2023-10-27 12:10:21 ET
Ontex Group NV (ONXXF)
Q3 2023 Earnings Conference Call
October 27, 2023 6:00 AM ET
Company Participants
Geoff Raskin - Investor Relations
Gustavo Calvo Paz - Chief Executive Officer and Interim Chief Financial Officer
Conference Call Participants
Markus Schmitt - ODDO BHF
Wim Hoste - KBCS
Charles Eden - UBS
Fernand de Boer - Degroof Petercam
Karine Elias - Barclays Bank PLC
Patrick Folan - Barclays
Salomé Charamelet - ABN AMRO ODDO BHF
Karel Zoete - Kepler
William Dennis - Bank of America
Presentation
Geoff Raskin
Good afternoon, everyone, and thank you for joining us today. I'm Geoff Raskin from Investor Relations and I'm pleased to have with us Gustavo, our CEO, to present the third quarter results.
Before that, let me remind you of the Safe Harbor regarding forward-looking statements which I will not read out loud, but which I assume you will have duly noted.
Gustavo, over to you.
Gustavo Calvo Paz
Thank you. Thank you, Geoff. Good afternoon, everyone. I'm here on my own, but I'm relieved that next time I will be accompanied by our new CFO, Geert Peeters, who will join us in December, as you most likely have read in yesterday's press release.
Meanwhile, I'm very pleased to report our quarter three figures demonstrating continued improvement in our operations and confirming the turnaround of the Company's performance and improved financial structure.
Moving now to slide four is the summary of our main achievements. In our core markets, we delivered 10% like-for-like revenue growth, delivering an adjusted EBITDA margin of 9.5%, a 4 percentage points increase, compared to the third quarter of 2022, strengthening the year-to-date performance of 9.4%, driven by sustained prices and operational efficiencies where our cost transformation program continues delivering cost savings. The strong EBITDA generation, including also a strong contribution from our discontinued Emerging Markets, drove our Group leverage down to 3.6 times less than half the peak of 7.7 times we recorded exactly a year ago.
Moving now to slide five, providing details of the revenue of our core markets evolution from quarter three last year to this year. Volumes grew by 3% this quarter in both business units, Europe and North America. In Europe, retail brands continue to gain share. The main driver this time was adult care, where we see more market demand for retail brands.
Ontex sales benefited from this trend by continuing to grow volumes in priority categories where we can differentiate more from the competition. The growth was most pronounced in adult care and baby pants. In North America, which constitutes our biggest growth opportunity, we are reconnecting with double-digit growth again. The destocking of lifestyles brands customers in the first-half is over.
And more importantly, our new leadership team's initiative are starting to delivering new business for Ontex North America, seeing the result of new retail brand contracts wins. Price were up 8% overall. While these are largely based on the pricing gradually implemented throughout last year, we're managing them closely, resulting in sustaining the price level of the first half of the year. Finally, we recorded a 5% adverse ForEx impact.
Now on slide six, we are comparing our quarter three core adjusted EBITDA versus last year with a strong increase of 81% reaching EUR44 million, driven by volume growth and continued cost transformation program contributing with EUR20 million and our pricing momentum supported by our goal to provide our customers with value through product innovation.
Cost inflation continues to have a negative impact by EUR12 million, but it has reduced significantly compared to the impact on the previous quarters. Raw material prices decreases versus the start of the year as indices came down. Year-on-year, however, the raw material cost is still higher by EUR5 million.
The impact of index changes takes some time to fit through the P&L and these indices are only a part of the price equation, being also subject to other cost factors as is the case for our own operating cost, which were up by EUR7 million reflecting wage inflation and energy cost among others.
ForEx had a highly negative impact of EUR21 million on the result. Even though these external elements were significant similarly to last quarter, they are almost fully offset by pricing contributing EUR33 million. But as you know, these do not cover the full inflation we absorbed since the beginning of the inflation spike starting in 2021.
On slide seven, you can see the evolution of our core adjusted EBITDA by quarters since 2022. Since mid-2022 now, four or five consecutive quarters, we have been growing our core adjusted EBITDA, recovering gradually, but steadily from the cost inflation spike. Our delivery so far this year is double that of the last year. This is also reflected by the margin which has doubled compared to the first half of 2022 to more than 9% consistently this year and in line with the high end of our initial guidance.
