Fiskars Q2'25: Weak quarter created new profit warning risk

Translation: Original published in Finnish on 7/17/2025 at 7:30 pm EEST.

Fiskars' Q2 result was clearly weaker than expected even after the June profit warning. We lowered our 2025 adjusted EBIT estimate to 85 MEUR, meaning we expect the company to have to issue another profit warning. We also expect the company to have to cut its dividend. Following the downward revision of our estimates, our target price was lowered to EUR 12 (was EUR 13) and the recommendation to Sell (was Reduce). 

Result was significantly below even the lowered expectations

Fiskars Group's Q2 revenue decreased by 8%, or by 7% in comparable currencies, when we had forecast a slightly milder decrease. The Vita segment's revenue decreased by 3%, being slightly weaker than expected. The Fiskars segment reflected the decreased demand in the USA, which was the reason for the June profit warning, and the segment's revenue decreased by 11% in comparable currencies, while our expectation was 5%.

The Group's Q2 adjusted EBIT fell to a very weak 3 MEUR, while our estimate even after the profit warning was 12 MEUR (Q2’24: 19.2 MEUR). Declines occurred in both segments, as the Fiskars segment's result decreased to 14 MEUR (Q2'24: 22 MEUR), largely in line with our forecast, and the Vita segment's result declined to -8 MEUR (Q2'24: 2 MEUR), while we expected a break-even level. As for the weakness of the Vita segment, the company primarily cited the poor performance of the Waterford brand and the negative earnings impact caused by its inflexible production. However, the impact in Q2 was quite significant relative to the fact that the annual sales of the Waterford brand are only about 6% of the entire Fiskars Group. Waterford's difficulties are also by no means a new issue, but they have been grappled with for years.

Meeting the guidance lowered in June will be a challenge

Fiskars lowered its guidance in connection with the June profit warning and expects full-year adjusted EBIT to be 90-110 MEUR, compared to 111 MEUR last year. This guidance was reiterated in the Q2 report. The company's H1 result was 14 MEUR weaker than last year, so a performance at the level of the comparison period in H2 would take it slightly below the midpoint of the guidance.

The company stated that the decline in demand in the USA accelerated in May-June towards the end of Q2 but did not want to comment on Q3 development or outlook separately. Given the headwinds created by tariffs and weak demand, a H2 result on par with the comparison period would in our view be a strong performance. We have thus lowered our 2025 adjusted EBIT estimate to 85 MEUR and therefore expect the company to have to issue another profit warning. Our earnings per share estimates for 2025-27 decreased by 15-25%. We also lowered our dividend estimates and expect the company to cut its 2025 dividend compared to last year.

The marginal target was a distant dream

Based on our forecasts for this year, Fiskars’ adjusted EBIT margin drops to 7.5%. The company finally admitted that it will not achieve the medium-term growth and profitability targets set in 2021 for this year. This has effectively been clear for a long time, and our forecast does not expect the company to get anywhere near the targeted 15% adjusted EBIT margin going forward. We expect the company to announce new financial targets separately for the Fiskars and Vita segments either at the end of this year or early next year.

Valuation is high

Fiskars’ valuation multiples for 2025 (e.g. P/E above 25x) are above our acceptable multiples and only within them for the 2027 forecast. Therefore, we see the share's expected return remaining negative. Profit growth forecasts for the coming years require volume growth and a consequent improvement in profitability, which Fiskars has failed to deliver in recent years. Our DCF value is in line with the target price.