Fiskars Oyj Abp (FSKRS) Earnings Call Transcript & Summary

Hello, and welcome to Fiskars Group's Capital Markets Day. My name is Essi Lipponen, and I'm the Director of Investor Relations. Today is an exciting day. We have just published our new financial targets for 2026 to 2030. So we have a lot to share with you. In addition, this is the first Capital Markets Day with operationally independent business areas. So that means that we will also have the business area CEOs on stage today. But let's look at the agenda for this afternoon. First, we will hear from the Group's President and CEO, Jyri Luomakoski, who will present the group's role and priorities in the new operating model. After that, the group CFO, Jussi Siitonen, will continue with the new financial targets and will present them in more detail. Following group presentations, we will shift gears to the business areas, starting with Vita and its CEO, Daniel Lalonde. After that, we will have a short break of 10 minutes. When we return from the break, Dr. Steffen Hahn will present business area Fiskars and its priorities and growth model. And finally, the group's CEO, Jyri Luomakoski, will present the key takeaways after which is it's time for a joint Q&A. I would also like to highlight that in addition to the Q&A, we have reserved some time after the business area presentations for your questions. And we will take questions both from the live audience as well as online, via the chat function. The official part and the webcast will end at 4 p.m. at latest. I think now we are ready to get started with the presentation. So please go ahead, Jyri.

Thank you, Essi, and warm welcome also from my side to our Capital Markets Day. To frame a bit the situation, we are not here giving a mid-quarter trading update. We are here not revisiting or changing or doing anything with our guidance, that was published after Q4 in February and reiterated over Q1 in late April. So now view and look is forward-looking and into our strategy period, '26 to 2030. Just as a quick reminder, you heard two BA CEOs will be on stage. Steffen being in charge of the Fiskars part and Daniel having from the slide, a bit bigger part and also from the revenues and quite many brands under the umbrella of our data Vita BA, but this is just a reminder, and you will hear way more about this later on today. Our footprint, we are quite well spread out. I don't like to call us global player because you see some quite big spots on the map where we are not present with our own people. own teams, definitely, there are consumers in many geographies in the lighter color using our products. Europe, still slightly above half of our revenues coming from Europe, 28% is the last 12 months from Q1 coming from Americas, dominated by the U.S. and then Asia Pacific, 20%. But the splits are quite different when you get later on today to the BA. Channel-wise, majority of our products in reaches the consumer through the indirect channel, i.e., distributors, retailers, wholesales. These players have many names depending whether on which side of the Atlantic, you kind of call them, et cetera, but shy 1/3 goes direct to consumer through our own stores, our own e-comm. And business area split of the revenues 46% Fiskars and 54% EBITDA. When you look at the two business areas, you might wonder what they are, as we saw so on the kind of ad hoc showroom as we built it here for you quite different, why are these together. We see different financial profiles, different levels of gross margin different levels of fixed cost in the operations, Jussi will address that later. When the DNA of Vita is in the global iconic desirable brands across the high end homeware categories and the fine branded jewelry, we have functional innovations in the gardening outdoor, seasons and creating and cooking categories in Fiskars. The channel route to market, we always need to win the consumer's heart, and that's what we do every day, but then how physically we reach the consumers' hands is quite different because the direct-to-consumer is a big part of the Vita business, while it has basically no material role in the Fiskars business. And then the balance between what we make ourselves, what we source, there are differences. So we have a kind of relevant presence in both BAs with our own manufacturing but also sourcing using third-party contract manufacturers, et cetera, has a big growth. And the geographical presence is quite much different. And then when you get to the seasonality of these businesses, 2/3 of Fiskars profits EBIT measured by EBIT are made in H1. So H2 is kind of low season, and very much inverse even more extreme, more than 100% statistically of our annual profits in Vita is made in H2 and H1, we should be kind of turning the hearing off, et cetera, because the EBIT doesn't support it. But then jointly, together as a company, Fiskars Group 40-60. That's already something that I would call way more bankable and using these type of aspects of financial performance, how it's split into the seasons and into the quarters of the year. And there is a very clear glue when we look at design excellence. Some of these are kind of aesthetically design items, beautiful objects that we do. We are many of us who also love the functional designs that we see in Fiskars and design is a broad term. It's not only the stakes, but it's designed for functionality and creating the fun effect working with some of our tools. All of our brands have a deep heritage. Youngsters there are to brands that are founded in the 20th century, 1904, Georg Jensen and then Gerber is in the 1930s, late 30s. And then dating back Fiskars 1649 when the journey started with the Fiskars brand in the village of Fiskars. Second oldest brand, Rorstrand celebrating now 300 years. So these are brands that have a deep heritage and they are authentic. It's not kind of AI generated interned design and then have a contract manufacturer doing some stuff and charm the consumer. These are real things. Consumer centrism and the tool to get to the consumer is brand in both cases, Vita Fiskars. We share our corporate purpose, our values, and we all are committed to sustainability in our business in whatever we do, because running a 377-year-old company, if you don't think about sustainability, how can you then plan to be in the game for the next 377 years. it's an existential topic for us. And it's an existential topic for all of us as human kind. We have strengthened our climate ambitions actually tightened or raise the bar. Safety, we strive for 0 harm