Fiskars Oyj Abp (Helsinki:FSKRS) Q2 2026 Earnings Call

0:00 Hello, and welcome to Fiskars Group's Q2 results webcast. My name is Essi Lipponen, and I'm the Director of Investor Relations. I'm here with our President and CEO, Yuri Luo Amakorski and our CFO, Jurisi Sydonen.

0:17 Let's look at the agenda of this call. Jyjri will first go through Q2 in brief, some highlights. After that, Jussi will go through the financials in more detail, after which Jussi will hand over to Yuri, who will cover business areas and our guidance for the year. After that, we will have plenty of time for your questions, and we welcome questions both through the chat and through the phone lines.

0:46 Yuri, please go ahead. Thank you, Esi. Good morning, and welcome also on my behalf. Brief summary of the quarter. It was actually the fourth consecutive growth quarter, much driven by our business area EBITDA. Comparable net sales 3% up and comparable EBIT improving from 3 ish million to shy of €8,000,000 So there was a clear way in the positive direction. Both sales growth and EBIT improvement really was driven by Weta for Fiskars BA, where the growth number, it's a black zero. So when you go to the decimals, you get to a positive. It's not rounded up to zero, but it's rounded down to zero and some margin expansion, but pretty much stable in terms of the EBIT.

1:42 One of our focus points now since a year has been cash flow as a consequence of the balance sheet or the indebtedness that had gone above our limits and we've been focusing on our cash flow. And there was a continuous improvement, significant actually to €31,000,000 on free cash flow and that's net working capital driven and strict CapEx management has been key there. We introduced the new financial targets in our Capital Markets Day in May, and you can actually find those in the appendix of this presentation and in our releases. So that's something we will not dive deeper into today as such.

2:31 On our sustainability journey, pleased to report also that we regained the platinum Ecovadis status or medal, and that's a result of hard work. We need to remember that that implies that we are in the top 1% of the company's assessed, and it's not the average companies that file for that. It's those who have sustainability already in their focus. We have not changed our guidance. It is, as it has been since February, comparable EBIT to increase or expected to improve from last year's level. But that's the segue to the numbers, Jussi.

3:19 Thank you, Jussi. So as Jussi already mentioned, so after admittedly a quite long period of no growth, we have now succeeded to grow fourth quarter in a row. The growth has been very much driven by Vita, 5.5% now in Q2 and then flat Fiskars BA. The growth has been very broad based. So when it comes to our top four countries, U. S. A, Sweden, Denmark and Finland now in Q2, which are more than 50% of our Q2 sales, all these four countries were growing. On top of that, we had a very robust growth in Japan. There are some differences between countries, but overall, at the group level, these four countries were showing a very robust growth. When it comes to our channels, so our own e commerce was up 4% in Q2, our own retail up 2% and then wholesale up 3%.

4:15 And by the way, this Q2 was the first time in company history when Vita was already bigger than Fiskars. And now we know that the second half is very Vita dominated when it comes to top line. On EBIT, we were up quite significantly from admittedly low level last year, so from €3,000,000 to €7,700,000 And I walk through more in detail which were the driver behind this one. Also, our earnings per share adjusted was negative €06 very close to last year same period, and I will go a bit deep on that one after a couple of slides. So moving to EBIT bridge, and I start here from the middle where we have BAWitte. So BAWitte succeeded to improve EBIT by €5,000,000 versus last year. The main drivers being increased sales volumes, lower marketing spend and then very strict SG and A management there. SG and A management was partially supported already the benefits from this restructuring program we announced earlier this year, where we said the €28,000,000 program, out of which up to onethree should come in now in 2026, which is very much second half loaded, but already in Q2, we have some benefits coming from that program.

