Fiskars Group: Beating both sales and EBIT expectations - ABG

Sales +18% vs ABGSCe, +14% vs Infront cons.
EBIT +11% vs ABGSCe, +2% vs Infront cons.
Terra driving the lion’s share of the growth

Q1’22 outcome
Sales were EUR 333m (18% vs ABGSC 281m), Adj. EBIT EUR 52m (39% vs ABGSC 37m), Net profit EUR 31m (11% vs ABGSC 28m), EPS EUR 0.38 (11% vs ABGSC 0.34).

Q1’22 takeaways
Fiskars Q1’22 report reveal a group sales growth of 10% y-o-y to EUR 333m, with a currency neutral growth of ~13%. We note that all business areas grew sales, however, Terra was clearly the main driver of the growth (which in turn was driven by double-digit growth in Gardening and Landscaping). We had expected Terra to be hampered in the quarter by the divestment of its North American watering business and the cessation of the group’s Russian operations, which primarily is attributable to Terra. Continuing, this is the first quarter for Fiskars to report adj. EBIT as its key profitability metric. Group adj. EBIT increased by 7% y-o-y to EUR 52m (+39% vs ABGSCe), on tough comps, yielding a margin of 15.6% (-0.03pp y-o-y, +0.17pp vs ABGSCe). The EBIT improvement is said was led by broad-based net sales growth and gross margin expansion (45.6% vs Q1’21 43.7%), partly offset by a marketing and selling cost increases in Vita and Crea. The group guides for FY’22 adj. EBIT to increase from FY’21’s level of EUR 154m. Our unrevised estimate is currently ~2% above this while Infront cons. is ~3% above. Regarding the outlook mgmt. says that longer-term visibility remains limited, but that it believes the actions it has taken/is taking should enable to mitigate the negative impacts of input cost inflation in FY’22, which we think is a sign of strength in these uncertain times.

We expect cons. to make limited estimate revisions
The Fiskars share is -12% YTD and is on our unrevised estimates trading at EV/EBIT adj. of 11.1x-9.3x in ‘22e-‘24e. At first glance, we expect consensus to make limited estimate revisions on both sales and adj. EBIT. The company will host a conference ...
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