Fodelia - Pioneer of the Food Industry

Stocks
2444

Pauli has made a new company report right after the negative guidance. :slight_smile:

Fodelia’s earnings warning issued on Thursday was worse than our preliminary expectations, but this was mainly due to Oikia, which is otherwise a minor part of the stock’s investment profile. We significantly cut our earnings forecasts, but with the sharp decline in the share price, we believe the expected return is attractive again. We raise our recommendation to buy (previously reduce) and lower the target price to 6.0 euros (previously 7.0 €). The company will report Q2 figures on Wednesday, August 6th.

Quoted from the report:

The share price has fallen by 29% since our last update, which is significantly more than the forecast cuts we implemented. We consider the current guidance and our current forecasts to be realistic when viewed against the operating environment and Feelia’s contract base, which reduces the level of risk associated with this year’s forecasts. The stock is priced at EV/EBITA multiples of 12.4x 2025e and 9.8x 2026e, although the latter already assumes a slightly stronger profitability margin (there is historical evidence to support these assumptions)

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2445

Generally speaking, I’d like to stay positive, but the CFO’s latest share sales cast a very questionable light. At the turn of June-July, Kati dumped her entire holding of ~9000 shares on the market, and now a warning is issued even about revenue, which should be known to the CFO almost in real-time. At that point, all figures up to May were known, as well as sales/revenue for June. What’s even more problematic is that even an external analyst can see that a profit warning should be issued. Credit to Pauli for that.

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2446

I spotted the negative news right away and posted it to a friend who has been involved with Fodelia. Luckily, he managed to sell above €6, as he had also coincidentally noticed the negative news himself.

I had to start researching the company myself, as falling knives are fascinating. Reading the Q1 report and wondering if the (potential) growth would be enough to justify the somewhat high multiples.

Then an observation about the board, and everything looked good; there was enough knowledge of sales, purchasing, logistics, corporate culture, and the company. And then the wall-sized Red Flag: a relative of the main owner, who works as a controller in the company itself, also sits on the board.

This speaks to a complete lack of business acumen and good governance expertise in the company.

If one could get this at PE 8-10 levels, then research could continue, but at this valuation, such things are not acceptable in my opinion.

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2447

The owner list has been updated. However, yesterday’s sales are not reflected, as it shows the situation as of July 29. Jukka Ojala has reduced his holding by 40,000 shares. He is the second largest owner and former CEO of Feelia.

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Let’s put the top here to be visible so that one can contextualize the scale :point_up:
(list limited so that all those who reduced their holdings are visible). Kati doesn’t seem to have been on the list at all, could it have been just bonus shares..? :thinking:

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Largest Shareholders – Fodelia

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2449

I am only commenting on your observation regarding the composition of the board. I personally represent a reasonably sized ownership entity of Fodelia. A few years ago, I proposed a new board member to the general meeting to represent the second generation of the largest shareholder. In long-term Finnish ownership, there is a challenge that responsible ownership does not properly transfer from one generation to the next. I see it as extremely important that the company has a visible main owner who is also prepared for a situation where the main owner is out of the game for some reason, e.g., due to deteriorating health or death. There are too many examples where these matters have not been responsibly prepared for. Furthermore, regarding the diversity of board members, a young Master of Science in Economics and Business Administration (KTM) has brought their own addition to the board’s composition. If this is an obstacle for someone to invest in the company, then we all have the freedom to choose. I see this only and solely as a smart and responsible measure.

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2450

Fodelia should definitely have a CFO who has skin in the game. @Mikko_Tahkola, the board should discuss the matter.

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2451

Indeed. I’ve long been of the opinion that the CFO should be replaced if they don’t have enough faith in their own work to be able to own a stake in the company. And Kati was indeed on the list of owners last month, with share ownership hovering around 10k shares before this month.

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2453

The Finnish Corporate Governance Code does not explicitly prohibit persons dependent on the company from being board members, but it does limit their number.

“A majority of the board members must be independent of the company. At least two board members independent of the company must also be independent of the company’s significant shareholders.”

In Fodelia’s case, this condition is met, with 4/6 board members being independent of the company and its largest shareholders.

Addition: this is just a general comment, if someone is pondering the matter.

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2454

If the CFO’s job is to understand money, it feels strange that company X considers owning company X as a criterion for job competence.

