Declining Net Profit MarginA material drop in net margin signals rising cost pressures or weaker pricing power that can persist absent structural cost fixes. Continued margin compression would erode retained earnings and limit reinvestment ability, making earnings more sensitive to input swings over months.
Weakening Free Cash FlowReduced free cash flow conversion curbs the firm's ability to fund capex, pay down liabilities, or return capital. In an industry with seasonal working capital swings, weaker FCF magnifies liquidity risk and can force reliance on external financing during adverse commodity cycles.
Commodity Price ExposureBusiness model is tightly linked to soybean and edible oil spreads; structural volatility in input and finished goods prices can cause persistent earnings variability. Without scale, hedging, or margin capture improvements, performance will remain exposed to market-driven swings.