Ontex' Brazilian subsidiary hampers growth

Ontex has not profited from its Brazilian Hypermarcas acquisition yet. The addition still struggles and that has impacted the Belgian diaper manufacturer’s global growth.

Hit on growth

In itself, Ontex has shown decent results for 2017: the baby product manufacturer’s turnover grew 18.2 % and generated a 266.4 million euro profit, but the company was not entirely satisfied because it had hoped to achieve more with its Brazilian and Mexican acquisitions.

Ontex Brazil in particular, created after it acquired Brazilian Hypermarcas in March 2017, lags behind and has had a negative impact on the Ontex group’s profitability. The group managed a 11.3 % profit growth instead of a 12 % increase.

Growing pains

In the third quarter, the company indicated that resource prices and exchange rates impacted the Brazilian division’s performance. Ontex Brazil also handed out discounts far too easily and did not reflect those in its accounting, which cost its parent company 15 million euro.

That was the final straw for Ontex CEO Charles Bouaziz, who immediately intervened in the Brazilian division’s discount policy and approach. “We eradicated Ontex Brazil’s growing pains as quickly as possible and are still confident about its growth potential”, Bouaziz added.

Ontex paid 286 million euro to acquire Brazilian Hypermacas last year as part of an overall strategy to become one of the five largest hygienic, disposable product suppliers in the world by 2020.