United Petfood performs better than expected in 2024, with positive forecast this year

In its recent analysis, the finance multinational firm gave United Petfood a ‘BB-’ credit rating, citing strong growth, high efficiency and a stable outlook.

The European private-label pet food manufacturer notes in its rating announcement that it had a strong 2024, far outpacing S&P’s expectations.

United Petfood posted €320 million ($332.4M) in earnings before interest, tax, depreciation and amortization (EBITDA) in 2024 – a 40% year-on-year (YoY) increase. This amount is significantly above S&P’s predicted range of €250 million ($259.7M) to €260 million ($270.1M).

S&P says much of this growth came from prices remaining stable despite material costs declining. The numbers followed “premiumization across categories, higher sales of wet [food] and snacks, operational improvements, as well as declining commodity costs – notably cereals, edible oils and energy – while selling prices remained relatively stable,” the report states.

The report mentions that United Petfood “benefits from leading market positions” for its private label and co-manufacturing businesses in the dynamic pet food market.

“It also has a highly efficient asset footprint and a favorable product and channel mix that supports above average profitability in the outsourced European pet food industry,” it says.

Outlook

S&P expects United Petfood to generate EBITDA of €310 million ($322M) to €330 million ($342.8M) in 2025 and €355 million ($368.8M) to €375 million ($389.6M) in 2026. The report says acquisitions, mix improvements and organic growth are behind the company’s high expectations.

“We expect about 9% organic growth annually coming from higher volumes and the ramp-up of the recently acquired assets.”

The financial group has also praised United Petfood for a unique mix of channels, evenly exposed to both mass retailers and brand owners. “We view the exposure to the brand owners’ channel as supportive of bargaining power and customer stickiness because the company acts more like a partner than a private-label manufacturer.”