The cost of beef has had a significant impact on Canada’s Premium Brands Holdings, leading the processed-meats and deli-foods manufacturer to revise its forecast for annual adjusted EBITDA. Despite still expecting a rise in adjusted EBITDA for the year, the company has adjusted its guidance due to the ongoing increase in the cost of beef raw materials.
Premium Brands now projects that its adjusted EBITDA will reach C$670-680m ($478.1-485.2m) in 2025, down from its previous guidance of C$680-700m. In 2024, the group’s adjusted EBITDA reached C$593.7m. On the other hand, the company has increased its forecast for full-year sales to C$7.4-$7.5bn from the previous projection of C$7.2-7.4bn.
Despite the challenges posed by rising beef costs, Premium Brands saw record highs in adjusted EBITDA and revenue in the third quarter of the year. Adjusted EBITDA stood at C$179.1m, a 12.4% increase from the third quarter of 2024, while third-quarter revenue reached C$1.99bn, a 19.1% year-on-year increase with volumes growing by 10.1% on an organic basis.
President and CEO George Paleologou acknowledged the impact of double-digit cost inflation for certain key beef raw materials on the company’s margins in the quarter. However, he expressed confidence that this challenge is temporary and that measures are being taken to address the issues causing the rise in beef prices. Premium Brands is implementing targeted pricing actions and developing new procurement initiatives to restore margins in affected product categories and aims to achieve its mid-term targeted annual adjusted EBITDA margin of 10%.
Paleologou also highlighted the company’s robust acquisitions pipeline, noting that several transactions are in progress and expected to close in the next quarter or two. However, he emphasized the company’s commitment to deleveraging its balance sheet over the course of 2025 and fiscal 2026, ensuring that any transactions align with this objective.
In recent months, Premium Brands has been active in acquisitions, including the purchase of Arizona-based premium sausage manufacturer Denmark Sausage for US$21m. The company also announced three other acquisitions in December, further expanding its presence in the market.
Despite booking a third-quarter loss of C$1.7m, Premium Brands remains focused on driving growth and profitability. With revenues for the first nine months of the year reaching C$5.58bn, compared to C$4.83bn in the same period the previous year, the company is navigating challenges and opportunities in the market to achieve its strategic goals.
The article “Premium Brands Holdings trims earnings forecast on beef costs” was originally published by Just Food, a GlobalData owned brand.
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