Q1’25/Q4’24 EU Earnings Weekly: Week Ended May 2 – Q4’24 Late Reporters See Strong Performance Led by IT, Healthcare; Early Q1’25 Earnings Less Promising Dragged by Consumer Discretionary, Materials

Relevant Items:
Q4 Earnings Analytics
Fundamentals by Octus

Octus’, formerly Reorg, Europe market-focused weekly earnings tracker seeks to highlight top-down trends in financials of LevFin issuers as they report through the earnings season.

This installment of the tracker for the week ended May 2 has two data sections that take into account both delayed Q4’24 reports, and companies reporting Q1’25 results, with our analyst team also providing select sector insights and trends.

Data for First Quarter of 2025

With first-quarter 2025 earnings now underway, a total of 34 high-yield and leveraged loan issuers were covered by Fundamentals by Octus for the week ended May 2. Fundamentals focused on the major loan and bond index constituents.
 

The following observations were made using the 53 companies that have reported their Q1’25 results in the past two weeks and are included in Fundamentals by Octus.
 

• Quarterly revenue growth for the cohort reporting during the week ended May 2 was negative 1.1% when looking at the median. It has improved from the negative mid-single-digits from the same quarter a year earlier, however, trailing the low-single-digit growth seen from the previous quarter.
   
• Quarterly EBITDA median growth was negative 8.6%, falling further behind growth of the same period last year and the previous quarter. IT was the only sector, where with a sample size of at least three companies, the median company growth was positive. Excluding IT companies growth declined further, almost to negative 10%.
   
• When looking at sectors that had three or more companies report last week, the only sector where the median company had positive quarterly revenue and EBITDA growth was IT. Conversely, the median consumer discretionary company posted negative growth in both regards, lagging behind other sectors.
   
• EBITDA margin for the median company was 16.5%, slightly improving compared with margins from the previous quarter and the same quarter a year earlier. Median unlevered free cash flow margin was 1%, which was a slight improvement compared with the same period last year, though lagging significantly behind the previous quarter, with one of the key reasons being seasonality.
   
• Median net leverage was 4x, in line with the same period last year, though an increase of around 0.4x compared with the previous quarter. Median interest coverage was 3.6x, in line with the previous quarter, albeit lower for the cohort when compared with the same quarter a year earlier due to a double whammy, as EBITDA growth declined further while interest cost increased year over year for the median company.

All Companies – Revenue Growth Distribution, Q1 2025

Sample includes companies from the week ended May. 2
 

All Companies – Earnings Overview – Key Metrics, Q1 2025
 

From a distribution perspective, the latest rolling two-week data showed 48% of companies posting positive quarterly revenue year-over-year growth and 48% posting positive EBITDA growth.

The distribution of delta between current (first-quarter 2025) versus prior year (first-quarter 2024) year over year growth was more skewed to the positive in terms of revenue growth, while evenly distributed in terms of positive versus negative EBITDA growth.

All Companies – Distribution – Revenue & EBITDA Growth & Delta, Q1 2025

Sample includes rolling last three weeks of earnings
 

The week ended May 2 data shows that companies were significantly more represented in the bottom left quadrant (42.4% of companies, highlighted in red in the chart below) of quarterly revenue growth, which reflects companies that experienced negative revenue growth in both the first-quarter 2025 and first-quarter 2024. At the same time, 12.1% of companies saw a divergence, showing positive quarterly revenue growth in first-quarter 2024 but experiencing a contraction in first-quarter 2025.

All Companies – QRT Revenue Growth YoY Distribution, Q1 2025

Sample includes companies from the week ended May. 2, excluding outliers
 

All Companies – Weekly Earnings Overview – Sectors, Q1 2025

Sample includes companies from the week ended May 2; median values except sample size.
Note: Sectors with fewer than three companies and unassigned sector companies were excluded.

 

All Companies – Quarter-to-Date Earnings Overview – Sectors, Q1 2025

Sample includes all 2025 first-quarter-to-date companies; median values except sample size.
Note: Sectors with fewer than three companies and unassigned sector companies were excluded.