5:38 As you can see, gross margin came down in BAWITA. That's very much driven of those actions we have put in place in our supply chain to manage the inventory level, to manage the factory variances. On the right, BA Fiskars was flat at reported EBIT. Then currency neutral pace, were slightly up versus last year. In BA Fiskars, we continued improving gross margin. And as we said in the Capital Markets Day that in BA Fiskars, are focusing on this flywheel where we are increasing media spend, where we are increasing R and D and get a momentum on top line. That continued now in Q2. So all those benefits what we had there from gross margin improvement, we invested back in marketing and R and D. R and D was up over 20% now in Q2 versus last year.

6:36 Then to cash flow. As Yuri already mentioned, we had a very strong Q2 cash flow. Free cash flow, the way we define it now, we changed it in Capital Markets Day so that our unlevered free cash flow now includes also those lease payments there. With this new definition, we were at €30,400,000 now in Q2, 28,000,000 better than last year, which is significant improvement there, mainly coming from change in net working capital. Net working capital came down over EUR 30,000,000, whilst last year it was quite flat. Another positive driver what we had on cash flow is our CapEx. So CapEx in Q2 was EUR 7,000,000, which is less than half what we had last year same period.

7:24 Even for the first half basis, in the first six months CapEx was EUR 12,000,000, which is half of last year's six months CapEx. So this CapEx management is now one of the key drivers what we have here to manage our cash flow. Then cash earnings per share almost doubled from €29 to €51 and I'll go through a bit more closely that on the next slide. Our asset earnings per share was quite flattish there on adjusted basis, so from minus €05 to minus €06 there. Adjusted EBIT contributed improvement there by €06 and then biological fair valuation of biological assets, I. E.

8:11 Our forest assets there and net financials took it slightly down. When it comes to our net financials there, the biggest single negative is fair valuation of our commodity hedges. Then taxes also took it down and taxes also include here those adjustments based on those items affecting comparability. On cash earnings per share, you can see significant improvement there coming from the net working capital change, and that has been the main driver for this improvement. On net debt EBITDA, net debt EBITDA was now 3.42 at the end of Q2. Last year, it was 3.16, so it's increased versus Q2 last year. But versus Q1, so in this last quarter, we succeeded to improve it a bit.

9:01 The main reason for this increasing net debt to EBITDA versus last year is coming from EBITDA side. So rolling twelve months EBITDA was lower than it was in comparison period. The net debt itself came down versus last

9:16 year. When it comes to our net debt overall, what we introduced or what we made now in Q2 was €50,000,000 tap issue to our existing €200,000,000 bond. And then we have also strengthened our liquidity. So total liquidity what we have at the end of Q2 is €420,000,000 consisting of €300,000,000 committed credit facilities, roughly €40,000,000 overdraft there and then roughly €80,000,000 cash. So liquidity is very strong now when we start the second half. Then when it comes to our sustainability and on our sustainability targets, I would like to highlight the circularity, which is one of the key KPI what we are here following our environmental commitments.

10:04 So now it's up to 30% versus last year 28%, and we continue driving it towards 50% by end of two thousand thirty. When it comes to emissions, Scope one, Scope two and Scope three, all are improving from last year. On social side, I would like to highlight this lost time accident frequency. So significant improvement from last year, 3.6 to 2.9%. And whilst we are very happy with this improvement, we can't be happy with the current level until it's zero. With that, handing over back to you, Yuri. Thank you, Jossi. Looking at our two business areas, what's been happening at Witte.

10:51 So as in the intro mentioned, fourth consecutive growth quarter for Witte, and we can clearly see signs of our turnaround that has been is critical instrumental to the business. As such, growth is relevant, but also those measures that we took in the wintertime, in the springtime in terms of restructuring, both reorganizing and as a consequence of that, that was leading also to reduction in our headcount, which you can see also now in the quarterly report when you look at the aggregate personnel, the FTEs average in the quarter is already down, already quite kind of in a relevant number and materially in line with our plans.

11:44 So what was driving up the growth? So across D2C and wholesale on a broad base in terms of channels, we've seen growth. Gyoki Ensen, which is a kind of the newest family member in the family of brands that Vita acquired '23 has continued strong performance on the top line and as such been a very wanted brand for the consumers. Then many of our regional leader brands, whether it's Restaurant, which has celebrated its 300 year anniversary this spring and Move in Arabia have continued growing.