The margin came down slightly in quarter three compared to quarter two, and this is mainly due to some exceptional one-off energy costs in North America following the carving of the Tijuana operations. These costs are temporary and will have ended by 2024.
Moving now on slide eight. Our cost transformation program is an important driver of -- for the EBITDA improvement and critical pillar of our value creation model. The program was initiated towards the end of 2021. And in 2022, we delivered operating efficiencies in our core operations of close to 5%. And now in 2023, it's reaching levels above 5%. This is the result of the acceleration of our strategy execution with continuous improvement in all fronts, procurement, supply chain, manufacturing efficiencies like OEE, as well as from R&D on its new innovation program.
On slide nine, you can see the evolution of the net depth and leverage of the whole group, including the contribution of our Emerging Markets division, which has been very strong in the quarter. We have meaningfully reduced our net debt in the year so far, mostly with the divestment proceeds from the sale of the Mexican business received in quarter two, which combined with a strong EBITDA from both our Core and Emerging Markets, have significantly reduced our leverage ratio to 3.6 times at the end of September.
This is less than half of the 7.7 times peak we recorded exactly a year ago and the best level achieved since 2020. And we have the firm's ambition to bring this farther down. Our working capital needs stabilized in the quarter, despite the still-growing sales. We successfully managed to improve our cash comparison cycle efficiency, especially through inventory management.
This created room for our capital investment program, now at a level above 4% of revenue in the quarter, increasing then consistently since quarter one. Our capital investment program is the enabler to our value creation plan by strengthening our innovation pipeline, gradually expanding the capacity in North America to support our high growth ambitions as we continue to increase our market -- increase our market penetration and transforming our European operations to become the most efficient in Europe, boosting our competitiveness.
The initial benefits are already visible in our results and this gives me high confidence to continue to improve our EBITDA margin in line with our ambitions.
Now moving to slide 10. We confirm our outlook for 2023. Revenue of core markets is still expected to grow high single digit like-for-like. The adjusted EBITDA margin of our core market is expected at the high end of our initial 8% to 10% range. And quarter four is to deliver the strongest margin in the year around 10%. Emerging Markets are expected to continue to contribute positively to our Group EBITDA and free cash flow.
We have already beaten our initial leverage outlook of 4 times set at the start of the year as well as the new one of 3.75 times set in July. We now intended to improve farther from the 3.6 times we realized in September. At the same time, we ensure our continuous investment level of close of 5% of revenue which will allow us to continue to improve our margins as per our plans to create shareholder value. This to support our innovation program, new business development in North America, and more efficient operations through our cost transformation program.
On the slide 11, to sum up, our Q3 results and 2023 delivery so far have been very, very encouraging. They show that the turnaround strategy at Ontex is delivering in all fronts, growing revenues, improving margins and overall profitability, and rebuilding our financial structure with significant reduced leverage.
We continue the momentum on refocusing the portfolio after the investment of the Mexican business. We reached agreements on the smaller Algeria and Pakistan business. And the profitability recovery in Brazil and Turkey is promising triggered to relaunch their divestment process. The acceleration of our strategy is well underway and the positive momentum motivates us all to continue with this journey as we still have much more to do.
Finally, I would like to thank all Ontex employees for embracing the accelerated execution of our strategic plans. I would also like to thank all other stakeholders for the support and confidence they have shown in non-taxability to deliver its turnaround.
I'm now available to answer your questions.
Geoff Raskin
Now, before we move to Q&A, can I ask all participants to clearly state their name and Company and also try to limit yourself to two questions to keep it manageable? Thanks a lot. Operator, over to you.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] The first question from the phone line state comes from Markus Schmitt of ODDO BHF.
Markus Schmitt
Yes, it's Markus Schmitt from ODDO BHF and Credit Research. I have just two questions. Thanks for taking them. The first one is on the cash flow in the quarter. I think you paid cash interest on the bond of EUR10.1 million in the quarter, but you had a use of cash of EUR16 million in the Core Group. Could you maybe reconcile the cash flow from the adjusted EBITDA level and also explain at what point you will produce a positive leverage free cash flow and where do you see this figure on an annual basis going forward?
And the second question is, if you could please tell, where do you see the net debt at the end '23, and what net proceeds do you expect from the Algeria and Pakistan divestments until year end? Thank you.
