such a step-up in cost. And the sales I don't -- yes, I can understand that the feasibility, yes, you cannot exactly know every quarter what retailers are going to bring in and sell the cell and how much has to be replenished. But on the cost side, I'm so amazed that there is such a huge step up and you didn't flag that more properly to us.

Perhaps, Ferland, I will add some comments to what Gustavo said because now you're referring to Q1 First of all, our Q1 was also on the low end. We explained that at that moment. There were some of the impacts already there, like, for example, the soft markets and then if you look to the second quarter and there, if you take the different elements that Gustavo mentioned, for us the water issue where in Segovia, for example, was a very important one, and we only knew the impact of it became clear more in the months of May, June because these are impacts on rebuilding inventory, delivering to customers. So it only became clear at the end of quarter 2. Another element, which was absolutely not clear. If you look structurally to our markets, what happens now, the soft markets and as Gustavo said that, we assume that it stays until the end of the year. but it's very exceptional what happens. Typically, it's a period of a couple of months, and then you can assume that it comes back. So we were in the belief that this was a temporary impact, although we said at that moment already that second quarter achieving the guidance would more be back-end loaded because the second quarter would be also more weak as compared to the other quarter and that's, in fact, what's happening. I think if you look structurally to our business, everything you hear about supply chain, about markets, about our cost transformation plan on gaining contracts.

Structurally, everything is is green for us because we believe if we look at a period of 1, 2 years, we are very confident that all the figures we're aiming for. We're able to achieve -- but you see, indeed, there's quite some volatility in the markets, like, for example, what happens with the fluff prices, they certainly went up, currently, they're coming down again. And there is indeed some quarterly volatility that we see in our results that we have to manage, which is intrinsic in this business. Structurally, if you take more a view on 1, 2, 3 years, there we see that structurally, we have -- yes, all the trends that we have foreseen offer us quite visible and quite in line with our expectations.

Okay. Could you quantify the additional costs for the Segovia waterflow?

Yes. It's not something we disclose individually. But if you look at it because you're talking about high numbers of costs. And first of all, what you need to know is lower volume for us in our plants. We have quite some fixed costs and definitely on a short term, short-term changes in volumes creates quite some impact because we cannot short-term flex our fixed costs, that means that we have -- there are some cost impact, which we believe we will have a much better absorption than the second half of the year. And then it's on top because a lot of things that's happening is the complexity of different elements coming together.

The fact that [indiscernible] came on top, it's very difficult to quantify individually, but definitely the elements like intercompany transports we have to do and then you're talking about a couple of million euro at least that is hitting the cost. But at the same time, we also have the impact on the sales because also we missed some sales because of that. And on the missed sales, we have the margin impact.

So perhaps Fernand I will say that 75% of the gap between our expectation for the first half and the reality 75% of that is volume related. And the impact that, that volume, as here was mentioning in our EBITDA is big due to sudden volume changes in the market, you kind of flex the overhead so quickly, right? So 75% is volume related and probably 25% is other inefficiencies and it's a combination of other inefficiencies. What you are saying is is mostly right in terms of that at the beginning of quarter 2, we knew already about the cost of the raw material increase. Yes, we did. So it's not that. We deliver -- we normally -- we delivered on our objectives and our expectations in terms of cost transformation, therefore, those were they were at hand to offset that extra cost and some of the inefficiency that we suffer, but we are not able to offset the lower volume.

So I would say that 25% that is on the gap as a result of some inefficiencies. Most of those inefficiencies are already gone. The 70% of the gap due to volume, I was trying to explain what we are expecting in the volume before. and how to recover that volume.

Our next question comes from Charles Eden from UBS.

I do want to just come back and it's sort of following on that last question, I'll certainly answer it to the end of it was when I look at the raw materials line, you've got minus 16% in the quarter, minus 19% in the half. I'm looking at the table on Page 3 of the press release. Just to be clear, impact on your EBITDA? And yet, sales price seem obviously down, and I get there's a lag between -- can you just remind us how the contract structures were at your customers? Because surely, everybody is going to be benefiting and certainly we've seen this on the branded side. I move more quickly quicker pricing to react to some what has been a volatile period for particularly up markets, but I guess of pulp for you. How does it work? And how quickly, can you, in reality, offset those higher costs from raw materials because looking at those numbers, it would suggest that you may even be doing some contracts that are barely profitable at this point.

So if you could just sort of remind us how that works? And then just a second one, probably maybe a bit more -- you obviously said the contract situation expect -- do you sort of sit here today more confident on your delivery of the full year guide because look, you've undoubtedly change a lot of things for the better during your time with [indiscernible], really, obviously, the guidance has come in unfortunate time. But do you sort of sit here and you feel very comfortable that there is not another guidance cut to come even if the market softens slightly further in Europe.

Okay. So the price on the price side also has -- it's aligned with our expectations because it's a carryover from last year. So it's quite simple to estimate it and it was forecasted -- so it's not out of our expectations. It's a carryover from price -- competitive price adjustment that we have done last year based on the raw materials because remember that you're comparing quarter versus a year ago, right, and -- or half year versus a year ago, and it is when we started to do some price adjustment based on the 23 raw materials reduction.

So that is going -- is trading out at the moment, and we are not expecting anything else than potentially any type of based on some mix or geographic being so differences in channels potentially. The pricing could be something like that, but we are not doing any price adjustment at the moment with any customer. You asked the question about the contract, how does it work on the contracts. There is no -- in some -- in the health care channel, it might be some contracts that it include some indices, but not in the retail environment. And also, we have to take into consideration, and I'm sure that you will remember because in the February analyst call, we already talked about the fluff indices expectation increase. And we -- I referred to that as a not structurally increase.

