Duell Q1 2026 Earnings Call - Weather-Delayed Winter Season and French Portfolio Transition Weigh on Performance

Pellervo Hämäläinen, Investor Relations, Duell: Good morning and welcome to Duell’s webcast presenting the financial report for the first quarter of 2026, from September to November 2025. The report will be presented by CEO Magnus Miemois and CFO Caj Malmsten. My name is Pellervo Hämäläinen from Investor Relations. You will have the opportunity to send questions in Finnish and English via the chat during the webcast. And at the end of the broadcast, there will be a Q&A session to address the sent questions. So I think we are ready to move forward. So Magnus and Caj, stage is yours.

Magnus Miemois, CEO, Duell: Thank you, Pellervo, and good morning to everybody also from my side. The first quarter of our financial year that starts in September, September, October, November, is the period where we turn from summer season towards winter season, and in the beginning of the quarter, a lot of focus is on delivering pre-ordered winter products to the dealer network, and so also this year, and then once getting in towards November, then typically the season is fully on and moving to daily sales. This year, unfortunately, the winter conditions in a good part of the Nordics, where of course the winter categories are mainly oriented, didn’t really allow the season to get started in the way that it was expected, so a little bit delayed start to the daily sales of the winter season.

Then as we had quite elaborately discussed and communicated around our full year results that we released in October, we are in the middle of a transition period related to brand portfolio in our company in France. And then comparing to the comparison the previous year, then this impact also has a, let’s say, a negative delta. So all in all, then these two challenges, one external, one internal, is flavoring this quarter one for us. Then consequently, with a slightly delayed demand picture on winter products, then of course it also impacted these inventory levels at the cut-off point at the end of quarter one. But overall, net working capital management progressed partly as planned. Then looking a little bit, opening up the various products and categories, the same comment there that on one hand we had the conditions, the market conditions and weather conditions in the Nordics.

This was, of course, a moving picture throughout the quarter. So if you go in, let’s say, really top of really the most northern parts of Norway, they received a lot of snow quite early in the year and the season opened there. And gradually, of course, the northern regions received snow partly during quarter one. But if you compare the situation now, it has changed from what it was then at September to November period. Of course, our focus and our development in other markets also continued. While there is off-season, it’s not a totally, let’s say, zero market in other regions. And Duell continues to explore and expand its Central European addressable market space. And we see now when we have started to also put some attention towards Eastern European markets and Eastern European countries that there is some interesting potential.

This builds, of course, confidence in that the strategy we have in focusing on Central Europe growth seems to be a wisely chosen strategy. As touched upon, we are in the middle of a transformational sequence with respect to our portfolio brands in the French operation. This started already on the previous fiscal year towards the end. And now this continued also in this period. However, of course, this kind of transformation takes some time. We have now initiated certain right-sizing activities that are, let’s say, tuned to the current situation. This is, of course, necessary to do in a situation like this where there are disruptions in the trend. As usual, we select a few highlights of our business to give a few snapshots across the Duell businesses.

We’re a company with a very broad portfolio of products, a very broad portfolio of brands. So we appreciate that it may be sometimes difficult to keep track of everything. And through these kind of few highlights, we hope to also serve some information that helps understand what’s inside the Duell business. The first highlight is continuing from my comment a second ago here, Eastern European countries. For us, we have started the Central European growth strategy, of course, in the larger economies with France, UK, Benelux, Germany, Poland being very important focus countries for us. But gradually, we’re also exploring the potential in these Eastern European countries. And when we have started this work, we see there is potential also in the smaller economies in Central Europe. And this, of course, is then allowing us to gradually also expand the footprint there.

What’s maybe noteworthy when we look at the smaller economies there is that when the very mature markets are quite, you see, let’s say, the long pedigree in terms of which brands, which products they favor, the big established ones are definitely strong in all of these. Whereas when we go to some of these more, maybe we could say, emerging markets, then we see a very strong adaptation of newer brands in the industry, both on vehicles but also on parts and accessories, which is parts, accessories, and rider gear, which is our focus. So this also gives maybe a little bit of a glimpse of how then the consumer preferences change. And it’s important for us to have an insight into this also. So we can take those reflections into how we develop the assortment for Duell in the future.

