Here are Pauli’s preliminary comments regarding Apetit’s Q4 review on Thursday.
We expect the company’s result to weaken from the comparison period, partly due to the timing of deliveries being weighted towards Q3, which is also partly related to the implementation of the ERP system in Food Solutions. The outlook for 2025 is a key takeaway from the report – our initial assumption is that the recent increase in the price of oilseed raw materials could weigh on margins and thus slightly weaken operating profit compared to 2024.
Here are Paul’s quick comments on this morning’s Q4.
Apetit reported its Q4 financial statement this morning, which was stronger than our expectations in terms of results. The declining earnings guidance for 2025 is somewhat in line with our latest forecast. In our opinion, the overall outlook of the report is cautiously positive due to the strong earnings development of Food Solutions.
Lohen Pauli has completed the post-Q4 company report on Apetit.
The year 2024 ended stronger than both our own and the company’s expectations, thanks to the strong earnings development of Food Solutions. We estimate the earnings level will decrease in line with the company’s guidance in 2025, which, in our estimation, is particularly affected by cost pressure from oilseed raw materials. With the declining earnings, the stock’s valuation is earnings-based close to a fair level.
@henrielo has once again made an analysis of Apetit, which can be read in about five minutes..
Apetit has good chips for potential acquisitions. The equity ratio is currently 80 percent. The company could invest up to 40 million euros with its own balance sheet and external capital, while still maintaining an equity ratio above 60 percent.
Deals are being made in the industry and focus areas are being chosen. Last week, food company Raisio announced it was selling its loss-making Härkis and Beanit plant-based protein business, with a turnover of 4.5 million euros, to Valio.
Note.
IR-ikkuna is a channel for SalkunRakentaja’s and Sijoittaja.fi’s corporate partners for background and analytical articles, as well as other interesting investor information. The article is part of a commercial collaboration with the company. The article does not contain investment recommendations.
Pauli has made an extensive report on Apetit. Like other extensive reports, it is available for everyone to read.
Apetit is a leading Finnish food industry player in frozen vegetable production and oilseed product processing. In our view, most of the strong earnings development in recent years is sustainable improvement, but temporarily favorable conditions in raw material procurement have also helped, according to our assessment. The outlook for this year’s earnings is declining due to, among other things, the rise in oilseed prices, and therefore the upside potential offered by the stock is not sufficient with our current assumptions. If the margin pressure is overcome with minor setbacks and earnings growth continues as in recent years, there could be upside potential in the stock in a favorable scenario. However, considering the short-term market risks, we are currently maintaining our reduce recommendation and raising the target price to 14.5 euros (previously 14.0 €).
The general meeting proceeded amicably, and nothing new or extraordinary seems to be on the horizon for the future either. Which, of course, is somewhat concerning. Inorganic growth has been discussed for years, especially since the coffers are full of money. But nothing concrete seems to be achieved. Even the Black Grains are always coming next year.
Of course, there was a lot of fashionable talk about responsibility. One thing that I believe was overlooked very lightly was occupational safety. Apetit experienced 20 accidents leading to absences last year. Considering that the company has about three hundred employees and operates in factory conditions, that number is terrible. Many construction companies achieve much better results, even though the risks on construction sites are much higher. This means that almost every 10th employee gets injured at work during the year. Not particularly responsible.
Here are Pauli’s preview comments as Apetit publishes its Q1 results on Friday.
We expect revenue to grow, but profitability to suffer compared to a strong comparison period. The weakening of the result in our forecasts is related to the increased price level of oilseed, which is likely to be passed on to sales prices with a slight delay.
Below are Paul’s comments on Apetit’s morning results.
Apetit reported its Q1 review today, which was broadly in line with expectations. Operating profit slightly exceeded our forecast, but on the other hand, net profit fell short of forecasts due to the weakening of the associated company’s result. The company kept its guidance for declining operating profit for 2025 unchanged.
