S&P lowers Ontex

S&P said it lowered its ratings on Ontex Group NV and its €580 senior unsecured notes due 2026 to B from B+.

“Ontex's weakening profitability is pushing leverage to an estimated 9x in 2022, which is not commensurate with a B+ rating. The high inflation and volatility of raw material prices, in particular oil-based derivatives, fluff pulp and energy, will lead to a deterioration of Ontex's profitability in 2022. Therefore, we have revised our forecasts and expect the company's S&P Global Ratings-adjusted EBITDA margin to contract to 4%-5% in 2022, from 6.5% in 2021 and 10.2% in 2020,” the agency said in a press release.

S&P said it estimates Ontex’s S&P Global Ratings-adjusted debt to EBITDA to climb to about 9x in 2022, compared with its previous estimate of leverage near 5x-6x.

The outlook is negative.

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