The Magnum Ice Cream Company (Q+A) | Buy | What will be the impact of lower input costs?

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The Magnum Ice Cream Company (Q+A) | Buy | What will be the impact of lower input costs?

The Magnum Ice Cream Company Buy | EUR17.60

Investment conclusion

Since the company's listing in Amsterdam in December 2025, Magnum's shares have gained

c. 26%, outperforming the wider European foods and consumer index. However, the

company still has much to prove, and the volatility of the shares has been significant. We

see Magnum as a classical turnaround case, whereby it can achieve much more outside of

Unilever than within the H&PC-focused group.

Growth rates already improved over2024-25, but profit margins are still at least 400bps

below the medium-term level we deem as realistic. As of H2 2026E, we expect both margins

and profit growth to pick up, which should act as a trigger to further reduce the valuation

gap versus peers.

With cocoa prices declining by 60-70% from their peak levels, and sugar and dairy prices

also developing in a favourable direction, we are increasingly confident that the benefits

from the structural margin improvement plans will become visible over the next 12 months.

These are based on a EUR500m productivity plan, of which the supply chain accounts for

c.70%, which is well underway with EUR250m in savings realised over 2024-25. We still

believe more is possible, and in particular, Magnum’s margins in Europe appear very low

compared to both the past and Froneri’s EU margins.

Based on our detailed analyses of Magnum’s cost base, raw material exposure, and its

hedging & buying strategies, we would argue that the COGS bill could decline by c. 200bps

in 2026E, primarily driven by lower cocoa prices. Although Magnum’s hedge book showed a

14% lower price YOY at the start of 2026, we think the EBITDA expansion will be more

skewed toward H2.