Translation: Original published in Finnish on 4/27/2026 at 8:04 am EEST.

Apetit's Q1 report fell short of our expectations as earnings were weighed down particularly by the unprofitability of Foodhills and cost pressures. Although the company reiterated its guidance, we believe the earnings outlook is weaker than before because cost pressures are overshadowing it. In light of the report, we have lowered our profitability forecasts for the current and future years. The share valuation is high on an earnings basis, and visibility into an earnings turnaround remains dim. As a result, we lower Apetit's recommendation to Sell (was Reduce) and our target price to EUR 12.5 (was EUR 13.0) in line with our downward revisions.

Q1 earnings were burdened by cost pressures and higher-than-expected losses

In Q1, Apetit's revenue increased by 5% to 46.1 MEUR, below our estimated 48.2 MEUR. The weaker-than-expected growth was due to Food Solutions' sales volumes in Finland, which remained at the comparison period's level. In Oilseed Products, tied to market price movements, revenue decreased by 8%, 1% below our estimate, due to declining volumes and stabilizing prices. Meanwhile, EBIT fell to -1.4 MEUR in Q1 (Q1’25: +2.3 MEUR), clearly below our EBIT forecast of 1.8 MEUR. Earnings in Food Solutions were weaker than both the comparison period and our estimates. This sluggish development was due to Foodhills’ losses and the impact of rising electricity prices. Earnings in Oilseed Products declined from last year, too, falling short of our projections due to raw material prices, lower volumes, a weaker sales mix, and a narrowing crushing margin. We had also expected an earnings improvement from the associate company Sucros, but its losses remained flat year-on-year, causing EPS to fall to EUR -0.47,  well below our estimate.

Guidance reiterated, but earnings outlook weaker than before

Apetit, as expected, reiterated its recently lowered earnings guidance for 2026, and the company still estimates that EBIT will decrease significantly relative to the comparison period (2025: 5.9 MEUR excluding the non-recurring impact of the Foodhills acquisition). The guidance also includes one-off costs and write-downs (~2.3 MEUR) related to the closure of the frozen pizza factory. Although we expected the company to reiterate its guidance, its operational profitability in the early part of the year was weaker than our estimates. In addition, cost pressures overshadow the company's outlook due to the tightened geopolitical situation and the conflict in the Middle East.

We have revised our earnings forecasts for Apetit downward for 2026, taking into account the earnings shortfall in Q1, as well as the aforementioned cost pressures and pricing delays. Our earnings forecast for 2027–2028 has also been lowered by approximately 9%, as the outlook for the company’s earnings improvement is weaker than before and cost inflation is expected to continue into next year as things stand. In our 2026 estimates, the adjusted EBIT of the old businesses (i.e., excluding non-recurring items related to the closure of the frozen pizza factory) will be 4.0 MEUR, but Foodhills' operating loss of 2.4 MEUR weighs on the total adjusted EBIT, bringing it to 1.6 MEUR. Due to sluggish volume growth and cost pressures in the beginning of the year, our earnings estimates will be more moderate than previously expected, despite seasonality supporting earnings accruals toward the year’s end.

Valuation is not attractive, and there is uncertainty surrounding the turnaround

Based on our 2026 estimates, Apetit's share valuation is high on an earnings basis due to the weak earnings level and unprofitability of the business acquired in Sweden. Even if the Swedish business were to turn around and become profitable, the multiples based on our forecasts would remain above our estimated fair value of the share (~10x) in the coming years. Thus, even a successful earnings turnaround would not make the share neutrally valued at the current price. Additionally, visibility into an earnings turnaround for the business is dim, considering its prolonged unprofitability and the challenges typically associated with international acquisitions. In our view, the stock price already reflects the earnings improvement we forecast, which is why the expected return in our analysis remains below the required return.