• '25e-'27e adj. EBITA down 5-3%
• Weaker UK retail sales could impede EBITA growth
• '25e EV/adj. EBITA of ~9x, nearly 50% below peers

What to expect in Q2'25

We expect sales of SEK 1,914m for Q2'25, implying ~7% organic y-o-y growth in addition to a ~3% FX headwind. The Easter holiday should be a contributor to organic growth in the quarter, but a detractor on the gross margin, which we believe should be just short of 31%. Humble is likely to continue investing in marketing and expanding capacity, and we therefore do not foresee conditions for margin expansion in this quarter. Moreover, Quality Nutrition is likely to continue to face challenges, and the company's UK exposure (i.e. Sustainable Care) is likely to take a hit from tougher conditions for discount retailers. Therefore, we expect EBITA of SEK 122m, corresponding to a 6.4% margin.

'25e-'27e adj. EBITA down 5-3%

We cut '25e-'27e sales by 1% and adj. EBITA by 6-4% because of weaker UK retail sales figures. We highlight that a significant portion (more than a third) of Humble's EBITA originates from the UK. Given Humble's historical commentary on capacity-increasing investments and their future benefits, we do not believe that they will halt this quarter. That said, we expect them to bear fruit in the later part of '25e and beyond. With respect to freight rates, we no longer anticipate a meaningful tailwind from a normalisation of freight rates in our '26e-'27e estimates, while we acknowledge that a weaker USD can be beneficial for overall gross margins.

Valuation

Based on our revised estimates, the company is trading around 9x '25e EV/adj. EBITA, while peers are trading at an average of 17x despite growing earnings at a generally slower rate. However, we note that peers are trading ~10% above their historical average.