Upfield - comment

Upfield reported its Q2 2024 financial results yesterday and followed up with a call. In general, the quarter was below our estimates (with the exception of margins) with the call being short with few questions asked. Q2 2024 revenues were €733 million which was worse than our expectations which was driven by selective and disciplined price/promo reinvestment and hence we intend to be more conservative in our assumptions on price & promotion going forward to model our revenues for H2 2024. Q2 2024 gross profit was €296 million which was behind our expectations though gross margins were better at 40.4% than our estimates at 37.8%. Q2 EBITDA came at €191 million vs. our estimates at €205 million with margins at 26% vs. our estimates at 25.3%. EBITDA seems to be growing at a stable rate with leverage at 6.4x. The company’s guidance for FY 2024 was low single-digit organic decline for net sales, low single-digit EBITDA growth and continued deleveraging. This is clearly a story of sequential improvement in volumes, pricing and promotion in the second half of 2024….lets hope the sun keeps shining for a refinancing of the senior notes which is still our expectation though timing may get pushed to 2025.