Apetit: New strategy more growth-oriented and riskier than before

Translation: Original published in Finnish on 12/19/2025 at 4:48 pm EET.

Apetit published a new strategy for 2026-2028 on Friday. The strategy is more growth-oriented than before, supported by, among other things, the company's recent acquisition in Sweden, which expanded its frozen pea business. Pulses (legumes) and the BlackGrain ingredient are also a key part of the growth plans, but investments related to these are still being planned. We interpret that profitability may be under pressure during the early part of the strategy period, but the company aims to improve its results towards the end of the period. The company will present its new strategy at a separate press conference on February 17, 2026.

Growth orientation is emphasized in the strategy

The new strategy's growth ambitions are summarized in four key points:

1. Strong growth in Sweden
2. Commercial breakthrough for BlackGrain
3. Growth from pulses (legumes) 
4. Increasing volumes of rapeseed oils

None of the chosen growth themes are particularly surprising, as we understand that the company has been planning growth investments around these themes for some time now. Growth in Sweden was already included in the previous strategy, which primarily consisted of exporting Apetit products manufactured in Finland to the Swedish market. With the Foodhills acquisition, which closed at the end of November 2025, Sweden's importance has been further emphasized. Foodhills is Sweden's only large producer and grower of frozen peas, but its operations have been loss-making to date.

The rapeseed-based BlackGrain ingredient has been under development since 2017, and the company is accelerating its commercialization as part of its new strategy. End products utilizing the ingredient, such as patties and veggie balls, have recently been sold to foodservice customers. However, we estimate that the majority of future BlackGrain growth will be based on ingredient sales to the food industry. The solutions for BlackGrain's mass production are still pending a decision, and the possibilities include both outsourcing final production and building proprietary production capacity.

In pulses (legumes), Apetit is considering starting its own pea protein production and is also exploring opportunities in the fava bean sector. The potential initiation of pea protein production would also require a somewhat significant investment from the company. The development of pulse products and plant proteins also aligns with the commercialization of the BlackGrain ingredient, which could enable the company to become a significant producer of healthy plant-based ingredients for the food industry.

Key to the growth of Rapeseed Oils is increasing the volume of value-added end products. These include, for example, vegetable oils for consumers and restaurants, but also the utilization of production side streams in, for example, the production of BlackGrain. Over the past two years, the company has invested in its own oil bottling capacity and in the BlackGrain raw material manufacturing process.

Earnings facing pressure in the short term

Apetit set the following financial targets for 2028:

• Operating result (EBIT) over 10.0 MEUR (2024: 9.3 MEUR).
• Return on capital employed (ROCE) over 7.0% (2024: 8.3%).

The targeted EBIT (over 10 MEUR) is 1 MEUR higher than the targeted level at the end of the previous strategy period (2023-25) (over 9 MEUR). The company already achieved a solid EBIT of 9.3 MEUR in 2024, but this year, earnings are expected to decline significantly (guided EBIT of 5.6-6.6 MEUR, excluding the impact of the Foodhills acquisition). We interpreted that the company expects earnings to be weaker in the initial phase of the new strategy period (e.g. due to losses in Sweden), but aims for earnings to strengthen towards the end of the strategy period, supported by strategy-aligned growth and a profitability turnaround in Sweden. We currently forecast the company's EBIT to rise to 9.1-9.7 MEUR in 2027 as the integration of the Swedish Foodhills acquisition progresses and profitability improves. However, the uncertainty related to the earnings turnaround is significant.

The targeted return on capital employed (ROCE > 7%) is 1 percentage point lower compared to the previous strategy period. We estimate this reflects the increased capital base due to the Foodhills acquisition. The acquisition of Foodhills significantly increased the company's balance sheet, and the realized purchase price was clearly lower than the book value.

Growth-seeking entails more risk-taking than before

In our view, the new strategy entails a higher level of risk than before. We believe that the clearest risk to the strategy's success is related to Foodhills' earnings turnaround. Foodhills' EBIT has been negative, averaging roughly 3 MEUR per year in 2020-2024. Apetit did not yet disclose clear concrete actions to turn around profitability in its strategy release. Growth in BlackGrain and Pulses also entails risks if the company invests significantly in them, as assessing the long-term commercial potential of new ingredients can be challenging. Apetit's balance sheet is quite strong (2025e net debt: 11 MEUR, net debt/EBITDA: 0.8x), which supports opportunities for investments and risk-taking.

Our current Reduce recommendation is partly due to the elevated risk level and the weak short-term earnings outlook. Elaborating on the strategy's nuances and concrete evidence of a profitability turnaround in Sweden could make the stock more attractive than it is now.