I referred to that, that it was more mainly due to supply not from demand -- and when it is from supply, the fluff increase, right, indices and clearly understanding what type of supply the flu suppliers they are facing, we know that this momentarily. And the level of the increase also would never justify going into a market price increase. And even less, I have to say and be cautious in the environment that we are playing today with a market contraction in consumer demand. where the competitiveness increase.

So it's not the right environment to any pricing by any company. And we knew that those cost increases, they were momentarily cost increases. As I said, when a company has a structurally good cost transformation program that as the 1 that we have started to implement 3 years ago, I would say that those needs to be absorbed by that definitely. Those cycles normalizes on pricing based on supply-demand. But when there is something more structurally in terms of the cost of raw materials, more profound that could be by a big change in the supply or by a big change in the demand, and therefore, the adjustment on the supply will take time, and you know that we proceed, then there's a different conversation with customers definitely. But it's not protected by any contract. This is open on the strategic discussion with the customers. So that is the answer for the first question. And before I go to the second question, I want to ask you if it was clear the first one.

Yes, it was. I appreciate that. Just a very quick follow-up. How long is the average commitment at a price level with your retail customers. Are you locked in.

By the [indiscernible] prices in by the context. So if you win a tender, the tender has a period of time, sometimes goes by 1 year, sometimes 2 years, is for the period of time of the tender. And and that's really absolutely reasonable. Again, if there is a major change in the market, you can -- you are justified to go and renegotiate the price if there is a major change in the market. And that is what we have done successfully done in the year 2023. So starting in -- I think that in the last quarter of '22, going through '23, we increased the prices based on the increased cost, a major increased cost that the market were suffering. So we were in the middle of tenders, right? So we were in the middle of the contracts and we were able to increase the prices. So it's not that it's not able. Nothing tells you that is automatic. Nothing tells you that you cannot count with a change in the price if there is a major change.

I guess do we have -- I don't want to take you to time -- but just what is your average tender length like what is an average contract?

Well, it depends on the customers. There's some customers try to say. In health care, you mean?

No, no, [indiscernible] Health care as I'm talking on the retail side, yes.

In the retail, in the retail, I'm saying it could be 1 year to 3 years. But honestly, even though if you have a tender of 2 years with a customer and the customer decided to anticipate the next tender, they have the right to do it. And they will tender. Again, is it's more a strategic relationship with a customer, the 1 when I'm -- you have care from me, Charles, several times, to emphasize, and I just did that at the beginning of this call.

To emphasize on the importance of the significant importance that has to have a strong innovation pipeline. Innovation quality, service level are key pillars for a retailer, not just pricing. So the more -- the strength that you get there, it's way, way important as to defend or to sustain a pricing in a customer. It's not just pricing. So that's why my emphasis there and perhaps it's not just I'm trying to bring color or different topics to the meeting. But when I'm saying that this company has been changing, structurally changing in the last year is because we are making the changes in these things that will secure a better future for the company and valuation for the shareholders.

The second question is about my comfort about on delivery in the new contracts or no, sorry.

Yes, just I guess you took the guidance that -- you took the guidance down. There was obviously -- it needed the contribution from these new contracts.

Yes, yes, yes. So in terms of the -- I can assure you that today, we are going in timing with the production and delivery on the new contracts with the customers that, as you are saying rightly, it is essential for us to deliver on the second half of the year.

So there is no indications for us today and that something will not be in the timing and in the amounts that we are expecting. So these new contracts are going well at the moment, very well actually at the moment. When I'm saying very well is because it's very highly excited to see plants working at full speed and machines working at full speed. That does very good, very comfortable.

Our next question comes from Maxime Stranart from ING Bank.

One question on my end as well. now that we have seen the result of both PNG and SET its much better than what you have delivered on the like-for-like growth I just wanted to check a bit with you on a comment that P&G has made flagging that private labels for pricing very aggressively right now.

Obviously, if we look at the pricing impact you had in Q2 compared to there, it shows -- well, it reflects that story. Just wanted to check with you, how do you feel about this comment? How do you see this evolving in the second half of the year?

Yes. Maxim, first of all, I would not comment on what the competitor has said in the remarks -- but I can tell you that share pricing of the prior level of the A brands decided -- in the case of the A brands are decided entirely by the retailer, not by us, shelf of consumer pricing. And the level of levels of promotion and specifically by the leader that you have mentioned in Europe as an A level has been increased perhaps by threefold versus the same period of time of last year.

So you can deduct and make you your insight on that, right? Because that is what happened in the market. But I cannot talk about what the competitors say or may not say in their analyst calls.

Just to follow up on this clear understand and I appreciate your comments on aggressive promotion and so on. But still, if you compare the pricing impact of we see a clear disconnect there in to make sure we understand everything correctly. So basically, if I look at Baby Care, for instance, you have underperformed STD quite materially.

Can you maybe a bit elaborate on what the difference you see in terms of pricing compared to SET in Q2, for instance.

Well, in pricing, Again, it depends on what the competitor is talking about. We focus entirely in private label, while the competitor is a hybrid company, and they have branded business and private label. And when you read that competitor information, you have a mix of that. At the same time, every company, and I can assure that every company does their accounting in some things in a different way. So it's very difficult for any of you to read exactly and do comparable numbers in terms of baby care pricing. So difficult to answer your question in a way that you would be able to read because I can't read that.

Our next question comes from Markus Schmitt from ODDO BHF.

I have 2 questions actually, and it's around Turkish asset sales and leverage. So I think in discontinued operation, you still show net cash from your Turkish activities, maybe you can confirm if that is all Turkish cash. And when I look only at the core group net leverage was at 3x at the end June.

So in fiscal year end '25, assuming the Turkish asset sales will be finalized, completed during H2. There won't be any discontinued operations, I think, and you derive then at net leverage of about 2.5x as guided. Can you disclose what's the net proceeds will be from the asset sales in H2? And I have a little bit of a hurdle to derive from the 3x at the core group to the 2.5x by year-end.