The first highlight here is really about growth potential. Switching to a totally different thing into the second highlight spot here. One of the house brands that Duell has in the portfolio is a brand called Snow People. As the brand name indicates, this is about winter season and this is about snow categories. Particularly maybe to the Finnish audience, if you have ever had the opportunity to visit Lapland as a tourist and perhaps used tourist services such as Snowmobile safari or husky riding or ice fishing or something similar in an organized way, then you might have seen these kind of monosuits that are black and red or black and blue. Sometimes you see groups of tourists all dressed alike. This is Snow People on the move.

This is a product and a product family and a brand that we have since a number of years developed exactly for this segment, the tourism industry in Lapland. A sector that grows quite nicely at the moment. We can read and see social media with famous movie stars that dressed in Duell’s Amok gear and helmets in social media. This is, of course, nice. The Snow People brand is, let’s say, more practical, more low-key, but for the broader masses. While we have talked in highlights quite often about Amok being really the more sporty brand, this Snow People is catering to a different segment. Maybe also interesting to note that there are products in the Duell assortment that is not related necessarily to motorsports.

So in this case, these products are used also for, as I said, husky rides or tourism, ice fishing and similar, so just a snapshot. The third highlight is, we communicated in October when we announced the full-year results that we have started a performance improvement program that we call Performance Uplift. At that point, we were more in the starting phase, and this has now continued. I’ll elaborate a little bit more on this later on in the presentation, but if we look at quarter one activities, this is one of the focus areas where we are putting a lot of attention now to identify and move forward activities and actions that aim at improving performance, particularly profitability and capital efficiency, so this is now moving into execution phase here, and the planning phase is completed in quarter one.

Then the fourth and final highlight from this session is the ongoing optimizations of our warehouse footprint in the Nordics. We currently have three warehouses, and we’re right now consolidating this into two warehouses, and this work is going on as planned. We’re utilizing the slower season for these products to accomplish and complete this, so we are in a place to serve customers in high level then when the season gets started towards the spring. This is on track, on schedule, and will be completed in March as planned. This is all about operational efficiency, and of course, then also being able to also harvest the benefits of that financially in the second half, but also important to keep in mind, it’s not purely about streamlining and driving efficiency. It’s also an activity we do in order to serve some customer groups better.

In this particular case, it will allow us to better serve the Swedish and Norwegian bicycle dealer network with serving them from our Swedish warehouse then in the coming season. So this is a logical rationalization and evolution step that we are executing right now. Then moving on to, let’s say, the summary of the key figures for the quarter. And these changes in this, let’s say, delayed start of the winter season and these transitions ongoing in the French company, unfortunately, led to that we were not able to reach the net sales levels of the previous year. So there’s about a EUR 3 million difference there in net sales. Then on the other hand, on gross margins, we are by and large on the same level, which indicates that in terms of competitiveness, nothing material has changed.

And we are able to keep up gross margin on more or less the same level. However, the changes in the difference in volume, of course, then also affected the profitability. So Adjusted EBITDA in this case ended up slightly negative when we compare it to the previous year where we were clearly positive. Quarter one is always the smallest quarter in our seasonal variations, in our seasonal profile. So such also small changes in volume hit quite a lot quite immediately on the profitability. On the financial position, net debt continued to reduce as expected. And then in terms of the leverage ratio describing net debt towards Adjusted EBITDA, then in this case, we ended up in the ratio of 4.2. So with difference in profitability there, of course, also a little bit difference in there.

What is the profile or, let’s say, typical for this part of the year, given also from the point of view that it is in revenue the smallest quarter? Then typically the cash flow profile is negative during this part of the year. And so also this year, however, in a, let’s say, improved position compared to the previous year, but still on the negative side. So these are the highlights or, let’s say, key figures for the quarter. And now I hand over to Caj Malmsten, and we can elaborate on all of these and more. Thank you, Magnus. Let’s open up the financials a little bit more. And as Magnus said, very challenging first quarter. In terms of sales, we had a decline in sales of 11.7%, driven by the late start of winter and the portfolio changes in France.

