Fenix Outdoor International AG

Quarterly Report • Oct 25, 2024

FENIX OUTDOOR INTERNATIONAL AG

Interim condensed consolidated financial statements for the period ended 30 September 2024

Third quarter 2024-07-01 – 2024-09-30

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Period 2024-01-01 – 2024-09-30

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Events after period closing

Holding of own shares

Financial information

Contact person

COMMENTS BY THE EXECUTIVE CHAIRMAN

Disappointing Quarter, but we finally see tendency of brighter times ahead.

The third quarter continued as the second quarter. The retail market continued to be driven by price pressure and warm weather. Due to the middle east situation, there were larger than expected delays in the supply chain. This not only creating delays to Europe, the following lack of containers also hurt deliveries in the US. This meant that compared to last year we faced challenges in delivering to our Brands and Global sales customers, including Frilufts, also facing shortages in deliveries from other brands. We also saw certain effects of preorders that last year were delivered in Q3 now are delivered in Q4 as our customers are requesting later deliveries due to the late arrival of colder weather. So, from a sales view there is not much positive to say, even though we do have growth is some markets. I would like to point out Canada as one market that showed growth as well as our joint venture in China.

In this tough environment we still managed to decrease our inventory and increase our gross margin. Our net liquidity increased to 29.3 MEUR from -10.6 MEUR last year. This was primarily driven by a decreased inventory level, which is down to a more manageable level. We still need to improve in some areas, but we also believe that due to some changes in the behavior, a potential need to increase inventory may happen, due to an overcaution among retailers when placing pre orders. The gross margin increased from 56.0 % to 57.7 %.

The Net sales for the quarter ended at 197.5 MEUR vs last year 222.9 MEUR, a decrease of 11.4 %, driven by the high inventory in the retail sector and a slower retail market in general. In terms of the split of consumer sales between digital and brick and mortar the changes had a shift, where brick and mortar outperformed digital in almost all markets.

We also had some higher temporary costs than anticipated.

Brands

The Brands segment shows decreased sales of 20.8 %. The decrease was mostly driven by the North American retail sales, which was also driven by the closures of some nonperforming stores. This will, however lower the costs and improve the bottom line. Germany also performed below par, while the Nordics outperformed. The gross margin recovered compared to earlier quarters due to lower need to discount merchandise. The costs were kept under control and savings were taking effect.

Global Sales

Overall Global sales decreased in net sales to 52.8 MEUR vs 63.3 MEUR last year. The decrease was mostly driven by North America and Asia, whereas the rest of the markets performed better. Gross margin was lower due to a different product mix. Also here costs where improved according to plan.

Frilufts

Sales in the Frilufts operation showed a decrease of 2.3 %, from 99.7 MEUR to 97.4 MEUR. This was driven by a decrease in Germany. Almost all the German decrease came from digital sales, whereas many shops showed an improvement. The volatile warm situation also affected sales in Germany. In terms of result, this meant an impact on profitability. Frilufts also took a one time write off for softwares of 1.2 MEUR.

North America

The North American did show a decrease in sales direct to consumer as well as wholesale. Besides a generally slow market the quarter was also hit by lower Kånken sales. Kånken proportion of sales is, due to the back school season, larger in Q3. The effect on total sales is therefore larger in this quarter.

Digital/Channel development from a Group perspective

Our total brick-and-mortar sales was flat 86.5 MEUR vs 86.7 MEUR. Our digital sales decreased from 37.4 MEUR to 32.2 MEUR, -13.7 %. As we look at the performance of our brands in Frilufts and as especially Hanwag outperformed their competitors we believe we outperformed the competition in the full price selling in the market in general.

Q4 sales

In terms of our expectations for Q4, it looks ok based on the performance during first couple of weeks. This is based on the performance in most of the Frilufts markets, but also on the reorder rate in both Brands and Global sales. However, due to the current situation in the market both politically and economically nobody knows.

