Fiskars: Profit warning pushed estimates down

Translation: Original published in Finnish on 06/16/2025 at 07:30 am EEST

Fiskars issued a profit warning as US tariffs impacted both demand and margins more severely than previously expected. We lowered our estimates and target price to EUR 13. The valuation of the stock is high (e.g. 2025 P/E 20x), and we reiterate our Reduce recommendation.

US tariffs led to a profit warning

Fiskars issued a profit warning last week and now expects this year's adjusted EBIT to be 90-110 MEUR, while previously it expected the result to improve from the comparison period's 111 MEUR. In April, we raised the risk of a profit warning due to the US tariffs. In its profit warning, Fiskars stated that import duties have affected distributors' demand in the US faster and more negatively than expected. According to the company, this has occurred during May-June, although end demand has been somewhat more stable than demand from distributors.

The effects are more visible in the Fiskars segment, where approximately half of sales come from the US. In addition, the company mentions that there have been negative impacts, and they are to some extent expected for the rest of the year also in Europe and the Vita segment. Although we expected negative demand effects, they seem to have hit even faster than we anticipated, as the company was forced to issue a clear profit warning at this stage of the year.

Fiskars also changed its comments somewhat regarding the direct impacts of tariffs. In connection with Q1, it still expected to be able to largely compensate for the negative effects of tariffs with its measures this year. However, it now states that these actions will be visible with a delay, i.e., during H2, because the company has prioritized maintaining its market share. In our view, this implies that the competitive situation has not allowed for, e.g., price increases as previously expected.

Estimates cut, especially Q2 and Q3 are weak in our forecasts

Following the profit warning, we lowered our estimates to reflect weaker demand and the negative margin effects of tariffs. The recent weakening of the dollar will also weigh on revenue growth, especially in the Fiskars segment. Our forecast for this year's adjusted EBIT is now 98 MEUR, i.e. around the midpoint of the new guidance. This implies a decrease of 13 MEUR from the comparison period, which is largely reflected in our Q2-Q3 forecasts.

The margin target is becoming a pipe dream

Based on our forecasts for this year, Fiskars’ adjusted EBIT margin is well below 10%. The company's target is about 15%, which currently seems very distant, and in our view, the company will set separate targets for the Fiskars and Vita segments in the future. We expect the margin to gradually improve to around 11.5% in 2026-28 as demand picks up. The improvement in earnings and especially the margin from last year relies heavily on the Vita segment. The Fiskars segment's profitability was already at a pretty good level  (2024: 14%), but the impact of tariffs will hit it this year, and profitability will decline. Thus, the earnings growth potential for the coming years will come from both the recovery of Fiskars' profitability and the increase in Vita's volumes.

Valuation is high

Fiskars’ valuation multiples for 2025 (e.g. P/E 20x) are above our acceptable multiples and only within them for the 2027 forecast. Therefore, we see the stock's expected return remaining subdued, supported mainly by the dividend yield. Earnings growth forecasts for the next few years require volume growth and, consequently, improved profitability.  Our DCF value is in line with the target price.