HKFoods Q1'25 preview: Efficiency-driven earnings growth continues

Translation: Original published in Finnish on 04/30/2025 at 07:15 am EEST

HKFoods will announce its Q1 interim results on Wednesday, May 7, at around 8.30 am EEST. We expect the company to continue on the path of earnings growth, driven by automation investments completed last year. Market development has been somewhat challenging in Q1, which could limit organic growth.

We expect the company to have grown faster than the market

We expect HKFoods Q1’s revenue to be 249 MEUR, which would be 9% higher than in the comparison period. We believe a significant part of the growth (6-7 pp) will be generated through accounting-technical revisions in the Polish bacon business. Our organic growth forecast is 2.5%. We expect the company to have continued its good momentum in terms of market share, especially in the foodservice segment. Market growth in itself has probably even been slightly negative in Q1, which is influenced by, e.g., new nutritional recommendations, rising unemployment in Finland, and the timing of Easter this year clearly in Q2.

Efficiency enhancements support earnings development

We estimate Q1 adjusted EBIT to be 3.4 MEUR, which is clearly stronger than in the comparison period (Q1’24: 1.4 MEUR). In addition to the forecasted growth, the earnings improvement is affected by, e.g., the efficiency improvement in industrial operations, as the company completed automation investments of the Rauma poultry plant and the Forssa meat packaging plant in mid-2024. We assume that financial expenses (excl. hybrid interest) have decreased to 4.4 MEUR due to, e.g., a decrease in the amount of debt and the interest rate (Q1'24: 4.9 MEUR). We estimate net income for shareholders to be 0.3 MEUR before hybrid interest or -0.7 MEUR after hybrid interest.

Positive earnings outlook for 2025 if the market does not surprise

HKFoods guides for comparable EBIT to increase from 2024 (27.7 MEUR) in 2025. Our forecast of 28.8 MEUR assumes only a small increase in earnings. The company’s operational efficiency measures and, e.g., the increase in poultry exports to China support earnings. On the other hand, there are also uncertainties at market level, such as the rise in beef prices due to weak supply, and possible temporary delivery challenges caused by strikes at the beginning of Q2. There is also uncertainty about the demand picture, as we believe that the barbecue season was exceptionally good in 2024. In addition to the Q1 result, our attention is drawn to the management’s comments regarding the market outlook.