Ontex delivered Q4 22 and FY 22 earnings in line with budget today (1 March 2023). The earnings call at midday UKT offered a first chance to hear from new CEO, Gustavo Calvo Paz. There was regrettably no tangible update on the progress of the disposal of non-core assets, however the company confirmed that talks with AIP, owner of peer Attindas, have ended. This puts to rest close to ten months of speculation around a possible merger of the brands and takes the possibility of early redemption of the bonds off the table for now.

Positively, pricing and cost savings eventually outweighed input cost inflation in Q4 22, with revenues and margins also boosted by volume growth. Similarly, there are good signs of structural tailwinds with retailer brands gaining market share in Europe in H2 22 and Ontex outpacing this market share gain in baby pants.

Management’s “prudent” FY 23 outlook is a little underwhelming but nonetheless points to decent and important de-leveraging and a continuation of stronger margins seen exiting FY 22. There is work to do to improve visibility into North America expansion plans and the company’s acceleration of its vague strategy, but the CEO has promised more in this regard in the near-term.

Ontex’s €580m 3.5% 2026 SUNs are up around one and a half points to 88.7-mid as of writing, yielding ~7.7%. The share price is up a little over three and a half percent to €7.76 for a market cap of €639m.