Fiskars Oyj Abp (FSKRS.HE) Earnings Call Transcript & Summary

Hello, and a warm welcome to the Get to Know Business Area Fiskars event. My name is Essi Lipponen, and I'm the Director of Investor Relations here at Fiskars Group. As you all know, Fiskars Group consists of 2 strong business areas, business area Fiskars and Business area Vita. This spring, we already hosted a similar kind of event for business area Vita. And today, the focus is on business area Fiskars. Here are today's speakers, Jyri Luomakoski, Fiskars Group's President and CEO; Jussi Siitonen, Fiskars Group's CFO; and Dr. Steffen Hahn, the CEO of Business Area Fiskars. And here is the detailed agenda for this afternoon. First, we will hear from Jyri Luomakoski, who will open the event. After that, Jussi Siitonen will talk about business area Fiskars from a financials perspective. And after that, we will get more deeper into the business area Fiskars with Steffen. After these presentations, we will have a joint Q&A, and we will take questions both online and from the live audience here in Espoo. The webcast ends by 4:00. And after that, the audience here in Espoo will have a chance to see some exciting new launches by Fiskars on the fourth floor. But without further ado, Jyri, please go ahead.

Thank you, Essi. And from my side also, a warm welcome, both to you here in the Fiskars Campus premises as well as online. We are excited to have you today here with us. We had an event in May in Copenhagen, where we presented our Vita business area with -- at that time, very fresh CEO of the BA, Daniel Lalonde. And this is a logical kind of continuation of those series. And as we have a lot of exciting things to tell and show today, happy to see all of you here as well as online. What is the focus of today? As Essi pointed out, we are split into 2 business areas. The one we discussed in May, Vita, it's home decoration, tabletop, some jewelry at Georg Jensen, many, many brands. And that's something that we started to build effectively with the acquisition of Littala back in 2007. And the last move on that side was the acquisition of Georg Jensen in '23. A bit longer heritage here on the business area, Fiskars, effectively 2 brands. And today, we will be concentrating on the brand, i.e., Fiskars, a bit longer heritage, 376 years and a couple of weeks on top of that or soon 2 weeks on top of that. Gerber is also a part. Steffen will address a bit also on our footprint and presence, Gerber, but focus will be more on the Fiskars brand within the Fiskars BA. Geographically, as a group, we are fairly well spread with equal -- of course, a big overhang in our position in Europe and then North America and APAC, both being important geographies for us. For BA Fiskars, as we will soon learn, North America is, of course, of bigger relevance than for Vita. But it's not only a European and North American business. So if you go to some of the prime do-it-yourself stores in Australia, you can't avoid coming across Fiskars products. And now comparing our 2 businesses here, quickly addressing Vita, which is from a distribution perspective, about half and half, direct-to-consumer, both our about 500 stores and e-com presence, and the other half through distributors, so indirect sales. Geographically, Vita has a fairly big European position, not that big Americas position. And then, again, Asia Pacific, led by Japan and China are the big geographies. But today's focus, indirect distribution model, dominating clearly the business model for BA Fiskars. There is effectively for Gerber, an own e-com presence, and that's where this 3% comes from. Half of the business is in Americas. Not exactly the half -- other half in Europe. So the APAC presence, effectively Australia and New Zealand, accounts for the 4%. And another distinction also here is that the BA Fiskars is more of sourced products, especially focusing on our North American offering and presence in Europe, actually, most of our offering is manufactured by ourselves. And at Vita, we see here that 60% of what we sell is made in our own factories, both ceramic, so porcelain and glassware factories. We have undergone a fairly big change in the organizational structure. And personally, I was in the Board from 2016 until not too many weeks ago. And 2020, when the pandemic hit us, we had a matrix that, at least, I had a difficulty to draw all the dimensions of that matrix actually. And that was simplified over the time. And now, since February 1 of this year, we have had a rather simple corporate structure. We have on group roles, about 1% of our people, group business services, that's basically financials, shared services, and IT as both businesses are sharing the same ERP backbone, about 3% of our people. And today, we talk about Fiskars BA, with about 20% of the total headcount or personnel of Fiskars Group being employed at BA Fiskars. Vita has a significantly higher share. From a revenue perspective, it's slightly bigger. But as you can imagine, if you are selling a lot of hand-painted porcelain plates, you need quite many hands to do that. And that's explaining effectively. Not to mention the 500 stores. Every store employs multiple people. And consequently, it's way more personnel-intensive as a business as the Fiskars BA is. Why did we do the split? That's a question. I understand there's been a lot of speculation, and it's been on the lips of many people. Obviously, with full accountability, we think that we can reach better results. My personal philosophy is that while we have a lot of smart people also working out of these premises, the group headquarters, but I can't claim that we know best what the Australian or the American consumer needs, how can we charm those consumers in different places that we would have that knowledge necessarily in some -- from many perspectives, remote location, of course, when you are located in Espoo from a very central location as we would say it in that context. But this improves our speed, our agility, closer to the market. Transparency, measurability, even in the times of the AI, I firmly believe that what gets measured gets done, and that's something we are living here with our division or business areas divided into their -- soon into their even legal subgroups under the holding company, Fiskars Corporation. We can allocate our capital smarter, more correct in a better way that yields the best results for our shareholders. We can set the targets properly. And when we get to the independent legal entities, on the lower left-hand corner, this is one of those topics operationally, since last winter, we've been in this structure. Till the end of Q1, we expect to have the legal part of the restructuring also done, which means that there is a legal subgroup under Fiskars Corporation that is the Fiskars business, and the other is the Vita business. Through that, we have the entire balance sheet available, also intend to increase our disclosures towards the financial markets for full transparency, but it's also giving us transparency. There might be currently in a country distributors who sell both Fiskars' products. They could be selling some of our nice glassware and the snow shovels and the access, and a few other things. And we have trade receivables from third party. Currently, we can't in the structure as we speak, separate those. So we don't have a full balance sheet, consequently, measuring and even then, in the end, basically rewarding on items that are outside of the income statement, which we have had split for years. This is opening, again, new avenues to be more relevant, kind of sharper focus to the right things. With this also looking at these 2 businesses, having been now in the operative role basically myself since May, Vita with about 12 brands or if you count all of them, it's probably 100, but 12 active and relevant brands, how to manage that business and then the big Fiskars brand business, different channels, different routes to market, a bit different arguments, how to charm the consumer. This offers us now divided Impera. So the dedication that we can do the right things also within the businesses, and not have a fruit salad from that perspective. This is a good segue, handing over to Jussi, how Fiskars's business area has managed to get to a resilient business model and also a very efficient capital structure. Jussi, please.

