High Liner Foods Navigates Q1 Challenges with Resilience

High Liner Foods ((TSE:HLF)) has held its Q1 earnings call. Read on for the main highlights of the call.

High Liner Foods’ Q1 2025 earnings call highlighted a challenging quarter, primarily due to the later timing of Lent, a slowdown in foodservice, and foreign exchange impacts. Despite these hurdles, the company showcased resilience through strong retail performance, innovation, and operational efficiencies. The promising start to Q2 indicates potential for recovery and growth despite the headwinds.

Retail Channel Success

Volumes and sales in the retail business grew during Q1 2025, driven by targeted promotional activities and new product innovations, such as the Sea Cuisine shrimp skewers. The U.S. retail market, in particular, saw notable growth with brands like Fisher Boy and Sea Cuisine outperforming the category.

Innovation and Product Development

High Liner Foods increased its focus on innovation, introducing new products like Sea Cuisine shrimp skewers and Cheddar Biscuit Tilapia, which have been well-received in the market. The company is also leveraging alternative species to combat price and supply challenges.

Operational Performance and Strategic Initiatives

The company implemented effective promotional strategies and operational improvements, maintaining a stable gross margin percentage despite various headwinds. These strategic initiatives have been crucial in navigating the challenging macroeconomic environment.

Strong Start to Q2 2025

Despite the challenges in Q1 due to the late timing of Lent, the company reported strong performance in April 2025, setting a positive tone for Q2. This early success in the quarter reflects the company’s resilience and adaptability.

Decline in Sales and Volume

Sales decreased by $8.6 million or 3.1% to $268.4 million in Q1 2025, and sales volume decreased by 1.5% to GBP66 million. This decline was attributed to the later timing of Lent and a slowdown in foodservice traffic.

Impact of FX and Canadian Dollar Weakness

The conversion of a weaker Canadian dollar resulted in a $3.5 million decrease in sales and a $1 million decrease in gross profit in Q1 2025 compared to the same period in 2024. This foreign exchange impact added to the quarter’s challenges.

Decreased Adjusted EBITDA

Adjusted EBITDA decreased by $2.1 million or 6.1% to $32.1 million, with a decrease in adjusted EBITDA as a percentage of sales to 12% compared to 12.4%. This decline reflects the broader challenges faced during the quarter.

Increased Net Debt

Net debt increased by $41.5 million to $274.7 million at the end of Q1 2025, reflecting higher bank loans and a lower cash balance. This increase in net debt highlights the financial pressures faced by the company.

Forward-Looking Guidance

During the earnings call, High Liner Foods provided detailed guidance on its financial performance, highlighting several key metrics despite the challenging macroeconomic environment. The company expressed optimism in its resilience and strategic initiatives, projecting strong performance for the first half of 2025. It aims to maintain a net debt to adjusted EBITDA ratio below its long-term target of 3x by the end of fiscal 2025.

In summary, High Liner Foods’ Q1 2025 earnings call reflected a challenging period influenced by external factors such as the later timing of Lent and foreign exchange impacts. However, the company’s strong retail performance, innovation, and strategic initiatives underscore its resilience. Looking ahead, High Liner Foods remains optimistic about its growth prospects and financial stability, setting a positive tone for the remainder of the year.