Fiskars: Strong gross margin shadowed by weak top line - Nordea

Fiskars Q2 adjusted EBIT of EUR 23.4m came 14% below Refinitiv consensus expectation. Net sales of EUR 268m were down 16% y/y (-13% on comparable basis) and fell 7% below consensus forecast. Q2 gross margin of 46.8% came above consensus expectations of 45.3%. China sales were up 50% y/y while Americas decline 16% y/y. Direct-to-consumer sales were up 8% y/y. On divisional level, Vita missed our adjusted EBIT estimate clearly, while Terra came largely in line and Crea beat our expectation clearly. Q2 operating cash flow improved clearly and was EUR 56m (EUR 16m a year ago) supported by EUR 38m decline in inventories. Net debt/LTM EBITDA was 2.1x (1.7x in 2022). EPS of EUR 0.16 fell short of consensus expectation of EUR 0.24, affected by FX. There were EUR -1.2m of items affecting comparability on EBIT level. Fiskars lowered its guidance on 5 July and expects adjusted EBIT of EUR 120-130m in 2023. Pre-Q2 consensus has been expecting EUR 126m adjusted EBIT. Initially, we expect consensus to make slightly negative estimate revisions (mathematically 2-3%). We note organizational changes that are proceeding according to plan and are expected to support EBIT in H2.