Fiskars Oyj Abp · OMXHEX:FSKRS
Fiskars Oyj Abp — Fiskars Group — Investor Day (November 2023)
58 slides from Fiskars Oyj Abp's investor day presentation, Nov 2, 2023
Slide 1: Fiskars Group's Capital Markets Day 2023
Fiskars Group’s Capital Markets Day 2023 NOVEMBER 2, 2023
Slide 2: Today's agenda
Today’s agenda 14:00 Opening of the Capital Markets Day 14:05 Nathalie Ahlström President and CEO 14:45 Jussi Siitonen CFO 15:30 Joint Q&A By 16:00 Webcast ends 2 NOVEMBER 2, 2023 Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 3: Delivering towards 2025 with further precision
Delivering towards 2025 with further precision NATHALIE AHLSTRÖM, PRESIDENT AND CEO
Slide 4: Key topics
Key topics • Solid foundation – our strategy remains intact and transformation levers are delivering • Sharpened logic with active portfolio management • Simplified way of operating • Executing in all conditions – targets unchanged 4 NOVEMBER 2, 2023 Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 5: Pioneering design to make the everyday extraordinary
374 years of Pioneering design to make the everyday extraordinary
Slide 6: Transformation journey continues
Transformation journey continues – strongholds and rigorous performance management soften the impact of current market 2021 2025 Entering the next phase: Several strongholds Transforming the company amidst Our strategy remains intact, to build on a tough operating environment and we are becoming sha
Slide 7: Our strategy remains intact, and we are becoming sharper
Our strategy remains intact, and we are becoming sharper and increasingly value driven Sharpened logic WE FOCUS ON WINNING: with active LOGIC portfolio Brands Channels Countries management Commercial excellence Direct-to-Consumer TRANSFORMATION Transformation LEVERS levers that deliver U.S. China IN
Slide 8: Sharpened logic with active portfolio management
Sharpened logic with active Transformation Simplified way portfolio levers that deliver of operating management Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 9: Long-term market dynamics remain attractive
Long-term market dynamics remain attractive POWERFUL BRANDS IMPORTANCE OF LUXURY SUSTAINABILITY THAT SURROUND DIRECT-TO- IS RESILIENT IS KEY THE CONSUMER CONSUMER 50% of consumers Integral to buyer’s 6-8% CAGR forecast 58% of consumers feel globally willing to journey – storytelling, for the global
Slide 10: Sharpened portfolio logic accelerating Group profile improvement
Sharpened portfolio logic accelerating Group profile improvement SHARPENED PORTFOLIO LOGIC OUTCOME: ACCELERATED GROUP PROFILE IMPROVEMENT Increase focus on brands which can: • Move the needle – make the big brands bigger and more powerful • Surround the consumer through category expansion Faster gro
Slide 11: Portfolio logic in action: clear portfolio roles for each brand
Portfolio logic in action: Clear portfolio roles for each brand with investments and resources allocated accordingly Maximise Accelerate potential MAKE THE BIG BRANDS BIGGER • Accelerate: Over-invest to grow Winning DTC first, across key cities & Three large categories luxury brands • Anchor: Unlock
Slide 12: Systematic and disciplined portfolio evaluation for inorganic opportunities
Group profile & performance improvement via systematic and disciplined portfolio evaluation for inorganic opportunities EXIT: US WATERING (02/2022) ACQUISITION: GEORG JENSEN (10/2023) • Commodity category (watering hoses) and • Strong portfolio fit (brand positioning, DTC non-core brands led) and su
Slide 13: Georg Jensen: Strong fit with our portfolio logic
Georg Jensen: Strong fit with our portfolio logic – now full focus on integration and synergy realization STRONG FIT + SIGNIFICANT SYNERGIES VALUE CREATION POTENTIAL • Big brand: • EUR 18m of cost synergies, moves the needle from ~50 individual streams • Group profile improvement • High-end • Detail
