Ebro Foods: The Dividend King of Spain

Global growth, steady dividends, and hidden value?

When thinking of Spain, most investors picture vibrant beaches or iconic companies like Inditex (Zara’s parent company) or Banco Santander. However, there’s a less glamorous but equally compelling player in the Spanish stock market that deserves attention—Ebro Foods. This Madrid-based food giant is a standout, not only for its robust fundamentals but also for its unique dividend policy, which diverges from the norm in Spain and globally. Let’s dive deeper into what makes this €2.43 billion company tick and why it’s worth a closer look.

Ebro Foods is the result of a strategic transformation that began in 2000. By shedding less profitable businesses like dairy and sugar and focusing on core strengths, Ebro emerged as a global leader in rice production with a strong position in premium and fresh pasta. This success is driven by a growth model anchored in R&D and product innovation, efficient raw material sourcing, and a balanced strategy of mergers, acquisitions, and organic growth. Today, Ebro stands as a testament to the power of strategic focus and adaptability.

What Does Ebro Foods Do?

Ebro Foods specializes in the production and distribution of rice, pasta, and premium convenience foods, generating revenue primarily from these two staples:

• Rice accounted for 79% of total revenue in 2023.

• Pasta contributed the remaining 21%.

The company operates in over 80 countries with a diverse portfolio of more than 80 brands, including household names like Tilda, Garofalo, Brillante, Carolina, and Mahatma. Despite its Spanish roots, Spain contributes only 7.7% to Ebro’s revenue. Its global revenue breakdown highlights the company’s geographic diversification:

• Europe: 36%

• Americas: 33%

• Rest of the World: 23%

This diversification and focus on branded, high-margin products provide resilience to market fluctuations, making Ebro a dependable choice for investors.

Quarterly Results: Resilient and Growing

Ebro Foods’ latest quarterly earnings, reported on October 30, 2024, reflect the company’s sound strategy and operational strength.

• Net Profit: €169.2 million, up 20.8% year on year.

• Adjusted EBITDA: €308 million, up 8.3%, driven by strength in the Pasta Division.

• Revenue: €2,346.8 million, a 1.7% increase, despite price adjustments in key markets to support consumers.

• Net Debt: €511.3 million, down €59 million from year-end 2023, even after paying €114 million in annual dividends and investing €100.7 million in CAPEX.

For the full year, Ebro forecasts an adjusted EBITDA of €402–407 million, reflecting the success of its business focus on value-added categories and operational efficiency.

Core Business Highlights

Rice Division

The Rice Division remains the company’s backbone, posting a turnover of €1,837.4 million and an adjusted EBITDA of €241.4 million. Notable achievements include:

• Global brand strength: Carolina® and Mahatma® in the U.S. and Tilda® in the UK, Australia, and the Middle East, all seeing strong growth.

• Favorable raw material conditions, particularly in the U.S., where early harvests signal lower prices.

Pasta Division

The Pasta Division posted a turnover of €512.4 million and an adjusted EBITDA of €79.4 million. Key highlights include:

• Premium growth: Garofalo achieved 16% global growth in premium pasta.

• Fresh pasta success: The Lustucru launch in France and Olivieri’s performance in Canada drove fresh pasta growth.

• Raw material prices: Durum wheat semolina prices are expected to fall, though potato flake prices may rise due to poor harvests in northern Europe.

Why Is Ebro Unique?

1. Tri-Annual Dividend Payments

Ebro Foods pays dividends three times a year, a rarity not only in Spain but globally. Just last week, the company announced its 2025 dividend plan:

€0.23 per payment, totaling €0.69 annually. This represents a 5% increase over 2024, following a double-digit hike in 2023.

2. Strong Dividend Track Record

Ebro has maintained an impeccable dividend history, avoiding cuts even during economic turbulence. With a current yield of 4.35%, it’s a compelling income stock. The company distributes approximately €106 million in dividends annually, underscoring its commitment to shareholder returns. Ebro also paid special dividends in 2015, 2020 and 2021.

3. Undervalued with Solid Fundamentals

At a share price of €15.88, Ebro trades at a price-to-earnings (P/E) ratio of just 12 for 2025—well below the market average. Combined with consistent EBIT margins (over 9%) and a record 2023 revenue forecast (€3.13 billion), Ebro offers an attractive value proposition.

What Do Analysts Think?

Analysts are broadly optimistic about Ebro Foods:

• 2 Strong Buy ratings

• 6 Buy ratings

• 2 Hold ratings

• No sell recommendations

Despite this confidence, the stock price has been relatively stagnant in recent years, even as dividends and earnings have grown. This creates an opportunity for patient investors to lock in high yields at an attractive valuation.

Key Metrics at a Glance

• Market Cap: €2.43 billion

• Dividend Yield: 4.35%

• P/E Ratio (2025): 12

• Adjusted EBITDA (2024 Forecast): €402–407 million

• Net Profit Growth: +20.8% Y/Y

• ROIC: ~8%

• EBIT Margin: ~9%

  Revenue Breakdown (2023)

  • Rice: 79%

  • Pasta: 21%

  Regional

  • Europe: 36%

  • Americas: 33%

  • Rest of the World: 23%

  • Spain: 7.7%

The Case for Ebro Foods

Ebro Foods may not deliver explosive capital appreciation, but it’s a fortress of stability for dividend-focused investors. With its unique tri-annual payouts, strong dividend history, and undervalued metrics, it offers a compelling option for those seeking reliable income and modest growth.

The stock’s muted performance raises one question: can Ebro unlock greater shareholder value? That might depend on continued execution in its high-value categories and geographic expansion.

Are Ebro Foods shares a buy for you? If you value consistent dividends and an attractive yield at a reasonable valuation, they just might be. Share your thoughts in the comments below! Thank you.

Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.