Translation: Original published in Finnish on 10/25/2026 at 12:53 pm EET

Apetit's earnings outlook is mixed, as Food Solutions in Finland is developing well, while visibility into the earnings turnaround in Sweden and Oilseed Products remains weak. In addition to earnings challenges, the valuation of the share is strained by the increase in working capital tied up in the balance sheet, which increases net debt. We reiterate our Sell recommendation and EUR 11 target price.

Accounting-wise high earnings, weak cash flow development

The Q3 report was weaker than our expectations in terms of revenue at the group level, but clearly stronger in terms of EBIT. Revenue decreased organically by 4% and all segments performed weaker than anticipated, which was impacted by, e.g., the decline in exports in Food Solutions and the timing of cake deliveries in Oilseed Products. Adjusted EBIT improved to as much as 5.0 MEUR (Q3’25: 3.6 MEUR) and clearly exceeded our estimate (2.6 MEUR), which was mainly driven by stronger-than-expected seasonality in Sweden, resulting from accounting practices. The company capitalized the manufacturing expenses of harvest-season production on the balance sheet, as a result of which Sweden's Q3 EBIT exceeded revenue, even though the operation is unprofitable on an annual basis. The adjusted earnings of the Finnish operations were slightly weaker than expected, as Food Solutions' earnings exceeded and Oilseed Products' earnings fell short of our estimates. The company reported that commercial successes accelerated growth in retail within Food Solutions, while Oilseed Products has continued to suffer from weak pressing margins. Working capital increased to 51 MEUR, representing an increase of 8 MEUR from the beginning of the year and 14 MEUR y/y. This weighed on the balance sheet as net debt rose to 29 MEUR (Q3’25: 6 MEUR).

We raised short-term earnings estimates

Apetit reiterated its guidance for 2026 and expects EBIT to be between -2 and +1 MEUR. Our estimate is -0.9 (in the mid-range). For Q4, we expect strong performance for Food Solutions in Finland, supported by a favorable harvest season, a significantly unprofitable quarter for the Swedish pea business, and a moderately recovering earnings profile for Oilseed Products, supported by, e.g., rising feed prices. We raised our 2026-27 adj. EBIT estimates by 0.3-0.6 MEUR, but the 2028 estimate remained unchanged as we had already modeled a significant earnings turnaround for that year. In addition, our cash flow estimate for this year decreased due to a higher-than-expected working capital commitment in Q3. Apetitstated that it expects the efficiency measures in Sweden to be visible already in this year's earnings, but in our view, a more significant turnaround requires better pea harvests and an increase in production volume. In Oilseed Products, the market situation is challenging, and earnings recovery to the 2.3-2.9% EBIT margin level we expect for the coming years is uncertain.

Valuation remains tight also due to the swelling net debt

Apetit’ investment profile is defensive and capital-intensive, and its profitability fluctuates occasionally with harvest seasons and changes in the cost environment. Apetit can grow its earnings in the long term, but due to its capital-intensive nature, we estimate that value creation will be low. The EV/EBIT-based valuation has become expensive in recent years due to both earnings challenges and the relative weakening of the balance sheet (working capital was tied up during 2026). As the forecasted earnings turnaround materializes, EV/EBIT will decrease to 17x and 12x in 2027-28, which in our view are still above a fair level (~10x). We expect the company to continue paying a dividend, albeit below last year's level (2025: EUR 0.7, 2026e: EUR 0.45), even though earnings will remain negative in the short term. However, the dividend yield alone is not enough to provide a good expected return. Even if the company's earnings turnaround progresses in line with our estimates, we see the expected return as weak due to high valuation multiples, which are likely to need digestion for the next few years.