Ontex Group has finalized its 2025 financial year, describing the period as a challenging phase where results met the company’s latest reviewed outlook but remained significantly below initial expectations. In response to these performance hurdles and market conditions, the company has initiated a strategic review to identify further value creation opportunities while setting concrete priorities for the upcoming fiscal year.
The financial results for 2025 reflect a year of significant contraction, with revenue falling 4.9% on a like-for-like basis to €1,762 million. This decline was attributed almost entirely to lower sales volumes, particularly within the baby care category. Adjusted EBITDA for the year was €176 million, down from €223 million in 2024, resulting in a margin contraction of 2.0 percentage points to 10.0%. This margin pressure was driven by the loss of revenue and the subsequent impact of lower fixed cost absorption. The company also reported a negative free cash flow of €(25) million, a notable shift from the positive €48 million reported in 2024.
Despite the challenging operating environment, Ontex successfully reduced its net financial debt to €577 million by the end of the year, down from €612 million at the start of 2025. This reduction was largely driven by the net proceeds from the divestment of its remaining Emerging Markets businesses in Brazil and Turkey, which together generated €131 million. However, because of the lower adjusted EBITDA contribution, the company's leverage ratio increased from 2.46x to 3.29x.
The operational difficulties in 2025 were compounded by a variety of external and internal factors. The baby care segment experienced a 12% volume drop for the year, with an even steeper 16.7% decline in the fourth quarter. This was driven by a combination of declining birth rates, lower consumer confidence in Europe, and intense promotional activity from branded players that disproportionately affected retailer brands. Additionally, the company faced supply chain constraints, including an outage at its Segovia plant and the unavailability of specific packaging materials during the first half of the year.
In response, Ontex accelerated its cost transformation program, which delivered €69 million in net savings—a 5% efficiency gain in operating costs that helped mitigate the impact of raw material inflation and temporary inefficiencies. The company also reached significant milestones in its long-term strategy, including the opening of a new R&D center in Segovia, Spain, and the launch of 14 major product and packaging innovations throughout the year. Furthermore, Ontex refinanced its debt by issuing a €400 million high-yield bond maturing in 2030, which replaced a previous €580 million bond.
Looking ahead to 2026, Ontex anticipates that market conditions will remain difficult, with continued soft demand in the baby care sector and persistent promotional activity. Despite these headwinds, the company has set clear, ambitious goals for the year. Management is targeting an approximate 10% increase in adjusted EBITDA, supported by a largely stable revenue base and further net efficiency improvements. Ontex also aims to turn free cash flow positive and bring its leverage ratio down to 3x or lower by the end of the year.
The company expects performance to improve gradually as the year progresses, underpinned by the ongoing ramp-up of recently secured contracts and an extension of the cost transformation program.
