FKRAF (FKRAF) Q3 2026 Earnings Report, Transcript and Summary

Hello, and welcome to Fiskars Group's Q3 2026 Results Webcast. My name is Essi Lipponen, and I'm the Director of Investor Relations. As usual, I'm here with our President and CEO, Jyri Luomakoski.

Good morning.

And our CFO, Niko Haavisto.

Good morning.

Today, for the first time, we also have the business area CEOs on the line. So please welcome Dr. Steffen Hahn from Business Area Fiskars and Daniel Lalonde from Business Area Vita.

Hello, everyone.

Let's take a look at the agenda. So Jyri will first start and describe Q3 in brief. After that, he will hand over to Daniel to cover Business Area Vita's highlights for the quarter. After that, Daniel will hand over to Steffen, who will cover BA Fiskars. After that, we will hear from Niko, who will present selected key financials, and then Jyri will end with the guidance for this year. After the presentation, we will have plenty of time for your questions, and we will take questions both through the phone lines and through the chat. And Daniel and Steffen will also be available for the Q&A. But Jyri, please go ahead.

Thank you, Essi. Good morning. We just reported this morning our third quarter numbers and all 3 key elements, top line, EBIT and cash flow, moved to the right direction. What we are extremely pleased is, of course, that for the fifth consecutive quarter, we are reporting growth, comparable net sales up 3%. And this quarter, we can observe growth from both business areas. The comparable EBIT increasing to EUR 20.2 million from the shy of EUR 14 million last year. And there, we can see that the top line growth is helpful and gross margin expansion. What are the sources for the gross margin expansion at Vita? It's from the positive mix development that's driving it. And the BA Fiskars gross margin got benefits from some U.S. tariff refunds. In our quarterly reporting last year, we did not address and quantify the tariffs that gradually kind of came layer by layer to the picture in terms of our cost position, nor are we now quantifying the refund amounts. So I'm sure there might be questions, but preempting that topic, that's not to be disclosed here. Free cash flow last year, negative EUR 20 million, now a bit more than EUR 40 million positive. So turning that is confirming that those things we have been doing in terms of curtailing production and focusing on the net working capital items are bearing fruit, even though the number EUR 14 million might sound small, but the turn is significant. We are maybe a bit boring in terms of our guidance because it's repeating what we already said in February, but probably boring is good in this context. So 3.6% top line growth with the reported currencies, but like-for-like currencies 3%, as mentioned. And here, we have comparable EBITDA up to EUR 38.6 million and EPS from EUR 0.08 last year to EUR 0.14 this year. And what I believe has been a bit in the markets kind of with the question, is there a stronger H2 that the guidance was also implying? I think we've started H2 in a nice way. We have an FX comparability topic of EUR 100,000 on the EBIT line. Both operative business areas actually improved their EBIT and the big chunk, as seasonally was also expected, is coming from Business Area Vita to our EUR 20.2 million. It's also a good time to remind us of some things why we also are successful in the marketplace. We don't have too many data points yet from peer companies, but I dare to kind of claim that in that relative competition situation, we are weathering the unstable environment pretty well. Many drivers and the colleagues from the business areas will address that on sustainability. I believe we are doing the right things. We are having progress in terms of our target circular materials, circular products growing from last year, emissions, both Scope 1, 2 and then the Scope 3 ones. And we've been successful in terms of managing our vendor suppliers that they are also bound and taking science-based targets to improve their sustainability. On the social side, good progress on the long-term accident or lost time accident frequency, LTAF down to 2.2 from 3.7 last year, but only a round 0 is something that will make us happy and keep our people safe. And then on the inclusion experience, where the comparability to historical numbers as we changed a bit the surveys is not really given, then we can clearly improve our act. But that takes us to the business area performance part and welcome for the first time on this forum, Daniel, on the Vita, how Vita has been doing in the third quarter. The floor is yours, please.

