Fiskars Oyj Abp

Hello, and welcome to Fiskars Group's Q3 results webcast. I'm Noora Huttula from Fiskars Group's Investor Relations, and I'm here with our president and CEO, Nathalie Ahlström, and CFO, Jussi Siitonen. We have slightly different program from usual. Nathalie will give a brief summary about that in just a moment. After that, Jussi will take you through the Q3 highlights, and then Nathalie will give a strategic update. We will then have time for your questions, and you can already type in your questions in the chat during the presentations. Natalie, please go ahead.

Thank you, Nora, and welcome everybody to this call today. There's a lot happening in Fisker's group at the moment, so happy to talk about that. But first, a few glance on the quarter and the key messages. We had another solid quarter in Q3, despite the challenging market conditions. We improved our profitability despite volumes decreasing. And yet again, all-time high gross margin in Q3, driven by very good work in our supply chain. Our strategic growth fundamentals continue to deliver and we have the final leg of delivering our transformation. And we have today come out also saying that we now are completing the brand's first approach to drive speed and impact, really drive speed and impact and the full potential of the businesses. And we are separating the business areas into two different operational independent companies. And we keep our guidance for 2024 unchanged. That means that our comparable EBIT is expected to be slightly above 2023 level. So that's the key messages for today. As Nora was alluding, we have a slightly different agenda today. We'll start with Q3. Jussi will walk through Q3, the solid Q3 that we just reported. And then I'll talk about the strategic update, followed then by a Q&A. But over to you, Jussi.

Thank you, Natalie, and hello, everyone. As already mentioned, we had a solid quarter here. We improved profitability despite the lower volumes. Our top line reported net sales, including also Georg Jensen now for Q3, we were up 6.1%. Organically, we were down 7.3%. More importantly, we succeeded to improve both profit and profitability, especially now in Q3 versus last year. Our EBIT went up 6.4 million to 24.3, and EBIT margin over 2% point up to 9.5%. When it comes to businesses, and I'll walk you through them a bit later, on EBIT, EBITDA was down, FISCUS was up versus last year, and then this other segment was back to normal level versus last year. The main drivers for this improvement were gross margin improvements. So we succeeded on quarterly basis, improved gross margin to 48.1 from last year's 47.2. Also on the year-to-date basis, we were 1.7 points up versus last year at level of 48.5. Free cash flow was down due to the net working capital phasing, and I'll get back to that also later. And our comparable earnings per share was one cent up to 16 cents. And of course, cash flow per share, or cash earnings per share, was at break-even level, reflecting cash flow. When it comes to Q3 comparable EBIT, as I said, it improved to this 24.3 million. If you take a more analytical view and then move to year-to-date EBIT bridge here, we succeeded to secure our performance, secure year-to-date EBIT through strong performance management. And let me walk you through how it actually went. We started the second half 10 million behind last year. Now in Q3, we succeeded to catch up 6 million out of that. So on a year-to-date basis, we are 4.1 million behind last year. But when we open that up more in detail, you can see here that the saving actions we have put in place in 2023, also this year continue driving those savings, they delivered over 30 million EBIT improvement there, which was then practically fully offset by lower volumes. Then also depreciation, amortization, mainly our historical investments in digital IT took down to profitability. Georg Jensen 3.9 million contribution to our year to date EBIT there, bearing in mind that typically the first nine months of Georg Jensen in the past has been at break even or even loss making like it was in 2023. So this shows that we have succeeded to significantly improve performance in Georg Jensen. Then more on BAs. So Viitta was up 16.5% there, including Jorg Jensen, 10.1% down organically. And then on EBIT, EBIT was down 4.2 million due to those low volumes, which were partially offset by the savings, what we have achieved also in Viitta business. Some highlights there. both Royal Copenhagen and Moomin delivered a strong growth in Q3. And that's just so, especially when it comes to Moomin Arabia, that we have strong momentum in that business. On Fiscus BA, our top line was down 4.9% comparable basis, 4.5 reported. US, which is the biggest market for Fiscus BA, roughly half of our Fiscus BA business is in USA. USA was down due to the softness in sellout. On the other hand, Germany and Nordics, especially Germany there, we don't see any strong improvement there when it comes to consumer sentiment. So we succeeded to grow strongly in Germany due to the actions we have put in place, more distribution, more categories and the likes. All the commercial excellence actions have been in place both in Nordics and Germany to improve top line. In Fiscus BA, we succeeded to improve EBIT by 2.5 million. and the drivers were both improving gross margin and SG&A savings than Fiscus BA. Moving from P&L to cash flow, as I mentioned, our free cash flow in Q3 was negative of 16.9 million. This is mainly due to phasing of trade payables, the phasing coming from both ends of Q3, both from Q2 to Q3, and then also what we paid now in Q3 instead of Q4. So this is very much this kind of phasing issue now between the quarters. When it comes to net debt EBITDA, it was slightly up to 2.8 times, the target being this 2.5 or lower. This 2.8 is now ahead of our seasonally strongest cash flow quadrant. So the historical pattern of a cash flow is that typically Q4 is the strongest, and therefore we assume that we also get net debt EBITDA back to the more targeted level now in Q4. cash conversion is still at healthy level. When it comes to our financial targets, the four targets there from net sales growth, profitability, cash flow and balance sheet, we can continue saying what we have said in many times, that those enablers, cash flow and balance sheet, remain healthy level, strong level even when it comes to cash flow conversion on rolling 12 months basis. So they can enable the future investments what we have in growth. EBIT margin 9.1% on rolling 12 months basis. I would say it's not bad, but it's going a bit wrong directions there. Very much reflecting the challenging operating environment there and low volumes. What you can see also here when we talk about organic net sales, which was down 4.4% on rolling 12 months basis. Then about those saving programs. So we announced two programs last year. We started one in January and then September. When it comes to SG&A, part of those saving plans, the SG&A part is now completed. The actions are implemented. We still enjoy and benefit from those programs also in Q4. But this kind of incremental improvement when it comes to SG&E efficiency start gradually declining. When it comes to supply chain actions, there we still have to deliver. And we can see that Q4 and also 2025, the programs continue delivering profitability improvement. The new structure, Natali will walk it through more in detail a bit later, with this new structure, they are further enabling savings there throughout simplification. We expect that additional annual run rate of those cost saving plans is approximately 12 million, starting already in 2025. So majority of the savings should be now in the year 2025 numbers, the rest being in 2026. The expected one-off relating to this organizational change is now 8 million, and that will be recorded during the transition period until first quarter of 2026. When it comes to the model itself, the decentralized structure will also improve flexibility and speed of executions, which is not yet visible in all those numbers. Having said that, giving back to you, Natalie.