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Introduction & Market Context
Festi hf (ICEX:FESTI) presented its Q2 2025 results on July 30, 2025, showcasing strong performance across its diverse portfolio of retail, fuel, pharmacy, and real estate businesses. The company, which operates major Icelandic brands including ELKO, Krónan, N1, and Lyfja, reported significant growth in key metrics and raised its full-year guidance.
The presentation highlighted Festi’s continued focus on digital transformation, infrastructure development, and strategic growth initiatives. With the stock closing at ISK 306 on July 29, 2025, investors were keen to see if the company’s performance would support its current valuation.
Quarterly Performance Highlights
Festi reported impressive financial results for Q2 2025, with sales of goods and services reaching ISK 43.6 billion, representing a 20.9% year-over-year increase. The company’s EBITDA surged 35.1% to ISK 3.9 billion, while profit for the period jumped 49.0% to ISK 1,419 million.
As shown in the following consolidated highlights, Festi demonstrated improvements across all key performance indicators:
Customer engagement metrics were equally strong, with the number of customer transactions increasing by 10.7% year-over-year. Digital solution transactions saw even more substantial growth, rising by 23.9%. The company also reported that items sold increased by 8.9%, while liters sold (primarily in the fuel segment) grew by 3.3%.
Card turnover data further confirmed the robust quarter, with domestic card turnover up 18.4% and foreign card turnover increasing by 16.6%, indicating strong performance in both local and tourist markets.
Detailed Financial Analysis
A closer examination of Festi’s Q2 2025 financial performance reveals strong results across the group’s operations. The company’s margin from sales reached ISK 11 billion, increasing by 28.1% year-over-year, while the profit margin improved to 25.3%, up 1.5 percentage points compared to Q2 2024.
The following breakdown provides a comprehensive view of the group’s financial performance:
Sales margins improved across all sectors, with particularly strong performance in grocery and convenience goods. The company’s profit margin in Q2 was 25.3%, representing an increase of 0.9 percentage points from Q1 2025 and 1.5 percentage points year-over-year.
The following chart illustrates the sales margin performance across different product categories:
Looking at individual subsidiaries, ELKO delivered strong results with revenue of ISK 5.0 billion, up 9.7% year-over-year. EBITDA increased by 23.2% to ISK 428 million, while profit grew by 40.7% to ISK 174 million. ELKO’s market share increased by 1.4%, and e-commerce continued to gain traction, representing 25.6% of total sales in Q2.
The financial performance of ELKO is detailed in the following chart:
Krónan, Festi’s grocery chain, reported revenue of ISK 20.0 billion, an 11.1% increase year-over-year. EBITDA rose by 9.7% to ISK 1.5 billion, with profit growing by 18.0% to ISK 652 million. The number of transactions in Krónan stores increased by over 5%, while units sold grew by nearly 6%. The company’s Smart Store concept saw particularly strong growth, with turnover increasing by more than 27%.
The following chart presents Krónan’s financial highlights:
N1, Festi’s fuel and convenience store chain, reported a slight decrease in revenue to ISK 14.5 billion, but showed significant improvement in profitability. EBITDA increased by 37.8% to ISK 1.7 billion, while profit more than doubled to ISK 528 million. The company introduced "Stöðin mín," a new approach to the fuel market, and continued to expand its EV charging infrastructure.
N1’s financial performance is illustrated in this chart:
Strategic Initiatives
Festi highlighted several strategic initiatives across its subsidiaries. In May, the company’s stock option plan saw 474 employees purchase shares for ISK 196 million, with 1,287 employees holding options for 12.6 million shares at the end of June. Additionally, Festi initiated a share buyback program on June 30, having already repurchased 680,000 shares, with plans to acquire up to 2.5 million shares for a total amount not exceeding ISK 800 million.
The company is investing significantly in technology solutions to enhance efficiency and drive sales, including improvements to the N1 app, new self-service solutions, a new inventory management system, and upgraded websites across its brands.
Festi’s real estate subsidiary, Yrkir, reported progress on several projects, including the sale of plots at Skógarsel and Stóragerði in Reykjavík to Sérverk for ISK 1.01 billion. Yrkir also acquired leasehold and building rights for a plot at Urriðaholtstræti in Garðabær for ISK 137.5 million, which will house a new Krónan store and office facilities.
The company’s balance sheet remains strong, with an equity ratio within the target range of 30-35%. Cash flow from operations was robust at ISK 5.2 billion, allowing for debt repayments of ISK 2 billion and dividend payments of ISK 1.4 billion.
The following chart shows the company’s consolidated statement of cash flow:
Forward-Looking Statements
Festi’s management expressed confidence in the company’s outlook for 2025, citing positive operating conditions and ongoing synergies from Lyfja’s integration. On July 17, the company raised its EBITDA guidance for 2025 to ISK 15,200-15,600 million.
The CAPEX forecast for 2025 was also increased by ISK 600 million to ISK 5,800-6,200 million, reflecting the company’s commitment to continued investment in its infrastructure and digital capabilities.
Management highlighted the company’s strong infrastructure and stable operations as key factors supporting its positive outlook, while acknowledging potential risk factors that could impact performance.
With strong Q2 results across all subsidiaries and improved guidance for the full year, Festi appears well-positioned to continue its growth trajectory through 2025, leveraging its diverse portfolio of businesses and focus on digital transformation to drive performance.
Full presentation:
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