Thank you, Jyri, and hello, everyone. So what is the Fiskars BA financial role within our portfolio? Fiskars BA contributes 3 key strengths to our portfolio: a lean cost structure, an asset-light balance sheet; and thirdly, a very resilient business model what we have there. Let's start first with this lean cost structure. Presented here, you can find Fiskars BA, Vita BA, and then the overall group P&L structure, rolling 12 months at the end of September. So Fiskars BA is dilutive to our gross margin. That's due to the business model what we have in Fiskars BA. Roughly half of net sales, what we have there is in U.S.A. So Fiskars BA operates in U.S.A., mainly through the big retailers. And typically, in U.S. retailers, the gross margins are lower than what they are with the European peers. Having said that, at the same time, that distribution is very cost-efficient. So once you get a door open for one big retailer, you have a platform available for nationwide distribution in one go. Of course, you need to prove that product is working, product is selling true, but at least the platform exists, and therefore, the distribution is very efficient. Another thing on top of the efficient distributions, what we have in Fiskars BA is also when it comes to our general admin cost, bearing in mind what Jyri said that only 20% of our employees are in Fiskars BA. The organization is very flat, very efficient there, and that you can see in the numbers. So even though net sales were down this 3.7% now on rolling 12-month basis, we have been able to maintain stable double-digit profitability. And that shows the resilience what we have in the Fiskars BA business. So that's about this lean cost structure. Then an asset-light balance sheet. Jyri said that we have a thorough, very detailed balance sheet by BAs once we get this legal entity split completed, but we already have directionally right numbers available. So what you can see here is, first of all, Fiskars BA, that has been built organically. And it follows this kind of CapEx-light approach. CapEx-light approach, meaning here that almost -- whilst almost half of the net sales is coming from Fiskars BA, Fiskars BA is only 1/3 of our CapEx, what we have. And that results in, I would say, relatively high capital turnover, what we can enjoy in Fiskars BA. High capital turnover combined with stable double-digit profitability results in very robust return of invested capital for Fiskars BA. So that was the second topic there. The third one is this resilient business model. And the best way to illustrate the resilient business model is to walk through Q3 EBIT bridge, what we have there. So as you most likely well -- it's quite well known that actually Fiskars BA is in the epicenter of these tariff discussions and tariff pressures what we currently have there. Despite that, the underlying gross margin, the gross margin improvement, what you can see here based on our own operational efficiency improvement as well as strategic pricing. We have succeeded to improve underlying gross margin more than what we have received negative items there from direct tariffs. So net-net, we were able to improve gross margins in Fiskars BA in Q3. That's only one thing. The second thing is that so-called OpEx fluidity what Fiskars BA is executing is yielding results. So all the savings what we have had there in admin cost in general cost overall, we have invested back in those top line fundamentals, i.e. marketing, R&D, and the likes. So we are in this self-funding model with Fiskars BA. We are able to continue investing back. And of course, the negative on what we have in tariffs there, we can mitigate, but preferably, we would like to invest that also in the growth. But nevertheless, the model currently works so that we can mitigate the negative ones from tariffs. And this resilience is truly needed. So from April when the tariffs were imposed on top of those April tariffs, the steel tariffs, which were introduced late August, they are impacting on our results. Of course, this year, when they didn't start from the January 1, we have some impacts already on our P&L. We see that next year, we will have the full impact. So we are not off the hook from the tariffs after 2025. They will continue also in 2026. In the business where 50% of net sales is in U.S.A. and most of that -- most of those products we are selling in the U.S.A., they are sourced outside U.S.A., mainly from Asia. So that's what I meant with being epicenter of these tariff challenges what we have. The current actions put in place already what we witnessed in Q3 and year-to-date September there strategic pricing efficiency improvement. We continue mitigating the direct impacts of the tariff. The challenging part is those indirect impacts. So what is the sentiment there when it comes to U.S. consumer? We know that U.S. consumer sentiment is somewhat declining. How we will be able to mitigate that one? Our focus is very much to maintain competitive position, securing our market share, and prioritizing our market share and then the cash flow, because that's something we can control. The own actions we have put in place and are putting in place as we speak is mainly when it comes to our sourcing refootprinting. What is the best place to source sustainably so that we can still avoid those highest tariffs there, and that's what we are focusing. How long-term planning can we have? Well, that's challenging at the moment because this tariff environment is very volatile, let's say so. We don't know what will happen tomorrow. But all the plans what we have put in place are now targeting to mitigate the direct impact. So that's very much when it comes to financial part of Fiskars BA in Fiskars Group. Now Jyri and I will walk through how we see Fiskars BA from a group perspective, what's their role in our portfolio. Bearing in mind from a financial perspective, lean cost structure, asset-efficient balance sheet and resilient business model. So then I'm now handing over to Steffen to talk more about what is Fiskars' business as such and giving you a better insight on that one. Steffen, please.

