This report does not constitute a rating action. Higher input costs and promotional costs amid rising competition may constrain Arnott?s EBITDA margin growth over the next two to three years. Recent price increases for key inputs have pressured the company's cost base. While sugar and wheat prices have moderated, cocoa prices remain elevated. Input-cost hedging and operational efficiency improvements may mitigate this. We forecast a mid-17% EBITDA margin for the next two years. We expect EBITDA growth of 5%-6% in fiscal 2025-2026, supporting deleveraging. Arnott?s strong brand equity for core products positions it for steady earnings growth amid subdued consumer sentiment. Incremental contributions from the company?s recent acquisition of Mother Earth, Flemings, and Value Pack brands will further support growth.
