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Kri-Kri | Spoon by spoon into the world

Yogurt momentum in UK and Italy increase our confidence in the growth profile; Buy – Kri-Kri’s strategic focus on international markets continues to deliver, with robust demand for authentic Greek yogurt, particularly in the UK and Italy. Category growth remains particularly strong, with volumes up >40% in the UK and c20% in Italy in 2024, supported by consumer demand for natural products aligned with health and wellness trends, a momentum we expect to persist in 2025. With the ability to scale efficiently—underpinned by a modern production platform and expertise in PL—KRI is well positioned to benefit from expanding shelf presence, a broadening customer base, and capacity already being added to meet rising demand. With these in mind, we have lifted our revenue forecasts by 5-10%, now projecting revenue growth of 19% in 2025e and 13% in 2026e. This will translate into 20%/17% EBIT growth in 2025-26e, followed by c14% through to 2029e, assuming that EBIT margins settle in the 15-16% area (vs 14.5% in 2024) supported by operating leverage, improved mix, and cost pass-through mechanisms embedded in PL contracts. The resulting margin places Kri-Kri at the upper end of the European food manufacturing peer set. With a 2-digit growth algorithm and valuation still undemanding (c9x 2025e EV/EBITDA), we reiterate our Buy rating.

2024 results softness should not cause trepidation; 2-digit growth story intact – While the sharp rise in input costs during H2’24 weighed on margins and led to an earnings miss, investors should not be alarmed. The near-term outlook remains compelling, with pricing adjustments already in place to offset cost inflation and PL agreements—covering most of its international yogurt sales—including cost pass-through clauses, thus providing a buffer. We thus expect flattish EBIT margins in 2025e (14.6%), with a gradual accretion in the coming years as input pressures ease. In our view, the medium-term growth story remains intact, supported by structural drivers such as rising demand for Greek yogurt abroad and Kri Kri’s growing footprint in high-potential markets.

Internally funded investment plan; scope for heftier cash returns – Kri-Kri continues to deliver strong free cash flow, consistently converting >70% of EBITDA into operating cash—allowing the group to fully self-fund its investment program without leveraging the balance sheet. This financial flexibility supports the €50m capacity expansion plan currently underway for 2025–27, aimed at doubling output in both yogurt and ice cream. The company’s cash-generative profile is further reflected in its sector-leading returns, with ROE primed to remain above 24-25%, and a net cash position of c€12m in 2024. Importantly, solid FCF also provides strategic optionality and leaves meaningful headroom for continued shareholder returns going forward (EEe 38% payout).

Valuation: increasing PT to €18.1; High-conviction Buy – As a result of the profit uplift to our medium-term estimates following our recent visit to KRI’s facilities (feedback in this report) and the roll-over of our valuation to April 2026, we raise our PT to €18.1, effectively valuing KRI at c11.4x 2025e EV/EBITDA, a small premium vs the current valuation of foreign peers, as we argue that KRI’s superior growth more than offsets the drawback of the smaller size and liquidity. We reiterate our high-conviction Buy, finding the valuation of c9x 2025e EV/EBITDA palatable as it represents a >15% discount vs dairy peers despite the superior growth.