Thank you, Jussi. So welcome also from my side. My name is Steffen Hahn, and I lead the Fiskars business area, which is the brands, Fiskars and Gerber. I would like to cover 4 things with you. The first thing is where we are. The second thing is who we are, what we do, and what hopefully, is particularly exciting for you, what we do next. So if we start by looking where we are, a bit of an overview, and I start on the right side of the slide. So you see our country footprint. Today, we are an international brand. We are present in more than 40 markets from North America, over Europe, down to Australia and New Zealand. So we are an international brand, but still with potential to grow in other markets. Well diversified, being present about 50-50 on both sides of the Atlantic, of course, always gives us a nice hedge depending on how the economics go on either side. If you look at the middle part of the slide, this is our retailer landscape. So for the Fiskars business area, we have decided that we focus on what we are good at, product design, so engineering, design, and brand building. We trust our partners to bigger retailers. So we don't do our own retailing. We don't do DTC for the Fiskars business area. So we are working a lot with big boxes. And of course, that begs the question, how exposed are we? Is there 1 or 2, or 3 retailers that really make the bulk of our sales? And many of you probably know the answer, that's not the case. So even our biggest customers stand for less than 5% of our net sales. And so again, we have a very well-diversified retailer customer base that gives us resilience when things go bad in a certain country or in a certain geography because we have other partners in other areas that wouldn't be as exposed to that. And then lastly, when you look at our product categories, we have a seasonal business. But the business happens to be fragmented into subparts that have different seasonality. So we have garden cutting in spring. We have back-to-school in summer. We have in fall, the axe business that is very pronounced there. And then we have -- as we run up now to Christmas, the Gerber business, the cooking business, and our snow tools, depending on how the weather goes. So we have -- each of our subcategories has a different geographical profile, which again makes us relatively resilient with the different seasons on our business. So overall, we are very well diversified as a business, geographically, customer base, category base. Yet we have one uniting factor. That's a key competence that we believe we can do better than anybody else. And that's cutting. Cutting is something that consumers care about, clean cuts, and they are willing to pay a premium for that because they acknowledge that there are tools that are better than others. And so we can command the price premium quite a bit when you look at our scissors in the cutting area. So what you will see later is that also as we think about how do we expand our portfolio to cover more consumer needs that we're always looking for what do we -- how do we have a right to win as we enter new categories so that we stay true to our core. Our brand has good penetration. In the high season and after summer in the U.S., during back-to-school, we sell 100 scissors per minute, statistically, if you do the math. The amount of stick tools we sell in the Nordic countries, so Scandinavia, Finland, amounts up to that we mathematically sell basically stick to every 10th person in the population every year in the Nordics. And when you look at the amount of products we sell in Australia, we should be in about half of all Australian households. So we have a foot in the door. And as we now expand our portfolio, we have fantastic opportunities to sell across and to sell up. And we are following that path, which you will see a little later. When you think about the penetration and the foot in the door, we have one business that is -- that we're very proud of and that is very attractive for us, access, where we have major upside. So our market shares, when you look at value is about 25%, give or take, depending on where we are in the market. But on the unit side of things, we're only selling about 10% of our units in the space. So when you think about the axe category, we are now -- we are shifting focus and say, how do we convert classic wood shaft axe users into our type of axes. That is very attractive for us, volume, economies of scale, premiumization, and it is very attractive for our retail customers because we create category value in a category that not necessarily is growing on its own. It's beneficial for the consumer because when consumers use our access, they realize how good of a product it is. And it doesn't necessarily tell itself that on the shelf because the shape is similar to what you're used to, but the functionality is really one of a kind. So there's a massive opportunity that I wanted to highlight of how we are using our initial penetration in these countries to now try to more deliberately expand our business, and how we can surround consumers with more of our products. We are serving our customers with what we think is a world-class supply chain. So we have warehouses in North America, in Canada and in the U.S., in Europe, in Finland and Poland, and we have a warehouse in Australia to serve our customers. And that is fueled -- that supply chain is fueled by 4 own manufacturing sites that we have. So in the U.S., we have a manufacturing site in Portland on the West Coast, which is the Mecca of knife making. So our Gerber business is producing our premium knives there. We produce axes and scissors in Billnäs, not far from here. And then a little further, but still not far. In Sorsakoski, we produce our cooking equipment. And then in Słupsk in Poland, we are producing a number of our gardening tools. So rakes, spades, the weeder, a product we are famous for, and some of our Puna. This was where we are. Now let's look at the who we are. Some of you have heard this before. And so I try to give a bit of a different take on who we are because it's very difficult to actually grasp what 376 years of heritage are. Early in my career, I used to live and work in Switzerland in Geneva, which some of you enthusiasts might know is the cradle of watchmaking. And amongst others, the oldest watchmaker in the world is based in Geneva, Vacheron Constantin. And when I lived there, they had a very intriguing campaign. They would depict historical events. And then they would say how old Vacheron Constantin was at that time already, to showcase how old they are. So when Napoleon was born, Vacheron Constantin was 14 years old. And when the U.S. signed their independent Declaration, Vacheron Constantin was already 21 years old. When Vacheron Constantin was founded, Fiskars was 106 years old. So Fiskars is 106 years older than the oldest watchmaker in the world. That's pretty mind-boggling, I find when you think about it. So Fiskars was founded in 1649. Franz Mozart was born in 1649, which was the great-grandfather of Wolfgang Amadeus Mozart. And in 1649, the Maryland Toleration Act was signed, which allowed all people on what today is the U.S. on the -- today's U.S. territory. So it was more than 130 years later to worship any kind of religion. Is that interesting? So in 1649, Fiskars was founded. We believe the Fiskars brand is much bigger than its current sales. And my team and I, we are determined to change that. So sales up that is. And we believe that Fiskars is really not only a brand or a very old company, it really is a part of cultural heritage of Finland and of cultural heritage of all. So I feel incredibly privileged to lead this incredible business. So 1649, more than 99% of all companies that -- or businesses that existed in 1649 have gone extinct. There must be something very unique about Fiskars to have survived so long. Survival of the fittest. Obviously, something very unique in our DNA. And I believe that is our ability to adapt. You might know Charles Navin said, it's not the strongest or the most intelligent species that survives, but the most adaptable. And so I think 376 years speak for themselves. We were able to adapt with changing consumer needs. So on the very right side, we were Dyson before Dyson with a head dryer. Fiskars had a microwave oven 20 years before they broke through in the market space on the left side of the screen. Fiskars did plates and cups and plastic trailers, Fiskars did excavators, Fiskars did traffic lights. So Fiskars has done a lot of things. And we've constantly moved with the consumer with changing needs and solved problems they had so that we would stay relevant, and we were able to make a profitable business. A few examples. So Fiskers invented a number of things that we still have today. So we have basically fundamental innovations that or inventions that we did and that we then could continuously innovate to make things better. And here are a couple of the examples. They are relevant still today and, as you will later see, also beyond. So the plastic handled scissors. Scissors used to be made out of complete steel, fully steel, which was very expensive. And so Fiskars actually invented these plastic handled scissors, which made them more affordable to consumers. And then we innovated. So we just recently launched our sixth generation. People are more well set today than they were in the '60s, which makes hands on average thicker. So you need -- you have