Fenix Outdoor International AG

Annual / Quarterly Financial Statement • Feb 13, 2024

FENIX OUTDOOR INTERNATIONAL AG

Interim condensed consolidated financial statements for the period ended 31 Dec 2023

Fourth quarter 2023-10-01 – 2023-12-31

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Period 2023-01-01 – 2023-12-31

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Dividend proposal

Events after period closing

Holding of own shares

Financial information

Contact person

COMMENTS BY THE EXECUTIVE CHAIRMAN

There are some exceptions to the generally bad trading climate. Canada kept on recovering showing healthy growth. The JV in China continued its recovery after Covid-19 and showed a record Q4 sales and profit, as well as for the whole year.

Brands

Our Brands segment had sales of 47.3 (55.4) MEUR. A decrease of 14.8%. The result was -1.5 MEUR down from 4.6 MEUR. The Brands segment has taken almost 5.5 MEUR of the extraordinary expenses, but it is also related to the increase we have been facing in other areas such as IT and digital projects. In terms of Brand performance, Hanwag is still feeling the decrease in volume in their key product segments as well as the high inventory in the retail leg. Fjallraven is still experiencing the effect of high inventory in retail, but when we are watching the direct-to-consumer channels it still shows a growth for the year even though the tough fourth quarter.

Global Sales

Global Sales reached external net sales of 34.4 MEUR (47.1). The operating profit was 0.6 (3.9) MEUR. The bottom line was positively driven by the Asian business in particular the Chinese JV. The North American and the European part of Global Sales was hit in the same way as the Brands business.

Frilufts

Our Frilufts operation had a mediocre Q4 and did not reach last year's numbers. Globetrotter was hit more than the Nordics. Sweden did beat last year's number in local currency, as did the rest of the Nordics. This means that the Frilufts group came in at 98.5 MEUR a decrease of 2.9% and that EBIT was 5.7 MEUR. The Norwegian operation showed a positive development but is still losing money. The small UK operation also struggled in the tough market but is still profitable. For the full year this means that the Frilufts sales where 352.1 MEUR, which meant a growth of 1.2%. It should also be noted that in terms of channels the brick-and-mortar sales performed better than the digital channels both in the quarter as well as for the year.

Digital/Direct to Consumer

In Q4 our direct-to-consumer sales was 136.1 (139.3) MEUR, down 2.3%. Our digital direct to consumer sales was 45.2 MEUR (47.2), down 4.4% and brick and mortar 91.0 (92.1) MEUR, down 1.2%. This means that of our direct-to-consumer sales 33.2 % (33.9%) is digital. On the year our total direct-to-consumer sales were 461.9 (455.6) MEUR up 1.6% of which 146.9 (146.3) MEUR, up 0.4%, was digital and 315.1 (308.3) MEUR, up 2.2%, was brick and mortar. The proportion of direct-to-consumer sale that was digital was 31.8% (32.2%) vs 68.2% (67.8%) for brick and mortar.

As I wrote last year "these numbers indicate a new balance in the retail area, and it seems that the new proportions lay somewhere around 30-35% digital vs brick and mortar". It should however be said that there is a difference between markets as well a type of stores and retail.

2024 and forward

We are facing a very challenging market in 2024. A lot of retailers have financial challenges, which means somewhat lower preorders than normal. They are counting more on reorders from the brands. There are also some larger retailers that have been sold and have gone into reconstruction. The order books are OK, but growth will have to come from reorders as well as our own DTC channels. We believe that the Q1 2024 will be a bit tougher for the wholesale part of our business, as the retailers are less inclined on taking on inventory. The retail on the other hand has started quite well in 2024 especially has the cold weather in the Nordics had a positive effect on sales during January.

We do strongly believe that the over inventory situation in the retail leg will have improved during Q2 and will mean an improvement in sales for wholesale during Q2. We saw that our reorder rate during July and August in 2023 was greatly improved compared to 2022, which means there is a possible shortage of goods in the market. We also need to keep in mind that there also is a possibility of a hang over for the industry in general due to the excessive growth experienced during Covid. There is also like mentioned earlier the issue of financial health among the retailers.

In terms of trends there are several brands that are outperforming others at this stage. Those brands are focusing more on outdoor as a lifestyle in general so called "outdoor fashion". If this will be a paradigm shift for the industry is still to be seen. Another type brands that are probably outperforming, at least from growth in percentage, are some direct-to-consumer brands that are purely digital. Their complete control of their channels gives them an advantage from some perspective. For example, they do not have to worry about their retailers reaction to price changes etc. This gives them more price flexibility. We are NOT intending to go only digital as we still believe a real outdoor brand needs to be able to face full comparative and physical competition. We will however, while being respectful of our retailers, put more focus on our brand store concepts and direct to consumer channels as a complement to our retail customers.