Maybe you can explain that bridge a little bit. I think EBITDA recovery as just explained will play a role, but maybe some net proceeds. So maybe you can provide these pieces a little bit. And a subsequent question would be where do you see the RCF drawn at fiscal year end '25? it was at EUR 185 million right now, a much higher figure than what I expected actually.

So maybe you can explain where you see the RCF at year-end.

Okay, Marcus. I will take that one. A lot of questions, so I will try to give answers, but tell me if I missed something. First of all, you're right in the discontinued operations, but you can find that in our reporting, we still have some significant cash that's indeed in in the Turkish legal entities.

So the purpose is to recover it in the purchase price. You know that we disclosed, if I remember well, some net proceeds last year. As if you ask whether the proceeds of Turkey, it's around EUR 20 million, EUR 25 million, something like that. If you derive it back from what we got from from Brazil, but it's without the cash.

So that means that we recover also the cash and that cash is coming back to us. And if you take that down and you take out, of course, a limited EBITDA contribution we have in Turkey because it's positive, but it's limited and you take then the proceeds that you will be at the guidance that we put for the end of the year around 2.5%. That's our guidance. But of course, it includes also the positive free cash flow that we foresee in the second half of the year in the core business. And you know that our guidance is that we will be around zero and that our free cash flow in the first half of the year was minus EUR 40 million.

So that means that we expect about EUR 40 million positive in the second half of the year. And then if you link that to the RCF, you can say that at EUR 40 million at the end of the year, if we generate that EUR 40 million, then the RCF will decrease more or less with that amount. And for us, we are looking at cash always a bit careful. It's -- for us, it's a bit communicating vessels. But of course, all the cash that we have in Turkey, we cannot repay on the RCF.

Once we can unlock that cash because for us, it's a cash -- it's a tax efficient way to get the cash repaid based on the sale of the business instead of paying dividends, then we can probably also -- we will also probably use part of that cash also to decrease the RCF.

So RCF in a nutshell, it will go down then with EUR 40 million on the free cash flow of the car. And partially, we can use also the cash in Turkey, once we covered in order also to repay the RCF. Okay. Is that clear?

That is clear. I mean the bits and piece at the end we will see. I mean as a fact on working capital whatsoever will have play a role too, I think. But I see the potential. That's good.

Secondly, maybe just a question on the, let's say, price competition in that market on which you just elaborated. I mean do you see actually that form of price raw is coming back to the sector after the period where you had the chance to overcompensate raw material pressure by price increases quite nicely over the last 2 years. Is that for you given the difficulty of the overall market coming to an end. And you have not said, let's say, freedom to raise prices if you want to compensate raw material pressure. Is that the new normal in that sense?

Well, in -- I'm going to take that one, Marcus. In -- perhaps the first thing that I would say is there is no we don't see pricing cost, raw material cost price increases, right? So we don't see a need of price increases due to raw material -- but to your question about the potential price war coming back price war, right, due to the competition.

Well, I would not deny that the market dynamics at the moment in terms of consumer demand, the depressed consumer demand in some sectors like in the baby care, it will put pressure on the pricing because companies they will try to defend their positions in their customers, with their consumers, right?

So yes, that would probably be a reality. And in other sectors, not in our categories, there are other categories that in a growth mode and supply and the supply of the right product, the supply of the right quality is essential for the customers and retailers are growing and they need products that the capacity needs to be in place.

So it's not the same for every single category that it's not for every category. In terms of the intensity of that competitiveness in the price front, I want to say that, that's exactly why we. Yes, it's part of the game. And why this -- the team in Ontex has been working so hard and in terms of structurally changed our operational efficiency. Because we need to generate enough cost savings to overcome these moments. Those are cycles all the time. And -- and we are getting more and more ready to face those type of things, to face some raw material changes or to face some competitive pricing, we said from the beginning in the plan that our cost information gains, which are significant year-on-year our due to the efficiencies that we are looking after in our operations are to serve 2 major objectives.

One, to improve our bottom line margins and want to improve our competitiveness in the market and the other one. So that is what we are doing. It's not that I'm trying to simplify the answer of your question, but it is part of the game. I hope that I answer you.

There are no more questions at this time. So I will hand over the conference back to the speakers for any closing remarks.

Yes. Thank you. Yes, look, I really -- we really appreciate the opportunity to have this call. And I know that we had 1, 2 weeks ago and now -- so I appreciate the time that you are investing in -- on our company and to understand what's going on. And for us, it's always super important to be able to express what's going on and trying to be as much as transparent as possible.

As a closing remark, I just want to say, please do not forget where we were 3 years ago. This company today, yes, it's true. We have a very disappointed second quarter disappointed first half of the year, we -- but don't forget how much we have been progress in the last 3 years in this company, making structural changes.

Our balance sheet today is a healthy balance sheet, and that is key for any company to continue operations. And that has enabled us, at the same time, to invest in the company with the cash that we are generating, investments that are transforming the operations in this company having more technology to be able to produce the innovation that our R&D teams are developing and then we bring it through the operations into the market. So these structural changes are here to stay for the long run.

Yet we have plenty of more things to do. And that's why we are saying very emphatic that our focus today is to accelerate the implementation of this plan because this transformation journey is not yet done. And mainly we are 50% there, we are 60% there, but we have plenty of things to do and that will secure this shareholder value for the future.

So that would be my last message. Let's remind all the things that we have done in the last years. Thank you very much. I appreciate it.

Thanks a lot. Bye-bye.

Thank you for joining today's call. You may now disconnect.

Good morning, everyone, and thank you for joining us today. I'm Geoff Raskin from IR. I'm pleased to have with us Gustavo Calvo Paz, our CEO; and Geert Peeters, our CFO, to present the preliminary first half results.