a different anatomy as a result, and we adjusted the scissors to go with that so that they are comfortable use. If you today use on average the scissors from '67, they would feel pretty tight. So -- then the power gear mechanism on the very right, 1996. There is a physical limit of how big of a branch you can cut. And Fiskars came up with this gear mechanism so that you're basically up to 3x the force that you have naturally, you can apply to a branch, so you can cut thicker branches. And those of you who do gardening, you know how it feels when you have this branch. You can't cut the bugger. So that is a thing of the past with our power mechanism. And we built on that, you'll see later on an innovation that we have that is taking that to the next level, because there are downsides with the gear as well that we're solving. So we continuously make the products better in innovation steps based on what we originally came up with in '96. -- the ropeless pre-pruner. Again, if you're using these tools, you get stuck with the rope. If you have one, I inherited one from my father with a rope, and it's not particularly convenient. Fiskars solved that problem. And then with the rope internalized, Fiskars could also come up with a gear mechanism, so you could cut ticker branches, which makes it incredibly productive because you don't have to climb up in the tree with a ladder or even get a landscaper who does it for you, and it's pretty costly. So again, an original invention from '97 that we have innovated. And again, you will see later of how we're taking this forward. The claw weed puller. So it actually, if you have velines, it tears out the whole plant, including roots, so they don't regrow, and you don't need to go down. If you do work, you have pretty quickly saw back. And so we solved it because you lift it up, it is stuck to the tool, and then you can unload it. So a number of things. It's not mind-blowing invention, but it makes a task of a consumer so much better that they see the benefit and want this tool over everything else that's available in the market. And so we do this about a broader range. This is a few examples. Now what's nice about Fiskars is we're not only good at solving functional problems, we also add emotional value, as evidenced in many of the wins we have in the design space, Red Dot as an example. What does that mean actually designed? For us, it means we have ergonomics that are truly based on insights of how our tools are used. We'll showcase that a little later about how much of a difference things can make to the handling, to the balancing to the weight when you really understand how the tool is used in practical terms and how you design for that. So economics lead to health benefits, you have professional landscapes that use these tools 8, 9 hours a day. That makes a huge difference. We also offer aesthetical benefits. Some of our tools are used in what you would call demonstrative consumption situations. Other people see you having it or using it. It's part of your interior. So you want it on the event, it's on display, you want it to look nice. You spend a fortune on your interior design. You don't want to have outdoor tools that are just functional. You want them to look nice too. That is a value that people are ready to pay for. And we have really, I think, mastered that art. We have -- and we are intentionally investing into it. We have the Chief Design Officer. We have more than 10 industrial design engineers. And what you see here, the quote on the chart shows you that we are amongst the top of the companies when it comes to industrial design. And the top of the companies means we are amongst the likes of Apple, Pininfarina, Porsche Design, Dyson, which you wouldn't necessarily expect from a company of our size. So really at the top end of design capability as judged by others. So -- and then when you think about sustainability, which is always a topic, Finland happens to be a relatively sparsely populated country. And that luckily makes nature present pretty much everywhere. It's always present. That's very nice because it's a good reminder of our obligation to protect it. So for us, care about the environment and making sure that we reduce our impact on the environment is who we are. That's really in our values. It's not just an annual report. And so we have 3 main pillars how we cater for that. The first is we make tools to last, durability, which goes very nicely hand-in-hand with the quality expectation and perception that consumers have about our tools. The second pillar is circularity. You know we have publicly committed to a target. We want our viscose products to be by 2030 made out of 50% circular materials. We have a milestone in '25, 30% on our path to get there, and we've just surpassed that. We have about 32% of all of our material we use in our products to be circular. And in some areas, we have really pushed it to what's technically feasible. So when you look at our cooking equipment, you cannot -- for process reasons, you cannot go to 100% of circular material, but you can go beyond 90%, and we've done that on stainless steel and on aluminum in our cost factory. So we are really on the cutting edge of what's technically feasible when it comes to the amount of circular materials. And then lastly, repairability. Of course, it's much better for the environment if you don't have to replace a whole product, but only parts of it. And that happens to coincide with a very attractive spare parts business financially. So again, ecology and economy go nicely hand-in-hand on the repairability front. And so this is what we have on sustainability. And if you then look at what does that lead to? So we are focused on solving functional problems. We are focused on adding emotional value, and we are focused on doing so in the least environmentally impacting way. And that has earned us a leadership position in garden cutting. Pruners, tree pruners, axes, you have an edge here, spades. So we're a leader in garden cutting. Given that we invented the plastic handle scissors and then continuously developed our portfolio there, we also earned a leadership position in scissors, both in adult scissors and in kids scissors and related crafting tools. In kids, there is now an interesting trend emerging, which is away from screen time back to crafting. So parents more and more look for activities they can give to their kids that sometimes earns themselves an hour free time where they're busy, but they develop their motoric skills. They don't look at an iPad, but they get active. And we have an expanding portfolio to cater for that. The same is true for adults. More and more people look for what they call digital detox. And so we internally call this grandma hobbies are on the rise again. [ Corse ] is growing more than 200% in the U.S. So there are things that are coming back, and we have a portfolio to capture these consumers in our offer. Now you could think there's a lot of offers in the scissor space, and that is true. But the Fiskars orange-handled scissors really is a recognized icon in the marketplace. This is -- you see here the CNN-style article. We've sold more than 1 billion pieces, which, of course, means we have a lot of experience of how to do these things right. And we know without being able to disclose names here, but we know that a lot of people use in their professional purposes, our orange-handled scissors when they really want to get the best possible result. Tailors and companies, automotive customization to cut leather and things like that, architects to build models. So our scissors is found in the offices of people that really care about the results globally. So we've now talked about product. I want to wrap it up with a part of our portfolio that is cooking. Cooking is about 10% of our business, profitable. And again, you see here our nod to our cutting competence, knives, scissors is interesting. I've just been to Korea in Korea, a lot of food in the kitchen and on the table is cut with a regular scissor instead of what we would cut here in Europe with a knife. And then Gerber. Gerber is about 6 of our business. You saw it earlier on the category mix when I talked about where we are. And within the Gerber brand, more than 80% of sales is in cutting tools or cutting-related tools, so knives and multi-tools. So if we move from product, the physical product now to the brand, our brand is present and highly regarded. So the National Collegiate Athletic Association, so college basketball, they have a custom that when a team wins a major title in the U.S., they would cut the net from the game and keep it as a memory for that title win. They have an officially appointed scissor for that, Fiskars. In the U.S., we are also on the teachers' list. So every year, when school kids, they get a list of equipment they need, Fiskars is on that list. And then if we go to the other side of the Atlantic, in Finland, in '25, Taloustutkimus named us as the #2 most reputable brand in Finland. We've done a number of changes to our brand management organization, which I'll cover in a second. And this is a testament to that what we're doing is working. We were 8 the year before. So we're up from 8 to 2 in Finland. And we're winning consumer tests in other areas, too. Test factor in Sweden, an important market for us, in Germany, in Poland. So our brand has a reputation for quality and design and is acknowledged by the people in the