If the CFO were aware that a departing director might lighten their holdings and that the share price would fall due to turnover along with weak results, why wouldn’t they sell the shares?

The idea that it’s about a coward who doesn’t dare to own is as speculative as the idea that it’s about an opportunist preparing to buy lower.

I don’t know the Fodelia case in detail, but generally, those who sold higher could be considered smart or lucky; why would that make the CFO a coward or an idiot, and not the other way around?

Edit. So I’m not saying that owning the company would harm credibility.

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April-June 2025 Summary

  • The revenue for the review period was EUR 13.5 million (13.5), an increase of 0.1%. Comparability was affected by businesses sold in 2024.

  • The revenue of the businesses continuing in the Group after the business acquisition increased by 10.4%. The revenue of continuing businesses in April-June was EUR 13.5 million (EUR 12.3 million). Feelia’s revenue grew by 15.0%, while Oikia’s continuing businesses’ revenue decreased by 2.7%.

  • The EBITDA for the review period was EUR 0.8 million (2.3) and 5.9% of revenue (17.3).

  • The adjusted EBITDA for the review period was EUR 1.0 million (1.0) and 7.2% of revenue (7.5).

  • The operating result (EBITA) of the businesses was EUR 0.4 million (1.8) and 2.6% of revenue (13.4).

  • The adjusted operating result (EBITA) of the businesses was EUR 0.5 million (0.6) and 3.9% of revenue (4.5).

  • The operating profit for the review period was EUR 0.3 million (-0.7) and 2.1% of revenue (-5.5).

  • The adjusted operating profit for the review period was EUR 0.5 million (0.5) and 3.4% of revenue (3.7).

Guidance for 2025 (published 31.7.2025)

Fodelia Group’s revenue in 2025 is estimated to be approximately EUR 54-59 million. The operating profit margin (adjusted) is estimated to be approximately at the previous year’s level or slightly below it.

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Here are Pauli’s quick comments. :slight_smile:

Fodelia reported its Q2 interim review today, which was preceded by the company’s profit warning issued on July 31. Feelia’s revenue and profit were slightly better than our expectations, but Oikia’s turn to a loss weighed down the group-level figures to be slightly weaker than our expectations.

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Pauli interviewed Fodelia’s CEO @RiikkaWulff regarding Q2. :slight_smile:

Topics:

00:00 Introduction
00:14 A more challenging quarter than usual
01:40 Oikia’s result weakened significantly
03:14 Challenges in private label production
05:04 Oikia’s online store outlook
07:30 Guidance reduction
10:26 Investments in organizational development

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And even more detailed analyses

Oikia’s changed competitive environment has lowered the group-level earnings outlook for the coming years. However, long-term profitable growth work continues at Feelia and enables double-digit growth at the group level for several years. The short-term valuation picture is stretched. We consider the current year partly a rebuilding year and expect recovering profitability to support the share price in the coming years. Following the share price increase, we lower our recommendation to Add (previously Buy) and raise the target price to 6.2 euros per share (previously 6.0 €).

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OP lowers its target price from €8.10 to €6.50 as they have significantly revised down their forecasts. However, after a significant share price drop, it maintains its BUY recommendation.

In their words: “Oikia’s profitability is expected to improve, but the softness of the segment does not weigh as heavily on the company’s valuation as the question marks surrounding Feelia’s growth.”

The target price is based on a cash flow model.

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CEO shopping, €10k+

Fodelia Oyj - Management Transactions - Inderes

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Someone is selling a lot again. 17k for sale at 5.30e. Could it be Jukka Ojala who had reduced (his holdings by) 40k earlier? The trading volume is so small that it easily drops the price if some party wants to sell a bit more. Of course, it works the same way in the other direction.

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DEEP DIVE IN PYHÄNTÄ VOL 2

After a hectic LapWall visit, it was Feelia’s factory’s turn.

