Fiskars: CMD event offered refined steps towards mid-teens EBIT margins – cash flows to remains strong - Nordea

Fiskars arranged its CMD event yesterday where it offered insights to its strategy and to how reach unchanged financial targets by 2025. The company is taking steps to further sharpen its logic with active portfolio management and has simplified its ways to operate with full accountability across brands. The company continues to focus on winning brands, winning channels and winning countries. Key transformation levers are intact with three out of four delivering good progress. With sharpened focus, the company aims for faster growth, higher profitability and improved ROCE. Growth investments will be focused on “accelerate” (Georg Jensen, Royal Copenhagen and Wedgwood) and “anchor” (Fiskars) brands. We note that the company is clearly steering its exposure towards luxury offering where direct-to-consumer (DTC) plays crucial role. New operating structure with two business areas (Fiskars and Vita) aims for clear business ownership and P&L accountability, while the company has created scalable platforms to support growth and to drive efficiencies. The company reiterated its financial targets, while offered new P&L structure towards targeted mid-teens EBIT margins after Georg Jensen acquisition. Gross margin is expected to improve by some 200bp due to Georg Jensen acquisition (in addition to ~100bp support from US Watering divestment), while Marketing and SG&A costs are expected to increase following higher share of Vita sales. Given low sourcing and own production volumes through 2023, we expect strong cash flow generation. The company noted sufficient inventories until H1 2024. For 2024, the company expects flattish organic growth, while financial targets rely on pick-up in growth in 2025. We believe there could be slight downward pressure on Refinitiv consensus top line estimates (+13% on reported basis including Georg Jensen), while consensus’ conservative gross margin assumption for 2025E (48.2%) could maintain adjusted EBIT estimates largely intact, we believe.

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