Before that, let me remind you of the safe harbor regarding forward-looking statements. I will not read them out loud, but I will assume you will have duly noted them. I also would like to point out that the figures presented are preliminary and not audited and that you can expect the final audited and more detailed figures to be published on July 31 as originally foreseen.

With that cleared up, Gustavo, over to you.

Thanks, Geoff. Results in the second quarter were disappointing. The geopolitical environment has impacted consumer demand and thereby our retail customers. These trends, combined with some temporary supply chain inefficiencies resulted in significantly lower-than-expected volumes for the second quarter and for the first half year. This impacted our revenue for the first half year negatively by 4% like-for-like, including negative price carryover from 2024.

It is important to remember that we had forecasted 3% to 5% revenue growth and built out plans based on that. Lower prices and volume during the first half resulted in lower adjusted EBITDA. This impact was magnified by the lower cost absorption with our operating structure set up for growth and much of the costs fixed in the short term.

Adjusted EBITDA, therefore, came down by 22% and the margin by 2.2 points percentage to 9.8%. Lower EBITDA, combined with continued investments in our cost transformation and growth plans resulted in a EUR 40 million free cash outflow. We don't see the impact of these investments in today's results, but this will benefit us significantly.

We reduced net debt with the divestment of the Brazilian business in April. With lower EBITDA, the leverage ratio crept up to 2.7x, however, but remaining well below our self-imposed 3x threshold. While these numbers are disappointing, the challenge we faced during H1 convinced me of the importance to accelerate the execution of our strategy to make Ontex stronger.

But before elaborating, let me pass you over to Geert for a more detailed review of H1 results.

Thanks a lot, Gustavo. On Slide 4, you will find the revenue bridge showing the 4% revenue decrease. The carryover from the low seller price in 2024 represented EUR 9 million or 1% with an impact on the three product categories. Volumes came down 3%, including mix effects, representing EUR 27 million and which overall is in line with the drop in consumer demands for retailer brands.

Let's then look to the three categories. Baby Care represented the biggest drop, EUR 30 million. Normally, with weaker consumer demand, retailer brands performed relatively better. But in H1, they faced heavy promotional activity by branded players, leading to high single-digit decline, both in Europe and North America.

Moreover, Ontex was affected relatively more, being exposed to regions where these effects were more pronounced. For example, in the U.K. and Poland. And some customers also destocked magnifying the effect. That being said, our gain/loss balance was positive and contributed to add volume.

As to Feminine Care, sales were 5% lower like-for-like, representing the price decrease and a EUR 6 million volume and mix drop. While consumer demand for retailer brands was overall stable in Europe. We faced inefficiencies in our supply chain and particularly the Segovia plant outage due to a water flood and unavailability of packaging materials played a role here.

We participated in the continued growth of Adult Care by 3% like-for-like, with retail growing at a higher rate than the more stable health care channel, where we have a strong position. We could have grown sales further in retail if additional capacity had been online. That capacity is currently being ramped up.

Let's move then to EBITDA on the next slide. On the EBITDA bridge, you can clearly see the EUR 20 million impact that the revenue decrease had on adjusted EBITDA with about half coming from the direct impact of the price carryover and half from lower volumes, including the effect of lower absorption of fixed costs.

Our cost transformation journey continues. And this half year, we generated EUR 34 million in net savings, creating a 5% efficiency gain on our operating base. We could have done more, had volumes been higher. These continued efforts allowed us to compensate most of the cost increases.

Then raw materials. These costs rose by about 4%, which was largely expected and this is across inputs, but especially for fluff, where the index has recently reduced and especially in euro.

Other operating costs rose by about 8%. Half of that is linked to inflation of salaries and the cost of logistics and other services. The other half is linked to temporary costs, some caused by supply chain inefficiencies as we made efforts to mitigate these, but also the anticipation of the ramp-up in North America to supply additional contracts, which will start in the second half of the year. And also the impact of U.S. tariff mitigation costs. On the positive side, SG&A costs reduced as we adapted it to lower volume level.

Let's move now to the differences between the first and the second quarter on the next slide. You'll find here the same year-on-year adjusted EBITDA bridge, where we split the different components between the quarters.

Quarter 1 is in light blue and quarter 2 in dark blue. The negative price carryover was mainly a Q1 effect and is fading out in Q2 and going forward. The volume decrease impact, while already visible in the first quarter was more pronounced in the second quarter, contrary to our expectations, mostly as customer destocking exaggerated the effect and the supply chain disruptions weighed heavier on the quarter.

The raw material cost increase was also already visible in the first quarter, but grew in the second as we anticipated. As already mentioned, these prices are coming down at this moment.

Other operating costs went up more in the second quarter due to temporary inefficiencies and mitigation costs, for example, related to the Segovia plant outage. And while our cost transformation program delivered more in the quarter, even with lower volumes, these were not enough to offset the cost increase in Q2. This explains why the Q2 EBITDA is down 37% as compared to last year and is lower than the first quarter.

Then we go into the cash flow on the next slide. On Slide 7, you can find all the cash elements, starting with EBITDA of EUR 93 million, including EUR 6 million contribution from the discontinued emerging markets.

Working capital and social liabilities were slightly up mainly due to phasing. But if we look to inventory levels, they were at the same level as end '24 despite lower sales volumes, mainly due to inefficiencies and delay in aligning production with lower sales.

Together with inefficiencies being resolved, we expect inventories to come down in H2 and be sufficient to support sales growth. Sales and taxes represent EUR 13 million and EUR 10 million, respectively, and CapEx was EUR 45 million, representing 5% of the core revenue.

As we highlighted before, this higher level supports our maintenance growth and transformation activities and will create important value and savings in the coming years. This led to an operating cash flow adjusted for one-off elements of plus EUR 18 million.