I had arranged a lunch meeting with CEO Riikka Wulff at 12 PM. The compactness of PyhÀntÀ is perhaps highlighted by the fact that even though I left the LapWall factory at 11:58 AM, I was only a couple of minutes late for this meeting.
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For an investigator who values real dividends, such a food industry target is very pleasing.
For lunch, there was goat cheese, spinach, and tomato soup,
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which worked quite well with Oikia oat crisps.
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For dessert, Marjavasu redcurrant kissel.
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Photography of the production facilities was prohibited at this site, so this report will not be a picture parade like the one from LapWall. The CEO admitted that such a prohibition might not be very necessary, but we decided to respect the rule. I did get to peek at the production facilities from the office window, from which they were clearly visible. At the same time, a maintenance person happened to be there who was able to talk about, among other things, the autoclave method, which was also clearly visible.

I had been pondering the functionality of this autoclave for different food types. I had thought it was best suited for soups and pasta dishes, but apparently, it is quite versatile. It would be good for the food to contain water, as it acts as an excellent heat transfer medium in the process. For this reason, for example, pizza reportedly doesn’t work and tasted like “pig’s ear” when tested.

Organizational Change in Focus

The lunch discussion focused quite a bit on the administrative organizational change, where the old holding company’s four-CEO model has been changed to a one-CEO model. At the same time, Marjavasu’s business has been integrated into Feelia’s business, both organizationally and physically by moving production from Kuopio to PyhĂ€ntĂ€. This apparently happened at the beginning of the year, and things have gradually started to roll.

I also brought up PyhĂ€ntÀ’s location, especially regarding the workforce. Currently, the company is looking for a production director, for which they have reportedly received a good number of applications, so there doesn’t seem to be a problem in that regard. Additionally, they have an open vacancy for a commercial director.

Wulff is originally from Kuopio, but does not have the same ties to PyhÀntÀ as is common for many companies in the region. It was considered that in the midst of such a change, it might even be a good thing to come into the situation from the outside and perhaps be able to act more objectively. She has experience with similar changes and growth from her previous job, so she seems quite suitable for this role.

It sounded a bit like the organization had been somewhat left behind by growth, and now they need to pause for a moment to get it in order so that growth can continue. She believed that the administrative changes would be sorted out by Christmas.

Business

I didn’t ask much about Oikia, as it was discussed quite a bit in Inderes’ earnings interview. Generally, I inquired about raw material prices, and apparently, beef is currently causing problems. It’s seemingly unavailable in Finland and would need to be imported from the EU, which would then require its own permits. I understood that the company can navigate this with different products and by replacing beef with pork, chicken, or plant-based solutions.

Generally, Feelia’s potential, especially in the public sector, was discussed. They have already received orders from the sector, but mainly from private operators. Negotiations with public entities are long, and politics play a role. On the other hand, it was considered that it’s worth investing in this sales work, as a contract then brings continuous revenue for a long time.

Lobbying is also likely worthwhile. Just before me, Juha HĂ€nninen, a National Coalition Party (Kokoomus) Member of Parliament, had visited the factory. What makes the situation amusing is that he had gone directly from Feelia to LapWall, meaning we crossed paths!

This report remained a bit short, as Wulff’s staff meeting began, and perhaps my own information about the company is also slightly incomplete.
However, real dividends were accumulated, and it’s pleasant to munch on them in the beautiful nature of the region.
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Disclaimer for this as well: the text is my own interpretation, which may be incorrect due to my incompleteness (of information/understanding).

P.S. Finally, one could also say that a deep dive into two companies in one day is quite a cognitively demanding task. At least for me.

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Inderesin kahvihuone (Osa 10)
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Thanks for this. It was interesting to read and also see from the pictures what the company I own looks like :wink: Apparently new products too, or at least I haven’t seen those flavors on store shelves. It also came as a surprise that LapWall (I don’t own it) is from the same locality and even so close.

These kinds of reports are nice, more of these! And I guess the company’s stock price will also start rising again, as time passes and misery and poverty continue in Finland, in municipalities and wellbeing services counties, and savings are sought.

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Well, well
 was this already here? The Western Uusimaa wellbeing services county is purchasing food services from Fodbar for the Raasepori, Hanko, and Inkoo areas. The estimated value of the procurement for a calculated four-year period is 13,000,000 euros (VAT 0%). Compass, Palmia, and Vireko all lost, and Fodbar won by a clear margin. This Fodbar concept clearly works, as long as the wellbeing services counties start tendering. Link to the decision https://luhva-d10julk.oncloudos.com/vhp/2025144037.PDF. Fodelia could be a bit more active in its communication; this is also a great win.

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