Flora - comment

Flora released its Q1 results yesterday, which came in slightly below expectations. There were a few mitigating factors, including the timing of Easter, but the update also highlighted ongoing challenges faced by the U.S. consumer. The outlook for FY25 points to continued, albeit modest, deleveraging, with EBITDA guidance in the flat to low single-digit growth range.

As we revise our model, we are inclined to exit the subordinated bonds. With only €300 million of subordinated debt remaining on top of €5.3 billion in senior notes, we view the credit risk as limited. However, with the subordinated bonds trading near par and yielding approximately 6.5%, we believe there are more attractive opportunities elsewhere.