 

Data for the fourth quarter of 2024

The figures below represent late fourth quarter 2024 earnings, with a significant majority of companies from the private sector. A total of 60 high-yield and leveraged loan issuers were covered by Fundamentals by Octus for the week ended May 2. Fundamentals focused on the major loan and bond index constituents.
 

The following observations were made using the 98 companies that have reported in the past three weeks and are included in Fundamentals by Octus.
 

• Quarterly revenue growth for the cohort reporting during the week ended May 2 was 3.4% when looking at the median. It was in line with the same period last year, while slightly improving compared with the previous quarter. Growth was primarily driven by Consumer Discretionary, Healthcare and IT companies. Excluding them, growth was 2.1%.
   
• Quarterly EBITDA median growth was 4.4%, while slightly above the growth of the previous quarter, it was more than two times lower compared with the same period last year. The three aforementioned sectors had an even more pronounced impact on EBITDA growth. Excluding Consumer Discretionary, Healthcare and IT companies, median growth was 1.5%.
   
• When looking at sectors that had three or more companies report last week, the median IT company led with double-digit growth in terms of both quarterly revenue and EBITDA. Median Consumer Staples lagged behind in terms of quarterly revenue growth, posting a negative figure of 4.6%. In terms of quarterly EBITDA growth, Materials was the only sector where the median company was in the red, at negative 4.8%.
   
• EBITDA margin for the median company was 21.1%, slightly trailing margins from the previous quarter and the same quarter a year earlier. Median free cash flow margin was 15.1%, an improvement of 200 bps to 500 bps when compared with the same period a year earlier and to the previous quarter.
   
• Median net leverage was 5.2x, a slight increase versus the same period last year and the previous quarter. Median interest coverage was 2.8x, which was slightly below the same period last year figure.

All Companies – Earnings Overview – Key Metrics, Q4 2024
 

The week ended May 2 data shows that companies were significantly more represented in the top right quadrant (39.1% of companies, highlighted in green in the chart below) of quarterly revenue growth, which reflects companies that experienced positive revenue growth in both the fourth-quarter 2024 and fourth-quarter 2023. At the same time, 13% of companies saw a divergence, showing positive quarterly revenue growth in fourth-quarter 2023, but experiencing a contraction in fourth-quarter 2024.

All Companies – QRT Revenue Growth YoY Distribution, Q4 2024

Sample includes companies from the week ended May. 2, excluding outliers
 

All Companies – Weekly Earnings Overview – Sectors, Q4 2024

Sample includes companies from week ended May 2; median values except sample size.
Note: Sectors with fewer than three companies and unassigned sector companies were excluded.
 

All Companies – Quarter-to-Date Earnings Overview – Sectors, Q4 2024

Sample includes all 2024 fourth-quarter-to-date companies; median values except sample size.
Note: Sectors with fewer than three companies and unassigned sector companies were excluded.
 

In addition to the Octus data above, our analyst team provides select sector insights and trends below:

Credit Watchlist

Several risky or distressed companies, including Tele Columbus, Ams-Osram, Amara NZero and Ellaktor, have recently reported earnings that reflect ongoing financial and operational challenges.

Tele Columbus, the German broadband provider which suffers from continuous cash burn due to the high capex requirement for fiber investment, reported weak 2024 results, in line with our expectation in the recovery analysis HERE.

The company is navigating declining revenue and EBITDA pressures, driven by regulatory TV losses due to bulk migrations, with a 5.7% year-over-year drop in revenue (€426.3 million) in 2024 and 3.3% in EBITDA (€138.5 million). On the upside, the company has continued to see significant growth in its internet services, making it the fastest-growing internet operator in Germany on a quarter-over-quarter basis.

For 2024, capex, excluding leasing, increased by 18% year over year to €215.6 million, mainly driven by investments in network infrastructure and consumer growth. During the fourth-quarter earnings call, the company stated it is considering raising additional financing opportunistically to accelerate its capex program to upgrade more of the network to fibre, which has been behind schedule. We note that this is aggressive, given that net leverage (including the shareholder loan) was 9x at year end.

The company has completed the first phase of separating its network services (NetCo) and service operations (ServCo), with key agreements in place. It is now moving into phases two and three, including subsidiary migrations and preparing the carve-out of accounts. See our earnings follow up for more details HERE.

