Flora - comment

Flora, Flora’s Q3 results demonstrated slightly stronger resilience than anticipated, with volumes declining by only 0.9%. Gross profit contracted by 250bps, primarily reflecting ongoing commodity and input cost inflation. However, recent price increases are expected to mitigate this impact in Q4.

Our forecasts for FY25 remain marginally below the Company’s projections, as we had anticipated a further downward revision to guidance. Nonetheless, Flora has reaffirmed its Q2 guidance for the remainder of the financial year.

Overall, performance was broadly in line with expectations. Continued softness in the US market and the weaker US dollar were offset by a modestly stronger performance in Europe. Leverage increased slightly to 6.6x (Company calculation), or 7.5x on a post-restructuring cost basis, but is expected to improve to around 7.3x by year-end.

Reported sales declined by 1.5%, with adverse foreign exchange movements weighing on results. Regionally, Europe remained stable, with pricing gains largely offsetting volume and mix effects, and pricing contribution continuing to strengthen. In contrast, the Americas reported a 6.3% decline in sales, including a 5.3% FX headwind, reflecting persistent macroeconomic pressures in the US and similar trends in Canada. AMEA delivered robust sales growth, although the region still represents only around 12% of total sales.