Hello all Inderes TV viewers and listeners. Rapala VMC published their Q3 report recently, and we'll be covering that with Cyrille Viellard, the CEO of the company. Welcome to the interview, Cyrille.

Thank you, Thomas, for hosting me again and allowing me to present our results.

It's always a pleasure to have you here, but starting off with the big picture, how was Q3 from Rapala's point of view?

Our Q3 was in line with the previous half of the year, with a strong North American business, good replenishment, and an even slower European business. That's the big picture.

So if we double-click on North America, which has been the positive driver for you through this year. Good growth there, but it did slow down a bit from the previous quarters this year. So is the consumer slowing down in the US? What do you think explains it?

Slightly. I think we need to be very moderate. Yes, we had a slightly slower Q3, but there is strong momentum behind our brands, and we feel from the data. We have that we are gaining market share there as well, so the market is softening, volumes are overall lower than previous year, but dollars are higher and we are overall gaining market share there.

Okay, that's good to hear. Your sales depend a lot on the reseller or retail inventory stocking and destocking cycles. So how do you feel, how well has your sales development. This year, especially in the US, matched the overall sell-through or retailer sales?

We have today pretty accurate point-of-sales data on the open water fishing segment. The stocking situation is relatively. good, so as we work mainly with big-box customers. There the supply chain is not as stocked as it could be in Europe.

So first look, you're pretty positive about the North American outlook going forward.

Yes.

But if we move on to Europe, which has been more difficult through the year, partly due to the droughts we saw here in Europe. How does the market currently feel there?

The market is pretty tricky, I would say. The continental freshwater. European markets are more distressed than the saltwater or Northern European markets, but as we are quite exposed to this continental freshwater market. It's been a challenging summer for us. Where we are able to be resilient is we have a healthy inventory situation. We have brought a lot of new products to animate market demand and also sustain good margins, and we have been. We are following up on that. Costs quite strictly, reducing our fixed costs gradually, not brutally, but gradually, and we are able to. with this challenging market situation to hold a reasonable profitability.

Good to hear. How, but how do the. inventory levels feel in retail in your categories currently in Europe?

In Europe. It is right now much more critical than in the United States, as well. What we see also in other industries is that the pre-orders are much lower every year, where the retail and customers rely more and more on the manufacturers' inventories for the market. Risk is carried by the manufacturer and not the retailer, less and less. So it's another way to work. It obliges us to be more agile with our own supply chain, but right now the retail landscape in Europe is challenging. We have. demands for longer payment terms. We have lower incoming pre-orders, so that is a bit the situation we're facing.

Move on to your own inventory levels. They increased a bit in Q3 compared to last year, and you did make this obsolescence allowance regarding your inventory, so how do you feel about your current inventory now?

I feel that overall, yes, a slight increase, but we are. gradually ramping up for Q1 open water 2026, as well as some open water deliveries already at the end of the year for the North American market. Where we are slightly high in inventories is where the markets are very active. If we look at where the markets are slower, our inventory levels are much lower than they were last year, so our turns have overall improved and our inventories are where. in the short term their prospects are more favorable. So I don't have any concerns, and the fact that we have increased our depreciations for obsolescence is more forward-looking, to accelerate clearances from one season to the other.

So it sounds like your inventory management is currently rather deliberate. When it comes to this slight increase, was I currently correct, and if we move on to the outlook somewhat, how does the outlook seem for the orders for the ice water fishing season? Currently, and how are we tracking compared to last year?

So we're tracking well, as. also previously, a good winter in North America leads to another good winter. We had a very good winter last winter. So we have good pre-orders, as we've been announcing, and deliveries are going well now. We are faced with the Gulf. in issue, which is affecting all the Pacific area and therefore North America, and we have some replenishment sales business, which impacts end of Q4 and Q1, so we need to be conscious. If it turns to the worse, it will impact mainly 2026, but for now. so far so good, but again, prudence.

And it's super tough to make a call about what kind of effect this kind of phenomenon has on retailers' demand.

Even more when you are into ice and snow related activities and. think about your.

Guidance for this. You did increase that this year, and you're guiding for 2 to 14 million euro. comparable EBIT after three quarters. You're clearly ahead of that at like 15 and a half million euros, so how are you thinking about your guidance internally? Because so far you're clearly ahead of it.

So Q4 is structurally for us a loss-making quarter. We close our books, we close not our books, but our activities and warehouses mid-December for the Christmas period, so there is, we lack invoicing. We are also, even though we have some ice fishing activity in Northern Hemisphere. Our winter business, our invoicing is low, and again due to the uncertainty of the winter business, also. more hypothetical, so we're structurally loss-making, which we need to improve, and. we are also now, I would say, culturally prudent, and we want to comply systematically with what we have done until now with our world, so we will meet our guidance.

But thinking about your guidance, how are you currently tracking compared to the marketing expenditure that you did flag in your profit warning that you will be increasing in the latter part of the year?

So on the. marketing, we have in some markets, due to our cash focus, been very cautious on our marketing spend, and the strong improvement of our business situation. causes our brands to be more visible. We need our brands to be more visible. So we have initiated that plan globally to now accelerate, and that plan will spread over time. The breakdown of the revenues to the spending is not yet where I had expected them to be, so it will come at a later date, but we have the will. It was that message also to the market that we will be more visible. We have gone through our brands already to streamline our portfolio. We do get brand owners, and in our cycle it is now time to, once we have this ownership and this clear segmentation, communicate the different positioning of our brands.

Sounds like it takes time to get up to the point where you're striving for when it comes to these expenditures. Great.

When you see your teams, this doesn't happen overnight, and a lot needs to be done in a structured manner, but we will increase our marketing spend over time.

So as a consumer, is more visibility what's supposed to expect from Rapala going forward?

Yes, you'll see everything.

Thank you, Cyrille, for the interview, and good luck with the rest of the year.

Thank you, Thomas. Thank you for your time.