Yes. Thank you. Thank you, Jyri, for that. I'm happy to be here. Good morning and good afternoon to all. Listen, overall, as you can see on the slide, I would say, a solid quarter for Vita. If I just stick to the points on the right-hand side, we've registered the fifth consecutive quarter of comparable growth in net sales of 4.5%. So we're comping, obviously, previous quarters and last year's quarter, which was positive as well, which is really nice to see. The growth came across both of our big channels, D2C channels, which includes 4 subchannels as well as wholesale, which, as you know, is a very important part of our business. From a brand point of view, we had some really good performance across many brands. We've cited 3 today, particularly with particular focus on Georg Jensen, which continues to have a very strong growth as we announced in previous quarters, Moomin Arabia and Rorstrand, which is celebrating this year its 300th anniversary. So that was very, very positive. On the comp EBIT, it more than doubled versus last year. And as Jyri explained, there were a few positive factors, which I'll describe on the next slide, notably higher volumes and improved gross margin, and then some savings from our turnaround actions and plans that we exposed, I think, to the markets earlier this year. Gross margin, as I just explained, went up by 190 bps to 53.9%. And while focusing on not only top line, but EBIT and cash flow, we're having meaningful efforts throughout the company at the same time to reduce our elevated inventory levels and rationalize production as continues on. So this is always the backdrop and a very important initiative for Vita brand. If I flip to the next slide, just to explain some parts of the bridge that takes us from a EUR 5.1 million EBIT to EUR 11 million. Let's start with sales volume. I think that's relatively self-explanatory by the 4.5% like-for-like growth. On the gross margin, as Jyri mentioned, we have a positive mix happening this quarter. What that means is the brands in our portfolio with the higher gross margins are those that have grown faster than the average. That's what that means. And then maybe I'll explain the SG&A, the SG&A part of the bridge. So 2 things here I want to mention. The first is the transformation plan that we announced to all of you early on this year in February. Just for a reminder, we projected a run rate savings of EUR 28 million by the end of next year. So the only comment I would like to make on that is that we are completely on target to achieve those results and to achieve the targets that we put for ourselves in 2026. So that plan is on track. We expect 1/3, as we said, 1/3 of the savings to occur in 2026. That was offset, though, by a few things, notably the bonus accruals. So they're full bonus accruals at this time, which was different than last year. And also a part of our business on the concessions business, which is the business in department stores, we run concessions, and we had a pretty meaningful increase in sales in the concessions, and those are variable costs. So this increased that part of the SG&A. And then maybe the last slide, just a few highlights. There are many, many highlights, we have to pick 4, or probably 50. This is what makes our business grow. So some notable ones, Georg Jensen launched a new collection called Fold, and that was developed with our internal designers, and it's intended to become an icon collection in the home business one day. So we had a very successful launch. You can see a picture of it here. Iittala also introduced a collection -- a collaboration called Unda with perhaps one of the most recognizable global designers today, Sabine Marcelis. So this was launched in Q3, beautiful, beautiful products. Moomin Arabia featured in its program Rebel Club features, which was very, very well received in the markets. There were a lot of festivals in Helsinki and other areas. So that was kind of a highlight of the quarter. And then the last is Waterford celebrated the 250th anniversary of the U.S. with a special exclusive collection as well. So these are just 4 of many highlights, which all contribute clearly to our like-for-like growth and the desirability of our brands. That's all I have to mention now. I'll pass the baton to Steffen.