The split between the regions, Nordics and Central Europe, more or less same level as a year back. Nordics going from 54-55%, so no major change. Same goes for the own brand sales, that’s stable. So ending at 20% of the total sales. But we can see a pretty clear increase for this quarter in the online sales, growing from 25-28%. And that’s, of course, a result of the mix of customers active during a certain part in time, but also the general trend in the market that online tends to grow. Moving over to profitability development, with a pretty big dip in the volume that naturally goes also through the whole income statement, so affecting the adjusted EBITDA pretty much, going down to minus 0.1 compared to a year back, a positive figure of 0.7.

But we look on the good side of the coin here. Gross margins remain on a healthy level. So 24.1, just a small change compared to a year back. And what we can see also here is the operating expenses is going down compared to a year back, I would say, as planned. We had a number of actions during last year in combination with the current ongoing France rightsizing activities. So bring in the operating expenses to EUR 5.8 million, a decrease of EUR 0.3 million. So cost side is developing in the right way. On the balance sheet side, we can see also that we have a positive development in the net working capital, down since a year back with almost EUR 2 million amounting to EUR 51.6 million now.

Here we have, on the whole net working capital side, we have had a lot of work ongoing and still a lot remains to be done. But we can clearly see that some parts are starting to pay off. So for example, the receivables side is developing in the right direction, where we have had for a long time already focused activity on credit management. And we can slowly start to see the results here. Same goes on the supplier side. We are continuously working with improving the terms with suppliers. And slowly we also see that in this case, the payment terms are getting better and start to give effects. Unfortunately, then on the big piece here, the inventory, we can say we are on same level, slightly higher. But here we have also the impact from the missing volume from the quarter.

All in all, net working capital is still on a high level, but direction for certain components is correct. As a result, now when the volume is going down, then the inventory to LTM sales is growing to 39.7, which is clearly still above our targets. Work continues and further results in the quarters to come. Financial position is, say, pretty stable quarter to quarter here. The net debt is going as planned down to EUR 22.6 million, so a decrease by EUR 2.1 million. Leverage is increasing to 4.2, this time driven with the weaker profitability, so bringing the leverage figure up. But as a summary here, amortizations of loans are following the current plans. And cash position in the end of the quarter, EUR 3.2 million. And although the operational cash flow is negative for the quarter, minus EUR 1.9 million, it’s a clear improvement since compared to a year before.

So if I, in a nutshell, summarize the financials, so we can say all in all, a very challenging quarter affecting sales profitability. But we can see some improvements on the operating cost side, net working capital, and also operating cash flow. So work continues. I hand over to Magnus again. Okay, thank you, Caj Malmsten. Then I continue with reiterating the guidance for the fiscal year. As we just concluded, a challenging quarter behind us. But again, quarter one being the smallest component in the full year equation for Duell. Then at this juncture, we maintain the guidance unchanged. And just to reiterate what that is, that we expect the market environment to remain similar to previous year. And the guidance is that we expect organic net sales to remain at the same level as last year. And also adjusted EBITDA to stay on the same level as last year.

Then, as I promised earlier, I’ll return to Performance Uplift a little bit. And again, reiterating, we mentioned this in the full year results release in mid-October that we had launched this program. We did back then the analysis that where are areas where we have potential to improve performance. And now during quarter one, we have converted that analysis and that target setting to concrete initiatives with concrete execution plans, people assigned and attached to these initiatives, clear schedules for implementation. And now we are in the point here at the start of calendar year 2026, where we move into execution and start to do the work that allows harvest also of the benefits. If we open up a little bit, what is the various themes inside the Performance Uplift program? There’s a number of things.

As mentioned also earlier, we have the ongoing transition and turnaround of the French business. This is its own, let’s say, cluster inside the Performance Uplift program with a number of activities, but maybe the most core ones being then to rebuild the core of the portfolio of brands that represents the largest portion of the business, and basically move a bit closer also to the rest of Duell in terms of assortment. Inventory management is extremely important in this because this is where we can affect major KPIs such as inventory level and through that net working capital, or in general, you could say anything related to capital efficiency, but also elements that are looking more, you could say, purely on the cost element of things such as how do we consolidate volume and through that purchasing power, for example, for logistics costs in the company.