Going forward

There are challenges. The supply chain and transport problematic remain. This is reinforced by that some larger customers are placing their preorders closer to when they want delivery and thereby increasing our risk of getting higher costs for transports, to secure delivery. Internally we might be facing higher costs in scaling up our operations in Ludwigslust, as we are using the lower inventory level to speed up that process, but we

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MEUR	Jul Sept 2024	Jul Sept 2023	Jan Sept 2024	Jan Sept 2023	Oct/Sept 2023/2024	Jan Dec 2023
Net sales	197.5	223.0	511.0	559.2	691.2	739.4
EBITDA	43.6	51.4	78.1	96.1	95.6	113.7
Operating profit	28.6	37.4	34.8	54.6	35.3	55.0
Profit margin, %	14.5%	16.8%	6.8%	9.8%	5.1%	7.4%
Result before tax	23.7	35.8	27.7	54.7	20.6	47.6
Net result for the period	18.4	27.8	17.9	38.8	11.1	32.0
Earnings per B-share, EUR *)	1.38	2.08	1.34	2.91	0.72	2.37
Solvency rate, % *)			61.5%	58.8%		56.1%

^*) 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

Brands

Frilufts

Global sales

Common, Liquidity and financial standing

THE OPERATION

External sales and operating result per segment

Brands

Frilufts

Global sales

	3 months	9 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	9 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
Total assets
Equity and liabilities
Total equity
Liabilities
Total non-current liabilities
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
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						38.6	38.6	0.2	38.8
Other comprehensive income for the period			0.7	-7.1			-6.4	-0.1	-6.5
Total comprehensive income for the period	0.0	0.0	0.7	-7.1	0.0	38.6	32.1	0.2	32.3
Transactions with non-controlling interests ***)						-0.1	-0.1	-0.2	-0.3
Share based payments**)							0.0		0.0
Dividends resolved at Annual General Meeting						-17.7	-17.7	0.0	-17.7
Transfer of cash flow hedge reserve to inventories			-0.2				-0.2		-0.2
30-09-2023	12.4	39.8	1.1	-18.7	-11.2	395.8	419.2	0.0	419.2

	Share	Other	Cash flow hedge	Foreign currency translation	Treasury	Retained		Non- controlling	Total
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						17.8	17.8	0.1	17.9
Other comprehensive income for the period				-0.8			-0.8	-0.1	-0.8
Total comprehensive income for the period	0.0	0.0	0.0	-0.8	0.0	17.8	17.1	0.0	17.1
Transactions with non-controlling interests ***)							0.0	0.0	0.0
Share based payments**)						0.3	0.3		0.3
Dividends resolved at Annual General Meeting						-17.1	-17.1		-17.1
Transfer of cash flow hedge reserve to inventories			0.1				0.1		0.1
30-09-2024	12.4	39.8	-0.2	-13.3	-11.2	390.1	417.5	0.0	417.5

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
30.09.2024, MEUR	Brands	Frilufts	sales	Common	Total	31.12.2023, MEUR	Brands	Frilufts	sales	Common	Total
Right-of use assets	24.4	94.4	1.4	3.8	124.0	Right-of-use assets	30.3	98.1	1.4	0.6	130.4
Lease liabilties	-26.3	-96.2	-1.4	-4.5	-128.6	Lease liabilities	-32.6	-99.5	-1.3	-0.5	-133.8

			Global						Global
	Brands	Frilufts	sales	Common	Total		Brands	Frilufts	sales	Common	Total
Depreciation	-6.8	-17.9	-0.7	-0.8	-26.2	Depreciation	-9.0	-23.2	-1.2	-0.8	-34.2
Interest cost	-0.6	-1.6	0.0	-0.1	-2.3	Interest cost	-0.8	-1.5			-2.3

Note 3 Exchange rates

		Average rate			Balance sheet closing rate
	Jan-Sept 2024	Jan-Sept 2023	Jan-Dec 2023	Jan-Sept 2024	Jan-Sept 2023	Jan-Dec 2023
EUR/SEK	11.4211	11.4951	11.4842	11.3000	11.5325	11.0960
EUR/CHF	0.9585	0.9792	0.9712	0.9439	0.9669	0.9260
EUR/USD	1.0870	1.0815	1.0826	1.1196	1.0594	1.1050
CHF/SEK	11.9158	11.7394	11.8253	11.9716	11.9273	11.9827

Note 4 Risks

Note 5 Hedge accounting

Market value, TEUR
FX Forwards

Note 6 Segment reporting – sales and operating result

Third quarter 2024-07-01 – 2024-09-30

		Brands Frilufts Global sales				Common and elimination Group
	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep	Jul-Sep
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
External Sales, MEUR
Internal Sales, MEUR
Sum Net Sales, MEUR
EBITDA, MEUR
Operating result, MEUR

