Stonegate Capital Partners has updated its coverage on Aquafil Group (BIT: ECNL), emphasizing the company's ability to maintain improved margins despite a significant increase in raw material and transportation costs during the second quarter of 2026. The announcement comes as Aquafil reported a modest decline in revenue and EBITDA, yet the results reinforced the company's progress in margin enhancement and deleveraging.
Aquafil's second-quarter revenue decreased by 1.0% year-over-year to €135.7 million, with volumes broadly stable. EBITDA fell 2.5% to €20.7 million, but the EBITDA margin remained robust at 15.3%, compared to 15.5% in the same period last year. Stonegate notes that the slight EBITDA decline was due to a timing mismatch between higher input costs and contractual price recovery, not a reversal in underlying cost performance. Management indicated that the majority of the cost increase is being recovered through third-quarter pricing, with additional recovery expected in the fourth quarter.
The balance sheet improvement is a key aspect of the investment thesis. For the first half of 2026, net financial position (NFP) improved to €196.9 million from €209.5 million at year-end 2025. NFP to LTM EBITDA improved to 2.64x from 2.89x, reflecting a continued focus on deleveraging. Management has signaled that further progress could eventually reopen capacity for higher capital expenditures or external growth opportunities.
Stonegate highlights that the main execution requirement for the remainder of 2026 is volume recovery rather than margin improvement. First-grade volumes increased only 0.3% in the first half of the year, versus management's full-year objective of approximately 5% growth. This implies a meaningful acceleration in the second half is required, even as management reaffirms its annual goals and points to Europe as the principal area of demand uncertainty.
The analysis underscores that Aquafil's lower fixed cost base and operating efficiencies are supporting margins even before a broader demand recovery. With the improving balance sheet providing additional flexibility heading into 2027, the company appears well-positioned to navigate near-term challenges and capitalize on future growth.