We have a fair amount of logistics activities ongoing on any given day of the week. So this, of course, translates to significant cost elements. And then it also includes elements that relate to how we address the market, how we segment customers, and the portfolio of services that we offer for these customers. So this is a quite broadly encompassing Performance Uplift program that aims at the outcomes of these aims that either improve profitability, which you could maybe understand as improved margins. It addresses either, let’s say, the margin side or the cost side. Or then the other big element and focus area is activities, actions that relate to capital efficiency, namely inventory and other working capital elements.

So this is a center stage priority focus program now for us going forward, and with the ambition then, of course, to start to collect the benefits, harvest the benefits of this program in the second half of our fiscal year. Then moving on to a recap of the Duell strategy. This time of year, we are right now in the middle of our annual cycle to revisit and review strategies as a company on a yearly basis. And this work will go on into the spring. But if we take the snapshot of the Duell strategy and value propositions as it is, then our ambition and our vision is to be the preferred wholesale partner for both the brands we represent, but also for the dealer network that we maintain.

We do this through one of the industry’s most broad product offering compared to our competitors, particularly in the number of product categories we represent. And this is particularly relevant, I would say, in the smaller markets. For example, in Nordics, where the size of economy is such that dealers tend to aggregate different categories, also due to the seasonality, in order to have a stable and sensible business throughout the year. So summer may be related to marine and winter might be related to snowmobile, just to paint a simple picture. And this is a strong value to our dealer network, but also equally to brands. Then when we go into bigger economies, maybe more Central Europe, take big economies such as France or U.K. or Germany, then this is not similarly profound.

Then it may be enough market demand for a dealer to focus only on motorcycle rider gear, for example, or focus only on bicycle. And so the landscape and the dynamics are a little bit different. But in both cases, the resourcefulness of the Duell’s offering is a core element in why to make business mutually. The house brand portfolio is equally important to Duell and its dealers. The house brands often represent either a different price point of products or a product in a space where external brands don’t have a good match. So this is complementary to the offering we otherwise maintain. Then moving to the segment or, let’s say, the layer in the value chain where our customers are, our dealers are, they are also different.

Some are purely e-commerce dealers, some are purely brick and mortar, some are national, some are regional or local in where they, let’s say, how they serve customers. And these different aspects just to describe that it’s not a one-size-fits-all. And Duell’s strength is that we have the ability to adapt and create and negotiate a partnership that suits that customer. And this agility and this, let’s say, flexibility is something that we also see is important in our approach towards the market. And of course, in the beginning of the whole value chain is the consumer that may either utilize Duell products very, very broadly throughout different categories or maybe only focused on one particular product category. So if the consumer is into bicycling, then those are the products that are relevant for them. Or if they’re into boating, then those are the relevant products for them.

And some are in several categories. And our mission is to optimize this and continuously develop this picture so we can improve market share. Then just to wrap up the quarter in a few sentences, that if we summarize quarter one, we had a delayed start to the winter season, and this had an impact on both volumes and through volume also profitability for the quarter. So we have some catching up to do. And we cannot affect weather. We can only adapt to it. But the things we are fully in control of, such as our ongoing development programs, progressed very well during the quarter. We have those highlighted. We have the changes in warehouse footprint in the Nordics, progressing very well. We have the longer-term, the investment projects focused on the e-commerce, the order channel that our dealers use to interact and browse assortment and order from us.

This has progressed a lot during the quarter and is heading now towards the next phase releases here later in this year. These are all on track. Then the performance uplift program I highlighted here just a few minutes ago, which is a key focus area for driving and delivering better performance going forward. With those three items, I summarized the presentation for today. Then I hope there are some questions from the audience. Maybe Pellervo has an overview of that. Yeah, thank you, Magnus and Caj Malmsten. Let’s move to the questions part. We have pretty much twofold of questions. The other one is focusing on the France operation and the other mainly for the winter season. I think we could start from France operations since there have been some challenges regarding the product portfolio changes.