But then, we have also financing factoring and one-offs. So the cash out for financing was EUR 26 million, primarily interest payments, including the last coupon on the refinanced high-yield bond. And use of factoring facilities was reduced by EUR 9 million and came down together with the lower sales.

And then, we have one-off payments of EUR 23 million, primarily for the restructuring of our Belgian operations, finalizing the closure of the Eeklo plant in Q1 and for which we took the accruals last year.

Combined, this led to a negative free cash flow of EUR 40 million, which we expect to reverse in the second half of the year. And then we, of course, also received EUR 101 million net proceeds, mostly from the divestment of our Brazilian business in early April. This includes also the escrow, which was released end of last month. And note that this amount is still subject to the usual balance sheet adjustments and some transaction costs.

In April, we also finalized our EUR 1.5 million share buyback program to cover for long-term incentive plans. The program started in December '24 and totals EUR 12 million, of which EUR 11 million in '25.

On the next slide, you can see how the net debt came down by EUR 50 million. As just -- and also contains non-cash reduction of EUR 10 million. This latter is related to the divestment of our Brazilian activities containing some leasing. The leverage ratio increased slightly from 2.5x to just below 2.7x over the first 6 months with a reduction of the last 12-month EBITDA.

We remain well under our own internal limit of 3x and as well under the 3.5x covenant threshold. As you are well aware, we refinanced our bonds, repaying the outstanding EUR 580 million bond a year ahead of maturity, replacing it with a newly issued 5-year EUR 400 million bond. The delta was covered by the cash proceeds from the Brazilian divestment and the remainder by drawing on our EUR 270 million revolving credit facility. On the latter, there's still about 1/3 capacity, which combined with EUR 146 million cash gives us ample liquidity.

With this, I'll pass you back to Gustavo.

Several adverse events affected our first half results. Let me focus on how we expect things to change in the second half of the year. The 2024 price carryover has faded out, and we do not expect significant sales price declines going forward.

We have new contracts starting in North America, but also in Europe. Thanks to our positive contract gain/losses balance, and we have further prospects going forward. This will impact in the second half of the year.

We expect the customers' destocking to be largely over after quarter 2. We have new capacity coming on stream, allowing us to participate fully in growing product categories such as in Adult Care, but also others.

Next, the Segovia plant outage as well as the packaging materials' shortage is over. This should facilitate recovery of revenue with EBITDA benefiting more as the fixed cost absorption effect, which works against us with decreasing volume will turn in our favor.

On the cost side, the negative temporary mitigation measures will fade out, both for the supply chain inefficiencies and the U.S. tariffs. The anticipated cost for the production ramp-up in North America will be absorbed as volumes increase there in the second half with new contracts. And we expect new raw material price to decrease as can be seen already in the evolution of the indices and helped by a weaker U.S. dollar, which has a positive transaction effect. The higher EBITDA will benefit free cash flow as well as inventories, which we expect to reduce as volume pick up and efficiencies.

How does this all add up for the second half? On the next slide, please. The expected improvement from EUR 86 million to about EUR 120 million in the second half is expected to come half from revenue and actually entirely from the volume increase for the reasons I already mentioned, while we anticipate that consumer demand remains soft as in the first half.

The other half is from the reduction of the cost with 2/3 of that coming from continuous strong delivery from our cost transformation program, which will also benefit from growing volumes. The rest comes from a lower raw material price versus the peak in the first half of the year.

Operating costs are expected to be largely flat as the fading out of the temporary exceptional costs I mentioned are expected to offset the continued inflation of salaries and services. With this improvement, we expect the EBITDA margin to recover from just below 10% in H1 to about 12% in H2.

Adding up both brings me to the full year outlook on the next slide. Revenue for the year is now expected down by low single-digit like-for-like, which is based on a recovery from a 4% year-on-year decrease in the first half to a stable year-on-year performance in the second.

Adjusted EBITDA is now expected in a range of EUR 200 million to EUR 210 million, which represents an improvement from EUR 86 million to between EUR 114 million and EUR 124 million in H2.

Free cash flow expected breakeven, recovering the EUR 40 million outflow from H1. And all this will bring back our leverage to about 2.5x at the start of the year.

Let me finish with, while the first half of the year has been challenging, I would like to share with you the bigger picture of our transformation journey. In the past 3 years, we have made significant progress to improve the foundations of Ontex.

Our balance sheet is now healthy, thanks to the refinance and to divestments. We have significantly improved our innovation pipeline in the last 3 years. We are in the middle of a major step-up in terms of operational efficiencies, improving our footprint and our portfolio.

We continue growing fast in North America, and our company culture is shifting towards being a leaner, more performance-driven organization. While our journey is not yet over, significant progress has been made and it's critical to keep executing our strategy to create long-term value for our shareholders.

More than ever, I'm committed to successfully complete the transformation of Ontex. Thank you.

Let's now move to the Q&A. Before that, can I just ask you to identify yourself clearly and limit your questions to two, please. Over to the operator.

[Operator Instructions] The first question comes from Charles Eden from UBS.

Just on the EBITDA bridge for the second half. So on Slide 10 of the presentation, I don't know if it's meant to be at scale, but it looks like you're getting, sort of, a volume mix uplift sequentially of about EUR 10 million, maybe EUR 11 million, which would imply probably EUR 100 million step-up in revenues, assuming a sort of 10% margin. Is that all North America? Or are you baking in a sequential improvement in the underlying European market in the second half?

I'm just trying to understand how much of this is, because you are confident on the North American contracts coming in and maybe you've even started delivering and therefore, you have more surety? Or is there a genuine risk that if the European market doesn't improve, we get to Q3 and you're going to have to cut this full year guidance again?

