Tereos (AO) | Sell | Another exit point - bonds downgraded back to Sell

Research evidence excerpt

Tereos (AO) | Sell | Another exit point - bonds downgraded back to Sell

Release date: 28 May 2026

Cyril Benayoun, CFA

Senior Credit Analyst

Sell (Hold) +33 1 70 81 57 29Tereos cbenayoun@keplercheuvreux.com

France | Food

Moody's: NR

Fitch: BB

Composite: BB-

Bloomberg: Tereos

Another exit point - bonds downgraded back to Sell

Key points:

Tereos remains in preservation mode as market conditions across its main products remain challenging.

Reductions in operating expenses and capex, along with non-core asset disposals, allowed Tereos to mitigate the decline in

profitability and free cash flow generation in FY 2025/26 (FY ending March 2026). Q4 and FY 2025/26 results released yesterday

were broadly in line with our expectations at the revenue and profit levels, while net debt was slightly better than expected

thanks to asset disposals.

However, FY 2026/27 shapes up as another year of deterioration, rather than the transition year that could have been hoped for a

few months ago. This renewed decline in profitability will result in deteriorated credit metrics that are not commensurate with

current ratings assigned by rating agencies in any way. We view the company as a single B credit in a cyclical industry.

In this context and in light of the outperformance of all Tereos bonds since our upgrade to Hold last January (see here), we

believe it is (again) time to take profit and exit all positions. The recently issued 8.125% 2032 bonds have performed well and are

still quoted well above par (101.3 bid).

FY 25/26 highlights

FY 2025/26 revenues reached EUR5,132m, down 13% YOY, while adj. EBITDA fell by 48% to EUR416m, both broadly in line with our

expectations. EBIT was negligible at EUR29m, and the net loss reached a staggering EUR590m, due to goodwill impairment in