Slide 14: Transformation levers that deliver
Sharpened logic with active Transformation Simplified way portfolio levers that deliver of operating management Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 15: Commercial Excellence: Focused actions to take our brands where they deserve to be
Commercial Excellence: Focused actions to take our brands where they deserve to be • Executing channel strategy: GROSS MARGIN HAS IMPROVED CLEARLY – WE ARE RAISING OUR AMBITIONS • Prioritize own channels • Win with the winning partners 50 >49%* • Leave unhealthy business behind 48 46.5% • Utilize ou
Slide 16: Direct-to-Consumer: We continue to grow in DTC
Direct-to-Consumer: We continue to grow in DTC despite a tough market – consumer appetite for our brands is strong • Leveraging central e-commerce capabilities SHARE OF DTC SALES HAS GROWN STEADILY • Continuing systematic roll-out of digital and Share of Group net sales Share of Vita net sales analy
Slide 17: China: Strong growth through a repeatable model
China: Strong growth through a repeatable model is strengthening our #1 position • Benefiting from brand heat – CHINA NET SALES HAVE TRIPLED FROM 2020 EURm Wedgwood clear #1 in its category 70 • Leveraging our platform: Strong local team with impressive track record and 60 +28% CAGR +67% 52 capabili
Slide 18: U.S.: Adverse development driven by retailers' inventory focus
U.S.: Adverse development driven by retailers’ focus on inventory management • Tough market environment – retailers’ focus U.S. NET SALES HAS DECLINED IN THE LAST TWELVE on inventory management continues MONTHS* EURm • Gross margin has improved driven by our 500 CAGR +4% -22% channel strategy and pr
Slide 19: Simplified way of operating
Sharpened logic with active Transformation Simplified way portfolio levers that deliver of operating management Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 20: How we operate: Strong Business Areas with true P&L ownership
How we operate: Strong Business Areas with true P&L ownership – Group evolving into a role of a portfolio manager KEY STRATEGIC ENABLERS REMAIN UNCHANGED: • People, Digital, Innovation & Design, Sustainability SIMPLIFICATION THROUGH “BRANDS FIRST” APPROACH… • Business Area (BA): Clear business owner
Slide 21: Accelerating strategy execution through simplified setup
Accelerating strategy execution through simplified setup and end-to-end accountability 2021: TODAY: BA VITA EXAMPLE: BAs as product owner, part of BAs as business owner, Brand-led, end-to-end Group-wide matrix organization P&L accountable accountable BA BA BA BA BA BA Vita Terra Crea Vita Fiskars Vi
Slide 22: Digital providing scalable benefits – advanced analytics
Digital providing scalable benefits – case example of advanced analytics • Centralised core team, agile model GERBER: ADVANCED ANALYTICS BOOSTED DTC CAMPAIGNS’ NET SALES SIGNIFICANTLY • Current focus on campaign pricing optimisation • Significant benefits achieved • Scaling continues: New brands 2X
Slide 23: Sustainability is core to our purpose
Sustainability is core to our purpose – case example of how we deliver impact INCENTIVISING ESG INVESTING AND EXECUTING PROTECTING AND CIRCULARITY CONCRETE STEPS TO CO2 REDUCTION CARBON SINKS -42% Over -60% ~87,000 Q3 2023 8% Own forests as Base year 50% carbon sinks 2021 in 2030 Net sales from circ
Slide 24: Ownership culture is key to how we operate
Ownership culture is key to how we operate, reinforced by a leadership team set to deliver FISKARS GROUP OWNERSHIP CULTURE... • Decentralized ownership & accountability First enrollment round outcome – owning your performance and potential June ’23 • Aligning interests of our employees and sharehold
