Apetit: Small dent in Food Solutions’ earnings development

Translation: Original published in Finnish on 12/15/2025 at 08:17 am EET

Positive organic momentum got a hit when Apetit downgraded its 2025 guidance, citing delays in seasonal harvest production. According to the company, the impact on the business is not very significant, but rather related to timing. However, the weaker earnings decreases our view of Food Solutions' normalized earnings level. In addition, the acquisition of the unprofitable Foodhills at the end of November will keep the earnings-based valuation multiples for the coming years, as well as the uncertainty related to earnings development, elevated. We reiterate our Reduce recommendation and lower our target price to EUR 13.5 (was EUR 14.0).

This year's EBIT will fall short of expectations

Apetit announced on the afternoon of Friday, December 12, that it was downgrading its 2025 earnings guidance. The Group's EBIT, excluding the impact of the Foodhills acquisition, is estimated to be 5.6-6.6 MEUR (2024 9.3 MEUR) Previously, Apetit expected the Group's EBIT, excluding the impact of the acquisition, to decrease slightly from the comparison year. The company justifies the profit warning by the delay in harvest season production due to operational reasons. The company typically processes and stores large quantities of vegetables in H2 and records the earnings impact through an increase in the value of inventories. This year, a larger-than-expected portion of this harvest season production is shifting to after the turn of the year. According to the company, the delay does not have a significant impact on the Food Solutions business, although it does affect the 2025 EBIT. Q4 adjusted EBIT is estimated to be only 0.9 MEUR with our current estimates (Q4'24: 2.4 MEUR), although an estimated 9 MEUR one-off earnings impact from the Foodhills acquisition will positively affect the reported figures.

We cut our assumption for a normalized earnings level slightly

We significantly decreased our adjusted EBIT estimate for 2025. Previously, we expected EBIT without the impact of the Foodhills acquisition to be 8.4 MEUR; we now estimate 6.4 MEUR, which is 24% less than before. There were no major revisions to the 2026-27 EBIT estimates (2026 increased by 3%, 2027 decreased by 2%). The shift in production could even support the earnings in Food Solutions in early 2026, but in the big picture, weaker-than-expected 2025 earnings development slightly lowers our estimates for the normalized earnings level. Our previous estimates were based on the good earnings trend of recent years, but with the profit warning, the strong H2'24 earnings in Food Solutions now look more like an exception than a baseline performance.

Foodhills' earnings turnaround still a question mark

Apetit's current stock valuation is high examined on an earnings basis (adj. EV/EBIT 2025-26e: 15.5x and 12.6x), considering the sector's domestic peers and Apetit’s historically modest return on capital employed. However, earnings have been on an upward trajectory in recent years, e.g., as Food Solutions has increased volumes in products with a more favorable margin profile. The Foodhills acquisition from Sweden, completed at the end of November, has, however, raised the stock's risk profile. Sweden's largest producer of frozen peas, Foodhills, has long been unprofitable, and we estimate it will still generate an operating loss of -2.4 MEUR in 2026. Our estimates include an earnings turnaround for Foodhills for 2027-28 (EBIT: 0.2-0.6 MEUR), but the visibility of success in this area is still low. Apetit'sstock has a cheap balance sheet valuation (0.8x), which is influenced by the very low purchase price paid for Foodhills relative to its book value. If the earnings turnaround is successful, earnings-based multiples would again decrease to attractive levels, and the upside potential indicated by the balance sheet-based valuation could materialize. However, the international nature of the acquisition and the unprofitability of the target increase the riskiness of the investment case and the required return premium until more concrete evidence of a turnaround is available.