Following Fiskars’ updated growth strategy at its CMD in November ’21 we are starting to see proof of the company executing on this by e.g., divesting its North American watering business and increasing its DTC efforts. The latter was reflected in the increased cost base in Q4’21, which we now assume should come in at a more normalized level in Q1’22. On the other hand, cost inflation continues to pose some uncertainty. We note that one of Fiskars’ key strengths has been to protect its gross margin from cost inflation and supply chain disruptions through price hikes and actively working with its ‘commercial excellence’. As such, we feel more confident that Fiskars should start 2022 on a stable note. Going forward, however, we stress that we could potentially see somewhat softer demand following a decline in consumer confidence, mainly in Europe, in the wake of increased inflation.
Q1 expectations
For Q1 we expect sales of EUR 281m, a decline of 7% y-o-y on tough comps. From Q1 Fiskars will start reporting adj. EBIT as its key profitability metric, and we pencil in an adj. EBIT of EUR 37m for a margin of 13.3%, which is a contraction of 2.8pp y-o-y. We note that the divestment of the North American watering business and cessation of the operations in Russia (~1% of group sales in FY’21) both are included in Terra and will become visible in Q1. According to management this should primarily have a negative effect on sales, while having a marginally positive effect on earnings. In sum we expect the sales loss to be largely offset by the growth in the other business areas, and raise our ‘22e-‘23e sales by 7% and 2%, also due to some FX effects. Lastly, on the back of management’s FY’22 guidance for adj. EBIT (to increase from FY’21) we raise our ‘22e-‘24e EBIT estimates, expecting it to grow slightly from the record level i ...
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