Aquafil (ECNL) Investor update summary

Financial performance and efficiency improvements

• Group volumes increased by 10.7% in H1 2024, with strong growth in Europe (+20.8%) and Asia Pacific (+13.8%), but weaker performance in the US market.

• EBITDA for H1 2024 reached EUR 32.6 million (11.3% margin), up 78% year-on-year in Q2, reflecting a positive trend in profitability.

• Net financial position improved to EUR 243 million at June 30, 2024, the lowest since December 2022, with NFP/EBITDA LTM ratio at 4.98.

• Headcount reduced from approximately 2,800 to 2,400, and inventory volumes decreased by about 20% year-on-year.

• Capital expenditures were halved in H1 2024 compared to the previous year, supporting financial targets despite slightly lower EBITDA.

Strategic initiatives and growth outlook

• The 2024–2026 plan targets EBITDA of EUR 65 million in 2024, EUR 80–87 million in 2025, and EUR 90–96 million in 2026, with net financial position improving to EUR 157–167 million by 2026.

• Growth is expected from volume recovery in the US (post-competitor exits), steady gains in Europe, and capacity-driven expansion in Asia, especially with new OneStep technology.

• Capital increase of EUR 40 million is planned to fund expansion, with major shareholder committed to its pro quota share; strategic investors may also participate.

• Planned investments include EUR 30–35 million in ordinary CapEx and EUR 60–65 million in growth/innovation, focusing on Asian plant expansion, OneStep technology, and automation.

• No dividend distribution is planned during the period.

Market and operational assumptions

• Pricing and raw material costs are assumed stable at H1 2024 levels, with margin reserves built in due to recent raw material price increases.

• Volume growth is mainly attributed to competitor exits and market share gains, rather than broad market recovery.

• Efficiency measures include further automation, consolidation of Asian operations, and optimization of the carpet recycling process, with targeted annual cost reductions of EUR 4–5 million.

• Debt covenants remain unchanged at 3.75x net debt/EBITDA, with waivers in place for 2024 and compliance expected by year-end.

• IFRS 16 impacts net financial position negatively but boosts EBITDA due to lease accounting; major lease-related investments include the Slovenian cogeneration plant.