So what are the measures that we are currently doing in order to get kind of the France business on track in thinking about both sales and the profitability? Yeah, yes. Okay, so there’s a number of activities, but if I highlight, make a little bit sort of a simplified model. So short term, we had a big difference in revenue in volumes. Then, of course, it immediately created an urgent need to right-size the cost picture of the company. And these activities are already ongoing. Some of them are already completed. Some of them are in motion. So this is maybe right-sizing is the right word there. And that, of course, aims at making quite quick adjustment to protect the profitability in that situation where the revenue top line is shrinking. But then the next step is, of course, to rebuild and turn around that business equation.

That is then related to the brand assortment and replacing the brands there with others. This is also, let’s say, an equation that there are some pieces that are one for one, and then there is some other expansion of products and product categories in the French business. Also for the purpose that looking back, we could, of course, now see some risks materializing that we translate into being maybe a little bit too narrow in the product assortment. Having a little bit broader product assortment in that given market would de-risk the business from a resilient or would increase the resiliency for any changes with one single brand. These two things, short-term right-sizing, focusing on the operating cost. Secondly, rebuilding, turning around the business and rebuilding with a stronger brand portfolio. Okay, very good.

Could you elaborate some magnitude of the change of what came from the brand changes? And what is the kind of estimate when we are expecting to get back on track to the growth path in France? Yeah, the changes are quite material. I think we said around EUR 4 million for the fiscal year 2025. And then, of course, that effect then trickles down to when we do the comparison now this year versus last year, and then in terms of turnaround, some of them are quite short actions like right-sizing cost elements that has quite those kind of actions we are able to do on a quite quick time horizon. But then in terms of introducing new brands, transforming that, then that’s more a process of months. I would say we expect that this fiscal year will be needed in order to do this kind of transition.

It’s not something we do within weeks or one quarter. Also, from the point of view that the market, also in France, has various seasons and various products are in different demand and volume throughout the season, so that’s also why we have to look at this more like on a year-to-year basis rather than a quarter-to-quarter. Okay. Then, what comes to personnel? So, are there legislative obstacles to make any changes in France? Every country has labor legislation, and they are not identical, but also in France, it’s possible to make changes, and we have made changes. The key point maybe here is that we operate in five European countries, and I would say that’s where we have, let’s say, bigger operations like warehouse, etc.

In all the countries where Duell operates, we have to relate to the local legislation when it comes to label or etc., including France. Okay, very good. If we exclude France operations, thinking about the Central Europe business, so is that growing if we take the France operations off? I can’t say off the top of my head. I think for quarter one, to open up Central Europe business, of course, there are variations, various seasons there. But just to give a few highlights there, we are growing in Benelux. This is a market where we are succeeding quite well at the moment. We are growing in UK. And maybe we should also reflect there that the market, if you look at, for example, motorcycle registrations, it’s not a tailwind kind of sailing in the market right now. We’re still improving.

And this, of course, shows that Duell and its subsidiaries is able to do the right things and serve customers in a way that we can take market share even in difficult times. So this is good. Then when it comes to the bigger economies in Europe, Poland, Germany, France, then we talked about France, but there are always some variations quarter to quarter. But overall, our business in Central Europe is growing. And this is what we can see, particularly if you take last 12-month perspectives, etc. Okay, if we jump from Central Europe to Nordic countries, so how has the market developed? If we think separately, Finland, Sweden, Norway, the Baltics, we could actually include here. And according to different categories, so could you comment?

First of all, maybe we need to make the small asterisk in the comment here that looking at a single quarter, particularly in this period of the year where weather conditions are really, really key to many things, then particularly the winter categories, and if we look, I touched on it earlier, we could see the winter season starting in Norway where the snow arrived up there in the north of Norway quite early. And then, of course, the northern parts of both Finland and Sweden, once the snow arrived, the season opened. Now if we look at the current present, which is not within the reporting period, but the current today, of course, the snow situation is different, particularly actually it’s better in Sweden than in Finland at the moment, especially if you look at the mid-level countries.

You compare Östersund in Sweden, snow situation to, for example, Jyväskylä, or, well, this morning I read that the snow cross Finnish championship series, the first event in early February in Nivala, is canceled due to snow situation in Nivala at the moment, so this is, of course, unfortunate for that sport, but it’s a good picture of how sensitive the weather situation is to the demand picture, but now overall to the question in the quarter, then the winter categories are, let’s say, it’s their time to shine in this part of the year, and then the demand picture is kind of like the key. Overall, Nordics, the demand picture is best in Norway, second best in Sweden, and most challenging in Finland, and now I’m talking, let’s say, more the macro level, and of course, yeah, this is how we see it in our business.

