Fenix Outdoor International AG

Quarterly Report • May 2, 2024

FENIX OUTDOOR INTERNATIONAL AG

Interim condensed consolidated financial statements for the period ended 31 March 2024

First quarter 2024-01-01 – 2024-03-31

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Events after period closing

Holding of own shares

Financial information

Contact person

COMMENTS BY THE EXECUTIVE CHAIRMAN

A start of 2024 in line with expectations

2024 started very much as we expected it to, with many challenges but also certain positive indications and opportunities to bring with us in the next quarters.

We entered Q1 with a lower order book compared to last year. This was mainly due to the inventory situation last spring which had caused high insecurity among our retailers, still affecting their liquidity. The lower order book resulted in lower sales for our Global sales and Brands segments. When comparing numbers to Q1 2023, it is important to remember that Primus is no longer a part of Fenix Outdoor, naturally resulting in a skewed comparison.

Looking at Frilufts Retail, the year started well, especially in the Nordics due to the colder weather in the region. Coming to the end of Q1 Frilufts showed a bit of slowing down.

For Brands and Global sales, we were able to deliver according to plan without any major problems. We did have some smaller cost overruns in the logistics, mostly due to a steep learning curve during the roll-out of a new automated logistic system in our central warehouse in Ludwigslust, Germany.

Looking at cost control, we are gaining control of the cost base, and we expect the effect of the measures we have taken to be more visible as the year passes.

Due to the increased proportion of direct-to-consumer sales, our gross margin increased for the quarter on a group level. Our direct-to-consumer sales grew 4.5% during the quarter. It now makes up 57,4% of the group's total sales. It was primarily driven by brick and mortar, well supported by the online sales on our brand sites.

In terms of geographical development, most of our wholesale markets had no growth during the quarter, due to the low order books. However, an interesting fact is that we have seen an increase in direct orders in most markets supporting our trust that the inventory situation is improving. We did have a very good Q1 in Asia with record numbers in China. In Retail, we saw growth in the Nordics, but Germany was flat.

Group Total

Total sales for the quarter were 163.8 (180.0) MEUR. Again, it is worth pointing out that last year Primus was included with 4.6 MEUR. The operating profit ended on 12.8 (17.1) MEUR. The decrease is almost exclusively caused by the lower sales. Furthermore, I need to point out that we are seeing the first sign of gaining

better control of our inventory situation. Our inventory is down 4.9% to 257.8 from 271.1 MEUR. This means we have now peaked on our inventory level on like for like. The operational cash flow for the period was 27.3 MEUR stronger than last year.

Brands

Overall, we have seen a slowing development in all major markets, due to the inventory situation and the general caution among retailers. Interestingly, the direct-to-consumer sales in Europe for our brands are growing in most markets, particularly on the web. Fjällräven is performing best in this area. Compared to last year Brands' external net sales decreased by 14.9% to 45.2 (53.1) MEUR. The operating profit was 12.9 (17.6) MEUR.

Global sales

Within Global Sales, we saw the same development as for the Brands' division. There was a decrease in net sales from 58.7 to 47.6 MEUR. The operating profit was 7.8 (12.3) MEUR.

Frilufts

The Nordics grew in Q1, especially supported by the colder weather. On the other hand, Germany saw a rather flat development. In terms of sales Brick and Mortar outperformed digital sales again. Trekit in the UK, which predominately is a digital player, is still struggling, but they were profitable. In total, the Net sales for Frilufts increased by 4.4% to 71.1 (68.2) MEUR. Q1 is by tradition a weak quarter for Retail. The operating profit was -7.3 (-8.6) MEUR. The improvement was mainly driven by higher sales in Sweden.

Sales channels

Overall for the group, Brick and Mortar is still outperforming in sales vs our digital channels, the exception being in brands. This seems to be a market trend. The digital sales were 19.2% of total sales of the quarter, compared to 16.8% in Q1 2023.

Q2 sales

In terms of our expectations for Q2, it is hard to predict. Given the situation in Q2 last year we are cautiously optimistic for Q2 this year. Due to our direct order rate as of now being higher than last year, and how the direct order rate developed late Q2 and early Q3 last year. Our main risk lies more in the financial well-being of the retailers and their ability to pay.

Going forward

Looking forward at 2024, we are fasing several challenges, but also possible opportunities.

As I have mentioned earlier, we are facing a non-satisfactory inventory situation. However, we are now seeing the first signs of improvement both internally as well as at our retailers. On the retail side, there is still a high risk of discounting in the market to activate the large inventories on hand.

The Covid years created a boom for our industry which in turn created a huge inventory when consumers returned to normal behavior. This means that the market is not growing to the same extent that we have been used to. This conclusion is supported when we look at our Frilufts operation, where see few brands showing any growth at all, and considering the inflation the real growth is even lower. When we look at our retailers, we see that a lot of them are hurting financially. The same goes for quite a few competing brands.

If we then also add the general economic and societal issues to the picture, my conclusion is that it is still very unpredictable how long this will keep on. I believe this year will continue to challenge us in certain areas, even though we see some improvements going into H2.

However, I am also convinced that we are well-placed to capitalize on all the opportunities ahead. We have strong brands run by competent and good people in our portfolio, enabling us to gain the necessary momentum going forward. We continue working on our costs as well as rebuilding our operations to become more efficient and utilize our great internal resources to the fullest.

It is also worth noting that this environment creates possible opportunities in terms of acquisitions and given our strong cash position is a definite possibility going forward as it could enable us to capitalize on the challenges in the market.

I am positive in terms of the long-term future as I believe that our business model has and will continue to show its robustness.