marketplace. Brand management will have an even more important role in our future. So we are very good with product and design, and we want to up it even on our systematic brand management. And so I talk a bit about the numbers and the quantity, but then also the quality. Before I do that, I want to talk about how we handle cost. So when I came in, in January, we looked at what are our strategic priorities. You saw we have a relatively diversified portfolio, but of course, that always lends the risk that you try to do too many things in too many places. So we've defined a narrow set of priorities. What are the priorities we really have to double down on because this is where we have an overproportionate return for our effort and investment? So we defined our strategic priorities, and then we looked at our organization. Post-COVID, there was a contraction of businesses, not only for us, but for the market in general. Of course, that created a lot of turmoil, organizational changes. And so we said we need to streamline our organization to be able to perfectly set up to execute what we've now defined as priorities. We implemented this multiple ways. And as a result, we have lower costs, but happier people. So we measure every month in our town hall if people -- our own internal people, it's a global town hall, if they agree with the direction -- if they agree with the direction we are taking, and if they know what their contribution is to it. It's on a 5-point scale. And since we started this in January '24, we've improved it by almost 1 point on a 5-point scale. So our people are clearer. They agree with the direction, they know how to contribute. And our employee engagement score also is up. So we aligned our organization. The saving out of that gave us the freedom to do 2 things in parallel that are usually conflicting. We were able to defend our profitability with everything that's going on right now, and we were still able to invest more, what Jussi alluded to earlier, into our future. And so when you look at the quarter 1 '24 as a base, we are now 50% higher media invest than then. So since I'm here, we've increased our media investment by 50%, admittedly from a relatively low base, but you all know what happens if we have great products and we tell more people about it. So we are very excited once the tide turns to see what that then unleashes when we also have a bit -- just a neutral market. We're not even asking for a tailwind when we just enter from a negative to a neutral market, and hopefully, at some point in time, also a bit of tailwind. Yes. So what does this do now if we look at our EBIT numbers? So if I focus first on the green line, that's our EBIT. profitability, so in percent. You see on the screen that we are substantially above pre-COVID times and that we actually -- it depends on how you want to read it. I want to read it that it's slightly up, but we are actually able to defend our profitability in a market that is not exactly helping. We have pressure on the top line. We have pressure on the cost and yet we were able to protect our profitability, which means that we -- while we were investing in our future, more media, also more R&D, you will see it in a second, we were able to defend our position in the top of our peer group when it comes to profitability in these difficult times. And while as you can see on the orange graph, our sales were under pressure. And so if I draw a quick interim summary before we move on, so we managed to take cost out and still have happier people that are clear where we go and what they need to contribute, and we were able to defend our profitability on sales decline while investing more in R&D and media. These things are usually conflicting, and I'm pretty proud of my team what they were able to pull off in the time we've worked together. So let's now look at what's next. To drive towards profitable growth, which is our ultimate aim, we have a very simple model, 3 pieces essentially. We want to continue focus on innovation, expand our portfolio. We want to be present in more retailers. So broader distribution, deeper distribution, better quality of distribution. And we want to drive awareness with media, with advertising. So in other words, we want to serve consumers with more products they can buy from us in more places and let more people know about it. And if we double-click on the first part of that, so innovation, over the last 20 months, we were able to more than double our innovation pipeline. We will show you 4 examples in the following, but we start with a little video. So that's our new top-of-the-line product, the Fiskars Ultra Axe. I used it this weekend. I can still feel it. If you have an old woodshaft axe in the olhack and you buy this and use this, I guarantee you it will be a revelation. This product is incredible. And so this is our new top-of-the-line range. And as you probably saw in the advertising, we are using this to give people an argument why they should buy this instead of woodshaft axe. You saw the demo. It truly is sharper. It truly -- you can truly drive with the tank actually over it. It flexes back. You can not separate the head. And I have myself had a woodshaft axe, an old one that dried, the wood dried. I was using it, and the head flew away, and on the other side where my kids were playing. You appreciate that this head cannot be removed from the shaft once you had such an event. Now I hope not everybody has that experience and then buys our axe. I hope they buy before that. But this is really one of the products that we have that we think will really make a difference in our axe category and start harvesting the 90% of the market that's still out there for us to capture. So it is -- you can tell I'm convinced this is a great product. It actually has an innovation, which comes to the coating. When you want to split wood, a common problem is that you get stuck in the lock. If you don't split it, this doesn't get stuck. So there's a coating on it. So it either glides through or it kind of stops at the top, but it doesn't get stuck, which makes it far more convenient to split locks. And the coating makes it more slippery, so it's easier to do these on a stack. So I was talking about the revelation and that's the technology. There are coatings. Our coating lasts more than 5x longer. So you can use it for a long time. It doesn't rub off. So you have this slippery effect for much longer than you usually have. If we go to the next example, urban gardening. Urban gardening is on the rise, rooftop gardening, growing your own herbs. If you're on Instagram, you see all these advertisings for tools that with lighting and everything. This is really a trend. And so we are looking for subcategories where we have a right to win, where there's in-build tailwind. Urban gardening is one of them. We've launched a number of products in this area. And so from retailers in the U.S., you see here some of the star ratings. Usually, if you're a brand manager of 4.3 is what you're looking for, we're getting 4.9 and 5s by a number of consumers. So we really got this one right. And as it is on display, I talked earlier about demonstrated consumption, you want these tools to look good because you see them, you don't put them away. And so this is where we really can apply our gardening knowledge, but also our design capability to deliver consumers something they want to have. The next example is pet care. Those of you who have a pet know this is a very emotional category. It is also a growing category. And one of the key concerns pet owners have is that when, for example, they cut their clause on the nail is that they hurt the pet. And there's an effect that some of you might know is if you want to cut and the tool that you have isn't sharp, you basically squeeze the nail. And so the pet starts trying to pull the p away if you have a dog. Our cools don't do that. They do a clean cut, and so you haven't actually experienced that this product is what you're looking for. We've launched now -- or we're in the process of launching 18 products. They're hitting the stores as we speak. Here, those of you who are based in Finland, which I understand is pretty much everybody. If you go to the retailers, you will be able to see it in the next days if you haven't seen it already. So it's rolling out as we speak. And we have very positive feedback from everybody who's used the product about its quality. So and then I want to go last but certainly not least, what is particularly exciting for us is our entry into power. The world is motorizing. If you think about a car today, the seat is electric, the windows are electric, the hood is electric, the trunk is -- everything is electric. And that is also true in all categories. Everything is motorizing. And so we are now going into this space, too. There are players already out there. And so of course, one of the questions that you have in mind probably is, okay, so why us now? Why now? And how do we think we win this? And I believe that we actually have an advantage that we were able to see what everybody else did because we could spot all the issues. And I believe that there is no player in the space today that either has the garden cutting inside we have, as evidenced on our manual business and/or the focus. There's a lot of players that basically have a product in our space, but they are construction-focused. They don't really know how you do gardening because they're mostly