Delfi Limited 1H 2025 Financial Results Analysis

Date of Results: 12 August 2025

Key Financial Metrics and Performance Overview

Delfi Limited reported its unaudited 1H 2025 results amid a challenging global environment characterized by record-high cocoa prices, currency volatility, and persistent economic uncertainty. Despite these headwinds, the company managed to keep Group Net Sales relatively flat year-over-year, while profitability metrics saw notable declines due to higher input costs and increased promotional spending.

^*2H 2024 figures inferred from charts and trends, as values are not explicitly stated in the report.

Segment and Geographic Performance

• Own Brands: Sales grew 3.1% YoY (5.9% in constant currency), driven by higher promotional spending in Indonesia and strong growth in the Philippines.
• Agency Brands: Declined 5.2% YoY, primarily due to weaker performance in Indonesia, partially offset by Malaysia.
• Indonesia: Revenue fell 4.6% YoY (1.3% in local currency) to \$162.0M.
• Regional Markets: Revenue increased 7.2% YoY (2.5% in local currency) to \$97.6M.

Cash Flow & Balance Sheet Highlights

• Net cash generated by operations: \$57.6M, up \$20M YoY due to improved working capital management and sales cycle alignment.
• Cash and equivalents (as of 30 June 2025): \$81.6M, after dividend payment (\$7.2M), capex (\$5.4M), and borrowing repayments (\$4.8M).
• Current ratio: 1.91 (vs. 1.95 as of 31 Dec 2024).
• Inventory days: 112 (improved from 124 at end-2024, reflecting sales activities tied to festive periods).

Exceptional Items and Expenses

• Results exclude a one-off expense from streamlining the Group’s Philippines manufacturing operations.
• PATMI (including non-recurring item): \$12.2M, down 37.7% YoY.

Dividend

• Interim dividend declared at 1.00 US¢ per share (payable 12 September 2025), representing a 50% payout of PATMI for 1H 2025.

Macroeconomic and Industry Context

• Record cocoa prices, currency volatility (especially a 3.4% weaker Indonesian Rupiah vs. USD), and economic uncertainty significantly impacted cost structure and profitability.
• Global operating environment remains challenging, with ongoing geopolitical tensions, inflation, and weaker consumer sentiment.
• High cocoa bean prices expected to continue weighing on industry margins.

Management & Board Outlook

“The global operating environment is expected to remain challenging through 2025 and into 2026, driven by ongoing geopolitical tensions, macroeconomic headwinds, and heightened uncertainty in international trade. Volatile currencies, slowing economic growth, weaker consumer sentiment, and persistent inflation continue to define an increasingly complex macroeconomic landscape. Meanwhile, sustained high cocoa bean prices remain a major challenge for chocolate manufacturers globally and are expected to continue weighing on industry profitability. Our teams continue to develop initiatives to mitigate the impact of higher input costs. Despite these short-term pressures, we remain focused on our long-term strategic priorities. Backed by decades of cocoa and chocolate expertise, strong brand equity, a strong culture of innovation, broad distribution capabilities, a healthy balance sheet, and resilient cash flows, we are well-positioned to navigate the shifting business environment. As uncertainties continue, we will closely monitor external developments and take timely, well-considered actions to remain on course.”

The tone is cautious but emphasizes long-term resilience and the company’s ability to navigate through current macroeconomic volatility.

Historical Performance Trends

• Group Net Sales have remained relatively stable over recent years, but profitability has been pressured by rising input costs and competitive pressures, especially in Indonesia.
• Gross profit margins have trended downward, reflecting higher cocoa prices and increased promotional expenditure.
• Disciplined capital expenditure and working capital management have preserved cash flows and a healthy balance sheet.

Conclusion & Investment Recommendation

Overall, Delfi Limited’s 1H 2025 financial performance appears neutral to slightly weak in the short term, with profitability metrics under pressure from industry-wide cost inflation and currency weakness. However, stable revenues, robust cash flows, and prudent capital management suggest resilience, while management’s focus on innovation and brand investment positions the company for recovery once input costs normalize.

• If you are currently holding Delfi shares: Consider maintaining your position if you have a medium- to long-term investment horizon, given the company’s solid cash flows, healthy balance sheet, and commitment to dividends. However, remain vigilant for further margin compression or macroeconomic deterioration.
• If you are not currently holding Delfi shares: It may be prudent to monitor the stock for now, as near-term earnings could remain under pressure due to high cocoa prices and currency volatility. Consider entering only if there is clear evidence of margin recovery or stabilization in input costs.

Disclaimer: This analysis is based solely on the company’s published 1H 2025 financial results and does not constitute personalized investment advice. Please conduct your own due diligence or consult a licensed financial advisor before making investment decisions.

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