Thank you, Daniel. Good morning, everyone. So I'll definitely contribute to your quarter 4, Daniel, with the Rebel collection for my daughters. But looking now at the business area Fiskars results on the next slide. What you see on the left is that we had a solid -- considering the circumstances, I would say, a good quarter with slight growth, 1% and excluding currency, 2%. Both regions contributed, North America continuing the momentum and Europe and Australia and New Zealand stabilizing. On the middle of the slide, you see our EBIT and which is ultimately paying the bills and has been on a good trajectory for us over the third quarters in past years, if you disregard the COVID heydays in 2022. So this quarter is no exception, driven by volume and gross margin and helped by some tariff refunds. If we look closer at EBIT on the next slide, you see how we are bridging, and it's pretty much all good news. So volume and gross margin helped. Margin and other costs were a nuance lower this quarter. And SG&A, the orange block, which we usually view critically, was pretty much all good cholesterol as we could call it. Last year, when our performance was below our targets, short-term incentive accruals were relatively low. And so with a better performance this year, we need to accrue for those incentives accordingly. So it's primarily a comparison effect, not an increase in the underlying base. Another sizable portion of this orange block was R&D, which is consistent with our strategy to drive more innovation. So our direction on SG&A, reducing cost to reinvest into our growth remains intact even if we have this increase in quarter 3. If we go to the next slide, and if we look at some of our launch highlights, we were covering power tools and a wonderful collaboration on our important scissors business. So let me talk a bit about the power launch that we are -- or launches that we are expanding now. I think we have built something that is very unique in our industry, a unique battery platform architecture for 2 reasons. One is our power tools are based on a power bank, and that gives you basically endless applications, 365 days a year, not just when you use your power tools. And the other thing is that it's scalable across voltages based on one and the same battery. And so if you take the customer, our retail customers' perspective, that is exactly what they want in terms of SKU productivity, one battery for truly all applications. When you look at the consumer, that is what they're looking for in terms of value for money. So both for the customer and consumers, I think we have a value proposition that is very compelling. And so consequently, we're expanding this platform, we are now launching an eSnowShovel this fall. You know we have a manual snow shovel business. So it's very complementary to what we already have in retailers. And in spring, we are launching electric hedge shears. We have manual ones. And so again, very complementary to our footprint that we already have a power version. And then on the other side, you see on this, we've launched this wonderful collaboration with MoMA, the Museum of Modern Art, and we've got wonderful reactions from consumers in social media on this collaboration. So we are encouraged to do more of these things in the future, building on the resonance we received on this launch. And with this, Jyri, over to you.

Okay. Thank you, Steffen. And I have a few selected key financials. So our free cash flow, it improved year-on-year, driven by the trade working capital development, positive in that sense. And operating cash flow was EUR 37 million. On the CapEx side, we are continuing our discipline there. It was EUR 10 million in this quarter, same as in the comparable quarter last year. And on the cash earnings, I will go into the following slide. So first of all, our comparable EPS went from the EUR 0.08 to EUR 0.14 and mainly driven by the EBIT there. What is really important, of course, is the cash EPS as well. So there, we went from basically 0 level to EUR 0.44 per share. So good development there. And the main driver there, the change in the net working capital. Net debt to EBITDA, we are improving from the comparison period, coming down on the absolute terms in the net debt of a little bit over EUR 50 million, and we are at the level of 3.36x. And there, we are aiming towards that 2.5x level in the coming years. And with that, I hand over to Jyri for the guidance.

Thank you, Niko. Guidance, as I indicated in the opening, we might be boring. We are repeating exactly what we said in February when we issued first time the guidance for 2026. What's behind in the thinking of our guidance, i.e., the assumptions, we do still see that uncertainties in the global economy, they continue. Visibility is limited. We know that the fourth quarter is important for our EBIT -- comparable EBIT generation, and that's the main season for Business Area Vita. We are expecting that the changes, and Daniel already referred to those from our reorg activities announced in February, that they continue to support the EBIT in the fourth quarter. We do recognize that in the absence of snow, which is, of course, our dream for the Nordic markets for snow tool business, to be a lot of snow coming for BA Fiskars, this is not the -- otherwise, the high season, but some further tariff refunds will fall into the fourth quarter. Last year already in the summer when both Daniel and myself, we were new in our roles, we clearly recognize that we need to curtail our production to manage our inventory situation, which was kind of too big. And hence -- and since then, we've been curtailing in some of our key factories to production, which leads to negative variances. And those activities and actions actually are continuing. Of course, when you compare now year-on-year, we get into, in a way, lighter comps on that aspect because those activities started mid last year approximately. But that was the guidance, and that takes us to the Q&A. Essi?

Yes. Thank you to all presenters. And now we have time for your questions. I can see that there are already some questions in the chat, but maybe we check if there are any questions through the phone lines.