Austria-based high-performance sensor and lighting solutions producer Ams-Osram reported relatively strong first-quarter 2025 results, with revenue reaching €820 million – at the top of its €750 million to €850 million guidance range – and an adjusted EBITDA margin of 16.4%, slightly above midpoint expectations. Despite ongoing cyclical softness in automotive and industrial/medical semiconductor markets, consumer electronics demand remained resilient.

The group may struggle to deal with the 2027 maturity of its €760 million convertible notes, which have recently traded up six points to 86 amid interest from distressed funds. These funds could benefit from a pull to par, should the convertibles be successfully refinanced next year. On the earnings call management stated that a reduction in leverage could be achieved through a transfer of the sale-and-leaseback of the group’s closed Malaysian facility which creates a €429 million liability. Additionally, management is seeking to make a number of asset disposals which could yield around €500 million of cash proceeds. These actions would make it more likely that the group will be able to successfully refinance the notes however this would also be contingent on the extension of the group’s unsecured RCF which currently matures in 2026. The RCF is currently undrawn, however it backstops a €585 million put option, which is likely to be exercised in the second half of the year, according to management.

On a positive note, AMS-Osram’s “Re-establish the Base”, or RtB, cost saving program is ahead of schedule, with €135 million in run-rate savings achieved and a new target of €225 million by end-2026. Capex dropped to €52 million (6.3% of sales) and is expected to remain below 8%, down from 14.6% in 2024, following the cancellation of its microLED project in Malaysia.

Spanish B2B energy transition solutions provider Amara NZero finds itself caught in the crosshairs of a sectorwide slowdown in solar installations. It experienced a contraction in both revenue and profitability, primarily driven by marketwide declines in solar module prices and increased structural costs due to international expansion. Revenue in 2024 fell 14% year over year to €591.7 million and adjusted EBITDA dropped 31% year over year to €32.5 million. Octus’ analysis on Amara NZero’s which discusses cash burn and liquidity runway can be found HERE.

Support from the sponsor Cinven may be needed if market headwind persists. On the fourth-quarter earnings call, a representative from Cinven said they do see the value in the business, but want to see if Amara could reach an EBITDA of €50 million or more after implementing the various initiatives to turn the business around, suggesting that Cinven would support the company at a later date if needed and there was still growth potential, as mentioned in our earnings analysis HERE.

Greek infrastructure group Ellaktor’s revenue from continuing operations fell 12% year over year to €253.6 million in 2024 mainly due to the non-consolidation of Attiki Odos (toll motorway system in Greece) for the last three months of 2024, due to the expiration of the relevant concession agreement on Oct. 5, 2024, when Attiki Odos was handed over to the Greek State. EBITDA from continuing operations fell 34.4% year over year to €149.6 million in 2024, which was driven by the revenue decline as well as that prior period benefited from a profit of €55.7 million from the sale of Smart Park and other properties in its real estate segment.

Automotives

Automotive first-quarter earnings releases from both sides of the pond illustrated the volatile environment in which the industry is currently operating. Last Tuesday, April 29, the Trump administration announced modifications to the offset mechanism for U.S. tariffs.

The latest executive order offers to offset a portion of the tariffs for auto parts used in vehicles assembled in the U.S., using a formula tied to how many cars they sell and the price. A separate order was also signed to prevent the stacking of tariffs on automobiles, steel, aluminum, and imports from Canada and Mexico.

Despite these latest twists, nearly all major OEMs lowered or withdrew their full-year earning guidance citing the continuously evolving tariff policies making it impossible to reliably forecast.

Among Detroit’s Big 3, General Motors, the most exposed OEM to U.S. tariffs, estimated a $4 billion to $5 billion impact from tariffs in 2025, taking into account the offset mechanism announced by the president on Tuesday, while Ford projected a $1.5 billion negative impact on EBIT for the year. Stellantis did not quantify the tariff’s impact but withdrew its guidance for a moderate recovery this year.

Elsewhere, Mercedes, the German premium auto maker, estimated that if tariffs remained in place all year, it would reduce its profit margins by 300 bps on cars and 100 bps on vans.

More encouragingly, Volkswagen did not withdraw its guidance though it said it expected operating margin to be at the lower end of guidance of between 5.5% and 6.5%.