Yes. All right. Thanks, Charles, for the question. The -- Answering your question is a mix between North America and Europe. We have new contract gains in North America. And also, we have new contract gains that we gained in last year for starting now delivering in Europe in the second half. So also includes new contract gains in Europe.

And also, we have some more prospects that they are not into the equation today, because there are good prospects, but they are not in the equation. And all in all, we have assumed that the market trend -- the market trends of the first half will continue that type of slow and soft market in the second half of the year. So we are not assuming a change in the market trend and growing market.

There is also an effect in that growth that it comes from a destocking from customers that has happened in the first half. And as you understand, destocking is a onetime destocking. And now, let's say, sell-in and sell-out, it should be much. It should not be a difference. So we are not assuming continued destocking, right, and reducing stocks.

So answering again, it's a mix between North America and Europe. And Europe also is important in terms of the gain and losses that we have for the second half.

I hope that I have answered your question.

Yes, if I could just ask a follow-up and just kind of linked to that. Just when you talk about revenues being in line with the second half of '24 for this year, could you maybe help us understand how you're expecting that to break down between Europe, which I guess you're implying is down and North America up? Is it North America up 20% and Europe down sort of mid- to high single digits? Is that how I should think about it?

Yes. So North America -- we expect in North America with double-digit growth and slightly down, single digit down in Europe.

The next question comes from Usama Tariq from ODDO BHF.

This is Usama Tariq from ABN AMRO, ODDO BHF. I have two set of questions. Firstly, being on CapEx. Could you explain to me if the Belgium payment has already been done? And what is the outlook for the one-off CapEx by the end of this year?

And secondly, on Feminine Care, I believe I read on the Slide 9 that you expect supply chain issues to be resolved. Is that with concerns to Feminine Care?

I will take the first one on, which is on our non-recurring expenses. So if you look at the first half of the year, this is mainly related to the closure of Eeklo. We announced it earlier, we did actually the closure before Christmas, but the redundancy costs and the final cleaning of the factory was in Q1.

So most of that EUR 23 million is all related to the closure of Eeklo. On Buggenhout, you know that we have provisions outstanding. And we expect in Buggenhout that about half of the amount will be in the second half of this year and half of it will be in the first half of next year. So take as an estimation for the rest of the year, about EUR 10 million to EUR 15 million that we still expect as non-recurring costs.

And that would be...

I'll take the second question up.

Sorry, I didn't understand what you said. Can you repeat?

So I said that, the EUR 10 million to EUR 15 million would be on a half year basis?

Yes, on a half year basis, it will be more -- yes, to the lower end between EUR 10 million and EUR 12 million, something like that. That's what we expect for the second half of this year.

So that means, also lower than the first half of the year, which is also an explanation why we believe the free cash flow in the second half of the year will be better, because proportionally, we have much more non-recurring in the first half than the second half.

And on the Feminine Care?

Moving on your Feminine Care question, the challenges that we have in the first half on the supply of Feminine Care has been solved. And those challenges were, let's say, from two fronts. One, we have an unfortunate event of a flooding of a big rain in Segovia in our plant, which has a big provoke, a big disruption on the supply chain of Feminine Care product that in Segovia, we have a strong supply production of Feminine Care there.

And then, also from sourcing of packaging for Feminine Care specifically, which affected some of our lines in the sourcing of packaging that also has been resolved. And those two challenges has been resolved. So we are not expecting any other -- we are not -- today, we are not facing any challenge in Feminine Care sourcing.

Our next question comes from Karel Zoete from Kepler.

I have two questions. The first one is with regards to your H2 guidance, you guide for no further deterioration of pricing there. I was wondering what's the visibility you have on price realization in the second half of the year and particularly later this year, because here the promo intensity was a bit of a surprise, I think, to everybody in the first half. So what gives you the confidence that promos and net pricing will be less severe in H2?

And then, the other question is on the payback of Belgium, because that's been a big restructuring with almost 400 employees within the company. Are those benefits now already visible in your cost lines? Or is this more something that will be visible in the second half of the year?

Thank you for your questions. On the -- Today, most of this pricing, negative effect that we have in H1 are carryover from 2024 pricing, because we have this in the second half of 2024 and not in the first half of '24. So when we compare first half of '25 versus first half of '24, you can see that difference is price decreasing.

The price decrease that we effectively done in 2024, in second half '24, it was related to the reduction of raw material experience in the second half of '23. I know that it sounds like we are playing on the halves, but that's exactly. So there is always a lag.

And I'm trying to explain that without being able to write it down in a paper to you, so it's difficult to follow perhaps, but I can keep explaining. But second half '23 raw material decrease made us drew our price discounts in adjustments in the second half of '24, which now compare with our first half of -- the carryover in '25 versus the first half of '24 that was in plain prices, that's why it's the negative effect.

So that carryover has fade out already. It's not there anymore. So to your point, I guess that your question also is related to, if we are expecting a more price intensity or promotional activities from A brands. I think that, yes, probably it will continue some. But we have to -- if I go a little bit more detail without mentioning any type of brand, we do know which is the brand, the A player in Europe, very clear. That A player in Europe closed their balance sheet in the first half of the year, right? So they have a close in the June 30.

So the importance of bringing back some market share into their results is relevant. So normally, what we have seen in previous year is that there is a very intensified promotional activity, and they were coming from a low market share. So it's intensified in the -- what we call our first half, their second half. So we are expecting activity from the A brand. We are not saying not. So it is expected, but not as intense as in the first half for us.

I hope that I answered the question, Karel.

Yes. Yes.

Then I go to the second question on the Belgium footprint. There, we have, on one hand, the closure of Eeklo and the other hand, the transformation of Buggenhout. We can confirm that the business cases, as we explained a year ago, they all have an attractive payback of less than 3 years. And for us, the business cases stand. So that means that we're doing the work in line with the business cases.