in our own operations, 2.8 is the index per million workers of hours worked, but it has a commercial dimension. So our distributors, there are many consumers who are aware they require that when they make a choice, they consume that they make the sustainable choice. It's been a bumpy ride. This is the period visible for the last long-term financial targets, and Jussi will dive deeper into the success rate, which is not great. We had the boom of COVID, the pandemic home nesting, then we had the hangover, then Russia attack to Ukraine. Commodity prices, consumer confidence, having it swings. So it's not been, as I said to someone somewhere lately, it's not been an only uphill battle, but it's been a downhill slide when you look at the profitability curve. And that's something that we need to turn, extremely important. We have been making quite big changes into the operating model, how we operate as a company. Still 5 years ago, we were basically an integrated consumer company. Now we are a group with two operational independent business areas, which both you could say are each of them are integrated consumer goods companies. Viscose corporation, that's the stock you can buy at the Helsinki. NASDAQ OMX Helsinki Exchange is the listed entity and provides some group functions, but the accountability for business performance lies within the BAs. What did -- why did we do all these changes? It's been -- so a lot of work actually getting the incorporations of the entities done and a lot of ours around IT changes that the invoices go from the right company to the right customer taxation-related topics. It's really the full business accountability. We want to increase speed. And I think we have a few proof points here. For Vita, we've seen a rather significant cost-related transformation program launched in February and the speed, how that's been executed is so much easier when it's encapsulated EBITDA environment. Similarly, in April last year, Liberation Day, new tariff regime for the U.S. came into force. The speed of the BA Fiskars teams were able to find new bases, new sources, for example, outside of China with lower tariff regimes for the U.S. market and qualify those suppliers get the customers convinced that we have the right stuff, and it's as good as the previous one. This is when I talk about speed, what we want to achieve with this structure. Dedication, not too many years ago, we had mixed sales teams and a global kind of a matrix around sales, et cetera. did not prove to be that successful, maybe save some costs, but also saved us from growing the sales. Now we have three consecutive quarters of sales growth, like-for-like growth in BE EBITDA. So there are some things happening as a consequence. You've seen maybe somewhere here in the back, some of our new Fiskars products, the cycle, how quickly from innovation to market, we've been able to get those and not only market to our showroom, but to the consumers, to our distributors, this is again a proof point that focusing on the right things increase is very much the likelihood of delivering on those things. Transparency, measurability. That's why we are here today. We have today published our long-term financial targets with some of those targets relevant to the BAs. And this is not a one size fits all because averaging everything doesn't make any sense as we saw somewhat different type of businesses. Certain commonalities, but when you get to the financial profile, definitely not. And with independent legal entities, so our Fiskars Corporation has two subsidiaries under which all of these both BAs basically are that gives also the structural optionality if we want to make any moves in any direction. What does the group do except the range Capital Markets Day? And so to speak coffee here. We are the, as I said, listed parent company of the group here, when we manage performance, then strategy, establishing a strategy and the framework for reporting is certainly following also being a public company, setting the ambition level, pushing for improvements and challenging prioritization. Portfolio, it's about allocating capital and shaping the portfolio, where to push on the brakes were to accelerate and where can we get the best return for the capital. Liquidity, long-term funding. So we had a question at the AGM from the audience. They -- now you have two different subgroups, so why aren't you listing those both to the stock exchange. We all know how costly it is to operate a public company and 500 million, 600 million businesses separately, are not really that attractive on the equity or debt capital markets. And when you look at some of these financial profile topics like seasonality, there is a risk mitigating complementing aspect coming from this business. And then we as a group have to ensure we are the listed entity. So there is enterprise risk management processes and many, many requirements. As we know, we get always new ones from the regulators to comply with. And that's not fun kind of free of charge, but now we have optimized that we paid those costs only once. What are our current priorities. So Daniel will talk more about EBITDA's turnaround, which has been openly flagged that there is a need, as you can also read from the numbers. BA Fiskars has shown resilience and margins that are beating most of the peer companies in the categories where Fiskars operates. Growth is in that market has been a challenge to us and supporting Fiskars returning to the growth trajectory is an important priority. Group functions here, we need to ensure that we are cost efficient and cost effective. And then when you look at our balance sheet, leverage numbers are off spec so to speak. So driving cash flow and reducing leverage is in our priority box. This is the number of things you can base with one -- fingers of one hand, still count. So in a brief summary. So Fiskars Group is acting as a as an effective portfolio and capital steward, developing its businesses and setting financial targets with a long-term perspective. The group's BAs who are closest to market and to the customers, to the consumers, drive BA strategy, build brands, manage customer relationships and the day-to-day operational performance. And this combination, we believe, with certain central oversight and empowered businesses is supporting our profitable growth, robust cash generation and creation of long-term shareholder value. With that introduction, pleased to call Jussi to the stage. So I had a nice overview, but now you have the hard facts available. Jussi, please?

