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Esther Berrozpe: “Ontex will not wait until June to remedy its debt”

Esther Berrozpe, new boss of Ontex, wants to complete by June a passage under the magnifying glass “without taboo” of the activities of the manufacturer of nappies. Goal? “Simplify”.

Free fall stock price since 2017, shareholder bloodshed, sharply rising commodity prices, growing competition, margins under pressure, problematic debt, downgrading to the rank of “speculative” investment by the agency Moody’s, result alert… there is no denying that there are no shortage of challenges for the new CEO of Ontex

, Esther Berrozpe, boarded on January 1st.

Improved sales in the spring

The Ontex annual figures are broadly in line with expectations. The Belgian specialist in disposable personal hygiene products saw its turnover decrease by 8.5% to 2.1 billion euros.

3% of this drop is “organic”, the result of fierce competition from players like Kimberly-Clark, Essity and Procter & Gamble. The remainder can be attributed to unfavorable exchange rates, in particular the fall of the Brazilian real and the Mexican peso. Their sudden drop in fact devours income in the crucial markets of Mexico and Brazil when converted into euros.

However, thanks to the savings implemented, Ontex was able to limit the decline in its gross operating surplus (ebitda) at 3.9%, reaching 235.6 million euros. Thus, the group was able to slightly increase its profit margin, from 10.7 to 11.3% between 2020 and 2019.

Net profit amounted to 54 million euros, or 0.67 euros per share. To note: no decision on the payment of a dividend has yet been taken at this stage. “The board of directors will decide ahead of the general meeting,” said Ontex.

For 2021, the new CEO, Esther Berrozpe, is cautious. Given the difficult basis for comparison, it expects an organic contraction “of at least 10%” this quarter. Sales should pick up from the second quarter, or in the spring.

It is not yet clear whether this will translate into a recovery in margins as well. Ontex is also grappling with the rising commodity prices. Steps will be taken to remedy this.

On the occasion of her first interview, the interested readily admits: “the situation is quite delicate” for the specialist in disposable personal hygiene products. But not new since the Hispanic-Italian has been on board the board since May 2019 already.

The deal is simple: Ontex “underperforms compared to its competitors and has not met its commitments, whether in terms of international investments or investments in new product categories “, analyzes the new boss.

Fortunately, the situation “can be fixed”. A strategic review was initiated in this direction in August last under the leadership of the new chairman of the board, Hans Van Bylen, who replaced Luc Missorten in May last year. The CEO will continue the exercise. With the idea of ​​arriving at a concrete action plan “by June”.

In the program, four major sites are on the agenda. On the one hand, the “portfolio will be reviewed, from A to Z “, with the idea of” simplifying “, but also of” projecting towards the future “;” there are no taboos “. Two, Ontex will have to” reconnect with a certain pace of innovation“. Three, work will be carried out to” tend towards a form ofoperational effectiveness“; and for good reason,” while our size – two to four times that of our pursuers – should give us the opportunity to have the best costs, we are no longer there. “From four, finally, the customer proximity will be put back on the table, “because we have somewhat lost this focus, and with it market share in Europe in particular, which is our main market”.

“The portfolio will be reviewed. The idea? Simplify, but also project into the future”

Esther Berrozpe

CEO of Ontex

The task is huge. Especially since work will also be carried out on the culture of the company, which “must be more performance oriented“and will go through a” new remuneration policy “(including the CEO, Editor’s note), just like on issues of environmental, social and governance responsibility, where Ontex” must make clear choices “.

But some decisions could be made upstream, on the model of the appointment of a new boss for Europe for example, or the process of recruiting a new CFO, which is underway at the moment. The question ofdebt is therefore one of the urgent issues to be resolved..

Indeed, a term loan of 600 million and a line of credit of 300 million expire next year. Analysts estimate that over the next 18 to 24 months, the debt will be 4.5 to 5 times the annual gross operating surplus (EBITDA). Clearly, Ontex is in a danger zone and refinancing is urgent. “We won’t wait until June to fix it“, promises Esther Berrozpe.


Easy to come and announce all this today, when the boss could have weighed upstream when she was on the board? “Most of the important decisions that have been made are before I arrived. So, could I have applied more pressure as an administrator? I did my introspection… We need more openness and transparency. I’m not saying it wasn’t, but I don’t think the board had all the pieces of the puzzle in their hands. Which made it difficult for him to add value “.

Ten-figure deal missed

Accusing the blows but running for a ten-digit takeover, the situation is far from ideal. However, according to our information, Ontex – like his challenger Drylock from Ontex veteran Bart Van Malderen – was fine one of the candidates for the acquisition of the hygiene division of the American Domtar, a transaction of approximately 1 billion. But the Aalst group had to take a step back in favor of the investment fund AIP at the beginning of January.

“I do not can neither confirm nor deny that we have been active on the file, “says Berrozpe.” But I agree: for the moment, we do not have the means to do such an operation. It would be very risky. “

Despite Ontex’s precarious financial situation, Berrozpe says it remains open to acquisitions if they allow it to accelerate its strategy. “However, first we have to get our house in order and become an efficient machine.”

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