12:29 So when we look at the comparable EBIT, still this time of the year, the number is dismal, and it's also unfortunately negative, but it has improved. And that's important that the direction is right and we are not sliding down on that side. So we can see both the effects of the volume growth and the effects first signs or first kind of things ending up in the income statement. And we have a high degree of confidence those ending up in H2 in Q3 and Q4, on our SG and A savings as a consequence of the program that was announced in early February.

13:17 And in U. S. EBIT bridges, you saw that the gross margin, there was a negative variance, unfavorable move the gross margin at Vita, but that's not because of pricing slippage. It is because of us continuing scaling down the production. So for many, many years when we had a declining top line, we did not have the corresponding decline in the operations and ended up at significantly higher inventories than the business would actually necessarily need. And now we are in the kind of inverse process. We are scaling down production.

14:02 We are ramping up sales, and that's the recipe to heat up the inventories. But as long as we are scaling down the production, that's eating up as you mentioned in terms of the

14:15 supply chain variances. So it's a lack of absorption of the fixed cost of factory facilities that is hitting the EBIT. But when we take the ruler, we can see that these lines will also meet each other at some point of time.

14:35 And that's really behind the comparable gross margin decrease. And the good news is that we know what it comes from and it's not from price erosion in the marketplace. Many things have happened. As I mentioned, restaurant turned three hundred years and that's of course something that has been boosting. There is a good reason to activate. It's a royal purveyor in the sort of warrant from the Swedish court and

15:08 attending also the three hundredth year anniversary, the Swedish National Museum is having an exhibition this summer on restaurant curated by the museum. So it's a bit similar like maybe in Itala perceived as national property in terms of the heritage.

15:27 Itala, those who have been active and young in the '90s have been playing with Pokemon characters, etcetera, will recognize the limited edition collaboration with Pokemon, actually sold out in the first week. More to come, but that's how desired brands are working. New jewelry series, our collection at Georgiansen, Weft and then

15:59 many of our brands were visible at three days of design in Copenhagen early June. Three days of design is behind besides Milan, kind of the biggest, I think, even globally biggest design event.

16:15 And in the picture on the slide, you can see a nine meter tall Alto Vase. So it's a bit bigger than ninety years ago when the Vase was launched and brought to the market, and it's not made out of glass, but it was pulling a lot of attention in the marketplace. Good way to celebrate the ninety year celebration and anniversary.

16:38 At Fiskars, top line flat on a currency neutral base. Half of the business is in The U. S, in U. S. Dollars. So still, the exchange is burdening us a bit less and less the further we go to the year when we look at last year's euro dollar exchange curve. Margin slightly expanded. And

17:02 while we were growing in The U. S, which is very much driven by our distribution gains and our credibility in the marketplace as we handled the import duty or tariff crisis and availability, kept the availability, have been bringing new products, declines in Central Europe. That appears to be the corner. Traditionally, it was the Fins, where Fins have been the most cautious consumers. If there is a kind of gunpowder burning somewhere on this planet, unfortunately, we currently can observe,

17:39 Fins were immediately stopping spending. And currently, it seems that it's Germans and some other countries in the Central European markets where this consumer cautiousness is very visible. So stable EBITDA and the gross margin, as Jussi's bridge showed, was expanding, but we have had some good traction with our new products and want to continue on that track remaining relevant to the consumer and to the trade to grant us the shelf space.

18:17 And then on picture level here, the modular system, one click tool system was introduced during the quarter. And then we gained a few Red Dot awards and our new power tools, French actually, got the highest design award, best of the best distinction at the Red Dot design awards and our new pet care and dual action

18:42 hedge shares and pruners and so forth got the normal kind of Retto Design Award. So it's been recognized also not only by the functionality, excellent functionality, but also the design and optics and aesthetics.

