Rapala VMC Corporation

Good morning, everyone, and welcome to this Rapala VMC Investor Audiocast covering the first half of 2026. My name is Tuomo Leino, and I am here with President and CEO Cyril Villalart. Good morning, everyone. And CFO Miikka Parna. A very good morning to all. We will first go through a presentation, and after that, we are open to questions. But without further ado, Cyril, please go ahead.

Thank you very much to all for attending our call today for our first half 2026 results. What I can say as an opening word is the implementation of our recovery plan is proceeding as planned. I would say we are slightly ahead with North American replenishment demand that came out strong in the second quarter for our new items as well as existing range. In comparable currencies, North America grew 19% above previous year. This has compensated a slower activity in other parts of the world where we have contrasted situations. I would say draws in some key European countries that you have seen in the news have hit our sales, whereas we have had favorable developments in Northern Europe. Rappala VMC Group growth landed at 11% in comparable currencies. Growth and continued cost control have flowed directly into EBDA and comparable index, which increased by almost 5 million euro from 8.6 to 13.5 million. Growth was led with controlled inventories and investments. leading to above $60 million of cash flow for the first half compared to $6 million in the first half of 2025. Our innovation pipeline is strong, and our brand strategies are bringing clarity, focus, and long-term projections. We will increase in the second half gradually our investments in marketing to support our brands, to secure all our innovative products are well supported for the millions of passionate anglers we serve worldwide. We're still navigating in uncertain waters with fluctuating tariffs and an unfavorable geopolitical situation that everybody knows. Nevertheless, as we indicated, in our reviewed issued guidance last week. We expect today our comparable operating profit to be in the range of 12 to 14 million euro. Mika will guide you now in more details in our sales and financial performance. It gives me the opportunity, closing my opening words, to thank the global Rapala VMC team for the great results of this first half. Mika, for yours.

Thank you, Sirin. So, let's walk through the key points of the first half of the year. So, sales landed at 134.8 million euros for the first half of the year. In comparable currencies, we were up 11% from last year. Foreign exchange rates had slight or actually even a significant negative impact, so our reported sales were up by 7% from last year. And operating environment was affected continuously with these geopolitical instability and tariff volatility. Despite these macroeconomic headwinds, we showed very good resilience in North American market. Consumer demand improved from last year, and the demand, the pull, was strong. And this, of course, then compensated for the rather slow European market. European market was a little bit subdued. Consumer demand was dampened by the sharp conditions in certain parts of Europe. if we move forward and look a little bit closer to the regions and the markets we can see here that North America is almost 60 percent of our global sales and we have shown strong growth in the North American market for the last couple of years so we are up in comparable currencies 19 year-over-year in North America in Q2 Q1 and Q2 were rather similar growth, so Q2 comparable sales increased by 18%. So we had very good load in deliveries in Q1, and this continued with the consumer pool pulling the products out of the shelves. Our replenishment sales remained very strong in Q2 of the year. And here, from the product categories and brands, it's noteworthy to say that the flagship Rapala brand led the sales growth, but we were happy to see that the growth remained very broad-based across all of our key brands. In the European markets, we had a good start for the year. We were up in Q1. We had good loading orders. The season looked to be better as previous season, but then the heat waves and the drought conditions came in, and actually in Q2, our sales decreased decreased by 4% in comparable effects. Here, the Nordic countries were not that affected by the heat wave and the drought conditions. In Nordic countries, we were able to show a little bit better growth compared to the continental European markets affected by the heat wave. And here, as well, our strategy implementation continues. So, key Rapala and Okuma brands exceeded prior year level. while sales in some of some other brands which had greater exposure to the continental European markets affected by the weather conditions showed a little bit decreased sales. In rest of the world's region sales growth continued strong in Q2 so Q2 comparable sales increase was 11 percent and first half we are up nine percent currencies don't have a major impact didn't have a major impact in the sales of this region growth continues to be driven mainly by the Latin American markets where we have positive momentum continuing we have good consumer pool and also growth there is supported by the new Okuma distributorship in Chile in the Asia markets those markets remain challenging for us with the global trade disputes continuing on consumer sentiment. So the price is going up, less discretionary spending. And we are of course still experiencing that local, strengthening local competition in those Asian markets. So then on profitability, which is showing a nice trend of improvement. So, we landed with comparable operating profit for H1 with 13.5 million euros, or 10% of sales. 57% increase from last year. And this profitability was, of course, naturally primarily driven by the increased sales volumes in the open water market. We were also able to secure our sales margin which improved slightly from last year and also we continued our focus on maintaining operating expense level and lowering the break-even point. In the reported operating profit which landed higher at 15.8 million euros we have an impact of 2.5 million from the IEETA tariff refunds in the US. And with these results, we had slightly lower financial expenses, slightly higher tax expense, and net profit for the first half of the year landed at 8.5 million euros, which is 6.2 million euros higher compared to last year. And earnings per share landed at 19 cents per share. Then next, let's look at our cash flow. So starting from inventory levels, our inventory landed 2.1 million lower compared to last year at 80 million euros. Here the currencies play against us, so currency exchange rates increased our inventory value by one million euro. Organic trading inventory was 0.8 million euros and we had a Net Realizable Value Allowance, which the allowance increased and decreased our inventory value by 2.3 million euros. And then on the right side, if we look at our cash flow, our cash flow from operations increased by 10.5 million euros year over year. H1 landed at 16.7 million euros. We have less capital tied in net working capital, which brought a 3 million benefit in our cash flow. And if we look at the cash flow excluding the working capital impact, our cash flow landed at 18.5 million euros, which is 7.5 million higher than last year. Capital expenditure remains roughly at last year level. Again, the same, same. Same capital expenditure targets here, manufacturing capacity, maintenance, investments, and also investments in new products, which is, of course, a key investment for us to maintain the new product excitement in the market. Last year, we had a disposal of 1.1 million from the sale of real estate in Finland. This year, the disposals were very minimal. And let's move on to the last slide of my presentation. So our deleveraging is progressing. Net interest bearing debt landed at 60 million euros, which is, it is higher, 1.4 million higher compared to last year. But here the comparison is a little bit flawed. we have to take into account that we have hybrids. Last year we had 30 million euro hybrids. Now we have 25 million hybrids, and the hybrid is considered as part of equity. So here, more meaningful comparison is looking at 2025 Q4 and comparing that to Q2, where we show a almost 13 million decrease in our indebtedness. Leverage covenants landed at 2.28, so the improvement that we've been working towards is now showing results. Gearing there on the right side of the slide is slightly higher, and this is again explained by the lower hybrid capital as the hybrid is considered as part of equity in the IFRS statement. So our IFRS equity decreased by some 3 million euros, but here we have to recall the hybrid impact.