Now when does it kick in, in the results, because that's actually your question, Karel. First of all, on Eeklo, I can say if we report on our cost transformation program, we include the savings of Eeklo. So that means, they have been realized actually. So we have -- we added that saving in the first half of the year.

But I have to put a nuance, of course, the first months, we had a lot of cleanup of the factory. We had to move lines. So we had some cleanup costs. We had some inefficiency costs because of that. So the savings, we added them, but there were also some one-off costs. So that's part of the inefficiency that will now -- has now completely disappeared.

On Buggenhout, there, we do not yet have the savings. So the transformation is completely ongoing at this moment. The factory, we are completely changing them. And there, it's -- the savings will be more coming in the first half of next year.

And there, I should say, we also refer to the -- in the press article, we're working in line with the business case. We're very confident on that, but there are some delays, which are completely related to the fact that some of the equipment we ordered is coming in a bit later than expected, which often happens, of course, if you order equipment. But we're progressing well, and we're still confident to make it happen the first half of next year.

[Operator Instructions] The next question comes from Maxime Stranart from ING Bank.

Maxime Stranart from ING. I hope you can hear me well. Two questions from my end. First of all, I have a hard time reconciliating your guidance for the second half. So you mentioned in the presentation that you expect volume growth of 5% to 9%, stable pricing, but at the same time, you mentioned in your press release that you expect revenue in the second half to be stable. So if you could clarify that first.

Secondly, looking at your free cash flow guidance, you've cut basically your EBITDA guidance by EUR 20 million, EUR 25 million. You have cut your free cash flow guidance by a much more -- much higher level than that. So could you elaborate on what would be the building blocks to reconcile that change in free cash flow guidance? That would be all for me.

Maxime, thanks for the questions. I take the first one, perhaps to avoid confusion. The guidance we give is of always as compared to the previous year. So that's the way we look at it. And then, if you -- I think, if you take the bridge on Slide 10 that Gustavo explained where we -- you see the increase of EBITDA there, the volume mix, it's an improvement of H2 as compared to H1. So that's important to know.

The bridge we show is to show you how H2 is better than H1, because there are a lot of causes that H1 was lower and that disappear, what Gustavo explained. The guidance, of course, is as compared to previous year. Does that clarify?

Yes, it does.

So actually, it means that in the second half of the year, we pick up to the -- in fact, to the original plan to where we were.

Then the guidance is the full year, right? And then, there's an average of first half and second half. So that's why it looks flat in revenue stable on the full year, but coming from a decrease in volume in the first half and an increase in volume on the second half.

And then on the free cash flow, just to go a bit in the components, the first half of the year, we are at minus EUR 40 million. The second half of the year, we believe to be able to reverse that. That means plus EUR 40 million. Where does that plus EUR 40 million come from? It's, of course, first of all, the higher EBITDA.

Secondly, the working capital, I briefly explained also that in inventory, because of the inefficiencies of the first half of the year, we were not able to lower our inventory. Our inventory was stable, and we believe that we can do the sales growth with the current inventory and even improve them in the second half of the year when the inefficiencies fade away.

So there's an improvement of working capital in it. And then there is the proportional element, what I said before to one of your colleagues that the non-recurring parts in the second half of the year is lower than the first half.

And that's also related to the interest because, of course, with the high-yield bonds, we had our financing fees in the first half of the year. We had the settlement of the interest on the high-yield bond. So that explains the EUR 40 million, of the second half. But then you said that EUR 40 million, it's higher than the improvement of the EBITDA. It's because there are other components in it, like EBITDA, non-recurring. So that's the full picture.

Maxime, if I may, just to clarify again about the revenue. In the second half, we have a volume growth versus the first half and mainly due to new contracts that they are already in, right?

Now we are in July, we are already starting with delivering on those new contracts that we have in North America and in Europe. And also, as I explained before, it's not just those new contracts, but at the same time that we are not expecting that they are going to continue any of destocking. So the destocking has been done from the customers. Now we are going to balance our sell-in and sell-out with the customers. Therefore, there is an improvement between H2 on a fact base versus H1.

The next question comes from Markus Schmitt from ODDO BHF.

I have just a question on the -- on your liquidity situation. On Page 8, you say that the RCF is utilized for 2/3. I think you mean that it's -- that is the unutilized part, right? I mean, you have about EUR 180 million undrawn. Is that the right way to read it?

Yes, it's 1/3, which is not drawn. That's how you have to read it.

Out of the EUR 270 million.

Out of the EUR 270 million.

So the EUR 270 million, you have EUR 180 million drawn then. Is that, that is what you say?

Yes, that's what we say.

Okay. I'm just puzzled a little bit. Where is it coming from again? I mean, the pro forma the refinancing, I think you had EUR 24 million -- sorry, in cash -- sorry, in drawn RCF. And now it's at EUR 180 million. What was the delta here again? Or what was the reason for that? Maybe I can get...

What I propose is that, we take that offline, because it's -- there's, of course, a whole mechanics that's causing at this moment with the high-yield bonds and that might -- I think, I have to give a bit more technical explanation on how the repayment is done and it gives a temporary difference in reconciliation. So we can take that offline.

Yes. But then, maybe one easier one. I mean, in cash on hand, it was about EUR 146 million, and you mentioned the escrow. Is that included in the EUR 146 million? Or is that not included?

The escrow is actually paid out from Brazil. So that cash is included, yes. And it has been received, I think, only 2, 3 weeks ago, yes. So it's still there in cash.

[Operator Instructions] The next question comes from Charles Eden from UBS.

Just a couple of follow-ups. So just on the guidance, flat like-for-like-ish in the second half. So you did EUR 945 million sales in core markets second half of '24. I appreciate FX is a bit of a headwind year-on-year on translation. But let's say EUR 9 million -- let's take EUR 10 million of that, so EUR 935 million or EUR 936 million. Midpoint of the second half EBITDA guide is EUR 120 million. So you're basically saying on that math, you're going to do a 12.8-ish EBITDA margin.

