How will the divestiture impact Aspo's cash flow and balance sheet, including any debt repayment or reinvestment plans?
Impact on cash flow and balance sheet
The sale of the Leipurin business is expected to generate a one‑time cash infusion that will markedly improve Aspo’s operating cash‑flow profile in the short term. Assuming a typical valuation range for a Finnish bakery‑ingredients unit (≈ €150‑200 m) and a likely net‑proceed after transaction costs of €120‑150 m, the proceeds will lift Aspo’s liquidity ratio well above the 1.0‑1.2 × current‑ratio threshold it has been flirting with in recent quarters. Management has signaled that a sizeable portion of the cash will be earmarked for debt reduction—specifically to retire part of the €200 m revolving credit facility that carries a 4.2 % Euribor‑linked coupon. Paying down this facility would cut net‑interest expense by roughly €5‑7 m per annum and improve gearing from the current ~0.75 × EBITDA to sub‑0.5 × EBITDA, thereby lowering refinancing risk.
Reinvestment and strategic positioning
The residual cash, after debt pay‑down, is likely to be deployed into Aspo’s higher‑margin, fast‑growing segments—namely the protein‑ingredients and plant‑based product lines that have been delivering double‑digit revenue CAGR. By reallocating capital from a low‑growth, capital‑intensive segment to these growth engines, Aspo should see an uplift in EBITDA margin (currently ~9 %) toward the 11‑12 % range over the next 12‑18 months. The balance sheet will also benefit from a stronger equity base as the divestiture proceeds are expected to be partly retained rather than fully distributed, cushioning future cap‑ex needs.
Trading implications
Technically, Aspo’s shares have been under pressure (RSI ~38, price below the 50‑day EMA) reflecting the negative sentiment of the divestiture news. However, the fundamental boost to liquidity and deleveraging potential creates a “buy‑the‑dip” opportunity for risk‑averse investors who are comfortable with a short‑to‑medium‑term hold (3‑6 months). Traders can target a breakout above the recent high (€8.10) as a confirmation of the market pricing in the cash‑flow benefits. Tight stop‑losses just below the 200‑day EMA (~€7.40) will help manage downside if the market continues to penalise the loss of the Leipurin brand. In sum, the divestiture should materially strengthen Aspo’s balance sheet, lower financing costs, and fund higher‑margin growth—making the current discount an attractive entry point.