Fiskars Oyj (FKRAF) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic Growth
Comparable EBIT: Down to EUR 3 million, impacted by lower volumes and declining gross margin.
Gross Margin: Decreased by 230 basis points, with a significant impact from tariffs.
Free Cash Flow: Down to EUR 12 million, primarily due to inventory and payables.
Earnings Per Share: Decreased by EUR 0.15 to EUR 0.05 negative on a comparable basis.
Cash Earnings Per Share: Down by EUR 0.40, influenced by volume decline and working capital.
Net Debt to EBITDA: Finished Q2 at 3.16, driven by lower last 12 months EBITDA.
Liquidity: Strong with cash of EUR 72 million and committed credit facilities of EUR 250 million.
Direct-to-Consumer Growth: Increased in the quarter, with China growing by 12%.
Guidance for EBIT: Updated to a range of EUR 90 million to EUR 110 million.
Warning! GuruFocus has detected 9 Warning Signs with FKRAF.
Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Fiskars Oyj (FKRAF) experienced growth in its direct-to-consumer business, including e-commerce and own stores, during the quarter.
The company saw a 12% growth in the Chinese market, indicating successful geographical expansion outside the US.
Fiskars Oyj (FKRAF) maintained strong liquidity with cash reserves of EUR72 million and committed credit facilities of EUR250 million.
The company is committed to sustainability, showing progress in circularity and emission targets.
Fiskars Oyj (FKRAF) has implemented plans to mitigate tariff impacts, with pricing strategies already in place for the second half of the year.
Negative Points
Comparable net sales declined by 6.8%, driven by significant decreases in the US market.
The company's comparable EBIT fell to EUR3 million, largely due to lower sales volumes and declining gross margins.
Fiskars Oyj (FKRAF) faced challenges with its Waterford brand in the US, impacting overall performance in the Vita segment.
Tariff impacts have negatively affected the company's profitability, particularly in the US market.
The company's free cash flow decreased significantly to EUR12 million, primarily due to increased inventories and lower trade payables.
Q & A Highlights
Q: Can you provide more details on the full-year guidance, especially considering the current shortfall compared to last year? A: Jyri Luomakoski, Group President & CEO, explained that the tariff situation is fluid, and the company has multiple plans (A, B, C, and D) to address it. The confidence in meeting the guidance comes from these plans and the absence of any new information contradicting their expectations for the second half of the year.
Q: What are the reasons behind the challenges with the Waterford brand, and how do you plan to address them? A: Jyri Luomakoski noted that Waterford's issues are partly due to its process industry logic, which suffers from low volume absorption. The company is working on balancing demand and supply and addressing distribution challenges in the US, particularly with department stores.
Q: How sustainable is the growth in China, and what are the main drivers? A: Jussi Siitonen, CFO, mentioned that the growth in China is driven by distribution and category expansions, with Danish brands like Gergensen and Copenhagen contributing. The fundamentals in place suggest sustainable growth, but overall market demand will ultimately determine sustainability.
Q: What actions have been taken to mitigate the impact of tariffs, and are price increases already agreed upon with customers? A: Jussi Siitonen stated that pricing actions have been communicated and are expected to take effect in the second half. The company is also focusing on sourcing, factory operations, and right-sizing investments to mitigate tariff impacts.
Q: How are you addressing the manufacturing capacity issues at Waterford, and what long-term solutions are being considered? A: Jyri Luomakoski acknowledged the need for a long-term solution to improve flexibility in Waterford's manufacturing process. The company is exploring various ideas to ensure a setup that meets future demand, with more details expected in the Q3 release.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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