Slide 25: Recap
Recap • Solid foundation – our strategy remains intact and transformation levers are delivering • Sharpened logic with active portfolio management • Simplified way of operating • Executing in all conditions – targets unchanged 25 NOVEMBER 2, 2023 Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 26: Executing in all conditions – targets remain intact
Executing in all conditions – targets remain intact JU SSI SIITONEN, CFO 26 NOVEMBER 2, 2023 Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 27: Midway milestone review
The remaining Midway milestone two years of Clear capital review strategy period allocation principles Things under our Unchanged, clear control proceeding as financial targets and Driving sustainable planned commitment to value creation realizing them Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 28: Current status: progress in sales and EBIT targets
Current status: Challenging operating environment reflected in progress in sales and EBIT targets FINANCIAL TARGETS TRACKING FY FY LTM SEPT KPI TARGET 2021 2022 2023 Annual, Organic, FX neutral mid-single-digit NET SALES 14.2% 1.7% -12.9% growth EBIT Mid-teen EBIT margin (excl. IAC) by end of 2025 1
Slide 29: Clear rationale for the financial targets set in 2021
Clear rationale for the financial targets set in 2021 TARGET P&L LTM 2025 RATIONALE FOR THE FINANCIAL TARGETS IN 2021 STRUCTURE SEP-21 TARGET Gross Margin 42.8% 46-47% • High-single-digit DTC growth Marketing 3.6% 4-5% NET SALES supported by low/mid-single-digit SG&A 26.0% 27-28% wholesale growth EB
Slide 30: Net Sales: DTC growth at targeted level
Net Sales: DTC growth at targeted level – wholesale hit by retailers’ focus on inventory management in the last 12 months DTC: Widespread MSD/HSD growth DTC up from 19% to 24% Wholesale: HSD/DD decline in offline/online Wholesale down from 76% to 68% ANNUAL GROWTH ANNUAL GROWTH CHANNEL SPLIT 2021 VS
Slide 31: Profitability: Gross margin target range achieved
Profitability: Gross margin target range of 46-47% achieved GROSS MARGIN BRIDGE LTM 9/21 – LTM 9/23 (%)* • Gross margin +370bps in two years 50 +3.7pp. • Structural changes (sale of US Watering), 46.5 channel mix improvement and Commercial Excellence actions delivering improvement 45 42.8 • DTC has
Slide 32: Profitability: OPEX – marketing and SG&A
Profitability: OPEX – marketing at target level, further SG&A flexibility through previously announced programs MARKETING, % OF NET SALES SG&A, % OF NET SALES (LTM ENDING SEPTEMBER) * (LTM ENDING SEPTEMBER) * 32.5% 28.6% Two cost efficiency programs 4.8% 26.0% announced, targeting 4.5% Target 15.5%
Slide 33: Free cash flow and net debt – back on track
Free cash flow (FCF) and net debt – back on track 227% FREE CASH FLOW, EURM (12MTHS ENDING SEPTEMBER) AND FREE CASH NET DEBT, EURM (30.9.) AND NET DEBT / LTM EBITDA (EXCL. IAC) Cash conversion rate FLOW / LTM NET PROFIT (EXCL. IAC) 122% Negative 227% 0.59X 1.61X 2.0X 2.0X 147 144 344 336 Net debt /
Slide 34: What's working, what's not
What’s working, What’s not – Set to deliver the second half of the strategy period GROWTH AND PROFITABILITY CASH FLOW & BALANCE SHEET DTC Gross Wholesale Cash Flow Margin and Up 256m SG&A from LY +9% flexibility +370bps Fundamentals in place Commercial Excellence Efficiency programs Robust recovery
Slide 35: The remaining two years of strategy period
The remaining Midway milestone two years of Clear capital review strategy period allocation principles Things under our Unchanged, clear control proceeding as financial targets and Driving sustainable planned commitment to value creation realizing them Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 36: Financial targets remain unchanged
