DALLAS, TX -- August 31, 2026 -- Aquafil Group (ECNL.MI): Stonegate Capital Partners updates coverage on Aquafil Group (ECNL.MI). Aquafil’s 2Q26 results continued to support the margin and deleveraging reset despite a sharp increase in raw material and transportation costs during the quarter. Revenue declined 1.0% y/y to €135.7M as volumes were broadly stable, while EBITDA declined 2.5% to €20.7M and EBITDA margin held at 15.3% versus 15.5% in 2Q25. Importantly, the modest EBITDA decline reflected a timing mismatch between higher input costs and contractual price recovery rather than a reversal in underlying cost performance. Management indicated the majority of the Q2 cost increase is being recovered through Q3 pricing, with additional recovery expected in 4Q. For 1H26, NFP improved to €196.9M from €209.5M at YE25. In our view, the quarter reinforces that Aquafil’s lower fixed cost base and operating efficiencies are supporting margins even before a broader demand recovery, while the improving balance sheet provides additional flexibility heading into 2027.
Quarterly results: ECNL’s 2Q26 underlying performance was better than the slight EBITDA decline suggests, as input-cost inflation moved through the P&L ahead of the related selling-price adjustments. First-grade volumes declined just 0.3% y/y, although performance shifted geographically from 1Q. EMEA volumes declined 3.8% as continued BCF weakness and lower Engineering Plastics volumes more than offset a 6.0% increase in NTF volumes. North American volumes declined 1.6% in 2Q following a strong 1Q, with BCF down 3.8% and NTF broadly flat, while Asia-Pacific was the strongest region with volumes up 17.3%. Net profit increased 19.2% to €2.1M despite higher financial charges, while H1 operating cash generation of €36.0M.
Outlook: Management reaffirmed its goals for 2026, which our prior report framed as approximately 5% volume growth, EBITDA of €79M-€83M, and NFP of €185M-€195M. We believe confidence in the outlook is increasingly being supported by cost and pricing execution. Raw material and transportation costs increased materially during 2Q, but Aquafil generally operates with an approximately three-month pricing lag, and management indicated that higher pricing is already flowing through in 3Q. Current trading in North America and Asia-Pacific remains relatively stable, while Europe continues to represent the main demand uncertainty and visibility into late 4Q remains limited. Continued fixed-cost reductions, automation and energy-efficiency initiatives should provide additional margin support, while further NFP reduction remains the near term capital priority; management also noted that continued deleveraging could ultimately reopen capacity for higher CapEx or external growth.
ECONYL®: ECONYL® increased to 61.3% of fiber revenue in 2Q26 from 59.1% in 1Q26. The higher mix, combined with continued production efficiencies, remains an important contributor to Aquafil’s margin profile. Management also provided additional detail around the next phase of ECONYL® cost reduction, with savings targeted over the next 18-24 months as the Company works to make regenerated caprolactam increasingly competitive with Chinese virgin caprolactam production. This is slightly buoyed by ECONYL® becoming cost completive with oil-based lines as crude prices remain elevated.
Valuation: We use both a DCF Model and EV/EBITDA Analysis to frame our valuation of ECNL. Our DCF analysis relies on a range of discount rates between 11.25% and 13.75%. This arrives at a valuation range of €2.41 to €3.77 with a mid-point of €3.00. Our EV/EBITDA analysis relies on a range of 5.0x to 6.0x leading to a valuation range of €2.35 to €3.30, with a midpoint at €2.82. When we combine these two methods with a simple average it returns a valuation range of €2.38 to €3.54 with a price target of €2.91.