We can however not relax. We pride ourselves on being ahead of the curve, and we will continue to stay sharp for further challenges and opportunities that will arise.

Martin Nordin, Chairman of the Board

MEUR	Jan-Mar 2024		Apr/Mar 2023/2024	Jan-Dec 2023
Net sales	163.8	180.0	723.2	739.4

EBITDA	27.1	31.2	109.6	113.7
Operating profit	12.8	17.1	50.6	55.0
Profit margin, %	7.8%	9.5%	7.0%	7.4%
Result before tax	11.4	16.3	42.6	47.6
Net result for the period	6.9	10.6	28.3	32.0
Earnings per B-share, EUR *)	0.51	0.79	2.01	2.37
Solvency rate, % *)	59.4%	60.9%		56.1%

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

THE OPERATION

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First quarter 2024-01-01 – 2024-03-31

		Brands		Frilufts		Global sales	Common		Group
	Jan-Mar	Jan-Mar		Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar		Jan-Mar
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
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-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europe
Americas
Other World
Total

THE OPERATION

Brands

Frilufts

Global sales

Common, Liquidity and financial standing

THE OPERATION

Net sales and operating result per segment

53.1 38.2 59.8 47.3 45.2 17.6 2.8 19.1 -1.5 12.9 - 10,0 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 Q1, 2023 Q2, 2023 Q3, 2023 Q4, 2023 Q1, 2024 Brands Net sales, MEUR Operating profit, MEUR

68.1 85.8 99.7 98.5 71.1 - 8,6 -1.0 4.4 5.7 -7.3 - 50,0 0,0 50,0 100,0 150,0 Q1, 2023 Q2, 2023 Q3, 2023 Q4, 2023 Q1, 2024 Frilufts Net sales, MEUR Operating profit, MEUR

	12 months
	3 months

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 STATEMENT 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
Total 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
Total equity and liabilities

Consolidated statement of changes in equity

				Foreign
		Other	Cash flow	currency				Non-
	Share	contributed	hedge	translation	Treasury	Retained		controlling	Total
Statement of changes in Equity 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	404.9
Net Profit for the period						10.6	10.6	-0.1	10.6
Other comprehensive income for the period			-0.6	-3.0			-3.4	-0.1	-3.6
Total comprehensive income for the period	-	-	-0.6	-3.0	-	10.6	7.3	-0.2	7.1
Transactions with non-controlling interests						-0.5	-0.5	0.2	-0.3
Transfer of cash flow hedge reserve to inventories			-0.7				-0.7	-	-0.7
31-03-2023	12.4	39.8	-0.6	-14.5	-11.2	385.2	411.1	0.0	411.1

				Foreign
		Other	Cash flow	currency				Non-
	Share	contributed	hedge	translation	Treasury	Retained		controlling	Total
Statement of changes in Equity MEUR	capital	capital	reserve	reserve	shares *)	earnings	Total	interests	Equity
01-01-2024	12.4	39.8	-0.2	-12.6	-11.2	389.1	417.2	0.0	417.2
Net Profit for the period						6.8	6.8	0.1	6.9
Other comprehensive income for the period			0.5	-3.8			-3.3		-3.3
Total comprehensive income for the period	-	-	0.5	-3.8	-	6.8	3.6	0.0	3.6
Transactions with non-controlling interests							0.0	0.0	0.0
Transfer of cash flow hedge reserve to inventories			0.0				0.0		0.0
31-03-2024	12.4	39.8	0.4	-16.4	-11.2	395.9	421.0	0.0	421.0

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			31.12.2023,			Global
31.03.2024, MEUR	Brands	Frilufts	sales	Common	Total	MEUR	Brands	Frilufts	sales	Common	Total
Right-of use assets	28.7	93.8	1.3	1.7	125.5	Right-of-use	30.3	84.9	1.4	0.6	117.2
Interest-bearing loans and borrowings	-30.7	-95.5	-1.3	-2.4	-129.9	assets Lease liabilities	-32.6	-86.3	-1.3	-0.5	-120.7

			Global						Global
	Brands	Frilufts	sales	Common	Total		Brands	Frilufts	sales	Common	Total
Depreciation	-2.2	-6.2	-0.3	-0.2	-9.0	Depreciation	-9.0	-23.2	-1.2	-0.8	-34.2
Interest cost	-0.2	-0.5	0.0	0.0	-0.8	Interest cost	-0.8	-1.5	0.0	0.0	-2.3

Note 3 Exchange rates

		Average rate			Balance sheet closing rate
	Jan-Mar 2024	Jan-Mar 2023	Jan-Dec 2023	2024-03-31	2023-03-31	2023-12-31
EUR/SEK	11.3361	11.2355	11.4842	11.5250	11.2805	11.0960
EUR/CHF	0.9548	0.9982	0.9712	0.9766	0.9968	0.9260
EUR/USD	1.0825	1.0776	1.0826	1.0811	1.0875	1.1050
CHF/SEK	11.8728	11.2552	11.8253	11.8011	11.3167	11.9827

Note 4 Risks

Note 5 Hedge accounting

Market value, TEUR
FX Forwards

Note 6 Segment reporting – sales and operating result

First quarter 2024-01-01 – 2024-03-31

	Brands		Frilufts		Global sales		Common		Group
	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
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-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023	Jan-Mar 2024	Jan-Mar 2023
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europe
Americas
Other World
Total

Note 7 Outstanding options from acquisitions

Note 8 Acquisition of Artic Fox s.r.o.

Note 9 Transactions with related parties

Note 10 Events after period closing
Alexander Koska
Calendarium