[Operator Instructions] The next question comes from Maria Wikstrom from SEB.

This is Maria Wikstrom from SEB. I have a few questions. Starting with the U.S. tariff refunds. I mean, if you could comment on the magnitude during the Q3 and the expected magnitude during the Q4, please?

As said, we are not commenting those on a quarterly basis. So that is the answer there.

The magnitude is still significant given that it's raised as a separate subject, I believe?

Acoustically, I missed a word or half -- word and a half from your question. But as Niko said and as I said in the intro, we are not commenting on the quantum or the magnitude in our quarterly reporting. We did not do that last year when those tariffs, multiple of them actually hit us. And one of them is subject to refunds based on the Supreme Court decision. So we are not disclosing those numbers, have not and will not.

Okay. And then I go to my second question, which is if you could elaborate a bit about the sales trend in North America, even I think it has been, I mean, one of the -- I mean, where previously, it has been for you the best performance, and now we see the North American comparable sales growth declining. So if you could give a little bit color that if this is like a sustainable trend that U.S. consumer is hit by the ongoing inflation? Or I mean, how would you interpret that in the U.S.?

If I start, first of all, it's a function of 3 things. We have commented in our report that our Fiskars-branded revenues continued to develop favorably, and Steffen will address that, too. And then we have -- on top of that, we have the outdoor business, which is not Fiskars branded. That's our Gerber brand. And then we have in Vita businesses in the U.S. And some of these have been also subject to, in a way, internally generated changes, or if I use the word disruption, it's too strong, but we've been moving DCs and doing stuff like that, but the big piece and the consumer sentiment and the pulse, if I hand over to Steffen, who under the Fiskars brand has the biggest bulk of our consolidated U.S. business. Steffen, please?

Yes. Thank you for the question. So we have a continued trend that is positive. And so far, there hasn't been any change in that. But of course, we are very closely monitoring the tonality that's getting sharper ahead of the midterms on fuel cost and affordability in the U.S. But so far, so good, I would say.

Thank you, Steffen.

And then maybe finally, just getting a little bit of indication that given that you have a quite big chunk of a third-party retailing, how would you say is the pulse, I mean, for the upcoming holiday season that are your clients currently willing to take more inventory to preparing for, I mean, better high season compared to last year? Or what is your sense, I mean, where is the market moving from here, please?

And I guess your question is more referring now here to the seasonally more relevant business, i.e., Vita, where the share of D2C is bigger in Q4 than it's on the average of the year, but Daniel has his pulse on -- with our distributors, our retailers. So Daniel, please.

Sure. Sure, Jyri. Well, maybe I'd answer this, this way. Our focus is entirely on sell-through. Sell-through of our D2C, which is ours, obviously, and the sell-through with our key partners throughout the world in all markets. And the sell-through has been good thus far. That's great. And I think some markets are feeling positive by the end of the year with the context that Jyri stated earlier. So from an inventory point of view, we're very mindful to match sell-through and inventory as well. We don't want to build inventories unnecessarily at our key retailers. We want to match both. But our focus has been on the sell-through, which has been, I'd say, relatively positive throughout our key retailers and wholesale partners throughout the world.

And maybe if I chip in one more question as Daniel is on the line, asking about, I mean, what is currently the status for your turnaround brands? And how is the turnaround currently progressing for Wedgwood, for example?

Okay. Yes. So not the turnaround plan, you were not referring to the ones where we showed that we will get to EUR 28 million of run rate savings. But as you know, we have some brands that we're scaling today. The example was Georg Jensen. We're scaling both sides of the business, very strong in both jewelry and home. Some of the turnaround brands, which were mainly in the -- what we call the House of British and Irish design. You talked about Wedgwood, and there's Waterford as well. Everything is moving, I would say, to plan so far. So it's moving certainly in the right direction. And as we indicated before, we want to make sure that we turn these brands around before scaling them. So that's -- we're very -- I'm very mindful about that. And Wedgwood, you asked in particular, has had some I'd say relatively positive Q3, although we're not revealing any numbers, but we're very much on track with Wedgwood. And Waterford also has an industrial footprint that we talked about before, but we're well off with a very tight program to improve both the top line and the EBIT performance and inventory performance of these brands as well. So overall, we're making good progress on our turnaround brands, I would say.

