Translation: Original published in Finnish on 07/30/2025 at 07:50 am EEST

HKFoods will announce its Q2 results on Wednesday, August 6, around 8.30 am EEST. We expect the company to continue its efficiency-driven earnings growth, supported by, e.g., automation investments completed last year. Q2’s operating environment has been quite challenging due to, e.g., strikes and a cool early summer.

Source: Inderes

Rather low market demand expected

We forecast Q2 revenue to be 258 MEUR, representing only slight growth from the comparison period (255 MEUR). Over the past 12 months, revenue has grown partly due to accounting-technical growth related to the Polish bacon unit, but we estimate that this effect will be very small in Q2'25 (less than 1% of revenue). We estimate that the demand environment in Finnish retail has remained challenging, influenced by factors like a cool early summer and a moderate weakening in demand for cold cuts due to new nutritional recommendations. In addition, food industry strikes have probably hampered deliveries for the Easter and May Day seasons. We expect HKFoods' market share to have developed favorably in retail and foodservice channels. In addition, poultry product exports to China support export volumes.

Earnings growth continues even amid the challenges

Our adjusted EBIT forecast is 7.1 MEUR and assumes significant earnings growth from the relatively weak comparison period (Q2’24: 4.4 MEUR). The main earnings growth driver is linked to the company's significant efficiency investments, which were completed around mid-2025. Strikes in early Q2 have likely caused a negative earnings impact of 1-2 MEUR, due to, e.g., overtime compensations and weaker delivery capability. The availability of beef has been weaker than usual in H1 and producer prices have risen, but our basic assumption is that it has no significant impact on Q2 earnings.

No guidance change expected, balance sheet position still interests

We expect the company to maintain its guidance for 2025 that expects comparable EBIT to increase from the previous year (27.7 MEUR). More information about the company’s balance sheet position could be obtained in connection with the Q2 report. In April, the company announced that it was considering selling its Polish bacon unit, but in July, it announced that the unit would remain part of HKFoods. This can be interpreted in two ways: 1) either the company does not need the proceeds from the sale and can redeem its expensive hybrid bond with internal cash flow, or 2) the potential sales price was too low, in which case the net benefit from redeeming the hybrid would have been negligible. In our forecasts, the hybrid bond will not be redeemed until fall 2026, when the company will have a sufficient safety margin for its current loan covenants.