Operating profit weakened in Q1 as expected due to rising raw material costs, and we estimate that the biggest headwinds have now been endured. Towards the end of the year, interest will focus on more positive developments, such as increased production volumes aimed at growing exports, and the efficiency benefits offered by the Oilseed Products bottling line. The valuation has become sufficiently attractive, which is why we raise our recommendation to add (previously reduce) and the target price to 15 euros (previously 14.5 €).
Conveniently, Apetit also reported on a small, 2 million euro investment, which supports the commercialization of BlackGrain. The investment will be carried out during 2025.
Here are Pauli’s preview comments as Apetit releases its Q2 results on Friday.
We do not expect earnings to decline significantly anymore in the latter half of the year, as we see the Food Solutions business continuing volume-driven growth. At the same time, we estimate that the margins of Oilseed Products will normalize or even recover as the headwinds related to raw material price development subside.
Here are Pauli’s quick comments on the morning’s results.
Apetit’s Q2 report published today was, in terms of results, slightly weaker than our forecasts, which, however, in our view, was mainly explained by temporary factors such as industrial action and changes in raw material prices. The declining earnings guidance for 2025 remains unchanged, but we believe the company has the opportunity to stabilize earnings development in the second half of the year after a difficult start to the year.
Pauli has made a new company report on Apetit after Q2.
Q2’s soft earnings development was mainly due to temporary factors. We expect the earnings level to develop more steadily in the latter half of the year, thanks to, among other things, the volume growth of Food Solutions and improved raw material availability for Oilseed Products. In our view, the company has the prerequisites to continue moderate growth, supported by the increasing domestic consumption of frozen vegetables and exports. The valuation level, with this year’s exceptionally weak result, is close to a fair level, but we expect earnings to turn to growth next year, making the return expectation with dividends sufficiently attractive.
Quoted from the report:
Working capital release supported cash flow
Business cash flow was at a very strong level of EUR 13.1 million in H1 (H1’24: EUR 6.8 million). This was particularly influenced by the change in working capital, which had a positive impact of EUR 8 million on cash flow. In Q2, working capital is typically released before the raw material purchases for the next harvest season, and this time the release was higher than usual. Investments in H1 were EUR 3 million, slightly higher than the comparison period, but mostly in line with our expectations. Net cash at the end of H1 was EUR 1.2 million (H1’24: EUR 6.3 million).
@henrielo has written a long article about Apetit and its *advanced factories. (edit: I accidentally wrote new ones)
The food company Apetit produces frozen vegetable and root vegetable products in Säkylä, presses vegetable oils at the Kirkkonummi Kantvik pressing plant, and bakes pizzas at the world’s northernmost pizza factory in Pudasjärvi. Business-wise, the largest units are Säkylä and Kantvik.
Subheadings:
Säkylä’s production process is two-phased
Apetit’s Säkylä production facility consists of two factories
Factory tour
“The world’s best pea”
Cultivation guidance is an important part of production
Thanks @Sijoittaja-alokas for noting my Apetit story. The factories are not new but have been operating for a long time. They are unique in Finnish conditions, as there is no other frozen vegetable production of a similar scale elsewhere; there are potato factories in Ostrobothnia. Of course, the factories are constantly being developed.
“The plant will create an industrial circular economy hub in the area. Apetit Ruoka Oy’s nearby factory is intended to supply food production side streams as raw material for the plant. The biogas produced from these would be returned for Apetit’s use.”
Here are also Pauli Lohi’s good comments on Apetit’s latest news. Apetit’s business consists largely of the processing of basic foodstuffs such as frozen vegetables and vegetable oils, but in recent years, the company has been able to support growth through more processed and higher value-added products. Some of the effects of recent years’ investments on the development of business figures are yet to be seen. In addition, the company is planning a new growth driver from the rapeseed ingredient BlackGrain and announced in July its first significant investment related to this ingredient.
The purchase price is nominal, as the acquired Foodhills has substantial debts. The enterprise value of the target company in the deal will be 60 million Swedish kronor, or approximately 5.5 million euros.
