Aquafil Group Demonstrates Resilient Profitability Amid Revenue Challenges in Q3 2025

Stonegate Capital Partners has updated its coverage on Aquafil Group (ECNL.MI), revealing the company delivered resilient profitability during the third quarter of 2025 despite experiencing softer top-line performance. The Italian synthetic fibers manufacturer achieved an EBITDA margin of 13.7%, representing a significant improvement from 12.1% in the same period last year. This margin expansion primarily reflected lower raw material costs, disciplined cost-containment actions, and a richer product mix favoring higher-value regenerated materials.

The company's ECONYL®-branded and other regenerated fibers continued to play a pivotal role in the business strategy, accounting for approximately 60% of fiber revenues year-to-date. This sustained shift toward regenerated content has strengthened Aquafil's environmental, social, and governance credentials while enhancing differentiation with key carpet and textile customers. The increasing proportion of higher-margin ECONYL® products has been instrumental in driving EBITDA growth and margin expansion, helping to offset volume softness in certain market segments.

Regionally, Aquafil's North American BCF business remained a key growth engine with solid volume gains, while the EMEA region performed broadly in line with the prior year. The Asia Pacific market continued to experience softness, particularly in textile applications, reflecting broader industry challenges in that region. Management advanced its reorganization of U.S. carpet collection and recycling operations during the quarter, recognizing one-off restructuring charges that are expected to position the business for structurally lower labor and logistics costs beginning in fiscal year 2026 and beyond.

For the third quarter, Aquafil reported revenue of €120.9 million, representing a 5.5% year-over-year decline, while EBITDA rose to €16.6 million, marking a 7.0% year-over-year increase. This performance highlights the company's continued progress in margin quality despite revenue pressure. For the first nine months of 2025, revenue reached €402.0 million, down 3.4% year-over-year, while EBITDA stood at €54.9 million, down 14.3% year-over-year. Net income showed improvement at €0.4 million compared to a €8.8 million loss in the same period last year.

Looking ahead, management maintains a cautious outlook for the fourth quarter of 2025, with margin performance expected to remain at the upper end of the industrial plan despite muted volume growth in certain regions. Profitability should continue to benefit from disciplined cost controls and the ongoing reorganization of U.S. carpet collection and recycling operations. Demand in the U.S. BCF segment is anticipated to remain healthy, partially offsetting softness in Asia and garment-related fibers. On the balance sheet, leverage is trending lower, with net financial position to EBITDA now around the mid-3x range, and management is prioritizing cash generation and disciplined capital expenditure to support deleveraging efforts.

Stonegate Capital Partners utilizes both discounted cash flow analysis and enterprise value to EBITDA multiples to frame its valuation of Aquafil Group. The DCF analysis employs discount rates between 10.75% and 11.25%, arriving at a valuation range of €4.68 to €5.07 with a midpoint of €4.87. The EV/EBITDA analysis uses multiples ranging from 7.0x to 8.0x, resulting in a valuation range of €4.52 to €5.54 with a midpoint at €5.03. These valuation methodologies provide investors with comprehensive frameworks for assessing the company's financial prospects and market positioning as it navigates current market conditions while advancing its sustainability initiatives through products like ECONYL® regenerated nylon.