19:04 So what is expected to happen this year, still half of the race is unfinished. We expect that our comparable EBIT is improving from last year's level. I guess that some of the listeners or watchers of this webcast were hoping for some kind of range.

19:27 That was something that we have been also hoping, but at the same time, we've been hoping that some of the wars would settle, and that hasn't been really the very recent trend, which means that the uncertainties in the global economy continue to persist and the visibility is somewhat limited.

19:49 We know that our EBIT generation is much weighted to the second half of the year and that really the improvement is primarily driven by business area VITA. We see that the changes that VITA announced in February, the execution of those programs has progressed basically like the manuscript says. And hence, we have a high degree of confidence getting that benefit to the H2 and

20:20 onwards also. We also know that we will still have kind of a savings mode and not full speed on some of our factories to eat up and consume the elevated inventories, and that will, as a consequence, have a negative impact. But this is from the historical H1, H2 pattern, obviously,

20:45 when we acquired Georg Jensen, we also showed that it will actually make it even more extreme. But the good news is that the H2 heavy and Q4 heavy Jensen has been one of our leading growth drivers in VITAS, so that's helping us much in terms of our confidence behind our guidance.

21:09 That takes us to the Q and A. Yes. Thank you, Yuri and Josse. We do have some questions already in the chat, but we will first check if there are any questions through the phone lines.

21:35 The next question comes from Joni Sandvall from Nordea. Please go ahead. Yes. Thanks, Yuri and Jussi for the presentation. Starting maybe with the supply chain. You mentioned that in short term this will still burden the margins. Are you expecting the let's say the impact to be still fading away during H2?

22:04 Or should we expect this only to happen in 2027?

22:11 Not 100% sure I can follow the impact,

22:17 what you imply with the impact that part of the question. Did you say? Yes. If you talk about delta versus last year, bearing in mind that those actions what we put in place last year, they started to impact second half twenty twenty five. So now when we are entering into second half twenty twenty six, they are already in our comparative numbers. So of course, then the delta when it comes to gross margin won't be the similar type of thing. It has been the first half this year. Yes. That's okay. Yes. Yes.

22:49 Okay. I'm just thinking, is it still is the track increasing in H2? Or are you seeing easing pressure already from this side? We have not specifically guided the individual income statement lines. But as you can certainly recall, last summer, we announced that the focus on cash flow generation and deleveraging. And as a consequence, we started to curtail production about a year ago. So hence, the comps, as usual said, are easier in this aspect going forward in the H2.

23:31 Okay. Okay. Then going on to Fiskars BA, you have ramped up the marketing as mentioned, but the sales growth has remained muted.

23:44 How confident are you actually on the growth side of the Fiskars BA? The growth we see is much coming from The U. S. Market and a couple of European, mainly the North European non Central European markets, so to speak. And there, we clearly see that both with the launches, our brand relevance with new product launches has been kind of we've maintained that both to the trade and to the consumers.

24:21 The consumer confidence type of factor that we have seen like in the Central European markets certainly has been negative. And

24:35 also on top of that, we had a year ago on the continent some loyalty campaigns with some big retailers, which we have not been repeating. Those type of campaigns can drive up volume, not in the same proportion, the bottom line though. And from that perspective, it's visible in the top line development, but we are not regretting that too much when we live in the end from the profits.

25:09 Okay. Thanks. That's clear. Then coming on the lower CapEx now in H1, should we expect this to be more structural? Or is it just near term

25:23 cash saving action that you have taken?

25:27 If we take our rolling twelve months CapEx there, which is a some kind of proxy for full year, we are level of €32,000,000 there on rolling twelve months basis. We do have some project going on in the second half, but therefore, the last year level is probably a bit too high for this year. So strict CapEx management will continue and the results would be quite visible for full year basis.