Gustavo Calvo Paz
Thank you, Markus, for your question. I have to say that I need to understand better your first question, please. Apologize.
Markus Schmitt
No, no. Sure. Happy to help. So I recognize that cash from June to September declined by about EUR16 million in the Core Group, yes. And since you do not provide a cash flow statement, I just want to understand how you get to that use of cash, yes. I mean, you had adjusted EBITDA of EUR44 million in the quarter. I know you had EUR10 million of -- to pay the coupon on the bond, I think in July.
And I think you mentioned also CapEx was about 4% when I'm not wrong on revenue in the period, but I try to understand the moving parts, how you get from EUR44 million adjusted EBITDA to a use of cash of EUR16 million in the quarter? So, that is my question. It can also be maybe taken offline later when it's better. I mean, it doesn't have -- it's not an -- I'm just curious. It's not in a hurry here.
Gustavo Calvo Paz
Yes, I know. I understand that we don't provide the cash flow right now, but our working capital has been flat.
Markus Schmitt
Yes.
Gustavo Calvo Paz
Throughout the quarter. The EBITDA has increased. Our CapEx also has increased. And yes, we still have a positive net.
Markus Schmitt
Okay. Maybe we can take that offline later on. I'm not 100% sure if I understand that bridge really, yes, but maybe more later. Maybe you can do the second question. So on the net debt at year end and the net proceeds from Algeria, Pakistan, maybe you can give some guidance there? That will be helpful.
Gustavo Calvo Paz
Yes, yes. Our -- yes. Our net debt is EUR652 million, EUR650 million is flat and that's for the -- we ended in the quarter. And the proceeds from Algeria and Pakistan are not relevant to consider for, you know, reducing that. A very, very marginal.
Markus Schmitt
Okay. So, so net debt as of now likely...
Gustavo Calvo Paz
EUR652 million, yes.
Markus Schmitt
Will likely be the same at year-end then obviously? Is that...
Gustavo Calvo Paz
Yes, yes. Yes, exactly. Yes.
Markus Schmitt
Okay. Thank you very much. Yes.
Gustavo Calvo Paz
You're welcome.
Operator
The next question is from Wim Hoste of KBCS.
Wim Hoste
Yes, good morning. I also have two questions, please. On -- the first one is on the Emerging Markets business. Can you elaborate a little bit on the performance? I think it was a very nice margin jump. How sustainable can that be? And also, what is this margin improvement, mainly Brazil related, as I understood? Yes, what does that mean for the disposal ambition you have? Can you maybe elaborate also on the, yes, the timing of that disposal process? How far are you in what kind of stage? Are you -- so those were the questions, please.
Gustavo Calvo Paz
Okay. Very good. So, on -- regarding the actual business performance in the emerging markets and the sustainability of that, we certainly believe on that because, yes, it's through strong cost savings that we -- and refocusing during this year on our portfolio and working on the cost savings there. And also we have made strong market gains, market share gains in certain categories where we have put the focus. So we certainly have the total confidence that are sustainable and we can keep always improving. So that's on the answer on how sustainable they are.
Yes, they are, you know, structurally -- structural changes in the way that we are doing the business in the emerging markets. And especially in Brazil with a strong recovery and making expanding the business in certain categories where we put the focus, launching new products and, yes, all that combined and a strong team that we have in place, good financial performance, good cash flow give us confidence also in the selling process that we are restarting.
So, how -- when do we see that? We are starting the selling -- the relaunch of the selling process at this moment for Brazil and for Turkey. And we are progressing -- we are start progressing during this year, the rest of this year. And, and yes, we have expectations for closing those prospects by '24 -- beginning '24. So we'll see how it evolves, but we are confident based on the results and the interest shown so far.
Wim Hoste
Okay. Understood. Thank you.
Gustavo Calvo Paz
You're welcome.
Operator
Our next question is from Charles Eden of UBS.
Charles Eden
Hi, Gustavo. Just one additional one from me, please, on the guidance for high single-digit sales growth for '23 in the core markets. Am I right in saying that is on a like-for-like basis? I think it is. And then if so, that would imply flattish or even a like-for-like sales decline in Q4 in the core markets. So given you should still see some positive year-over-year pricing benefit, is there an expectation for a volume decline we should be aware of in Q4? Or is this just a degree of prudence in the guidance on that metric? Thank you.