As our result for the last few quarters indicate we have been somewhat frivolous with our investment and costs. We have therefor, as mentioned earlier, taken measures and costs in Q4 for measures to enable us to rectify these mistakes. We believe that the measures taken will decrease our costs already in 2024 with 7 MEUR. The new climate, with real interest rates again, also means that we have launched higher hurdles for investments. We are also refining our operations by investing in ERP system for the Brands and Global Sales

MEUR	Oct-Dec 2023	Oct-Dec 2022	Jan-Dec 2023	Jan-Dec 2022
Net sales	180.2	203.9	739.4	759.2
EBITDA	17.5	28.6	113.7	138.6
Operating result	0.4	12.5	55.0	83.5
Profit margin, %	0.2%	6.2%	7.4%	11.0%
Result before tax	-7.1	8.8	47.6	82.8
Net result for the period	-6.8	6.0	32.0	60.9
Earnings per B-share, EUR *)	-0.51	0.45	2.40	4.57
Solvency rate, % *)			57.2%	60.0%

^*) Earnings per share are calculated on outstanding shares. Solvency rate are calculated as Equity as a percent of total assets.

Net sales, MEUR

Operating profit, MEUR

THE OPERATION

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Fourth quarter 2023-10-01 – 2023-12-31

		Brands		Frilufts	Global sales			Common	Group
	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
External sales, MEUR
EBITDA, MEUR
Operating profit, MEUR

		Brands		Frilufts		Global sales		Common	Total
External sales per market, MEUR	Oct-Dec 2023	Oct-Dec 2022	Oct-Dec 2023	Oct-Dec 2022	Oct-Dec 2023	Oct-Dec 2022	Oct-Dec 2023	Oct-Dec 2022	Oct-Dec 2023	Oct-Dec 2022
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europé
Americas
Other World
Total

Period 2023-01-01 – 2023-12-31

		Brands		Frilufts	Global sales			Common	Group
	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
External sales, MEUR
EBITDA, MEUR
Operating profit, MEUR
Number of Stores
of which are franchise
Non-current assets
Cap. Expenditures

		Brands		Frilufts		Global sales		Common	Total
External sales per market, MEUR	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europé
Americas
Other World
Total

THE OPERATION

Brands

		2023 (2022)		2023 (2022)
External net sales	Q4	47.3 (55.4) - 14.8%	Q1-Q4	198.3 (206.0) - 3.8%
0	~ .	4 - / 4 - 25	04.04	a a a ( = a = )

Frilufts

		2023 (2022)		2023 (2022)
External net sales	Q4	98.5 (101.4) - 2.9%	Q1-Q4	352.1 (347.7) + 1.2%
Operating result	Q4	5.7 (6.0)	Q1-Q4	0.4 (6.4)

Global sales

		2023 (2022)		2023 (2022)
External net sales	Q4	34.4 (47.1) - 26.9%	Q1-Q4	188.5 (205.5) - 8.3%
Operating result	Q4	0.6 (3.9)	Q1-Q4	25.7 (31.0)

Common, Liquidity and financial standing

		2023 (2022)		2023 (2022)
Operating profit	Q4	-4.4 (-1.9)	Q1-Q4	-9.2 (-12.6)

THE OPERATION

Net sales and operating result per segment

Global sales

	3 months	12 months
CONSOLIDATED INCOME STATEMENT
MEUR
Total income
Operating expenses
Operating profit
Profit before tax
Net profit for the period

Consolidated Statement of	3 months	12 months
Comprehensive Income
MEUR
Net profit for the period
Total other comprehensive income for the period
Total comprehensive income for the period

CONSOLIDATED STATMENT OF FINANCIAL POSITION, MEUR
Assets
Non-current assets
Total non-current assets
Current assets
Total current assets excl. current assets held for sale
Assets held for sale
Total current assets
Equity and liabilities
Total equity Liabilities
Total non-current liabilities
Current liabilities excl. liabilities directly associated with assets held for sale
Liabilities directly associated with assets held for sale
Total current liabilities
Total liabilities

Consolidated statement of changes in equity

				Foreign
		Other	Cash flow	currency				Non-
	Share	contributed	hedge	translation	Treasury	Retained		controlling	Total
Amounts in MEUR	capital	capital	reserve	reserve	shares *)	earnings	Total	interests	Equity
01-01-2022	12.4	39.8	1.4	-2.7	-10.2	340.8	381.5	0.0	381.4
Net Profit for the period						60.6	60.6	0.3	60.9
Other comprehensive income for the period				-8.9		0.3	-8.6	-0.1	-8.7
Total comprehensive income for the period	0.0	0.0	0.0	-8.9	0.0	60.9	52.0	0.2	52.2
Transactions with non-controlling interests **)						-1.0	-1.0	-0.2	-1.2
Share based payments ***)							0,0		0,0
Purchase of own shares *)					-1.0		-1.0		-1.0
Dividends resolved at Annual General Meeting						-25.7	-25.7		-25.7
Transfer of cash flow hedge reserve to inventories			0.7				0.7		0.7
31-12-2022	12.4	39.8	0.6	-11.6	-11.2	375.0	405.0	0.0	405.0

