Fiskars Oyj Abp

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 Jyri Luomakoski and our CFO Jussi Siitonen. Let's look at the agenda of this call. Jyri 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 Jyri, 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. Jyri, please go ahead.

Thank you, Essi. 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 Vita. Comparable net sales 3% up and comparable EBIT improving from 3-ish million to shy of 8 million. So there was a clear way in the positive direction. Both sales growth and EBIT improvement really was driven by Vita. 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. One of our focus points now since a year has been cash flow as a consequence of the Thank you very much. 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. On our sustainability journey, pleased to report also that we regained the platinum Ecovadi status or medal. And that's a result of hard work. We need to remember that that implies that we are in the top one percent of the company's success. 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 a bit to increase or expected to improve from last year's level. But that's the segue to the numbers, Jussi.

Thank you, Jyri. So, as Jyri 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 Fiscus BA. The growth has been very broad-based. So when it comes to our top four countries, USA, 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%. 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 million to 7.7 million and I walked through more in detail which were the driver behind this one. Also our earnings per share adjusted was negative six cents 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 BA Vita. So BA Vita succeeded to improve EBIT by 5 million versus last year. The main drivers being increased sales volumes, Thank you very much. As you can see, gross margin came down in BA Viitta. 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 base, we were slightly up versus last year. In BA Fiskars, we continued improving gross margin. And as we said in the capital markets today, that in BA Fiskars we are focusing on this flywheel where we are increasing media spend, where we are increasing R&D and get a momentum on our top line. That continued now in Q2. So all those benefits what we had there from cross-margin improvement, we invested back in marketing and R&D. R&D was up over 20% now in Q2 versus last year. Then the cash flow, as Jyri 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 today so that our unlevered free cash flow now includes also those lease payments there. With this new definition, we were at 30.4 million now in Q2, 28 million better than last year. which is significant improvement. They are mainly coming from change in net working capital and net working capital came down over 30 million whilst last year it was quite flat. Another positive driver what we had on cash flow is our capex. So CAPEX in Q2 was 7 million, which is less than half what we had last year, same period. Even for the first half basis, in the first six months, CAPEX was 12 million, 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 euros and to 51. And I'll go through a bit more closely that on the next slide. As I said, earnings per share was quite flat on adjusted basis. So from minus 5 cents to minus 6 cents there. Adjusted EBIT contributed improvement there by 6 cents. and then fair valuation of biological assets, i.e. 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 networking capital chains, and that has been the main driver for this improvement. On net EBITDA, net 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. The main reason for this increasing net debt EBDA versus last year is coming from EBDA size. So rolling 12 months EBDA was lower than it was in comparison period. The net debt itself came down versus last year. When it comes to our net debt overall, what we introduced or what we made now in Q2 was 50 million tap issue to our existing 200 million bond. And then we have also strengthened our liquidity. So total liquidity what we have at the end of Q2 is 420 million consisting of 300 million committed great facilities, roughly 40 million overdrafts there and then roughly 80 million 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. So now it's up to 30% versus last year, 28%, and we continue driving it towards 50% by the end of 2030. When it comes to emissions, Scope 1, Scope 2 and Scope 3, all are improving from last year. On the 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, Jyri.