The first-quarter results were relatively heterogeneous. Stellantis reported a 14% drop in revenue following a 20% slump in volumes in North America. Luxury automaker Aston Martin‘s revenue and EBIT both dropped by 13% year over year in the first quarter. Mercedes sales fell by 7%, with car and van sales declining by 6% and 17%, respectively. Sales in the U.S. market however increased by 1%.

The better performers include General Motors, whose revenue and volumes are both up 2% year over year. Volkswagen sales were up by 2.8%, with a 1% volume growth, including 4% in Europe and 17% in South America. These offset the decline in North America and China, respectively down 2% and 6%.

Parts suppliers impacted by U.S. tariffs maintained their ambition to fully pass on the costs to their customers.

Valeo for instance said it is “making progress” on neutralizing the direct impact of tariffs. It is holding firm on its business policy to obtain compensation for 100% of the costs. The group confirmed its guidance for fiscal year 2025 which includes sales growth, EBITDA margin improvement and stable free cash flow year over year. In the first quarter, sales declined by 2.1% year over year as reported and by 0.8% organically.

The 2024 fourth-quarter earnings season concluded with releases from the small and mid-sized automotive suppliers Antolin, Adler Pelzer, Standard Profil, Conceria Pasubio and Paragon.

Their performance ranges from poor to robust, with Standard Profil reporting a 16% year-over-year drop in revenue and 66% year-over-year drop in adjusted EBITDA due to low volumes and Adler Pelzer enjoying stable revenue and 37% year-over-year rise in adjusted EBITDA.

Paragon, another German manufacturer of electronic parts, also experienced a 16% year-over-year decline in sales to €135.7 million due to lower customer call-offs. EBITDA was however stable on a like-for-like basis through higher margin product mix and cost saving measures. For 2025, it expects a 3% to 7% increase in sales based on order book and volume expectations.

The group said it is not possible to forecast the impacts of the U.S. government’s tariff policy on the automotive industry, citing the “confusing global situation.”

Another interior parts supplier, Spanish group Antolin, whose revenue dropped by 6% in the fourth quarter, expects revenue to fall by as much as 5% in 2025 but EBITDA margin to improve. In the U.S., it also indicated that it is in constructive dialogue with its customers regarding compensation for any tariffs-related costs. Most of its products are however USMCA compliant and are sold locally, implying tariff impacts will be indirect through lower volumes.

Conceria Pasubio, a leather supplier to the automotive industry, recorded an 8.5% year-over-year decline in sales in 2024 and a 2.5% drop in adjusted EBITDA. It explained that its earnings were impacted by a contraction in production volumes in the European automotive market which was partly offset by a decrease in raw material prices, which has helped ease cost pressures.

A rare outperformer is Adler Pelzer, a German auto supplier of interior parts which recorded a 2.3% year over year growth in revenue and a 37% growth in EBITDA. It cited the benefits of the full integration of acquisitions completed in 2021, operational improvements implemented in all regions, as well as successful management of pass-through for material cost increases. The group guides for relatively flat revenue in 2025 and a 7% year-over-year increase in EBITDA.

Healthcare

The healthcare sector continues to demonstrate resilience, driven by the essential nature of its products and services. Most of the high-yield healthcare bonds are yielding between low 3% to high 5%, according to IHS Markit. While the broader healthcare industry remains robust, certain individual companies, such as Cheplapharm and Cerba, are facing certain operational challenges.

Asset-light German pharmaceutical company Cheplapharm reported a 3.3% year-over-year decline in fourth-quarter revenue, with EBITDA falling by 27.5% in Q4, due to persistent supply chain disruptions and delays in technology integration. The weak quarterly performance reflected persistent supply-chain disruptions and delays in technology integration, which hindered its ability to leverage its typical M&A growth drivers.These issues were not isolated but reflected broader structural challenges across 2024. For the full year 2024, EBITDA fell sharply by 14.9% year over year, though the decline was largely expected by investors after the sales shock in Q3’24.

The company has indicated that 2025 will focus on stabilization, emphasizing supply chain resilience, accelerating product integration, optimizing marketing and driving efficiency gains across processes. Cheplapharm’s 7.5% 2030 notes have risen up 4 points since April 28, now quoted around 96.5 post results, yielding 8.5% according to Solve.

