Valuation trends

Cheese custom index vs food market index

During the last three years, the cheese custom index has outperformed the food & beverage industry benchmark (FTSE all — food producers — world index).

Cheese - past three years’ EV/sales multiples

Cheese - past three years’ EV/EBITDA multiples

During the last three years, average revenues and EBITDA trading multiples — of the selected cheese listed players — have registered interestingly different patterns. Even though the average revenue multiple has linearly increased from 1.0x to 1.4x, the average EBITDA multiple has followed a less regular route. In fact, after having peaked at 14x EV/EBITDA in December 2015, the set touched its lowest value the following year, namely at 11x in December 2016.

The reason behind this erratic movement can mainly be attributed to the drop in raw material prices (during 2016, European farm-gate milk prices reached their lowest value since 2009; source: CLAL). As proof, the set’s average EBITDA margin as of December 2016 reached 11.5% vs 10.2% registered in December 2015. The increase in farm-gate prices after 2016 has brought the EV/EBITDA back to a normal level of 12.5x.

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