Lipton Q2 Adj. EBITDA Jumps 69% YoY on Easy Comp; Lowers FY Outlook; Sponsor CVC Shores Up Management With New CEO, CFO, Commits Equity Support If Needed

Lipton Teas and Infusion, fka Ekaterra, reported a double-digit year-over-year jump in EBITDA for the second quarter ended June 30, flattered by an easy comparable. The global tea business has lowered its full-year guidance in the face of further headwinds, however, sponsor CVC has brought in a heavyweight new management team and has committed to providing additional equity if the business needs it, sources said.

Second-quarter net revenue fell 6.9% year over year to €334 million from €359 million the same quarter last year. Volume improved 3% year over year, however this was more than offset by pricing pressure in some of the group’s key markets such as Egypt, Pakistan and the U.K., and adverse currency movements. Adjusted EBITDA rebounded to €61 million from €36 million over the same period, reflecting an exceptionally weak performance in the second quarter of 2024.

However, the second half of 2025 is looking more challenging than the company previously expected, with Lipton facing additional one-off costs, adverse currency moves, pricing investments to regain volume and higher spend to bring brand and marketing investment, or BMI, back up to its long-term average of around 12% of sales from its unsustainable low of just 7% in the fourth quarter of 2024.

As a result, management lowered its full-year outlook to €280 million to €300 million reported EBITDA, and €318 million to €338 million adjusted pro forma EBITDA, compared with around €365 million adjusted pro forma EBITDA under its original guidance. However, it expects second-half run-rate pro forma adjusted EBITDA to reach €360 million, and free cash flow generation to come in at around €30 million to €50 million, which is broadly in line with the €50 million cash generation level it previously guided, and would leave the group with €140 million to €160 million of core liquidity at year-end.

Lipton burnt €130 million of cash during the second quarter, largely driven by its semi-annual interest payments and one-off restructuring charges. This left it with €108 million of liquidity as of June, comprising €91 million of cash and €17 million of remaining availability under its €375 million RCF. However, management noted that this marked the trough and is expected to improve in the second half. CVC told lenders that its investment committee approved providing additional capital if Lipton requires further liquidity, although Lipton’s management does not expect this to become necessary.

The sponsor has also strengthened Lipton’s management team, bringing in Mark Busain as CEO and Johan Malmqvist as CFO. Busain comes from global beer giant Heineken, where he was the president of the Americas, while Malmqvist is the former CFO of Polestar, Lilium and Dole Food Company. Both candidates have a strong track record in the consumer goods sector, sources noted.

The group’s net leverage through its second lien debt and calculated using €375 million LTM June adjusted end-state EBITDA eased to 8.6x from 9.5x at the end of March. Net leverage based on €322 million LTM reported EBITDA came to 10x.

While the near-term outlook remains challenging, the group is making progress with its turnaround. Overall volume started to recover in its main emerging markets, rising 10% year over year during the second quarter, after having fallen 15% in the same period of 2024 and dropping 15% in the first quarter of this year.

Lipton is also making headway in regaining distribution – including in North America with Walmart – which helped grow volume 5% year over year in the region, and is continuing to launch innovative tea products to offset the decline in its core black tea market, sources added.

Lipton Teas’ capital structure as of June 30:
 

According to Octus’ CLO database, Lipton’s loans are held by the following managers. Click HERE to see the holders in the database.