Magnum Ice Cream Company's stock price plummeted 14% due to underwhelming performance and weak guidance.

Investing.com - On Thursday, Dutch ice cream manufacturer Magnum Ice Cream’s stock plummeted over 14% after the company reported fiscal 2025 results that missed analyst expectations, and provided guidance indicating profit margin pressures will persist into 2026.

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The company reported an adjusted annual EBITDA of €917 million for the year ending December 2025, down 5% from the consensus estimate of €962 million. Adjusted earnings per share were €0.93, below the analyst forecast of €1.02.

Free cash flow sharply declined from the analyst expectation of €288 million to €38 million, an 87% drop, raising concerns about the company’s financial flexibility ahead of planned acquisitions in Portugal and India.

Organic sales growth for the full year reached 4.2%, below the consensus of 4.9%. Adjusted EBITDA margin declined by 100 basis points year-over-year, whereas an increase of 5 basis points was expected.

Performance in the fourth quarter deteriorated sharply, with organic sales growth turning negative to -0.7%, versus the expected 3.7%. Quarterly volume and product mix declined 3.0%, compared to an expected 0.5% increase.

The company’s guidance for fiscal 2026 projects organic sales growth of 3% to 5%, versus the consensus of 3.4%.

However, the adjusted EBITDA margin guidance on a “comparable” basis is 40 to 60 basis points, translating to only 0 to 20 basis points on a “reported” basis, below the consensus of 21 basis points.

Morgan Stanley analysts noted that the margin difference “mainly reflects the impact of the expected acquisition of the Indian business in the first half of 2026.” The firm stated that “improvements during the year will be more concentrated in the second half of 2026, due to phased implementation of transitional service agreements and commodity price effects.”

Morgan Stanley indicated that the midpoint of the guidance range implies a downward revision of the consensus adjusted EBITDA for 2026 by a single-digit percentage.

The Europe and Australasia region, which accounts for the largest share of revenue, saw organic sales growth of 3.3% in fiscal 2025, below the 4.2% consensus.

The region’s adjusted EBITDA margin declined 150 basis points year-over-year, worse than the expected 50 basis points decline. Volume grew 1.2%, versus the expected 1.9%.

Performance growth was mainly driven by the UK, France, and Spain, while Italy underperformed. Magnum, Ben & Jerry’s, and Cornetto brands achieved high single-digit growth.

In the Americas, organic sales increased 0.8%, below the 1.4% consensus, with volume flat, versus the expected 0.9% growth.

Adjusted EBITDA margin declined 65 basis points year-over-year, better than the expected 30 basis points increase. Yasso maintained double-digit organic sales growth.

Other regions worldwide performed strongly, with organic sales growth of 10.9%, slightly below the 11.3% consensus.

Volume grew 4.5%, versus the expected 4.7%, while price and product mix increased 6.1%, versus the expected 6.6%. Adjusted EBITDA margin declined 80 basis points year-over-year, an improvement from the expected 90 basis points decline.

By the end of 2025, the company achieved €250 million in cumulative cost savings, exceeding the initial IPO guidance range of €230-240 million.

The acquisitions in Portugal and India are still expected to be completed in the first half of 2026. The company stated that it still aims to exit the transitional service agreements by the end of 2027.

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