Slide 1: Investor Update
INVESTOR UPDATE 15 December 2021 Investor update - 15 December 2021 1
Slide 2: Forward-looking statements
FORWARD-LOOKING STATEMENTS This Presentation may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management’s current intentions, beliefs or expectations relating to, among other things, Ontex’s future results of operations, financial conditi
Slide 3: Strategic Update
STRATEGIC UPDATE Esther Berrozpe Chief Executive Officer Investor update - 15 December 2021 3
Slide 4: What's on management's agenda today
WHAT’S ON MANAGEMENT’S AGENDA TODAY Major steps taken in Management focused strategic priorities on execution Portfolio review finalized Top-line stabilized and execution started Significant cost savings realized Savings program extended and accelerated Strong cash discipline Investor upda
Slide 5: Facing unprecedented input cost inflation
FACING UNPRECEDENTED INPUT COST INFLATION Index evolution [1] Main raw material indices rose by 40-80% [2] in 2021 Other raw material price indicators, such as cardboard and plastic packaging, rose >50% [2] Other operating costs, such as energy and transport costs, are significantly up 2011 20
Slide 6: Addressing the headwinds with extended cost program and pricing
ADDRESSING THE HEADWINDS WITH EXTENDED COST PROGRAM AND PRICING Intensify & accelerate Pricing to mitigate Cost savings program inflation Intensify delivery of savings plan with Early positive signs in the market cross-functional organization and revised ▪ A-brands in US have risen prices 5-10%
Slide 7: Mid-term targets validated, timing influenced by input costs
MID-TERM TARGETS VALIDATED TIMING OF SUCCESS INFLUENCED BY INPUT COSTS Our portfolio choices will Revenue LFL CAGR [1] Adj. EBITDA margin Leverage ratio change the scope +2-3% 12.5-13.5% < 3x by 2023 vs -4% CAGR vs 11.3% in 2020 vs 3.6x end 2020 over 2017-2020 Allowing to reach objectives by 202
Slide 8: Portfolio built on key strengths, focus on partner & healthcare brands
PORTFOLIO BUILT ON KEY STRENGTHS FOCUS ON PARTNER & HEALTHCARE BRANDS Channels PARTNER & HEALTHCARE Strengthen core competence of partner BRANDS brand manufacturing Geographies Growth Leverage on scale & one platform setup EUROPE PANTS, & NORTH ADULT & ECO Invest in profitable growth opportuni
Slide 9: Defining core and non-core businesses
DEFINING CORE AND NON-CORE BUSINESSES 2020 EUROPE & €1.43bn Revenue NORTH AMERICA 13% Drive growth & mix Adj. EBITDA margin Europe Significant market segment for partner Invest in product North brands with future growth innovation, America opportunities Turkey services and Algeria Pakistan S
Slide 10: Focus on supporting growth in Europe & North America
FOCUS ON SUPPORTING GROWTH IN EUROPE & NORTH AMERICA Turn around Europe Sustain double-digit growth Strengthen leadership position as partner of in North America choice for retailer brands Build on our strongholds in retailer and lifestyle brands Drive market in fast-growing product segments,
Slide 11: Partner Brands Focus
PARTNER BRANDS FOCUS Laurent Nielly President Europe Division Investor update - 15 December 2021 11
Slide 12: Retailer brands: a unique business model
RETAILER BRANDS A UNIQUE BUSINESS MODEL Contracts & Product Different Customer tenders focused levers specific based Investor update - 15 December 2021 12
Slide 13: Examples of our partnership model
EXAMPLES OF OUR PARTNERSHIP MODEL Fueling the virtuous circle Owning back the right to play Patiently rebuilding Demonstrating Selectively relationship and ability to win investing to Brand Building via trust together accelerate Leading powerful consumer innovation to activations, online and offline
Slide 14: Identified pools of profitable growth
IDENTIFIED POOLS OF PROFITABLE GROWTH Outperform in the Improve feminine Outperform in adult fast-growing markets care performance care, especially in of baby pants & through innovation & pants & light inco natural materials simplification Step-change online presence, supporting omni-channel strateg
Slide 15: We have strong growth ambitions in adult care
WE HAVE STRONG GROWTH AMBITIONS IN ADULT CARE Outgrow market by Category expertise and proximity with consumer and customers accelerating Retailer Brands while protecting our Healthcare leading positions Full product range and available capacity Innovative solutions: products & services Cost
Slide 16: New R&D / innovation approach with category/product platform approach