Okay, so if we keep us still in the Nordic countries, so what kind of explains the challenges in these countries? Is it the high inventory levels that dealers are having, especially what comes to winter season since last year? The season was pretty challenging as well. Or is it more like based on daily sales? Depends a little bit on which dealer you consider. But I would say my answer would be both. And why do I say like that? And let me explain. When we see the situation and we talk to, let’s say, dealers who carry stock, who do pre-orders, who maintain stock in the inventory in their own stores, then yes, we hear a lot about this kind of comment you mentioned that, well, I have some leftover from previous year, so I want to clear that first. And this is natural.

But we also see a similar dynamic with the customers that don’t carry stock, for example, e-commerce and the kind of dropship type of equations there. And this, of course, then tells the picture that the demand side, that the consumer is not spending the money. So then, and I think this is maybe the big picture we see here is that everything starts from that how keen is the consumer to spend their hard-earned euros or kronas or pounds or whichever currency on the kind of products that we offer. And then after that, it’s a question about is the customer’s need fulfilled through a stock product in our dealer’s inventory, or is it trickling down to generating new business for us? Okay, good. Then what comes to the size of, let’s say, the winter segment comparing Finland and Sweden?

So are those equal or is the other one clearly higher or bigger than the other one? No, the exact numerics of this is a level of detail we don’t disclose between categories and markets. But on a broad market, I would say, although there are differences in these two markets, for example, in Finland, snowmobile riding is more of a trail riding tradition. And let’s say this relates also to legal frameworks, what’s allowed. Whereas in Sweden, the freeriding, the deep snow freeriding is quite popular. So it also has a little bit of a different customer clientele. But in both markets, Sweden and Finland, there’s a strong snowmobile culture.

Maybe an additional twist that we see in the Finnish market, which is not so equally profound in Sweden, is the link to tourism, these so-called snowmobile safari services that are quite widely offered in the Finnish Lapland, which again seems to attract the movie stars and the rest of us as well when we have time of it. Very good. Yeah. Thinking about the Nordic market share, what is our estimation? Have we won some market share or have we lost something? Again, without exact numerics on this, and of course, with an increasing customer preference towards web, let’s say, e-commerce purchasing through web stores, then it gets actually increasingly difficult to track that. Did I now purchase from a domestic company or did I purchase from a foreign company?

Actually, the consumer may not actually be concerned about that at all if they focus on the product. Of course, we recognize that there is competition. Competition is increasing throughout Europe. We are a challenger in the Central European marketplace. Overall, the industry is not experiencing a strong growth wave at the moment in terms of demand. Of course, this means that every competitor we can name is looking to pick up business in regions they haven’t before. When we look at Nordics, we are maybe more on the defensive side there. We have clearly the biggest market share in Nordics, and others look at it. It’s the opposite in other markets such as Germany or Benelux. Good. Thanks. We have one question about financials and mainly on currencies.

As the US dollar has weakened, so do we see some kind of tailwind boost in the profitability for Q2, Q3, and Q4? And are these kind of already taken into the purchase prices? Of course, we cannot really speculate about the future, but we, of course, follow what’s going on and are updating purchase prices all the time with currencies that are on the market right now. Very good. Thank you. I think we have now ending the webcast and go through the questions. And Magnus, please summarize the Q1 and take up the most important actions that we are taking now and moving forward. Thank you. Thank you, Pelle. I’ll a little bit mentally revert to the summary page. And yeah, a challenging quarter in terms of delayed start of the winter season. That’s just external that we had to adapt to.

And from that, we stayed focused on putting a lot of attention to the changes, the development, the things that we can be in control of, can drive. And we had the right progress on all of those things as we set out to do. So moving into the rest of the year, we move into the rest of the year with confidence on the rest of the 26 fiscal years. And of course, I want to thank everybody for participating here today and wish everybody a continued great day. Thank you. And we will come back then with the Q2 financial report in early April, and we will meet then again. Thank you very much and have a nice day. Thank you.