Financial targets remain unchanged TARGET P&L LTM ENDED SEPTEMBER 2025 RATIONALE FOR THE UNCHANGED FINANCIAL TARGETS STRUCTURE TARGET 2021 2023 Gross Margin 42.8% 46.5% > 49% • No rapid reignition of organic NET SALES Marketing 3.6% 4.8% 5-6% growth expected in 2024; back to growth in 2025 SG&A 26.0
Slide 37: Net sales: Four brands expected to deliver solid growth
Net sales: Four brands (70% of net sales) are expected to deliver solid growth in the next two years NET SALES, 12MTHS ENDING SEP 2023 ANNUAL GROWTH LAST 2YRS GROWTH RATIONALE FOR THE NEXT 2YRS • Over-invest to grow DTC first, Accelerate +6% across key cities & categories 31% Accelerate 21% • Unlock
Slide 38: Further gross margin improvement through growth drivers and supply chain
Profitability: Further gross margin improvement through investments in growth drivers and supply chain efficiency gains GM CONTRIBUTION (PP), LAST 2YRS ENHANCED GROSS MARGIN DRIVERS COST OF GOODS POTENTIAL FOR GROSS MARGIN IMPROVEMENT 100% • Warehouse footprint vs. Logistics & strategic channel mix
Slide 39: Further SG&A leverage through ongoing programs
Profitability: Further SG&A leverage through the ongoing programs SG&A STRUCTURE ONGOING PROGRAMS 2022 (%) Program Target and main levers Related one-offs Status January • Savings of EUR 30m, half of which in • EUR 6m • 100 roles terminated 2023 H2 2023. • Fully recorded in YTD • External services •
Slide 40: Towards mid-teen EBIT%
Towards mid-teen EBIT% – balanced improvement boosted through gross margin & announced cost efficiency programs • Gross margin improvement EBIT MARGIN BRIDGE 2021-2023-2025 (%) expected to continue 20 supported by the Georg Jensen acquisition +3.7% -1.2% -6.5% Mid- teen • SG&A efficiency mainly 13.0
Slide 41: ROCE: Capital employed structure by Business Area
ROCE: Capital employed structure highlights different Business Area roles CAPITAL EMPLOYED (EURM) BY BUSINESS AREA CAPITAL TURNOVER (LTM) × LTM EBIT MARGIN (%) LTM ROCE (%) 1,096 Fiskars Vita Other 2.4X 15.0 26.0 Fiskars Fiskars 2.2X NWC 261 60% 40% 14.0 24.0 (24%) 2.0X 13.0 22.0 Capitalized 131 1.8
Slide 42: Georg Jensen Acquisition: Significant cost synergy benefits
Georg Jensen Acquisition: Significant cost synergy benefits identified – accretive also to Fiskars Group cash conversion +~200bps GM% GEORG JENSEN P&L IMPACT (%)* ILLUSTRATIVE driven by Georg Jensen’s luxury position and high DTC exposure 9.4% ~EUR 18m cost synergies further improving accretive P&L
Slide 43: Georg Jensen Acquisition: Bridge facility take-out financing
Georg Jensen Acquisition: Bridge facility take-out financing consideration underway • Georg Jensen EUR 40m TRANSACTION FINANCING* REPAYMENT SCHEDULE OF THE EXISTING DEBT EURm EURm bond redeemed on 26 Oct, 190 150 refinanced by the existing Lease 20 170 bridge facility liabilities Bond 40 • Further s
Slide 44: Clear capital allocation principles
The remaining Midway milestone two years of Clear capital review strategy period allocation principles Things under our Unchanged, clear control proceeding as financial targets and Driving sustainable planned commitment to value creation realizing them Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 45: Principles for capital allocation prioritization
Principles for capital allocation prioritization 2024 2025 Deleverage balance sheet back to the target level Priority Maintain Secure funding for organic growth investment Maintain Maintain Ensure stable, sustainably increasing cash dividend Priority Priority Maintain financial flexibility for futur
Slide 46: Strong balance sheet has enabled steady investments and shareholder returns