about carpeting and building drywalls and construction business, or you have more technology-based companies, people that had a battery, particularly the Asian suppliers, they have a battery or motor, and so they're coming more from the tech side, but not from the gardening inside. So I think we have an area where we double down now, where we have a unique competence to cover. And I want to cover 3 aspects how I think this is evidenced. The first thing is, of course, we've compared our product to the competition out there, and we are delivering the top-end cutting performance that you would expect, both in terms of force but also in terms of duration. You will see this later, those of you who are on the product show, we have you can basically use the battery without charging for a whole day, which is when you have a professional landscaper, a pretty compelling argument. The handling, a lot of the tools that we see in the market out there are not really based on the inside of how you handle tools. Particularly when they get long, weight balance is very important. And we see a number of competitors that basically scrapped a pruner to a pole, and you have all the way at the head. But now imagine when you're reaching out 2 or 3, you just can't hold it. Like from a physics point of view, it's very impractical. And so we have a very different approach to that, and we think that is superior is our belief. Then there's a question about battery system. We don't have a battery. We have a power bank. So we have a power bank that happens to double as a battery for power tools. So all the other players have a battery that they can only use for these tools. That means probably 350 out of 365 days, these batteries sit somewhere not used. And they're not exactly cheap. And so ours, you can use daily. You can charge your phone, you can charge your laptop, you can use it when you're gardening in your gardening tool. And then you also don't need a bulky charger. One common problem is that you have one battery charged, you forget about the other one. And when you want to use it, you basically uncharged. All you need for ours is your phone charger. In USBC, you plug it in, you charge the battery. If you happen to have more than 1 charger, I have 5 or so, you can charge 5 batteries at the same time because you can use your standard USB-C charger. And given this is no European standard, we can be fairly certain that this is standing the test of time, which is nice because 5 years ago, that wasn't the case. So us coming now gives us the advantage that we see where the -- where everything has landed, and to now do what we think is an offer that is really distinctive and relevant in this market space. We watch another video. So this covered the first part of the 3-part model, innovation. Let's now look at POS. I said before that we are looking to expand our retail presence. more doors, broader portfolio in each of the retail outlets, and higher quality. Our fundamental approach is that we want to be where the shoppers are. And that means not only off-line but also online, of course, but it also means at different price points. So we're looking at are we offering good, better, and best. And the Ultra Axe is an example of how we added a new best, and now we have, with our A-Series and X-Series, and Ultra, we're offering good, better, best. So different price points and then also different use cases. Some people are just not doing so much pruning than others. So we're covering occasional usage products at a cheaper price and then also heavy-duty products that we know will last for a very long time in adverse conditions. We talked about the number of doors that we want to expand and the breadth. What I want to double-click on is the quality of distribution because we know that brand building isn't just an advertising task, it's also primarily actually a POS task. So at point of sale, you need to get the perception that this brand is offering good value for money. So delivering the quality for the price and also clarity of why should I trade up if you have multiple things on offer. So we are very much focused on improving the quality of our POS presence. We have something that's called the ambassador fixture. So it's basically a shop-in-shop offer for our customers that we have installed in a number of places in Europe. So if you go to DIY retailers here in Finland, you would see them most often with very good POS in Finland. We're rolling this out, and we have now basically made a change in the U.S. where we didn't have any of those. We have partnered with one retailer where we're now rolling out the shop-in-shop. They have national distribution in the U.S., and we have now more than 200 installed, and we keep counting. So POS quality to bring to life what I tried to explain here earlier in terms of our points of difference and why you should pick a certain product from Fiskars, and why Fiskars in the first place is a key priority when we look at the second bucket of our 3-part model, which is POS, online, offline. So we have a physical model for brick-and-mortar retailers, but we also have a virtual shop-in-shop, if you want, for -- to tag along with the retailer websites on. I should probably mention here that 100% of the traffic we generate goes to our retail partners. As I said earlier, we don't do DTC. So we are really driving traffic to our retailers, and they noticed that I'll cover that in a second. So I'll cover that in a second. It's pretty much now media, the third part of our model. We have great products, but we have an opportunity to tell even more people about it, which is why you saw we've increased our media investment. We've changed our structure. We've brought in additional capability in the media space, for example, we in-house that. We have now an own media team. We call it the media town. We've overhauled our media mix. We know which media channels give us the best return on investment or on advertising spend. We've changed our brand management organization, and we're in the process of also altering our agency network. We have now implemented a number of changes; more to come. But we can also see the results. So I earlier talked about our most reputable brand score here #2 in Finland. But what's very encouraging is when you look at the middle of the slide, this is sales change versus last year. So the -- in brackets, we indicate in which country this was. So this was retail results on products we supported. And you know the macroeconomics. So in general, sales are rather down. And these are some of the numbers where we supported certain items with our approach. And the retailers feed us back that they don't really know what we're doing, but it's working. In an environment, where they don't see this from anybody else in our peer group, because everybody, because of the macroeconomic situation, is, of course, a bit in consolidation mode. And because I think we generally did our homework, we're able to invest against the trend, as you've seen in the numbers before. And we are now -- that's why I'm, by the way, excited about the current situation because it gives us a possibility to shake the tree. Nothing is worse if everything is settled and stable, because then you can't really move. And we now have this catalyst of change to show retailers why we're the partner to play more within the future because we're investing, because we have innovation, because we're doing all the things they are looking for desperately for their own needs. And so they feel us like across Europe and in the U.S., we're doing the same thing, as you can see here, they say it's really working. And so they get excited, and they want to give us more space. And this is how we then want to get the whole wheel spinning, a virtuous circle. We have more innovation. We get more space in retail. We're telling more consumers about that we are there and that they should buy us, which they then do because it works. We get more innovation, we get more space, and the whole thing starts spinning, and we're back to a profitable growth model. That's really our approach that we are currently pursuing. Now what have we covered? So we are a brand of a long heritage with a reputation for functional quality, aesthetical value, and design. We think we have industry-leading capability when it comes to innovation, not the least evidenced in our very long survival in the marketplace. We've adjusted our commercial model to serve our consumers. So both the shoppers at point of sale and the in use, the actual user, which is not always necessarily the same person. And we are doing so by creating retailer value, category value. So it's not only attractive for us, it's actually also very attractive for our retail partners. So we have synergistic goals when it comes to developing the Fiskars business. While doing that, we were able to do our homework on the cost side and on the cash flow side. So we've delivered robust financials in the current environment with proven control of cost and risk. And that, I believe, gives us a position that we are very well set up for growth in the future, profitable growth in the future from more innovation. We'll give you a glimpse in a moment. From more distribution, higher quality distribution at POS, and from telling more consumers that we exist and what differentiates us to buy us instead of the alternatives out there. That's what I wanted to cover. Thank you. And with that, back to Essi.