Gustavo Calvo Paz
No, no. So we are not seeing volume decline. Thank you, Charles, for the question. We are not seeing volume decline. We are confident on our volume to continue to keep growing. And as I was mentioning before in the presentation, we have a strong new businesses development in North America and also we are doing, you know, good progress and volume growth in our specific focus categories in Europe. So, certainly, we are not seeing volume decline. And, and yes, we are expecting the high end of this growth on the top line, yes.
Charles Eden
Great. Quick follow-up.
Gustavo Calvo Paz
Yes, go ahead.
Charles Eden
Thanks, Gustavo. Yes, just because I'm looking at the first nine months, core market [Technical Difficulty] like 13%. So I'm just sort of saying like is that just you just want to be cautious with a view to, you know, not over-promising and under-delivering, which may be on decks in the past?
Gustavo Calvo Paz
Yes.
Charles Eden
Is that really what you're trying to say? Not that we should be aware of any material impact on something in Q4?
Gustavo Calvo Paz
Yes. Yes, you are reading me very well. Yes, I've been, I've been trying to be prudent the whole year. I keep you behaving in that way. We are not seeing and I would not like you to think that we are seeing something coming in the wrong direction for us. No. You know, we are expecting continue to be strong in the revenue growth.
Charles Eden
Thanks, Gustavo.
Gustavo Calvo Paz
You're welcome.
Operator
Our next question is from Fernand de Boer of Degroof Petercam.
Fernand de Boer
Yes, good morning. Also, two questions. One, I think you mentioned that you had a kind of one-off in energy cost in the U.S. It's possible to quantify that. And then it was not entirely clear to me that you said we expect that to end by '24. Do you mean that it still runs until the end of next year or that it ends this year? That's the first question.
And then you had an, let's say, volume mix component of 3% this quarter. Well, the additional EBITDA of these sales was only EUR1 million, which looks very low to me. So what explains this low operational leverage on these additional sales?
Gustavo Calvo Paz
Okay. So on the energy cost, yes, it was specifically in our Tijuana plant that is located in Mexico. And as a result of our carving in the month of last May and in April, we did have -- we started to have an increase on the energy cost because of the new entity -- due to the new entity. And yes, it was impacting in a significant accumulated way from May altogether to the third quarter.
And then we are going to have us another portion on the fourth quarter of that energy increase. But we know we are all set to not have any more in '24. So it's not that it will continue in ‘24. We are all set to not have it. What I'm saying we are all set is we have our contract in place, everything set and the pricing for the 2024, which is different and has no debt surplus. That is for Tijuana or energy cost impacting.
Regarding volume mix 3% on the quarter and EUR1 million additional in the EBITDA, we have also the ForEx exchange rate impact and that has been significantly playing a role there to -- let's say, to not, I don't want to say minimize, but reduce the impact of that sales into the EBITDA.
Fernand de Boer
Can I then come back on this ForEx impact? Because that was minus EUR22 million, I think, in Q3.
Gustavo Calvo Paz
Yes.
Fernand de Boer
What could we expect in Q4? Because I'm always puzzled about this number. Because then one hand, you say we are hedged. And the other hand, we say we cannot predict currencies. But you know now what the ForEx is at the moment and you also know how you are headed on this. So…
Gustavo Calvo Paz
Yes, yes.
Fernand de Boer
I still don't understand how you arrive at EUR22 million for this quarter and then going forward, what does it mean for Q4 and maybe even in the first-half of '24?
Gustavo Calvo Paz
Yes, yes. So that we had a significant impact in Q3 coming from -- one impact was the ruble, our Russian operations significant, and then also the fluctuations between the dollar and the euro. That's another consequence. But in Q4, we are assuming our September actuals going into Q4. That's our expectation. Of course, that is still a forecast.
Fernand de Boer
Okay. Thank you.
Gustavo Calvo Paz
And yes, we can also follow-up with you. Then Geoff can follow up in terms of the explain a little bit because you said it's hard for you to understand the EUR21 million impact and there's pretty much detail on that that I'm sure that Geoff can follow up with you individually.
