Q4 sales rose by +23% yoy thanks to strong foreign yogurt growth (+41%). But a combination of elevated raw material & payroll costs, along with lower yogurt prices in Greece, resulted in EBITDA and net losses of E1.4m and E1.8m, respectively. DPS at E0.40 on a 38% payout. Kri-Kri exceeded its FY sales guidance (E256m vs E245m) but fell short of its EBIT target (E37m vs E39m) as the EBIT margin settled 100bps lower than projected. Management anticipated maintaining a 14%-15% EBIT margin in 2025, implying +15%-20% EBIT growth, on +17% higher sales to E300m.

This is our BoP Greek equities briefing. We have not made many changes compared to our semi-annual one in July: we downgraded Alpha and Helex; and upgraded Eurobank. Plus, we re-visited GEK, reiterating OI and replacing its soon-to-be-delisted RES subsidiary, Terna Energy.

Kri-Kri reported Q3 sales/EBITDA/net income of E77m/E14m/E10m or +20%/+14%/+12% yoy thanks to foreign yogurt sales growing by +34% yoy. This performance confirms FY guidance for sales >E245m and EBIT margin at 16%. It also confirms the double-digit growth outlook of sales and earnings in 2025-2026, which is a sight for sore eyes in the low earnings growth Greek equity universe…

Kri-Kri reported FY EBIT -3% below our estimate and -6% below their own mid-point guidance. DPS at E0.35 from E0.20. Still, 2023 was a record P&L and cash flow year, with RoE @ 31% and FCFE yield @ 9%, partially on lower costs and stronger volume, but mainly thanks to higher prices.
Which management said will reduce this year (further, as yogurt prices were reduced by 5% in H2), resulting in a -300bps lower EBIT margin (at 15%) on +8%-11% higher sales (>E233m), despite lower raw material prices. More importantly, Kri-Kri plans to enter new countries and/or introduce new products in existing ones.

Q2 results were impressive and validated the sweet spot theme enjoyed by most of the companies we cover: higher prices + lower costs = higher margins. Pricing accounted for 80% of the gross profit increase yoy. Operating leverage did the rest for the bottom line, with annualized RoE in Q2 at 58%!
The question is: are current margins sustainable? Kri-Kri believes they are. They raised 2023 EBIT guidance to E33m from E24m, implying E7m in H2 vs E26m in H1. Seasonality explains the decline with management adding price discounts, uncertainty, and extra costs. Still, E7m of EBIT is remarkable considering H2 is usually loss-making.