Translation: Original published in Finnish on 2/27/2026 at 7:54 am EET.

Apetit announced on Thursday that it is considering closing its frozen pizza factory in Pudasjärvi and exploring alternative models, such as contract manufacturing, for frozen pizza production. We consider the shutdown of weakly profitable production to be a sensible move, as Apetit's market share in frozen pizzas is low, and thus the prerequisites for competitiveness are weak. Discontinuing the business could have a negative impact on the company's revenue, but a strengthening effect on profitability. At the same time, streamlining operations would support investment capacity in the growth areas central to the strategy. In addition, Apetit's associate company (stake: 20%) Sucros is also planning to discontinue, among other things, cube and powdered sugar production to improve profitability.

Weak sales development and investment needs are driving change

Apetit invested approximately 2 MEUR in the Pudasjärvi frozen pizza factory in 2022 and renewed the brand and recipes of its pizzas. Despite the relaunch, pizza sales have not met the set targets. At the same time, the factory's renovation and equipment needs are significant and, according to the company, would clearly exceed the scale of the previous investment. In our view, transitioning to contract manufacturing or another more asset-light model would be justified for the company, as it would reduce investment needs and enable investments in businesses where the company has better competitiveness. The Pudasjärvi plant permanently employs 21 people, and change negotiations will begin in week 11.

Earnings forecasts are based on an improvement in profitability in the coming years

Although the reorganization of pizza production may lead to one-off costs and write-downs in the short term, we believe the measure will improve the profitability of the Food Solutions segment over a few years. Apetit's strategic focus has recently shifted towards pursuing growth in, for example, its pea and oilseed businesses, where the company is the sole producer in its operating countries.

We expect Apetit's adjusted EBIT to gradually rise from its current level. Our forecast for adjusted EBIT in 2026 is 5.1 MEUR, but we expect earnings to strengthen significantly as the strategy period progresses, reaching 7.2 MEUR in 2027 and 8.2 MEUR in 2028. Earnings growth is particularly influenced by the anticipated turnaround of the unprofitable pea business in Sweden, but the profitability of Finnish operations is also expected to improve. The now announced consideration of a change in the production model supports this expected earnings improvement, as the company focuses on more efficient businesses that offer a better return on capital.

Associate company is cutting down on the production of specialty sugar products

Apetit owns 20% of Sucros Oy, whose sugar refining business is highly dependent on sugar price movements and refining sector margins. The industry's profitability deteriorated significantly in 2025, which was also reflected in Sucros's earnings contribution to Apetit (-2.8 MEUR). Sucros is now implementing cost-saving measures, as the company has initiated change negotiations and is considering discontinuing the production of cube, granulated, and powdered sugar in Finland at its subsidiary Suomen Sokeri's factory in Kirkkonummi. There are also plans to transfer the raw sugar refining operations from Kirkkonummi to Sucros' factory in Säkylä. The measure could lead to the redundancy of up to 40 permanent employees. The production of regular sugar and liquid sugar products would remain in Kirkkonummi. We believe the measure is driven by both industry profitability challenges and a shift in consumption habits, as sales of baking products have been declining in recent years, and the consumption of cube sugar is likely unfamiliar to younger generations.

The measures are likely to have a positive impact on profitability, but we do not believe this alone will turn Sucros' result positive. We believe that a positive earnings turnaround will also require a market recovery, which will be partly influenced by the reduction of competing European sugar refining capacity. We have assumed in our forecasts that Sucros will break even in 2026 and contribute 1 MEUR to Apetit's earnings in 2027-28, which is close to the long-term average earnings.