Salada 6M 2025 Earnings “Brews-ed” By Higher Operating Costs

• After reporting robust earnings in its first quarter ended December 31, 2024 (Q1 2025), Salada Foods' performance stalled in Q2 2025, with the company recording a 10.1% dip in earnings for the six months (6M) ended March 31, 2025. The decline was primarily driven by higher operating costs.

• Gross profit growth increased by only 3.3% to J$236.82Mn reflecting modest revenue growth that was partially eroded by higher direct costs. For the 6M period, revenues increased by 5.7% to J$767.90Mn, backed by a 6.6% improvement in domestic market sales and a 1.6% uptick in export revenues. This growth reflects the company’s ongoing strategic marketing initiatives and distribution expansion efforts. However, direct costs grew in tandem, with cost of sales rising by 6.8%.

• Continued investment in developing export markets to support brand expansion resulted in operating costs surging by 22.9%. and a 13.6% drop in operating profit to J$107.19Mn, compared to J$124.07Mn in the prior year period. The combined effect of rising costs and modest revenue growth compressed the operating margin, which fell from 17.1% to 13.9% in H1 2025.

• Despite a 47.0% uptick in net financing income, as interest income on invested funds exceeded financing expenses, Salada’s net profit margin declined to 11.6% from 13.6% in the prior corresponding period.

• At the close of the market on May 14, 2025, Salada’s shares closed at $3.25, implying a P/E ratio of 19.1x, which is above the Main Market Distribution & Manufacturing Average of 15.9x.

(Sources: Salada Foods Financial Release & NCBCM Research)