Thank you, Stefan. [Operator Instructions]. We already have some here. But maybe if we start from the live audience, and let's just wait that everybody gets settled here. Are there any questions here in the room?

Very interesting presentation. I'm just curious because I'm not actually sure that in which country you are located.

In Stockholm and Sweden.

In Sweden. Okay. But then a little bit given that, I mean, U.S. is 50% of your business, where is current, like if you think about like how you divide your time between the different geographies, I mean, how is that done? And then maybe as everybody is very interested about the -- like the consumer environment. And I think, I mean, now reading quite a lot the transcript of consumer companies, I think people are saying that especially in the U.S., it's very diverse that I mean low-income classes are suffering, and then the higher income classes, I mean, they probably spent more prudently, but still have money to spend. So if you could a little bit give a color on the consumer outlook in different geographies as well.

Yes. So on the first part of your question, I literally spent myself 50-50 between the U.S. and Europe. I'm also there very frequently. And that means that covers actually both Gerber on the West Coast and not on the East Coast, but to Chicago, our fiscus business. So -- and I'm building an organization that represents that too. In the past, we had set up so we try to manage the U.S. out of Finland or try to manage Europe out of the U.S. And we are now really working on a system on an organizational setup that is double legged. So we have R&D on both sides. We have brand management on both sides. I internally call my 2 brand managers on both sides, half a CMO each that need to align on where we are taking the brand. So we really -- we're not running one or the other side. We're really trying to treat it as a global brand, but we are low for differentiation to be locally relevant. That's really the driving force. When it comes to the environment, I think we all are a bit surprised how well it actually goes in the U.S. is what we expected after the early days of the tariff regime in April. We have a lot of leading indicators we look at, consumer sentiment, spending data, interest rates, everything you could possibly look at. So we're following the market very closely. We get real-time data, particularly from the U.S. when it comes to sell-out numbers. So we have our ear on the track. And I think we have a very good read of where the business is going. What we, of course, don't know is how the policies change, given that they haven't been particularly consistent recently. But we take it as a sportsman. It creates an opportunity for us, never waste a good crisis. Every disruption creates an opportunity if you're ready to grab it. And so when the tariffs were announced back then, we -- within 48 hours, we basically moved half of our organization of the U.S. from other tasks to a task force to refootprint our supply chain, which is one of the reasons why you saw these robust financials. So by now, we've solved more than 99% of our portfolio that was sourced originally from China. And we are getting actually additional distribution from our U.S. customers because they feel our plan really is sound and they can rely that we can ensure supply also if circumstances would change again. So I think we are well set.

And you had this 12% growth from the U.S. in Q3. Was that I mean, attributable, I mean, to be successful, I mean, back-to-school campaign? Or do you think that is a sustainable level?

So we will not be double-digit growing on a going basis in the U.S. There's, of course, always a lot of underlying factors. Inventory, everybody had a bit of a post-COVID reflex on the first announcement of tariffs immediately, all the retailers were like we need to be tight on inventory. So that's now in the base. We don't expect it to go worse or better. But I think the -- we are looking for moderate growth, low to mid-double digit on a continuous basis. So I wouldn't read too much into a quarterly result. But I think we're on a good path in the U.S. to get to our target rather short term.