				Foreign
		Other	Cash flow	currency				Non-
	Share	contributed	hedge	translation	Treasury	Retained		controlling	Total
Amounts in MEUR	capital	capital	reserve	reserve	shares *)	earnings	Total	interests	Equity
01-01-2023	12.4	39.8	0.6	-11.6	-11.2	375.0	405.0	0.0	405.0
Net Profit for the period						31.6	31.6	0.4	32.0
Other comprehensive income for the period			-0.6	-1.0		-0.1	-1.6	-0.1	-1.6
Total comprehensive income for the period	0.0	0.0	-0.6	-1.0	0.0	31.5	29.9	0.3	30.3
Transactions with non-controlling interests **)						0.2	0.2	-0.3	-0.1
Share based payments ***)							0,0		0,0
Dividends resolved at Annual General Meeting						-17.7	-17.7		-17.7
Transfer of cash flow hedge reserve to inventories			-0.2				-0.2		-0.2
31-12-2023	12.4	39.8	-0.2	-12.5	-11.2	389.1	417.2	0.0	417.2

Consolidated statement of cash flows
MEUR
OPERATING ACTIVITIES
Cash flow from operating activities before changes in working capital
Cash flow from operating activities
INVESTING ACTIVITIES
Cash flow from investing activities
FINANCING ACTIVITIES
Cash flow from financing activities

Notes to the financial report

Note 1 Accounting principles

Note 2 Right of use assets

			Global						Global
31.12.2023, MEUR	Brands	Frilufts	sales	Common	Total	31.12.2022, MEUR	Brands	Frilufts	sales	Common	Total
Right-of use assets	30.3	84.9	1.4	0.6	117.2	Right-of-use assets	29.5	86.9	1.5	1.2	119.1
Lease liabilities	-32.6	-86.3	-1.3	-0.5	-120.7	Lease liabilities	-31.5	-88.6	-1.5	-1.1	-122.7

			Global						Global
	Brands	Frilufts	sales	Common	Total		Brands	Frilufts	sales	Common	Total
Depreciation	-9.0	-23.2	-1.2	-0.8	-34.2	Depreciation	-10.0	-21.7	-1.1	-1.1	-33.9
Interest cost	-0.8	-1.5	0.0	0.0	-2.3	Interest cost	-0.7	-1.4	0.0	0.0	-2.1

Note 3 Exchange rates

	Average rate		Balance sheet closing rate
	Jan-Dec 2023	Jan - Dec 2022	2023-12-31 2022-12-31
EUR/SEK	11.4842	10.6571	11.0960 11.1218
EUR/CHF	0.9712	1.0006	0.9260 0.9847
EUR/USD	1.0826	1.0474	1.1050 1.0666
CHF/SEK	11.8253	10.6503	11.9827 11.2946

Note 4 Risks

Note 5 Hedge accounting

Market value, TEUR
FX Forwards

Note 6 Segment reporting – sales and operating result

	Brands		Frilufts		Global sales		Common		Group
	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec	Oct-Dec
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
External sales, MEUR
EBITDA, MEUR
Operating profit, MEUR

	Brands		Frilufts		Global sales		Common		Group
	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
External sales, MEUR
EBITDA, MEUR
Operating profit, MEUR
Number of Stores
of which are franchise
Non-current assets
Cap. Expenditures

		Brands		Frilufts		Global sales		Common	Total
External sales per market, MEUR	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022	Jan-Dec 2023	Jan-Dec 2022
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europe
Americas
Other World
Total

Note 7 Outstanding options from acquisitions

Note 8 Sale of business

	2023-12-31	2022-12-31
Tangible assets	0.3	0.3
Goodwill	0.3	0.0
Inventory	9.6	11.4
Accounts receivable trade and other receivables	3.2	1.5
Prepaid expenses and accrued income	0.7	0.1
Cash and cash equivalents	1.8	0.0
Total assets, classified as held for sale 31.12.2022	16.0	13.3
Other current liabilities	7.5	1.5
Current tax liabilities	0.4	0.0
Accrued expenses and deferred income	0.2	0.3
Total liabilities, classifed as held for sale 31.12.2022	8.2	1.8
Net assets disposed of	7.8	11.5
Sales price	6.9
Result recognised in Financial income P/L	-0.9
Sales proceeds
Sales price	6.9
Sales price as Non-current receivables	6.1
Short term liability for reduction of sales price	0.1
Received payment for part of sales price	0.8
Cash disposed of	-1.8
Settlements of loans to Primus	4.6

Note 9 Acquisition of Exist

Note 10 Transactions with related parties

Note 11 Events after period closing