Fernand de Boer
Okay. One last question because coming back on the previous question on the guidance. If you look now, we had 8% price in Q3. Normally speaking, what should that be in Q4? Because that has to go close to 0%. Or is that the wrong assumption?
Gustavo Calvo Paz
So price increase, it will decrease in Q4. I don't want to give an exact number to you at the moment. We don't disclose that. But yes, you should expect that it will decrease.
Fernand de Boer
Okay. Thank you very much.
Operator
Our next question is from James Cawthorpe of Barclays Bank PLC.
Karine Elias
Hi. It's actually Karine from Barclays. Thank you very much for taking my question. You may have touched a little bit on that before, but I just wanted to spend a bit more time on the pricing environment. Obviously, as raw material prices are coming up, are you seeing any pressure to reduce prices? Or is it -- is the direction of travel being a bit different depending on the various different raw material prices? That will be helpful. Thank you.
Gustavo Calvo Paz
You -- can you repeat, please? Because honestly, the voice was a little bit -- the connection was a little bit harsh to understand you.
Karine Elias
Okay, sure. Apologies about that. It's Karine from Barclays.
Gustavo Calvo Paz
There you go. There you go.
Karine Elias
Great. Thank you. I just wanted to get a little bit more color from you on the pricing environment. I mean, overall, my thought was raw material prices are coming off, but it seems that this is not necessarily a linear decline. Are you seeing any pressure from retailers to reduce prices? How should we think about the pricing environment?
Gustavo Calvo Paz
Yes, yes. Thank you. Thank you for repeating and, and answering you, yes, it's not about pressure. But I think that, yes, with some indices going down now, they are stabilized, right? But they went down. So, yes, we have conversations with retailers in terms of that and we should -- you know, the environment, it is. The retailers, they are looking after price reductions.
Let me add to that our retailers' conversation has been very positive so far in terms of that we are trying to build a different relationship instead of building, you know, being just a trade type of conversation with them. We are building a relationship where we talk about the strategy, we talk about product innovation and how to give value to their retail brand, retailer brand, and the products that they are selling. So the conversations are not just in a trading way. So we feel very positive in terms of that. Retailers are open to those types of discussion. We understand the needs of the retailers and, of course, that -- yes, but I will say that in the market, there is, yes, a discussion on pricing differently.
Karine Elias
Thank you. And maybe just a quick broader question as well. I mean, you've been very cautious and you've delivered and overdelivered on your results, you know, throughout. So, you know, core margins are definitely getting to that sort of like 10%. What do you think realistically, obviously, is where core margins would end up shaking? Is the mid-teens still, you know, achievable, I think, in your opinion? I'm not trying to put a timeline on that, but what do you think is the underlying real margins for the core business?
Gustavo Calvo Paz
So, that's a very -- you can imagine with your question, it's very difficult for me to be fully transparent with you. I wish, I can do it publicly in terms of what are my aspirations and my belief and what we are active, right? Because we are working very hard. Our commitment is very clear in terms of creating value for the shareholders and, you know, the financial performance is critical here. Reducing our debt is critical.
Growth of our business is critical and reducing our cost. Those two things, our growth, new businesses and reducing the cost will deliver more, you know, EBIT or more margin into the business. We aspire to keep growing. So I cannot give you a number, but I can tell you that definitely we aspire to keep growing throughout 2024.
Karine Elias
That's very helpful. Thank you very much and congrats again. Thank you very much again.
Gustavo Calvo Paz
Thank you very much. Much appreciate it. Thank you.
Operator
Our next question is from Patrick Folan of Barclays.
Patrick Folan
Hey, Geoff. Hey, Gustavo. Thanks for the question.
Gustavo Calvo Paz
Hello, Patrick.
Patrick Folan
Hi. I just have one and I'm just looking at the volume mix of 3% and you talk about North America volumes are back up double-digits. I'm assuming most of that is due to the kind of customer destocking element reversing in the second-half. And I just kind of want to quantify what percentage of that was the stocking versus the customer gains. But then also thinking of the core market business and that 3%. I imagine North America was the majority of that kind of 3% ball mix number.
