Smart Organic – 2025 Q2 review

Increased sales but hurt profitability amid international expansion

2025 Q2 consolidated results

• Smart Organic continued their sales growth in Q2 when operating revenue marked a 28.6% increase YoY to reach BGN 55.9mln. The export share stood at 73%. Considering that exports were reported to be 66.7% in their annual 2024 results and 70.7% the year before by YE 2023, it is clear that a significant focus in SO’s expansion is placed on external markets, which clearly grow. It is a very positive sign to see a company, which considers this step before reaching saturation point on its domestic market. Considering the signed partnership agreements with major retailers in EU, this trend is likely to become stronger. However, note that the breakdown between export and domestic markets in Q1 in terms of percentages were slightly different (76% vs 24%), which means that Q2 was a strong quarter for the domestic market.
• The exports target European markets. Of those, the DACH region is the most important as it contributed BGN 27.2mln or about 67% of all exports (a growth from 64% in Q1). The DACH sales include own products, as well as the production of proprietary products of the retail chains they work with. The retailers they partner with are Lidl, Billa, Denn’s, Aldi, Hofer, Kaufland, dm, Rewe and Rossmann.
• Bulgarian sales were 27% and sales to non-EU countries amounted to 6%.
• A breakdown of the products sold shows that the products that have driven the growth are chocolate products (115% growth to BGN 11.1mln), tahini and creamy type of products from pressed nuts (102% growth to BGN 8.6mln), cookies (39% growth to BGN 4.1mln) and products (20% growth to BGN 4.4mln). Interestingly, the main products, because of which the company was founded and became famous – eco bars (nuts, etc) – marked a decrease of 7% to BGN 6.7mln.
• The shift of product sales is likely because of the targeted markets, rather than a wrong strategy by the management. The DACH region has historically been a very important market for high quality chocolate products and has produced behemoth brands, such as Milka, Lindt, Nestle, Merci, Toblerone and so on. By targeting those markets and being able to expand, Smart Organic shows that their chocolate products can compete for customers’ demand. The partnerships with major retailers are strategically important steps, which will position the company as a reliable B2B partner and a recognizable brand for retail clients.
• OPEX increased 40.7% to BGN 48.4mln. Of those, the greater contributor was COGS, which shot up 38% to BGN 27mln. This shows the high dependency on external factors, such as the prices of the products, which they source. There is no disclosure whether the company hedges its expenses in this regard, it is likely that they do not. Considering the rise, however, with increasing sales volumes in the future, this need will become more apparent. Personnel expense marked a 25% increase reaching BGN 9.3mln. External services also increased 61% to BGN 7.9mln, but there is no disclosure what part is transport services, which used to be a third of it, and other sub accounts.
• EBIT sank 20.1% to BGN 7mln, EBITDA dropped 10% to BGN 9mln and Net Profit fell 21% to BGN 6.3mln, bringing down the Net Margin from 18.4% to 11.3%.
• Assets grew by 22% to BGN 116.5mln. Within Long-term assets, the main change was the increase of PP&E by BGN 9.6mln to reach BGN 46.3mln. This reflects the implementation of the new base in Bozhurishte. Within Short-term assets major movers are Trade receivables (54% growth to BGN 25.7mln) and Materials (25% increase to BGN 22.4mln) reflecting the increased work with retail chains. Additionally Short-term financial assets (tripling to BGN 2.6mln) in Q1 were share ownership of funds by Shroders (EUR 879Billion AUM) and Amundi (EUR 2,247Billion AUM), which the company purchased to manage their cash position. There is no disclosure for Q2, but it is likely the same.
• Within liabilities, total debt increased 19.8% to BGN 20.5mln. It is largely due to utilization of investment facilities for the completion of the Bozshurishte location, as well as working capital facilities needed for the expansion of trade (used for LGs, liquidity, etc.). So far the company has 8 facilities, 7 of which are with United Bulgarian Bank. 3 of those will mature in Q3 2025. There are no liquidity issues, as cash is 5x all ST loans and the management has been diligent in their loan repayment schedules.
• 05.2025 the company made a decision on its GSM to distribute a dividend in the amount of BGN 0.24 per share or 0.7% dividend yield.
• Clearly, Smart Organic is not a high yield stock as they are more concerned with utilizing the generated cash for their expansion. Considering the steps to partner with some of the largest retailers in the EU, this is a step in the right direction. They, however, wanted to send the positive signal of growing the dividends – it was BGN 0.20 in 2022, BGN 0.22 in 2023 and BGN 0.24 in 2024, which indicates that there is financial discipline and predictability. The financial discipline is also visible in their relationships with the servicing banks.
• 06.2025 the company announced that as of 04.06.2025 there had been a change in the ownership structure. The owner and CEO Yani Dragov transferred shares from the capital of Smart Organic AD to its subsidiary Organic Ventures EOOD, which resulted in a change of the directly owned shares by Yani Dragov (note, Organic Ventures EOOD is fully owned by Yani Dragov). As a result of the change, the direct ownership of Yani Dragov in SO went down from 85.13% to 58.68% and the indirect increased from 0.01% to 26.46%.
• There will be a general shareholder meeting on 15.10.2025 from 11am at 6 Damyanitsa Str, Vitosha quarter, Sofia, where they will vote to increase the capital from BGN 11,340,999 to BGN 11,365,999. Right to participate will have Smart Organic employees, who have been with the company from 01.01.2023 to 01.07.2025 and have exceptional contributions to the growth in markets or improving the corporate governance of the group.

Full report can be downloaded here.