And then, I mean, given that you had a headwind from the tariffs in the U.S. And I think, I mean, if I look at your numbers, you've been able to increase the prices. I mean to match at least I mean some of the tariff pressure. But still, I mean, you read the statements from the Walmarts and like saying that I mean tariffs won't impact their pricing. So I mean, how should I read this?

Yes. So I think the -- we have -- you saw in our innovation pipeline, we are trying to move our footprint to categories that have intrinsic growth, tailwind even if we do nothing. And we expect that to offset some of the headwinds that we have in other areas. So of course, there's a lot of things written about what pricing or pricing is not happening in the U.S. I can't comment on that for the reasons. But I think we are able to, as you saw in quarter 3, manage our gross margin to where we need it to be, and we continue to work on that.

And then my final question is that, I mean, Uureausses, building this organized, I mean, legal structure, I mean, for the both of the divisions. So what do you think is the biggest benefits for Fiskars to actually have the legal structure in place to be like your, I mean, own business?

This is actually a passion topic for me because what -- there is this theory about if you centralize things, you have more synergies. The truth is there's also cost of complexity. And what I feel and what I believe is that what we are now doing is we're getting actually to the sweet spot. There's still a couple of things we do on a group level that make perfect sense. But at the same time, we are creating the speedboat and the agility and the nimbleness to quickly react to market changes in areas where we don't need to have a long internal alignment process. I think we're just moving closer to the sweet spot between synergy and independence, and my team feels that too.

We have another question here.

Joni Sandvall from Nordea. Maybe a question on the gardening power tool market. What is the size of the market? And what kind of shares you are maybe looking in coming years? And is there a risk for cannibalization on your, let's say, manual tools?

I take it in reverse order. There is a risk, but if a prune is EUR 20 and the power pruner is EUR 200, we are very happy with cannibalization because 1 for 10x the revenue, that's pretty attractive. So we can -- there is no limit of how much we are ready to cannibalize ourselves because it is financially attractive. When it comes to the tool market, so there is no official statistics on it. When you look at the power -- the big power tool companies together, they are probably eating a cake in the size of EUR 50 billion a year. If and when we have developed our power business to EUR 100 million, it's not noticeable to them. So we don't think that anybody will react to our entry because they have bigger fish to fry, all of them. And we believe that we have a competence in an area that they can't match because they're not focused, what I said earlier. So I think for us, we can generate significant growth while everybody else in the market will not feel the need to react to us because for them, it's just not big enough, which is a pretty attractive position actually to be in when you think about it.

Then you went through about your -- how you are aiming to increase point of sales and stuff like this on this front. Are you also -- how -- let's ask like this, how far you are with your investments within the retailers currently in the U.S.? You said 200 and growing. What's the target level?

Yes. So our first milestone we're now going for is 500 versus the 200 plus we now have. It's not really -- we don't have a target. You can always do payers better. And we -- I consider this to be now the ignition of a new journey, we want to keep doing. And when you look at other companies in the power place, there are some that have pulled this off for 10, 15 years consecutively. So we are not really -- this is not a one-trick pony or like a temporary thing. We want to now get on a new trajectory that we then fuel. That's really our model, the virtuous cycle.

And last question from my side. If the market remains as soft as it has been this year. What needs to be done in '26?

So first of all, our base assumption is that it stays soft. We don't expect it to go worse, but we also don't expect significant improvement. We are focused on what we can control. And of course, there is a bit of shift in dynamic. When people expect the economy to grow, they trade up. When they expect the economy to be difficult, they have a tendency to trade down. We are working with our partners to capture these consumers regardless of where they're going.

There's a question in the back.

Rauli from Inderes. Just one question from me on the financials. As Jussi showed, Fiskars' division is doing quite good margins and returns on capital already. So what's kind of your priority in terms of growth and profitability? Are you basically aiming to maximize growth at this profitability or returns level? Or how do you approach that?

So we have 3 targets. We want to sustain cash. We want to defend EBIT, and we want to fuel growth. We believe that in the midterm, the only way for us forward is profitable growth. And so we are determined to do that. But of course, we want to sustain cash and defend that. That's our current priority.

Calle Loikkanen from Danske Bank. Perhaps continuing a bit on that, I was wondering about the kind of the margin development, sounded based on the previous answer, that you prefer growth or margins at the moment. Is that the correct or incorrect assumption?

We prefer a profitably growing business, and in some cases, volume due to the cost structure that you have might trump unit margin. And in some other cases, it might be the opposite. So we don't have a one-size-fits-all answer. We're really looking at the subcategory by category. We're supporting categories individually also with advertising. So it's really a case-by-case and the answer will be different depending on the category.

So if you now kind of try to -- with new innovations and everything, try to push up volumes and sales, over, let's say, the next 2 years. Do you think that the margin -- EBIT margin would then -- should we expect kind of unchanged margin levels going forward? Or how do you view that side?

Yes. So I think we're not getting into guiding territory. We have obviously not guided beyond end of this year, February '26, we will issue the guidance for '26, and that will kind of move us step by step forward. As Steffen indicated, for example, with power, the unit cost, unit price per solving a consumer's problem, i.e., cutting trees, for example, is way higher. And from that perspective, when we do development, we do not development that's not intended to dilute our business economically to the contrary.

And then perhaps just on the final question on the profitability side. Would kind of the improvement in profitability or margins come mostly from sales growth, volume growth? Or is it like gross margin expansion? Or kind of what's the main driver for -- I mean, I'm not talking about next year or this year, but next 3 to 5 years.

Yes. So the general direction is that we want to improve our gross margin. We want to have a structure that makes more room for investment into R&D, into media, and we want to defend our EBIT margin, which means, in general, we are looking to expand our gross margin. When it comes to future categories, we expect every category to at least pull its weight, if not more. So every category we go into has to be internally competitive when it comes to the financial structure. We will not go into categories that are dilutive to our gross margin mix, if you want.