Gustavo Calvo Paz
Yes, Patrick. So the U.S. -- destocking has finished, so we are back into track. But year-to-date, I will say that definitely compared with last year, it's below in terms of the lifestyle. So the growth that we are getting in U.S. is, I would say, totally related to the new businesses that we are developing there. I can tell you that it's very encouraging to see the new leadership team that is there, how they are approaching this new business, developing this with plenty of initiatives, and of course, that we are investing a big portion of our capital expenditure is, because we're investing in adding capacity into the U.S. market to respond to that.
Many of these new businesses has started somehow this year and will continue throughout the quarter four. But definitely majority of that impact we are going to see during 2024. So the growth -- double-digit growth that we're experiencing in U.S. is, is very healthy and we are developing that new business in the retail brand.
What do I see in Europe, I see that although the total volume in Europe perhaps is not a significant volume mix increase. But in certain categories, in our specific categories where we want to compete, where we know that we have a competitive advantage and also they are very value added for the customers, we are growing market share. So meaning that we are growing faster than the market and categories like adult care and pants and baby pants are also high-end, single-digit, or double-digit growth.
Patrick Folan
Okay. Sorry, just to clarify on the -- Europe was still positive volume mix, right?
Gustavo Calvo Paz
Yes. Certainly, yes.
Patrick Folan
Thank you.
Gustavo Calvo Paz
You're welcome.
Operator
Our next question is from Salomé Charamelet of ABN AMRO ODDO BHF.
Salomé Charamelet
Hi. Thank you for taking my question. I have two. The first one I would like to come back on the price implementation. So you mentioned that you still had an impact from the price implementation you did last year for Q3. Shall we consider it as fully passed on? Or shall it still have an impact on revenue? So this was my first one. Thank you.
Gustavo Calvo Paz
So the -- yes. Sorry, we, we -- can you say it again, the impact that we had? So the -- still impact from '22 pricing? Yes, because...
Salomé Charamelet
Yes.
Gustavo Calvo Paz
We started the pricing increase in 2022 in -- most of the pricing was in Q3, Q4, and Q1 2023. So that is most of the pricing implementation. So, in Q3, we're still -- this year, we are starting to compare with already Q3 higher price of last year. So towards quarter four, it's going to be even more. So the gap between quarter four of this year, of quarter four last year, it will be reduced, so -- just due to the comparison. So yes, I don't know if I'm answering. It was that what you were asking?
Salomé Charamelet
Yes, yes. It's pretty clear.
Gustavo Calvo Paz
Okay.
Salomé Charamelet
Thank you. And my second one is on the Middle East situation. Do you see or do you expect any direct or indirect impact from that?
Gustavo Calvo Paz
In the indices, you know. [Multiple Speakers]
Salomé Charamelet
Yes, yes.
Gustavo Calvo Paz
Middle East situation.
Salomé Charamelet
Yes, yes.
Gustavo Calvo Paz
Yes. So well, I think that the impact there, it could be in the oil price, as we are seeing. So oil price going up and that oil price, it will hurt our -- of course, in the cost of the logistics and also in all raw materials that derivate from the oil. So we are -- in this moment, the question is very good. Because in this moment, we are assessing a new outlook of those raw material cost versus what we have done in August, for instance. So -- but that -- it will be, you know, for us and for all the peers, right?
So -- but it's something that we need to assess and that's why we try to be prudent also in all discussions in terms of the cost because it's a moment where we are doing a new assessment on the forecast of that.
Salomé Charamelet
Okay. Thank you a lot. That's very clear.
Gustavo Calvo Paz
You're welcome.
Operator
And the next question comes from Karel Zoete of Kepler.
Karel Zoete
Yes, good afternoon all. Thanks for taking the questions. I have two questions, a follow-up one on Brazil because you've been doing well. I think most of the companies we do got report positive momentum in the market. Can you be a bit more specific in which segments you've emphasized and got good growth in return?
And the other question is on the North American market. Because on an earlier questions, you said that the reasonable conversations are better and not only about price, but also on a more strategic level. I presume this is also very much true for the U.S. business, probably more than for Europe. What have you kind of changed in the U.S. business over the last three to six months that now gives this momentum and confidence? Thank you.
Gustavo Calvo Paz
Okay. Good question, [Salomé] (ph). Thank you. In terms of Brazil, you ask about which segments. So our -- first of all, our business model in Brazil, it's a very unique business model. In terms of we are a multi-tier, multi-brand model and we have a very, very significant distribution across the country, so where we put the focus is in baby care and adult care. Those two segments are our focus there. And in both, we are gaining market share. And also specifically within those two categories, also, we emphasize this in some specific segments within the category. So that I know is that -- I hope that answered your first question in Brazil.