NEW R&D / INNOVATION APPROACH WITH CATEGORY/PRODUCT PLATFORM APPROACH AS KEY ENABLER TO ACCELERATE PACE Streamlined R&D Network Reorganized against global product & technology platforms and Local market adaptation teams Global platforms with intentional design for scale in strong collaboration w
Slide 17: Industrial Transformation
INDUSTRIAL TRANSFORMATION Vincent Crepy Chief Supply Chain Officer Investor update - 15 December 2021 17
Slide 18: Solid savings potential in cost base
SOLID SAVINGS POTENTIAL IN COST BASE 2020 cost base (in €M) €1.85bn total cost base Indexed raw materials ~10% ▪ 60% raw materials of which 40% linked to commodity indices Other raw materials ~10% ~40% ▪ 20% fixed costs Transformation Proximity to our customers, ~20% Transportation & 19 producti
Slide 19: 3 goals with clear KPIs to measure success
3 GOALS WITH CLEAR KPIS TO MEASURE SUCCESS GOALS MEASURES Competitive cost, ~4% ~5% 4-4.5% lower capex & of cost base NWC/ Capex inventories reduction / year [1] sales as % sales A-brands Product performance and Quality quality perceived by consumers at par with global brands Top tier customer Servi
Slide 20: 5 key levers to drive industrial transformation
5 KEY LEVERS TO DRIVE INDUSTRIAL TRANSFORMATION Infrastructure Processes Footprint Asset Sourcing & Design Operations Optimization Optimization Excellence Excellence Balanced total delivered Fewer, better utilized Step-up core capabilities Embed accountabilities cost and customer assets to r
Slide 21: Delivering results and stepping up the pace
DELIVERING RESULTS AND STEPPING UP THE PACE Gross cost savings Cash → ~4%/year on cost base conversion Driven by NWC Capex Raw Transfor- Transport & SG&A /sales /sales key levers materials mation cost logistics → ~5% → 4-4.5% €52M cost reduction [1] Footprint optimization + ++++ +++ ++ + +++ deliver
Slide 22: Financial Update
FINANCIAL UPDATE Peter Vanneste Chief Financial Officer Investor update - 15 December 2021 22
Slide 23: The supply crisis impacts short-term margins
THE SUPPLY CRISIS IMPACTS SHORT-TERM MARGINS MITIGATING MEASURES ARE BEING DEPLOYED Historically unprecedented input cost levels 15-20% estimated inflation vs 2020 Weighted average index evolution [1] Short-term margin pressure through inflation & supply disruption ▪ Starting in H2 2021, with hi
Slide 24: Top-line back to growth
TOP-LINE BACK TO GROWTH Turn around Europe Sustain Double digit growth in North America Current performance From -3.5% in 2017-2020 Based on solid track record demonstrates turning to +1-2% growth trend ▪ Overall stabilization in H2 Net customer gain-losses flat in ▪ US on growth track H2 20
Slide 25: Cost savings stepped up to mitigate inflation and drive margin growth
COST SAVINGS STEPPED UP TO MITIGATE INFLATION AND DRIVE MARGIN GROWTH Cumulative gross savings & related one-time cost (in €M) Stepping up savings Cumulative ~4% Already delivered €52M [1] in 1st 9 months of 2021, gross savings annual productivity or 70% of targeted €75M [2] for 2021 Delivered 155
Slide 26: Pricing, savings & divestments bring mid-term margin target within reach by 2023
PRICING, SAVINGS & DIVESTMENTS BRING MID-TERM MARGIN TARGET WITHIN REACH BY 2023 New Adj. EBITDA margin New > 15% Portfolio projects already started with advisors engaged 1.5-2.5pts 12.5-13.5% 11.3% -0.5-1pts 1.5-2.5pts margin upside through savings & divestments inflation, divestment growth pri
Slide 27: NWC and capex discipline lead to mid-term cash conversion >60%
NWC AND CAPEX DISCIPLINE LEAD TO MID-TERM CASH CONVERSION > 60% Net working capital Capex Cash conversion [2] New (in €M) (in €M) (in €M) 10.0% 2.1x 9.6%9.6% New 1.8x 1.8x 7.8% 1.7x New 60% >60% 6.2% 49% 47% 47% ~5% 1.0x 44% 4-4.5% 4.8% 4.5% 4.6% 5.1% 3.4% 200 224 220 177 128 (112) (104) (104) (106)
Slide 28: Leading to a healthy balance sheet
LEADING TO A HEALTHY BALANCE SHEET Financial debt (in €M) Gross debt New Leases (1,278) (133) (1,032) Other debt Derisking balance sheet (989) (101) (145) (125) (107) Bond Net Debt reduction in last 3 (104) Debt under years, to be continued (1,044) (580) covenant (741) Funding diversified Leve
Slide 29: Set for Success
SET FOR SUCCESS Esther Berrozpe Chief Executive Officer Investor update - 15 December 2021 29
Slide 30: Ontex set for success
ONTEX SET FOR SUCCESS Strategic review finalized Clear strategic choices and alignment of resources Addressing exceptional cost inflation environment With intensified savings program, pricing initiatives and cash discipline Mid-term targets remain valid on the new Ontex scope Ontex to become more fo
Slide 31: Q&A
Q&A Investor update - 15 December 2021 31
Slide 32: Thank you
THANK YOU Investor update - 15 December 2021 32