Today, alongside the profit warning, another stock exchange release was issued.
The Pudasjärvi factory will be closed. However, Apetit pizzas will still be available in the future. They will be produced through contract manufacturing in Finland.
It has been decided to discontinue production at the Pudasjärvi frozen pizza factory and close the factory. Work at the frozen pizza factory will continue until approximately the end of 2026.
In the future, Apetit’s frozen pizzas will be produced through contract manufacturing in Finland. Contract manufacturing will begin during 2026. The production reorganization will not cause any delivery interruptions for the products.
The annual cost savings resulting from the closure of the Pudasjärvi frozen pizza factory will be approximately EUR 0.7 million starting from 2027. The Group’s one-off investment needs for the coming years will decrease by approximately EUR 3 million due to the factory closure. The one-off costs and write-downs related to the factory closure, impacting the operating profit for 2026, are approximately EUR 2.3 million.
What are your thoughts on the new Chairman of the Board? About twenty years ago, Seikku was leading HK’s international expansion, and now, based on the impression I got at the AGM, Apetit’s strategy is leaning towards growth and expanding further into international markets as well. In my opinion, his track record from that HKScan situation wasn’t exactly a complete success; hopefully, things go better with Apetit.
Kaisa has written a pre-earnings report on Apetit, as Apetit reports its results on Friday, April 24.
We forecast that the company’s revenue grew, driven by an acquisition, but that the operating profit fell short of the comparison period, weighed down by the loss-making nature of Foodhills. We have lowered our forecasts for the current year’s reported result after the company issued a technical profit warning yesterday related to the closure of the Pudasjärvi frozen pizza factory. Our operational forecasts thus remain unchanged, and therefore we reiterate our reduce recommendation and EUR 13.0 target price.
Apetit released a Q1 report this morning that was clearly weaker than our expectations, as the company’s result fell into a loss, missing our forecasts. Revenue grew from the comparison period but fell slightly short of our forecast due to lower sales volumes. The result was weighed down especially by the losses of Foodhills as well as cost pressures, particularly due to the rise in electricity prices. As expected, the company reiterated its recently lowered guidance in the report, but according to our preliminary assessment, the Q1 operational performance creates downward pressure on our forecasts, considering the risk posed by inflationary pressures.
Kaisa and Pauli have prepared a company report on Apetit following Q1
Apetit’s Q1 report fell short of our expectations, as the result was weighed down especially by the losses of Foodhills and cost pressures. The company reiterated its guidance, but in our assessment, the earnings outlook is weaker than before, with cost pressures overshadowing the outlook. Following the report, we cut our profitability forecasts for both the current year and the coming years. The stock’s valuation is high on an earnings basis, and visibility regarding an earnings turnaround remains hazy. Consequently, we are lowering our recommendation for Apetit to Sell (prev. Reduce) and lowering our target price to EUR 12.5 (prev. EUR 13.0) along with the forecast cuts.
Kaisa and Pauli have published a new company report on Apetit
Burdened by cost pressures and losses at Foodhills, we expect Apetit’s earnings this year to fall clearly below the comparison period. However, with the decline in the share price, the valuation has become more moderate, and based on our forecasts for the coming years, the multiples have fallen closer to our accepted level. A dividend yield of approximately 6% supports the return expectation, but uncertainty regarding the earnings turnaround keeps the risk-adjusted return expectation weak. Following the share price decline, we are raising our recommendation to reduce (previously sell) but reiterate our target price of 12.5 euros.
Apetit’s Q2 report was weaker than we expected, with both revenue and profit falling short of our forecasts during what is otherwise a seasonally weaker quarter. In addition to the Swedish pea business weighing on earnings, the Oilseed products segment is also suffering from pressure on crushing margins and geopolitical uncertainty. The outlook for the harvest in Finland is generally favorable, but the pea harvest in Sweden is likely to remain weak due to drought.
A mild reaction in the stock market: currently -1.2% with low trading volume.
Pauli has been hard at work finishing the company report on Apetit following Q2
The delay in the earnings turnaround in Sweden and, on the other hand, earnings challenges in domestic Vegetable Oil products are pushing this year’s earnings close to zero. We expect earnings to return to profitability in H2 and continue to improve in the coming years. Although the company is taking the right steps to strengthen its Swedish operations, the earnings turnaround is not entirely in the company’s own hands, as demonstrated by the weak pea harvest this summer.
Just was thinking that I should buy some food company, and Apetit was a strong option since it’s so neglected and according to the strategy, strong profitable growth should be in sight in a couple of years. But if even the CFO doesn’t 100% trust it, then the choice is probably between HKFoods and Atria. Atria feels too obvious of a choice?
Apetit announced on Thursday that it has frozen a record-breaking pea harvest in Finland. This, combined with otherwise good crop prospects in Finland, supports the recovery of the profit level we forecasted for Finnish Food Solutions. However, the weak pea harvest in Sweden and the challenging market situation for Vegetable Oil Products will keep the overall result below the peak levels of recent years.
Pauli Lohi has prepared an extensive report on Apetit.
Apetit is a leading Finnish food company in frozen vegetable production and oilseed processing. The acquisition of the loss-making pea business in Sweden has weakened earnings and increased the risk level, although it also offers more growth potential than before. In our view, the share’s current valuation is based on the assumption that both the Swedish pea business and Oilseed Products will achieve a significant turnaround. The turnaround depends partly on factors such as harvest success and market developments, which limits visibility and increases forecast risks. We await more evidence of progress in the turnaround, but for now, the valuation is very challenging, which is why we reiterate our Sell recommendation and target price of EUR 11.
Pauli and Iikka discussed Apetit regarding the new comprehensive report
Topics:
(00:00) Intro
(00:11) Apetit as a company
(01:58) Profit performance has weakened
(03:17) Swedish operations are loss-making
(05:49) Oilseed prices
(07:01) Frozen food business drives Apetit’s earnings
(08:09) BlackGrain
(09:32) Earnings forecasts and recommendation