25:53 Difficult to say that we continue spending the way we did second half last year. So approximately, are coming down as we guided in Capital Markets Day also. So I would say that's a good proxy also for 2020 And maybe filling in a bit building on that. When I look at the CapEx, it's not that we've pushed on any panic button. There is no single initiative or CapEx program that I would have stopped kind of under the headline that we need to save CapEx. It's more the structural. It's new product related. Tooling has been a big item, some IT related, but that's been more limited now as the separation of the two BA so so on the ERP level is completed.

26:44 So that was driving some part of the historical CapEx and so forth. So it's not that we wouldn't do the CapEx that's required to run the business. And in terms of the production, as you have seen, we've been curtailing production, which implies that we have at least enough capacity, if not somewhat too much. So hence, from that perspective, we haven't had any and don't foresee in the kind of near term future structural needs to for CapEx to increase to accommodate higher level of production as we have those capabilities in place. Okay. Perfect. And last one on the visibility. You mentioned, Jure, that it has it's limited, but maybe going back to Q1 from Q1 to Q2, could you say that visibility has improved or worsened when the summer has gone?

27:50 Well, when there was a ceasefire, we thought that it has improved. But as we know, that's kind of, again, history from the recent past that there was a ceasefire in around Iran and that war. So I wouldn't it's difficult, of course, to measure per se, but I wouldn't be able really to quantify. No material change maybe is relevant way to spell it. The next question comes from Maria Wickstrom from SEB. This is Maria Wickstrom from SEB.

28:50 I wrote some of the questions on the chat, but decided to join in the telephone line, you can discard those from the chat. And I was interested in your thoughts on the global consumer demand and maybe you need to split it by geographies. First of all, did you see any differences from different months during Q2? And what is your take that would you say that the consumer global consumer demand is currently improving? Or what is how would you describe the currently the consumer appetite given that you are like one of the few consumer companies reporting early the Q2 results?

29:35 Thanks. Geographically, I think what we communicated around Fiskars is maybe something we can apply on a more broader base. The American consumer seems appears to be more spending happy than the European one. And while historically, we Fins have been the most cautious one always, now it seems it's more on the continent where the consumer worries are more visible. When we look at the pattern of the quarter, the kind of towards the end of the quarter, the growth rate was higher than it was in the middle of the quarter.

30:24 So from that type of perspective, it's consistent with those observations. The Asian consumers and for us the big markets there are China and Japan, no material change really visible in those markets. So it's been pretty much going according to the manuscript that was made for this year. Perfect. Thank you so much for the color. Then I had a second question relating to the inventory that if we look on the like first half basis, I think, I mean, your inventory is down some €20,000,000 which in respect I mean, the inventory value at the end of Q2 was €340,000,000 is not that big number given that you have had these measures to take down the inventory level. So what do you say that I mean is do you think that you need to take I mean further actions to write down the currently very high inventory level? Or do you still think that you are enabled to move this inventory that you currently have in your balance sheet? Maria, if I start with about the seasonality of our inventories, and then Yuri can continue with this latter part of your question. So what we see is that, of course, second half, as it's so much about Vita, and the projected inventory decrease what we have

31:54 for this year is very Vita driven. So therefore, it's year end loaded where we should expect the inventories coming down. And year end loaded here actually means that it's November, December when the big slots should come there when we talk about inventory reduction. So it's in that sense, are confident with the plans what we have in place, but the numbers won't be visible until we reach the year end. But then this other part of your question, Yuri, if you You referred to the write offs. And we, of course, analyze the structure of our inventories on a monthly basis and at quarter end and especially half year end to even more thorough analysis, which also the auditors look carefully through.

32:43 If, let's say, speculating if we would not be able to reduce the inventory volumes by year end, that could then start to trigger some more provisioning. We do have anyhow already now provisions for excess and obsolete inventory, and it's much in the Vita area where we have some collections that we have discontinued, for example, end of last year. They are still saleable. They when you look at the Vita gross margins, and that's the gross margin, that's much dominated by our sell out through wholesale, etcetera. And events like Black Friday, etcetera, which are much about making good deals and clearances, Those are, of course, important for us in making sure that the provisions that we currently have also remain adequate end of the year.

