Aquafil Group Demonstrates Resilient Profitability Amid Market Challenges Through Strategic Focus on Regenerated Fibers

Stonegate Capital Partners has updated its coverage of Aquafil Group (ECNL.MI), revealing the company's ability to maintain resilient profitability despite facing softer revenue trends in the third quarter of 2025. 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, demonstrating the effectiveness of ongoing efficiency measures and cost control initiatives.

The company's performance underscores the growing importance of sustainable manufacturing in the textile and carpet industries. Aquafil reported revenue of €123.6 million with adjusted EBITDA of €16.6 million for the quarter, showing a notable divergence between top-line pressure and bottom-line improvement. For the first nine months of 2025, revenue reached €402.0 million, representing a 3.4% year-over-year decline, while EBITDA stood at €54.9 million, down 14.3% from the previous year. However, net income showed marked improvement, reaching €0.4 million compared to a €8.8 million loss in the same period last year.

ECONYL®-branded and other regenerated fibers continue to play a pivotal role in Aquafil's strategy, accounting for approximately 60% of fiber revenues year-to-date. This sustained shift toward regenerated content not only reinforces Aquafil's environmental, social, and governance credentials but also strengthens its differentiation with key carpet and textile customers. The increasing mix of higher-margin ECONYL® products has been an important contributor to EBITDA growth and margin expansion, helping to offset volume softness in certain market segments.

Regional performance varied significantly, with North America's BCF business remaining a key growth engine with solid volume gains. The EMEA region performed broadly in line with the prior year, while Asia Pacific continued to experience softness, particularly in textile applications. Management's ongoing reorganization of U.S. carpet collection and recycling operations, while resulting in one-off restructuring charges, positions the business for structurally lower labor and logistics costs in fiscal year 2026 and beyond.

Looking forward, management maintains a cautious outlook for the fourth quarter of 2025, expecting margin performance 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 efforts. Demand in the U.S. BCF segment is anticipated to remain healthy, partially offsetting continued softness in Asia and garment-related fibers.

From a financial perspective, the company's leverage is trending lower, with net financial position to EBITDA now around the mid-3x range. Management is prioritizing cash generation and disciplined capital expenditure to support further deleveraging. Stonegate Capital Partners' valuation analysis, available at https://www.stonegateinc.com, utilizes both discounted cash flow and EV/EBITDA methodologies, arriving at a valuation range of €4.68 to €5.54 with midpoints of €4.87 and €5.03 respectively.

The company's performance demonstrates how manufacturers can navigate challenging market conditions through strategic focus on higher-margin, sustainable products while maintaining cost discipline. Aquafil's success with ECONYL® regenerated fibers highlights the growing market demand for circular economy solutions in the textile industry, positioning the company favorably as environmental considerations become increasingly important to both consumers and business partners.