Karel Zoete
Yes.
Gustavo Calvo Paz
Specifically now in North America that you ask, yes, you're absolutely right. Very good conversations with customers and big retailers there, big, big retailers. You know that retail brand in U.S. is not as much as developed as in Europe and we have been analyzing that. And also based on my experience in the past, knowing that market and, and in the way that some of the retailers and big retailers were -- some of them, they were treating retail brand in one way and some others in another one, of course.
But there is a lot of room for -- and our discussion is how we collaborate each other to improve the retail brand performance within the retailer and those conversations are going very well with already in some of them with very positive outcome on those conversations. But believe me that it will continue being like that. We have a very solid position in U.S., in particular competitive position that give us the opportunity to expand and create new business with retailers. Because also our footprint there where we have a West Coast and an East Coast production is a big advantage.
We would -- we are the unique retailer suppliers with that footprint and that give us an advantage versus competitors. And also we are the number one global retailer supplier. So our global knowledge in terms of this I think that help us also to have constructive discussions with the customers. I know -- hope that I have answered your question.
Karel Zoete
Yes. Thank you. Very clear. And as a quick follow-up on the U.S. with the footprint you currently have, do you require much investment to grow that business substantially? Or is the current footprint sufficient to add a couple of dozens, millions extra in revenues?
Gustavo Calvo Paz
What will require is capital because we need to add capacity. We are talking here on significant growth. And yes, it will require CapEx to add more capacity, more machines and we are balancing that, of course, within the entire business. But that is what will require and strengthen the team. We start doing that with a team. We are following with the capacity. And, yes, we are ready to supply our customers. And they are seeing that. And that's something that you need to ensure them that you're going to have the right supply, the right quality. And yes, it's a new newborn business for us.
Karel Zoete
Thank you.
Gustavo Calvo Paz
You're welcome.
Operator
Our next question is from William Dennis of Bank of America.
Gustavo Calvo Paz
Hello, William.
William Dennis
Thank you. Hi, thank you. Thank you for taking the question. Seems most people have answered already. You've answered my questions, most of them. So I have two more on liquidity. I didn't see anything in the release on the RCF, the new RCF, and how much was drawn this quarter. Please, could you stand and give it more detail, if possible?
And lastly, on the market share gains early this year, you mentioned you have gained a market share. Going towards the end of this year, do you see this continuing? Do you see -- and also on volumes, is this mostly as a result of just overall new business wins or it's basically more demand from customers, already established customers, that's the formula.
Gustavo Calvo Paz
Yes. So on the first one, William, I only can say that the liquidity is good. We are in a good position. And -- but unfortunately, we don't disclose exactly now these numbers, but we are good. We are okay.
And then on your second question regarding market share gains, what we are expecting to continue? Yes, overall in the core markets, we are expecting, as I was mentioning, with good new businesses that we are developing in U.S.
And then specifically gained market share -- gain market share in specific categories where we are focusing in Europe. And then you asked and you said, are you growing the volume due to the market growth or -- yes, you know, more sales in the same customer or we are gaining new businesses in Europe as well. Yes, in some categories where we are putting focus. Yes, we are gaining new business and sustaining the existing ones and gaining new business in our, in our focus categories. So my answer is yes, we expect to keep sustaining growing market share in those specific categories where we are focusing on.
William Dennis
Okay. Thank you. Thank you very much.
Gustavo Calvo Paz
You're welcome.
Operator
And there are no further questions at this time.
Gustavo Calvo Paz
All right. Very good. Very good. So that concludes then the Q&A. And now, before closing the call, I would like to emphasize that we have now consistently delivered on expectations for more than a year that these results confirm our recovery momentum further and that we are making solid progress on the portfolio refocusing, and that we thereby are on track with the acceleration of the strategy execution.
I want to thank you. Thank you very much. And hear you in February or before with -- hopefully with right -- I'm expecting, with Geert, our new CFO in place already. So thank you very much. Have a good day and good weekend. Bye.
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Ontex Group NV (ONXXF) Q3 2023 Earnings Call Transcript