Despite these challenges, we continue to view Cheplapharm as a fundamentally sound credit, supported by comfortable loan-to-value ratios. Our recovery analysis highlights a senior secured LTV of 55.7% in the base case, indicating that debt remains well-covered even amid operational disruptions.

EQT-backed French clinical laboratory Cerba reported underwhelming fourth-quarter results, with a 2.7% year-over-year decline in Q4 revenue and a 6.7% drop in EBITDA. Soft numbers were expected on the back of a surprisingly large regulatory tariff price cut of 9% in September. For the 2024 financial year, top line fell by 1.8% year over year, while EBITDA marked a 2% decline. The 2028 senior secured notes have fallen 2 points since April 28, now quoted around 75.5, yielding 13.7%. The 2029 senior unsecured notes have fallen approximately 5 points in the same timeframe, now quoted around 32.5, yielding over 40%.

Its key sponsor, EQT, did not participate in the call to provide any guidance for potential support. With deteriorating sales, no sign of a turnaround in the research business and an unsustainably high leverage (8.4x adjusted pro-forma EBITDA), the risk of restructuring and a liability management exercise is materially high.The reported results also fell short of Octus’ forecast in our LME option analysis, as a result of the delayed start of the $120 million research contract with the U.S. government.

This $120 million research contract, once seen as a positive development in a research division lacking profitability, is now at risk of being halted due to a cost review by the Trump administration. Management revealed that research contracts typically do not include compensation clauses and that the review process could take up to three months before a decision is reached regarding the U.S. government contract.

Additionally, management increased the synergies and remediation plan, raising pro-forma EBITDA by €3 million from €144 million in Q3 to €147 million in Q4. There are also changes in the composite of the adjustment, shifting more focus from top-line growth to cost-saving initiatives, which raises concerns that the EBITDA adjustment was overly ambitious and underscored the significant flexibility in the leverage calculation with EBITDA adjustments.

Chemicals

In the chemical sector, profitability continues to be eroded by pricing pressure amid weak demand, although there are early signs of recovery in volumes.

Ineos Group Holdings and Ineos Quattro reported their first quarter earnings last week. Both Ineos businesses highlighted there were signs of a volume recovery, but pricing was weak as supply continued to out strip demand in the polymers segments. Management attributed weak pricing in polymer related business segments to over supply. On a positive note, both businesses expected volume increases across segments in the second quarter although remained cautious.

On their outlook regarding the impact of tariffs, both groups said customers were localizing supply arrangements and that their diverse production footprint would mitigate against this. The groups also mentioned the cost of some raw materials and capex in the US could also increase.

Ineos Group Holdings saw its first quarter revenue increase by 10.9% year over year to €4.182 billion, though margin pressure, particularly in its polymers business, led to an EBITDA decline by 19.3% to €416 million.

In O&P (Olefins & Polymers) North America division, EBITDA fell to €172 million in the first quarter from €227 million due to margin erosion and lower inventory gains, while in O&P Europe division, EBITDA dropped to €71 million from €114 million despite revenue gains from recent acquisitions. Management pointed to persistent customer destocking, difficulty passing through energy cost inflation, and secondary effects from trade-related uncertainty as key drivers of compressed margins.

Ineos Quattro‘s first-quarter earnings call revealed a challenging quarter marked by a 7% year-over-year revenue decline and a 19% drop in EBITDA due to weak demand and high energy costs across its divisions, though the Inovyn segment saw sales improve. Despite these challenges, there’s cautious optimism for the second quarter. However, the overall demand environment remains fragile, and full-year guidance includes a revised capex, increased tax guidance and interest expectations.

Since the April 24 trading update, Ineos Quattro’s €368 million 2.25% 2027 senior secured notes have dropped by 0.4 points, the $400 million 9.625% 2029 SSNs have shed 1 point, the €775 million 8.5% 2029 SSNs are down 1.7 points and the €675 million 6.75% 2030 SSNs down 2 points. See the first-quarter earnings analysis HERE.

