Premium Brands Holdings trims earnings forecast on beef costs

Core Viewpoint - The rising cost of beef has prompted Premium Brands Holdings to lower its annual adjusted EBITDA forecast, although the company still anticipates an increase in adjusted EBITDA for the year [1][2]. Financial Performance - Premium Brands now projects adjusted EBITDA for 2025 to be between C$670-680 million ($478.1-485.2 million), down from the previous estimate of C$680-700 million [2]. - In 2024, the group's adjusted EBITDA was C$593.7 million [2]. - The company reported record third-quarter adjusted EBITDA of C$179.1 million, a 12.4% increase compared to the third quarter of 2024 [3]. - Third-quarter revenue reached C$1.99 billion, reflecting a year-on-year increase of 19.1%, with organic volume growth of 10.1% [3]. - Despite record adjusted EBITDA, the company's margins were below expectations due to double-digit cost inflation in key beef raw materials [3]. Strategic Outlook - The company believes the current challenges with beef prices are transitory and is implementing targeted pricing actions and new procurement initiatives to restore margins [4]. - Premium Brands aims to achieve a mid-term targeted annual adjusted EBITDA margin of 10% [4]. - The acquisitions pipeline is described as robust, with several transactions expected to close in the next quarter or two [4]. Acquisitions and Financial Strategy - The company is committed to deleveraging its balance sheet throughout 2025 and fiscal 2026, with any acquisitions being conducted within this framework [5]. - Recent acquisitions include Denmark Sausage for US$21 million and three other companies announced in December [5]. Recent Losses - Premium Brands reported a third-quarter loss of C$1.7 million, compared to a profit of C$25.4 million in the same period the previous year [6]. - For the first nine months of the year, net earnings were C$28.8 million, down from C$84.2 million in the first nine months of 2024 [6].