Stonegate Capital Partners has updated its coverage on Aquafil Group (BIT: ECNL), highlighting the company's resilient margin performance and continued deleveraging in the second quarter of 2026. Despite a sharp increase in raw material and transportation costs, Aquafil's revenue declined a modest 1.0% year-over-year to €135.7 million, with volumes broadly stable. EBITDA decreased 2.5% to €20.7 million, yet the EBITDA margin held at 15.3% compared to 15.5% in the same period last year.
The slight EBITDA decline was attributed to a timing mismatch between higher input costs and contractual price recovery, rather than a deterioration in underlying cost performance. Management indicated that the majority of the cost increase in Q2 is being recovered through pricing adjustments in Q3, with additional recovery anticipated in the fourth quarter. This suggests that Aquafil's lower fixed cost base and operational efficiencies are supporting margins even before a broader demand recovery takes hold.
Importantly, the company's balance sheet continues to strengthen. Net financial position (NFP) improved to €196.9 million from €209.5 million at year-end 2025, and the NFP/LTM EBITDA ratio improved to 2.64x from 2.89x. Management remains committed to deleveraging, and further progress could eventually reopen capacity for higher capital expenditures or external growth opportunities.
The main execution requirement for the remainder of 2026 is now volume growth rather than margin recovery. First-grade volumes increased only 0.3% in the first half of 2026, compared to 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 identifies Europe as the principal area of demand uncertainty.
The quarter reinforces that Aquafil's strategic initiatives are yielding results, positioning the company well for future expansion. With a stronger balance sheet and a focus on operational efficiency, Aquafil is better equipped to navigate market challenges and capitalize on demand recovery when it materializes.
