Fiskars Q1'25: Weakening US demand risk for guidance

Translation: Original published in Finnish on 04/25/2025 at 08:18 am EEST

Fiskars' Q1 result was good, as the company grew organically for the first time in a long time and earnings improved slightly. The company reiterated its guidance for an improvement in full-year adjusted EBIT, but we believe that a possible weakening of demand in the US is a clear risk to the realization of the guidance. We lowered our estimates slightly. We reiterate our EUR 13.5 target price and Reduce recommendation as the return expectation remains weak due to the high valuation (2025 P/E 17x).

Organic growth in Q1 figures for the first time in a while

Fiskars' comparable revenue grew by 2% in Q1, while we expected it to remain flat. This was the first growth quarter since early 2022. There was a slight growth in both segments and all geographical areas. Considering the weak market situation, the performance is good, although the comparison figures are also weakish after several years of decline. Fiskars' Q1 adjusted EBIT of 26.8 MEUR was slightly better than the comparison period (25.1 MEUR) and our estimate (25.5 MEUR), but in line with consensus (26.5 MEUR). Adjusted EBIT improved in both segments, although the gross margin in the Fiskars segment decreased from the comparison period, which depressed the Group's comparable gross margin year-on-year (47.5% vs. 48.3%).

Guidance unchanged, but risks have clearly increased

Fiskars reiterated its guidance for 2025 and still expects comparable EBIT to improve from 111 MEUR.  About 30% of Fiskars Group's revenue and about half of the Fiskars segment's revenue come from the US, and about 15% of the Group's purchases come from China, so tariffs between China and the US have a significant impact. The company believes it can “largely mitigate adverse direct impacts of tariffs". This is supported by the fact that the Fiskars segment's season is in H1, so the goods for sale have been imported to the US before the larger increase in tariffs at the beginning of April. Fiskars also says it is aiming to shift sourcing of products away from China, either to other subcontractors or to its own factories (which are in Europe), and to raise prices to compensate for the impact of tariffs. We lowered our earnings estimates slightly, as we believe that if tariffs remain at current levels (or increase), their impact will weaken consumer demand in the US in the second half of the year, when the rise in prices due to tariffs begins to be reflected in consumer prices. We now expect adjusted EBIT to remain close to last year's level, and as a result, Fiskars may have to lower its guidance later this year.

Improved performance in coming years largely dependent on Vita

Based on our forecasts for this year, Fiskars’ adj. EBIT margin will be close to 10% for the third year in a row. The company's target is around 15%, which currently seems a long way off. We expect the margin to improve to around 12% in 2026-29 as demand picks up. The improvement in earnings and especially margins from last year relies heavily on the Vita segment. The Fiskars segment already has a relatively good level of profitability (2024: 14%) and its growth potential is limited due to the mature nature of the market and Fiskars' good market shares. Thus, in our view, Fiskars' earnings growth potential in the coming years will culminate in Vita's volume growth, as efficiency gains alone will not lead to significant/sustainable earnings growth.

Valuation is not attractive

Fiskars’ valuation multiples for 2025 (e.g. P/E 17x) 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.