Kem One, the French caustic soda and PVC producer, reported its fourth-quarter results on April 24 which showed a volume recovery but subdued pricing across both PVC and Caustic soda. Our forward model was predicated on a pricing increase, noting both Ineos groups reported pricing pressure in their polymer (plastics – PVC) segments in their first quarter indicating Kem One will not achieve our base case EBITDA of €95 million. They will likely achieve EBITDA closer to our low case figure of €51 million. Although still in preliminary stages, the group expects that they could indeed achieve €10 million to €15 million in savings from the renegotiation of their ethane contract with Ineos – although the talks were still ongoing. Since the group released its results, its €450 million 5.625% 2028 SSNs have lost about 2.3 points and are now trading at 67.

Materials

The materials sector is experiencing profitability pressures despite signs of stabilizing demand. Companies are grappling with weaker pricing, higher input costs and supply-demand imbalances.
Italian recycled cartonboard manufacturer Reno de Medici, or RDM, reported an 8.3% year-over-year increase in fourth-quarter revenue but a sharp 57.9% decline in EBITDA. Full-year 2024 revenue was down 0.3% year over year while EBITDA fell by 51.9%. The drop in profitability was driven by lower sales prices and higher raw material costs, especially for recycled paper due to reduced availability and increased exports. Further inactive mills have compounded RDM’s low utilization rates.

However, there is optimism as demand for cartonboard in the first quarter of 2025 grew at a double-digit rate, supported by recovering manufacturing output. The company is also aiming to improve margins through price hikes in its white lined chipboard products, set to take effect in the second quarter of 2025.

Liquidity concerns had been significant for RDM, with €100 million in levered free cash burned in the first nine months of 2024. Nevertheless, the company managed to stabilize its cash flow in the fourth quarter, bolstered by a €32.2 million working capital inflow and low capital expenditures of only €4 million. In response to liquidity pressures, RDM upsized its RCF by €46.6 million (€20 million on Feb. 27, 2025, and €26.6 million on Jan. 20, 2025), securing €146.6 million in total RCF commitments with maturity in 2028.

Similarly, German engineered wood products group Pfleiderer, which just completed its distressed A&E transaction in August 2024 experienced a 12.2% year-over-year decline in 2024 net sales, driven by a 15.2% drop in its engineered wood division due to lower pricing and volumes. More than 80% of the year-over-year decrease is due to price and volume declines in the first half of 2024, while volumes in the second half of 2024 stabilized.

The 2024 full-year adjusted EBITDA amounted to €82 million, down 14.2% year over year, excluding the impact of energy trading. The group reported a pro forma adjusted EBITDA of €144.6 million, with an add back of €33.9 million related to sales boost in the engineered wood products and €28.6 million in its Silekol division. However, the figure remains below the medium-term EBITDA target of €195 million (€280 million in the long term) which was communicated as part of its value creation plan.

The price of Pfleiderer’s 2029 senior secured notes were broadly flat when the results were announced. Currently, the €350 million 2029 senior secured FRNs are quoted at 77.5 yielding 14.3%, and €400 million 4.75% senior secured notes to 2029 are quoted at 77.5 yielding 12.1%.

Other Consumer Discretionary

The consumer discretionary sector is continuing to face a mixed landscape as companies navigate persistent headwinds. The latest earnings reports from two struggling retailers, Isabel Marant, or IM, and HSE, highlight both the ongoing challenges and glimmers of resilience in the industry. However, the gym operators (David Lloyd and Pure Gym) and hotel operator Motel One both showed great resilience, achieving organic growth despite softer consumer sentiment and ongoing economic uncertainty.

For French high-end fashion designer and retailer, Isabel Marant, 2024 was marked by a challenging wholesale environment, with the group’s wholesale revenue, including wholesale online, plunging 29% year over year to €80.6 million. This decline, compounded by a staggering 48% year-over-year drop in e-tail (online wholesale) sales, significantly impacted the company’s overall topline performance, despite the increased retail sales. The weakened wholesale segment led to a notable collapse in the price of IM’s €265 million senior secured notes due 2028, which dropped to as low as 39 cents on the euro in April. However, post-report, the notes saw some recovery, rising to current 54 cents, driven by the improved order book for fall/winter 2025.