33:45 Maria, as you can hear from our comments here, we are not talking about Fiskars here. So Fiskars inventory levels are in good order. And the way we are producing and selling, goes well in line with plan. So this is very much fit the challenge what we have. Yes. And then what's this extraordinary items during the Q2? Are they related to the Visa cost savings plan or They are predominantly all about this Visa plan we introduced in February this year with a note that €28,000,000 EBIT improvement there, up to onethree will be already in 2026.

34:33 And this program will result one off of roughly EUR9 million. So those are now the ones what we have in Q2. And that's all in the appendix to the release. Is a list of the laundry list of all the items this Yes, year and last exactly. Yes. And then finally, about your guidance, I mean you are currently, I mean, some EUR 3,000,000 ahead from last year on comparable EBIT. And my thinking is here that how much is your guidance based on the underlying, improvement in consumer volumes and then on your results from that?

35:21 And how much for the Visa turnaround program that you are currently carrying out? Given that the guidance is open ended, your question is somewhat difficult to answer specifically, at least not in the level of detail you would like me to answer it per se. So if we are now €3,000,000 ahead, that's true. That's kind of technically is being ahead or improving. We know that we get this SG and A benefit to VITA in H2 that we know because those actions have been carried out and people who have had to leave the company have left the company and so forth. So that's well, it's not in the books, but that I would say it's in the bag per se.

36:17 And the continued good momentum with our brand relevance charming the consumers every day is still there and is still in force. Yes, it has a component that we can grow and we have shown that we can grow also profitably in terms of no growth is not done by discounting prices. The gross margin reduction as Yossi commented comes solely from the supply chain, let's say adjustment or rightsizing there. So it has a component, but kind of year to date on the savings and then the belief that we can continue on the good momentum with our offering and the attraction to of it to the consumers is giving us the confidence that we can deliver in the end a decent year.

37:24 Thank you. I did not have further questions at this point. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Yes. We still have some questions in the chat. Maybe starting from tariffs. Yuri, maybe if you want to take this one. What is the situation regarding the potential tariff refunds in The U. S? Have you received any or are you expecting to receive something and when could this happen? That's an excellent question. Our imports are focusing on what the phasing system of this tariff refund is referring us, wave two.

38:13 And a couple of weeks ago, the system actually just opened for entering these refund claims or refund requests and how long that process then takes and what is kind of the approval rate. Rumors tell that customs is very kind of precise that no typos allowed, so to speak. But we know from other companies and have read releases from some U. S. Public companies who have been in the wave one that they have already received papers now in the meanwhile with stamps from the government, whether they have received any checks from the treasury, I'm not sure.

38:59 But they were several couple of months ahead of us in terms of the wave one starting when that system opened for it. Fairly technical topic. And of course, we hope that we can complete on time the input to this system of the U. S. Customs and Border Protection, and then those get processed, but very difficult and early to assess in detail on that. But that's something that we, of course, obliged to communicate to the market when we know more. But currently, telling that we don't know is somewhat the only thing we can comment.

39:48 But there's a, if not around the clock work, but pretty much that ongoing with our U. S. Teams. Exactly. And regarding our guidance for the sake of clarity, our guidance does not include any refunds from those potential tariffs. True. At the moment, we have one question, and let's see if any others come up, but I will ask the last question for the moment. And Jussi, maybe if you take this one. How did WITA's sales margin develop in Q2 versus last year? Sales margin or gross margin? That is the question. Maybe it's gross margin. Think it's gross margin. I think, Yuri, you read it through already already in your presentation, so came down very much driven by the supply chain actions what we have in place. And also what mentioned here in the call, we haven't taken out any decline there in gross margin due to the sales. So if you talk about sales margin only, it stays on the proper level. The decline is coming from supply chain.

40:59 Thank you. And it seems that we don't have any more questions. So thank you for your active participation, and I wish you a very nice summer. Thank you. Thank you very much.