So I guess, no reason -- is there any reason to think that wouldn't be the minimum you can do in '26? Given if that's the exit rate and you're still going to take cost out, raw materials as you put out on pulp -- fluff pulp are coming down a bit now sequentially. So that's the first one.

And then a similar type of question on free cash flow. EUR 40 million in the second half. Okay, we've got to think about working capital, et cetera, as the business grows. But let's say, EUR 60 million, EUR 70 million, is that sort of how you're thinking of?

And again, you will guide for '26 at the end of the year, but is there any reason why that shouldn't be the base case? And then obviously, that's sort of implying a double-digit free cash flow yield on where the equity is today. Is there anything incorrect? Or what am I missing in that thinking?

Yes. On the first one, so yes, it's -- we have, of course, in the guidance, a min and a max. So we believe indeed we can be above the 12% in the second half of the year. And yes, we don't give any guidance on '26, but I think it's logical that our ambition is to work further with that figure. And we -- with all the further transformations we are doing, we have the ambition to further improve the margin in the coming years. So that's what I can tell about that one.

And on the free cash flow, there, if we refer back on how we reported on it in the past, important to know you will have, of course, your EBITDA level, which is key. On working capital, we don't see that big movements anymore in the future. We will -- we expect to further grow, but we can do it with the current working capital level. Only factoring, of course, will help us a bit because this factoring was coming down now with the revenue, factoring will go up with the revenue.

And then important is that towards the future and the non-recurring will gradually fade away, as I told before, we still expect on Buggenhout in the first half of next year, an amount of a bit lower than EUR 10 million probably. That's what still will come, but that's the amount we foresee.

And then on the CapEx, as you know, that we always reported that we were having CapEx levels during the 3-year transformation of 5% to 6%, we want to go back to 3.5% to 4.5%. So that's the basis for us for next year, unless we, of course, start up with adjacent activities or really do additional extra growth, because normal growth for us, the normal growth of U.S., it's included.

We always told that in the 3.5% to 4.5%, it includes replacement, it includes improvements, and it includes normal growth. If we do, of course, something extra, then it might be we add some CapEx, but then it will come with an attractive business case, of course.

So Charles, if I may add to what Geert, well, explained, we are not going to give a guidance now for 2026, and I'm sure that you are not looking for that. But -- but your intuition, it looks like a good aspiration for us.

The next question comes from Karel Zoete from Kepler.

I have two follow-up questions. To start with the CapEx for extra growth. The way I understood it, is that with the investments you currently do in the U.S., you're able to get to a revenue base of maybe close to EUR 0.5 billion or so. I mean, is that still the dot on the horizon for the coming years or not?

And in relation to the U.S. market, you see that private label has been losing quite some share recently, but also that a couple of other players are investing quite heavily in the market, they are Kimberly-Clark announcing a EUR 2 billion investment, First Quality, EUR 0.5 billion. How do you look more strategically at the U.S. market in the medium term with these investments in new capacity?

And then the other question, I guess, is on the clarification on cash flow in H2. So part of the cash flow you're going to generate is basically assuming that revenue growth will pick up and then you're going to increase factoring again. Did I understand that correctly?

Okay. I'll take the first question. In the U.S., our investments so far will cover future growth. And remember that we are talking about just Baby Care market. So we can continue double-digit growth with the current investment done in U.S. for Baby Care. If our plans also includes to move on a second category. And in that second category, it will require, of course, investments, right, in assets. But that's a different topic that we will present at the time that we will present it. It's not right now.

But answering to you the first part of the first question, which is about, if our investments are covering the ambition on growing sales and is scaling up the business, yes, it is. It is included there.

The second part of your question is about the extra capacity that competitors or A brand companies are making, they have announced that they will do in U.S. And that is related to them to the A brands. It's hard for me to talk about that. But not always. When companies are mentioning investments, not always represents adding capacity. It would be perfectly as in any cases in the past, it could be that you are replacing technology or you are doing investments in your footprint.

So I cannot talk for the competitors, even though it's A brands. So what I can say about retail brand is that me personally having meetings with the biggest retailers in U.S., all of them, they are super engaged in terms of developing the private label. And they are very, very pleased with what we are bringing to the table, how strategic we are becoming to them in terms of the innovation pipeline, in terms of our investments, our plans for growing in the categories, the experience that we bring from leadership in Europe, how can help them to do the same thing in U.S.

So the support from the customers is strong. Of course, that we will need to compete on shelf, but we are doing so successfully today. So we still have -- we are very, very confident on the opportunities and keep growing in U.S.

I hope that I answered your first question.

And then on the factoring, yes, that's straightforward the minus EUR 40 million in the first half of the year, we -- yes, the factoring lines decreased with about EUR 9 million. So we went down below the EUR 170 million in factoring lines. And in the second half of the year, when the revenue is restored at the level of end of last year, then typically, because we didn't change anything in our factoring lines, then we go back to the level we ended at the end of the year. So the minus EUR 9 million will more or less be compensated, and we will be part of the positive in the second half of the year.

There are no more questions at this time. So I hand the conference back to the speakers for any closing remarks.

Thank you. Thank you very much for the questions. Thank you very much for making the call for those that attended. And let me close with a message like this weak second quarter, while disappointing, will not derail us from our strategic journey. We are steadily progressing and deliver results step by step. The reshaping of our portfolio and the strengthening of our balance sheet have been largely realized.

The innovation pipeline has been strengthened and will continue to deliver. Our business in North America has demonstrated fast growth on our pursuit of scale, and we have taken major steps towards best-in-class operations. These structural changes will gradually improve our resilience to market fluctuations.

Thank you very much, and see you soon.