Strong balance sheet has enabled steady investments and increasing shareholder returns despite recent cash flow volatility NET DEBT / EQUITY AT QUARTER- CASH FLOW FROM OPERATIONS (CFO), CAPEX AND CASH RETURNS TO END AND LONG-TERM AVERAGE SHAREHOLDERS (LTM) 80 (%) EURm 70 250 203 60 189 50 200 40 Net
Slide 47: Net Debt / EBITDA back to the target by 2025
Net Debt / EBITDA back to the target by 2025 NET DEBT POST GEORG JENSEN ACQUISITION (EURM) NET DEBT 2023-2025 (EURM)* 0 200 400 600 +190 60 526 Net Debt 20 Net Debt / EBITDA 2.0X 130 40 Sep-23 394 58 336 M&A Impact Lease 138 liabilities Cash Flow impact CP’s 126 2024-2025 Bank Net Debt 130 Net Debt
Slide 48: Organic growth investment and predictable cash distribution
Fostering organic growth investment whilst ensuring resilient, predictable cash distribution to shareholders CAPEX AND DIVIDEND 2024-2025, % OF CFO* • Target to have a balanced 0% 10% 20% 30% 40% 50% 60% distribution of cash between organic investments and dividends Historical 14% 39% Capex/CFO Hist
Slide 49: Growth investments' share of CAPEX allocation will increase
Growth investments’ share of CAPEX allocation will increase COMMENT NEXT 2YRS FISKARS VITA • CAPEX 4-5% of • 60% Expansion Net Sales Retail 7% • 40% Renovation/maintenance (earlier approx. 4%) Functions 12% • Growth investments’ Product Development 12% share in Retail, Supply Chain and Digital will
Slide 50: Solid history of returns to shareholders
Solid history of returns to shareholders: a foundation for resilient and sustainably growing dividends 12.6% EPS (EXCL IAC) AND DPS 2019-2022 EUR CEPS AND DPS 2019-2022 EUR 2.46 Dividend CAGR 2019-2022 1.36 EPS CEPS DPS 1.19 1.16 59% 0.87 1.51 Payout Ratio on EPS excl. IAC 0.80 2019-2022 0.76 1.21 0
Slide 51: Driving sustainable value creation
The remaining Midway milestone two years of Clear capital review strategy period allocation principles Things under our Unchanged, clear control proceeding as financial targets and Driving sustainable planned commitment to value creation realizing them Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 52: Summary
Summary • Solid foundation – our strategy remains intact and transformation levers are delivering • Sharpened logic with active portfolio management • Simplified way of operating • Executing in all conditions – targets unchanged 52 NOVEMBER 2, 2023 Ⓒ FISKARS GROUP I CAPITAL MARKETS DAY 2023
Slide 53: Sse
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Slide 54: Appendix
FISKARS ss. GROUP 0 Appendix
Slide 55: Business Areas and key categories
Business Areas and key categories VITA FISKARS BUSINESS AREAS & KEY CATEGORIES Tableware Drinkware Interior Jewellery Gardening Outdoor Cooking Scissors & creating KEY BRANDS BA SHARE OF NET SALES* ~50% ~50% *Illustrative, based on Fiskars Group’s and Georg Jensen’s combined audited 2022 figures. 55
Slide 56: Our detailed ESG targets
Our detailed ESG targets Environmental: Pioneering design against throwaway culture Social: Making the everyday extraordinary Q3 Q2 2023 Target 2023 Target Q3 2023 Q3 2023 2022 Q3 2023 4.6 0 72 80** 8% -53% -15% 46% Base year 2021 50% Base year 2017 -60% Base year 2018 -30% Target set 2020 60% in 20
Slide 57: Seasonal volatility: BA Fiskars H1, BA Vita H2 focused
Seasonal volatility: BA Fiskars H1, BA Vita H2 focused – Group net sales and EBIT evenly split between quarters QUARTERLY NET SALES BY BA QUARTERLY NET SALES SPLIT BY BA 22% 28% Q4 35% Vita+GJ 43% 42% 52% 50% Net 23% 62% 23% Q3 Sales 24% 28% 24% Q2 20% Fiskars 57% 58% 48% 50% 38% 21% 28% 24% Q1 Vita
Slide 58: Cost of Goods Sold
Cost of Goods Sold COGS TOTAL OWN PRODUCTION DIRECT MATERIALS 100% 100% 100% Plastics Logistics & Warehousing Steel Direct materials 75% 75% 75% Aluminium Packaging Sourcing 50% 50% Direct labour 50% Components Indirect labour 25% Own 25% 25% Production Energy Maintenance material Other Depreciation