Karelia Tobacco (KARE) Q2 2025 earnings summary

Executive summary

• Net turnover for the first half of 2025 rose 13.7% year-over-year to €167.2 million, driven by increased sales volumes in both domestic and international markets.

• Operating profit increased 13.4% to €63.5 million, while EBITDA grew 12.0% to €67.0 million compared to the same period last year.

• Net profit after tax and non-controlling interest declined 29.8% to €41.5 million, mainly due to negative currency exchange differences of €21 million versus positive differences last year.

• Gross profit margin on net turnover slightly decreased to 46.5% from 47% year-over-year, reflecting higher input costs from prior-year tobacco purchases.

Financial highlights

• Group turnover (net of excise tax and VAT) reached €167.2 million, up from €147.1 million in H1 2024.

• Operating activities generated €63.5 million, up from €56.0 million year-over-year.

• Net financial result fell 14% to €10.6 million, impacted by lower interest rates and investment valuations.

• Profit before tax dropped 29.6% to €53.1 million; net profit after tax and non-controlling interest was €41.5 million.

• Basic and diluted EPS for the period was €15.05, down from €21.45 in H1 2024.

Outlook and guidance

• Sales volumes in early H2 2025 are trending positively, with expectations for continued growth in both domestic and international markets.

• Full-year 2025 international cigarette sales are projected to rise 10%, and RYO tobacco by 3%, barring unforeseen events.

• Management anticipates gradual gross margin improvement as procurement prices for tobacco and filters decline.

• Lower interest rates are expected to reduce income from time deposits and financial investments.

• The company continues its investment program to expand production capacity and flexibility.