(3 months data are not included in auditors' review of the interim report)

		Brands		Frilufts		Global sales		Common		Total
External sales per market, MEUR	Jul-Sep 2024	Jul-Sep 2023	Jul-Sep 2024	Jul-Sep 2023	Jul-Sep 2024	Jul-Sep 2023	Jul-Sep 2024	Jul-Sep 2023	Jul-Sep 2024	Jul-Sep 2023
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europe
Americas
Other World
Total

Period 2024-01-01 – 2024-09-30

		Brands	Frilufts Global sales				elimination	Common and	Group
	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
External Net sales, MEUR
Internal Net sales, MEUR
Total Net Sales, MEUR
EBITDA, MEUR
Operating result, MEUR
Number of Stores
of which are franchise
Non-current assets
Cap. Expenditures

External sales per market, MEUR		Brands		Frilufts		Global sales		Common		Total
	Jan-Sep 2024	Jan- Sep 2023	Jan-Sep 2024	Jan-Sep 2023	Jan-Sep 2024	Jan-Sep 2023	Jan-Sep 2024	Jan-Sep 2023	Jan-Sep 2024	Jan-Sep 2023
Switzerland
Sweden
Other Nordic countries
Germany
Benelux
Other Europe
Americas
Other World
Total

Note 7 Outstanding options from acquisitions

From the acquisition of the Taiwanese distributor, Fenix Outdoor International AG has a right and an obligation through a put and call arrangement, where the price is based on a profit multiple, to acquire the remaining 30% of the company. The exercise period started on 30 June 2022 and ends 30 June 2027. The present value of the redemption amount is recognized as a short-term liability for the amount of MEUR 2.3 and the non-controlling interests are derecognized.

Fenix Outdoor International AG acquired 2017 Alpen International. The agreement from 2017 includes put/call arrangements for the 25% non-controlling interests, exercisable in the period between 2020 and 2029 whereof 16.8 % were exercised in June 2020. The present value of the redemption amount is recognized as a short-term liability for the amount of MEUR 0.7 and the non-controlling interests are derecognized.

Future changes in options liabilities will be recognized in equity.

Note 8 Acquisitions, Partnership and Sale of business

2024

Artic Fox s.r.o.

In March 2024 Fenix Outdoor has acquired 30 % of its local Fjällräven brand retail partner, Artic Fox s.r.o. Artic Fox runs six Fjallraven Stores and online business in the Czech Republic and Slovakia. The purchase price was MEUR 0.4. Fenix Outdoor has an option to increase its ownership over time. The transaction is not expected to have any significant effect in Fenix Outdoor's consolidated accounts.

Maloja

Fenix Outdoor is entering into a partnership (no purchase price) with the German outdoor brand Maloja to operate apparel production at their existing production facility, Viomoda, in Plovdiv, Bulgaria. This is the first step toward establishing apparel production in Europe at Fenix Outdoor.

Fenix Outdoor has the option to acquire up to 49% of Viomoda, the production subsidiary of Maloja. The option has not had any and is not expected to have any significant financial effect in Fenix Outdoor's consolidated accounts.

2023

Primus

The divestment of Primus AB and its subsidiary Primus Eesti Ou was during quarter two 2023 calculated to be to a salesprice of MEUR 7.1. During quarter four 2023 the salesprice were adjusted to MEUR 6,9 and the

Note 9 Transactions with related parties

Note 10 Events after period closing
Alexander Koska

Ernst & Young Ltd Maagplatz 1 P.O. Box CH-8010 Zurich Phone: +41 58 286 31 11 www.ey.com/en_ch

To the Board of Directors of Fenix Outdoor International AG, Zug

Report on the review of interim condensed consolidated financial statements

Introduction

We have reviewed the interim condensed consolidated financial statements (consolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial statement, consolidated statement of cash flows, consolidated statement of changes in equity and notes), pages 8 to 17, of Fenix Outdoor International AG for the period from 1 January 2024 to 30 September 2024. The Board of Directors is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34 "Interim Financial Reporting". Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 "Interim Financial Reporting".

Zurich, 25 October 2024 Ernst & Young Ltd

Roger Müller Patrick Bächtold (Auditor in charge)

Licensed audit expert Licensed audit expert