Despite these setbacks in B2B sales, IM’s direct-to-consumer, or D2C, operations showed notable resilience. Retail sales in owned physical stores increased 6% year over year, while online sales from its own e-shop grew by an impressive 27%. This strong D2C performance, coupled with the reported 9% increase in total D2C sales, paints a picture of an evolving strategy for IM—one that leans more heavily on its direct interactions with consumers as the wholesale model struggles. Management has pointed to early signs of recovery in wholesale, which could signal a potential turning point for the group.

Despite these positive signals, the group’s total revenue still fell 13% year over year to €211.8 million, underscoring the ongoing strain in its business-to-business segment. IM’s liquidity remains a key concern. IM stated that it obtained a waiver for the Dec. 31, 2024, test of the 5x maintenance covenant on the group’s €15 million RCF, however, our waterfall analysis suggests that the company may require additional capital before the maturity of its bonds in 2028.

Meanwhile, HSE, a troubled German e-commerce and TV retailer, which agreed a restructuring plan, has similarly been contending with the challenges of a tough consumer environment and the challenges of a sunset industry. For Q4, HSE reported flat earnings, with full-year revenue down by 1.2% year over year to €617 million. The group also saw a decline in active customers, down 5.7%, as consumer sentiment in the DACH region (Germany, Austria, and Switzerland) in which they operate remains subdued. The macroeconomic climate – Germany revised its 2025 growth forecast to zero due to the U.S. tariff impacts especially on the automotive sector – has continued to dampen consumer spending in the region.

Undeterred by these challenges, HSE remains optimistic for 2025, projecting 5% revenue growth, driven in part by voucher campaigns. On the cost side, the company expects to benefit from a weaker dollar, with annual exposure of $80 million from purchasing and freight costs, with about 80% of its 2025 exposure hedged at a favorable EUR/USD rate.

HSE’s bond prices have had some positive movement after the earnings report, with the 2026 SSNs rising 1.2 and 3.7 points to 48 and 49 cents on the fixed and floating tranches, respectively, as the company obtained additional bondholder support to 83% entering into the lockup agreement (up from 78% on announcement earlier in the month). Completion of the transaction is expected in June. Net leverage is at 7.2x as of Dec. 31, 2024, up from 6.6x a year earlier, excluding Russia, of which the sale concluded in June 2024.

The English High Court reserved judgment yesterday, May 6, after a convening hearing for HSE’s scheme of arrangement. However, this morning the court delayed ordering the convening of a single class of creditors to vote on the scheme of arrangement while it awaits information on the composition of the ad hoc bondholder group.

David Lloyd, the U.K. health and wellness club operator, reported record performance in 2024. Total revenue was up 14% year over year to £860.8 million, with adjusted EBITDA 33% higher than the previous year at £230.6 million, driven by increase in both membership size and prices. The group has £645 million senior secured and €300 million senior secured floating rate notes, both due in 2027 and trading at par.

The strong earnings performance comes at a good time for sponsor TDR Capital, amid rumours of a potential stake transfer in David Lloyd to a new fund and the introduction of new investors, which would value the group at between £1.8 billion- £2.3 billion.

Strong performance in the health and wellness sector was mirrored by U.K. gym chain Pure Gym, which operates at a lower price point compared with David Lloyd. Pure Gym’s notes trade well above par at 106 points apiece on its £475 million SSNs and €380 millionFRNs due 2028.

Revenue rose 10% year over year to £605 million, while adjusted EBITDA climbed 17% to £154 million. Run-rate Adjusted EBITDA increased to £184 million, up £34 million from the year prior, reflecting underlying operational momentum and the contribution from recent site openings.

Pure Gym ended the year with 680 open sites, having added 105 new gyms in 2024, including 56 acquired from Blink Fitness in the U.S. and 46 new corporate-owned organic sites. Membership rose by 397,000 to reach 2.25 million members across the estate. This growth has led to significant capex of €208 million, leading the group to burn €137 million during the year.