I have no further questions at this point.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers.

Thank you. There are questions in the chat, so we will continue with those. Let me see, maybe we can start with a question related to Vita's turnaround actions, and there is a question on how much of the 1/3 of EUR 28 million savings realized in Q3? And Daniel, if you can take this.

Sure. Well, listen, I don't think we're going to specify the exact number per quarter. I just go back to the point I made earlier, which is the EUR 28 million, which we've exposed to everyone. And we're running very much on track, slightly ahead, I may even say, to the capturing 1/3 of those savings this year. We measured every month across all my markets, across all my brands, across the global functions as well. And we're piloting slightly above that target of 1/3. I think that's all I can share with you at this point in time.

Yes. Thank you, Daniel. And there was also a question, how much do you expect for Q4, but I can already answer that we will not quantify that either. So let's see what we have next. Then we have a question related to the -- to costs related to that program. So Daniel, this is also for you. Vita turnaround costs have already reached EUR 11.9 million, above the original estimate of approximately EUR 9 million, and further costs expected in Q4. Have the expected total costs increased?

Yes. I -- it's a good question. I think they have. As the program -- as our program has progressed and a lot of individual actions have been finalized, I think we can say fairly that the one-off costs have become clear and have turned out to be slightly -- to be higher than estimated. So I think that's a valid point. Again, I think we're not going to reveal exactly all the figures by quarter. And then I would just end up saying again that the program itself remains very much on track, again, slightly above what we were expecting this year. And the savings have all -- materializing from Q1, the last month of Q1 as planned so far.

Yes. And continuing with the same topic, the savings program in Vita support also gross margin in Q3. And how does the total EUR 28 million split between SG&A and COGS? So Daniel, if you can give some kind of an answer to this.

Okay. There are a lot of questions on this program, which is fine. I can just give you what I can give you. The answer is yes, there has been -- some of the savings without getting into much detail have been -- so they're both SG&A and gross margin-related. So I can just say that the savings that we said we would obtain this year are very much on track, ahead of track, and they affect both. So there was some -- some of the gross margin improvement was as a result of the transformational plan that we presented early on this year. They're in both. They're in both. You'll find them in our P&Ls in both the SG&A and in the gross margin as well as planned.

Yes. Still continuing a bit more with Vita, and then we do have some questions for Steffen, too. About the Vita inventories, there are a couple of questions related to those. Vita's Q3 gross margin improved despite continued production curtailments. Could you quantify the remaining negative impact for Q4 and for 2027? And when should we expect Vita's inventories to begin declining more visibly? And what would you consider a normalized level? Sorry, there are a lot of questions in the same question, but I guess we can say that we don't quantify the impact, but maybe we can answer about the schedule when do we expect them to begin declining more visibly?

Okay. Again, fair question. Let me tackle the inventory one because I think that's important. So as I mentioned earlier, our key metrics, financial metrics, obviously continue the top line growth, go for another quarter of like-for-like growth after 5, which is good. Improvement on EBIT gross margin, as we talk, cash flow is important to us in inventory. Inventory is a big focus of ours. And reducing inventory is -- there's multiple levers that we're going through to reduce the inventories, not only the quantum, we measure it in the number of days, days of inventory outstanding. But also what's important to us is the health of the inventory as well. So the quality of inventory, not just the quantum and the number of days. It's a clear priority for us. It takes a little time. As I think we've discussed earlier, our products are not perishable, as you know. And our aim is to bring our inventory levels down gradually in a controlled manner without harming the business. This is our goal. And we've made some progress. We have made some progress since we last chatted. Also, what we've decided to do this year in addition to reducing the quantum, that's our objective, the days, the quality of the inventory, we've also decided to fund a slight program to increase the availability of our top SKUs in the key brands. So that was a very conscious effort that we made to make sure that we're at very high availability rates of those products as well. So that's a little bit part of the overall inventory strategy, I would say. But overall production remains curtailed, and it's a big focus of all -- of me and all our teams to get the right quantum and the right quality of inventory.

