Fiskars: Headwind from tariffs

Translation: Original published in Finnish on 4/9/2025 at 8:00 am EET.

The US is Fiskars' biggest market, and tariffs have a negative impact on it. We have lowered our forecasts by 5-10% and our target price to EUR 13.5 (was EUR 15). We reiterate our Reduce recommendation. 

The US is Fiskars' largest market and tariffs have clear negative effects

The US accounts for about 30% of the Fiskars Group's revenue and about half of the Fiskars segment's revenue, while in the Vita segment the US accounts for a much smaller share (about 10%). The Gerber brand is produced locally in the US and accounts for approximately 8% of Fiskars Group's total revenue. The rest of the products sold in the US are imported from other countries and are therefore vulnerable to tariffs. At group level, about half of the products are manufactured by the company itself, and for the Fiskars segment, manufacturing takes place in the EU. In the Vita segment, the company has large factories not only in Europe but also in Asia. Half of the products are manufactured by subcontractors, with China, Vietnam and Thailand being the largest suppliers. China is an important country, accounting for about 15% of the group's total sourcing (including subcontracting and own manufacturing).

If the tariffs are implemented as planned, we expect the negative impact on Fiskars to be felt in the second half of the year. Our forecasts assume that the tariffs will remain in place, but not to the full extent announced. We estimate that the company will not be able to fully pass on the increased costs in prices, which means that its margin will be eroded. Moreover, with tariffs pushing up prices, demand is likely to weaken, at least in the US and possibly elsewhere, depending on the extent of the trade war. Fiskars' competitors are largely in the same situation, which should lead to gradual price increases. However, we believe that weaker demand and cost increases due to tariffs will continue to affect Fiskars' results in the coming years. Due to these effects, we have lowered our earnings estimates for 2025-27 by 5-10%. The situation regarding tariffs can change quickly, and some of their effects are still unclear. We will of course revise our estimates if and when new information becomes available.

Forecast for the current year still in line with guidance

For this year, Fiskars' guidance is for the adj. EBIT to improve (from 111.4 MEUR). Even before the latest tariff news, Fiskars had said that the operating environment is expected to remain challenging, and the company did not seem to expect significant support from revenue growth this year either. The result is supported by the expected gross margin improvement and savings from organizational changes and other efficiency measures. On the other hand, the company said it will invest significantly in "demand creation" this year, such as increased marketing. This naturally limits the earnings improvement, as the effects of the investment will partly only come in the longer term, if they are to come at all. In a deteriorating market environment, we do not expect volumes to grow despite these investments, and even the savings from efficiency improvements will be largely absorbed by offsetting tariffs and other rising costs. As we see it, the year has started relatively sluggishly and we expect Q1 revenue and adj. EBIT to be roughly in line with the comparison period.

Valuation is not attractive

Fiskars’ valuation multiples for 2025 (e.g. P/E 16x) are above our acceptable multiples and only within them for the 2026 forecast. Thus, we believe the share’s expected return consists mainly of dividend income and is subdued despite the earnings growth outlook for the next few years. Forecasts for earnings growth in the coming years would require volume growth and thus improved profitability, which seems increasingly uncertain in the current economic environment.