German hotel chain Motel One reported a solid set of FY’24 results demonstrating a degree of resilience, despite management acknowledging a softer German macro environment throughout the year. In the fourth quarter, the group saw substantial like-for-like occupancy and average daily rate growth compared with the same period a year earlier, driving topline and EBITDA higher. The group has seen a strong start to 2025 with first-quarter revenue growing 10.6% year over year and occupancy rates of 62.4% being 2.3 percentage points higher compared with last year. Management had a positive outlook on 2025 despite expecting subdued economic recovery in Germany.

Motel One tapped the market with a €907 million term loan B issue to fund PAI’s acquisition of the group and refinance existing debt. The loans priced at E+425 bps with an OID of 99.75. Octus’ Primary flash analysis, available for lenders in the syndicate room, can be found HERE. Octus’ loan analysis can be found HERE.

Consumer Staples

Challenging market conditions persist for consumer staples companies after latest earnings reports, including Oatly and Casino. Oatly showed tentative operational improvements but faces demand softness, while Casino continues to struggle, albeit with slight sequential improvement in sales momentum.

Plant-based oat milk producer Oatly showed signs of making operational strides amid a challenging market, in its Q1’25 earnings. The company is improving its cost discipline and margins, but faces the key challenge of needing to regain commercial momentum and pricing power in a category experiencing softening demand. Revenue for the quarter was $197.5 million, down 0.8% year over year on a reported basis but up 0.7% in constant currency. Regionally, Oatly is seeing strong growth in Greater China, but this is being offset by declines and stagnation in North America and Europe, respectively. Overall, Oatly is focused on balancing profitability with reinvestment in its brand, while navigating a market where premium brands are under increased scrutiny.

After its April 30 earnings release, Oatly’s $335 million PIK-toggle convertible senior unsecured notes due 2028 were up by 1.5 points to a price of about 64.8. Octus’ earnings analysis can be found HERE.

French retailer Casino first-quarter trading update revealed ongoing struggles within a challenging operating environment. Sales were down across all of its convenience brands, except Naturalia which is its smallest and fairly insignificant brand (making up 4% of net sales revenue in Q1) when looking at the bigger picture. Consolidated net sales came in at €2 billion for the quarter, down 1.2% year over year on a like-for-like basis, an improvement from the 1.8% year over year decline seen in the final quarter of 2024 – management also highlighted a positive trend emerging since early April. That said, we still see a long path before the group recovers to adequate levels, as highlighted in our recovery analysis HERE.

Real Estate

The real estate sector continues to see valuation recovery during the course of 2024, as exemplified by Vivion, while those with maturing debt with relatively high LTV may struggle to refinance such as Globe Trade Centre.

Luxembourg-based hotel and office real estate group Vivion realized property revaluation and capital gains of €124.6 million in 2024 driven by increased letting activity in the German portfolio and overall improved market conditions. This compares with a loss of €286.1 million in 2023.

Its 2024 revenue grew 6.6% year over year to €258.9 million, mainly attributable to new rental agreements in the German portfolio, indexation of rents across German and U.K. portfolios, and currency fluctuations. Adjusted EBITDA in 2024 for the group rose 4.6% year over year to €203.9 million. Since the earnings announcement on April 29, both prices of Vivion’s 2028 and 2029 SSNs have been broadly flat, yielding both at about 9.8%.

Poland-based office and retail real estate firm Globe Trade Centre is nearing the maturity of its bond – €500 million 2.25% senior unsecured notes due June 23, 2026. The group said it is closely monitoring capital markets with its investment banks to ensure optimal refinancing strategy and timing for this bond. The bond prices have been broadly flat since its earnings announcement date on April 29, and is currently quoted at 90 yielding 12.5%.

Its net loan-to-value, or LTV, ratio amounted to 52.7% as of Dec. 31, 2024, higher than 49.3% as of Dec. 31, 2023, mainly due to an increase in investment property following the acquisition of German residential portfolio and capex on investment property under construction and acquisition of new assets. The group’s rental and service revenue were up 2.2% year over year to €187.5 million in 2024, and adjusted EBITDA for the year totaled €106 million, up 3.9% year over year.

Other

European credit management service provider Lowell, which has an unsustainable capital structure with limited improvement in operating performance, as discussed in Octus’ analysis HERE, recently secured the support of over 90% bondholders for its recapitalization plan and reached an agreement with its RCF lenders for an amend-and-extend of the facility.