Analyst Wim Hoste lowers his 2022 EBITDA earnings forecast for Ontex’s core markets
. Previously he had assumed 111 million, but now he reduces it to 101 million. The price target of 12 euros and its buy recommendation remain. The reason for the lower outlook is that its peer Essity recently reported seeing an increase in additional costs, forcing it to raise prices further.
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Exposure to gas prices is very limited, because Ontex does not use it in the industrial process.
Wim Guest
Analyst at KBC Securities
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“We expect Ontex’s margins to start improving in the second half of the year thanks to strong sales, rising prices and cost savings,” said Hoste. The diaper maker has suffered from severe cost inflation in the past few quarters, which it simply couldn’t pass on due to long-term contracts. “We think margins will gradually recover over time.”
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Also note that exposure to high electricity prices in 2022 is limited, he continues. ‘This is almost completely solved and only includes 2% of the total costs. Furthermore, the exposure to the skyrocketing gas prices is very limited, because the company does not actually use it in the industrial process. ‘
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The price target of 12 euros offers doubling potential. Ontex drops by 0.4 percent to € 6.05.
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