Yes. There are some similar kinds of questions. So I will just check if we have already discussed. This also relates to Vita inventories. Can you please provide more color on the gross margin implication and price actions to reduce inventory?

Okay. So can you repeat that again, please? I think you said price as well.

Yes. What sort of price actions are we taking?

So implicitly, whether we have been selling at deep discount to reduce the inventory, I think that's in plain language the question.

Yes. Yes. Yes.

Yes. Okay. So the answer is no. No. One of our objectives as well within our company is to try to sell more at full retail overall, reducing discount rates, particularly in the D2C channels. So that's important. We've had also a program to -- when I said about the quality of inventory, we have the current inventory, and then we have products that become obsolete as well over time, delisted from the catalogs. So there's a specific team and program on the obsolete inventory as well to get that -- to sell those inventories throughout the world as well. So I think on the overall inventory, and then we've had a price increase, but I don't think that's your question. So some of our brands have had a price increase also in Q3. So no, we're not -- we're being very mindful overall on how we get to the reduction and the better health of inventory. It will take a little time, making sure that it has not a big impact on the brands. So we have to manage both sides while also delivering more top line growth and EBIT. So we're mindful. And it's not how can I say this, it's more of a midterm -- there's a lot of actions happening now, some progress, obviously, now next year, but it's not something that we solve in a quarter or 2. It will take a little bit of time, but it's moving in the right direction.

And before Essi shoots off the next question because they are, in a way, on the same topic on the inventory, which I believe pretty much have been answered what we can answer. What I in my intro also mentioned that as we started to curtail the production last year, mid of the year approximately, so initially, of course, in relative terms comparing to the prior year, the impact and the burden was bigger. Now we are having as comps times when we have been already curtailing the production. And in terms of the sellout when the production is curtailed, Q4 is the highest volume quarter. That's, of course, the time when we also expect to see reductions taking place. But it's a marathon, as Daniel said, but it's a marathon with kind of good shoes. Our goods are not getting sour or rotten or anything like that, like in some faster-moving industries it would be the case. But that's the case that comps are getting in relative terms easier on this production, variance or as the follow-up or consequence of us curtailing the production.

Good. Maybe that concludes the inventory topic. Then a question for Steffen on BA Fiskars. We mentioned in the report that Europe stabilized, and we mentioned the new categories. There is a question on how did the legacy categories perform in Europe?

Yes. Thank you very much. I think I -- first of all, thanks for the question, I see you read the release. But joke aside, I think I alluded to this when I talked about our power launch. What we are seeing is that the world is motorizing. And of course, that has an effect to some of our manual tools. It's not dramatic, but it is over time a slight erosion, and we're countering this. There is subsegments that we have, for example, crafting sees a bit of a renaissance in the U.S. in particular. There are subsegments that are growing. And we -- with our focus on innovation, we take the deliberate path to move our product footprint to growing subcategories. And the launches we are doing in the future are on that intention. So we are observing the markets. We have retail data, of course, that shows us more near-term tactical shifts in categories, and then we have the long-term trends, and we are baking our portfolio for the future and exactly to make sure that more of our portfolio is exposed to intrinsic category growth. So we are -- I think we are satisfied with our base business performance, but we know that we have to do well to move our business overall into faster growth categories to deliver against the targets that we have 3% to 5% per year in top line growth.

Good. Then there was a question about the tariff refunds and how much, but that we have already answered that we are not going to disclose that. I'm not sure if this question is for the group level. So maybe we can start from the group level, and this is then for you, Niko. Gross margin improved clearly. Do you think this is a sustainable level? Or was this clearly supported by, for example, the tariff refunds?

Once again, on the tariffs, we feel that that's the level that we are going forward as well.

Let me see. I think there are no more questions at this point. So that then concludes our webcast for today. Thank you for your active participation, and have a nice rest of the week.

Thank you for joining. Good day.

Thank you.

Thank you, everyone.

Okay. Bye.