Thank you, Jyir and hello, everyone here at Espoo campus and online. So in the next 20 minutes, I'll show you how we translate the strategy into new financial framework. The one we are committed to deliver, the one we are measured against. Three topics I will cover. First is that how we are resetting the framework what we have had in the past. Secondly, what are the new targets? ambition level what we have set now for the BAs. And thirdly, how do we get there? And I will stay quite high level with the fundamentals behind because then Daniel and Steffen will walk you through more in detail. If we start first, this is not refreshing the old target. This is reeling the new framework because the structure of the company and environment around it has changed. So the three forces behind this change. First of all, is that the last five years period concluded last year. So we owe you a new one. More importantly, the group structure has now changed. We have two independent BAs holding P&L accountability and then group acts as a portfolio and capital steward on top of these BAs. Then thirdly, operating reality, is now tougher than what we -- and admittedly, most of the consumer durable companies anticipate five years ago when we set the targets last time. So targets and ambition. I'm presenting they set today to reflect the reality, not the aspirations we cannot deliver. Before start even talked about the new framework. Let's have a point of departure. So I walk through how we performed versus the old target. We had four targets out of which we delivered on cash flow conversion. Two, we missed top line growth for this full period of 21' , 25' has an average minus 1.6%. So last year, we were flat. And then on EBIT target being the mid-teens, we ended up at 6.7%. both well below the targets. The fourth net debt to EBITDA, we managed to keep that at a targeted 2.5% MAX level until end of last year when it went up to 3.3%. Why? Two reasons, which are not excuses. So Jyri already explained, but the whole post-covid consumer sentiment declined in our core markets, core categories, especially when it comes to Vita categories, were the ones which pushed down both the top line margins and then also wind up our net working capital, leading to this net debt to EBITDA increase there. Our response, we have productions in place already to restore profitability and unwind working capital growth. New targets we are now setting. They are reflecting that outcome. So that was the first out of those three reasons why we changed the target. The second one is the new structure. This chart shows what we have been operating with and it's actually best summary on why we are moving to BA level targets. If I start here first on the middle panel, which is BA Fiskars. As you can see, net sales started decline in 2023. And since that continued coming down. At the same time, we have succeeded to maintain decent low double-digit EBIT margin in that business. So that shows that Fiskars BA is resilient, asset-light, well-run business, what Steffen is now leading. The left panel BA -- BA Vita same period, very different picture. Sales declined sharply in 2023, 2024, and then at the same time, EBIT margin compressed from about 15% level to 4% level. That leads to the turnaround. Daniel is now leading. The right panel is a consolidated group level, flat to declining sales than margin compressing to mid-single digit. A single group level number, would high and ignore the strength that we have in BA Fiskars and the urgency what we have in BA Vita. Jyri already covered that we have shifted from centralized matrix to operationally independent BAs. The structure is now complete. The financial framework will follow. The principles guiding the design, what we have had here is that when it comes to growth and profitability, the targets are set at BA level. not hidden by a single group KPI. Having said that, when it comes to our official guidance, that will be kept at group level. So we do not start guiding BA level numbers. When it comes to cash and leverage, bearing in mind the group role what we have here to maintain capital allocation take care of the funding those targets will stay at the group level. But with great BA level transparency, what are the drivers behind, especially when it comes to cash flow. And then with this model, both accountability and comparability of the business, is clear versus what it used to be. Tender new targets, a new framework, showing our ambition also for financial targets externally committed. On top of that, five regularly reported KPIs providing further transparency. Let me present the four targets one by one. Organic net sales growth only set at the BA level. Comparable EBIT margin set at BA level and the group is merely the outcome of those results. Cash flow now measured at free cash flow EBIT ratio. And then balance sheet targeted sales comparable EBITDA remained unchanged. The only change is that now it's measured at the year-end eliminating the quarterly volatility. I will now walk you through more in detail each of the targets, let's start first with the top line. The chart here shows where we have been, as I already mentioned, it from minus 6% to plus 3% last year. Over 4% growth if we take rolling 12 months end of March and then 5% only in Q1. The growth target set for BA Vita is now in this period to deliver for the 6% top line growth annually. The drivers behind is repositioning our iconic brands, enhancing those brand desirability. Then distribution expansion, both in channels as well as countries where we are underindexed. And then thirdly, optimizing channel mix and especially from a profitability perspective. Then on Fiskars BA. As you can see, we have been the mid-single-digit type of negative growth for a certain period of time. Now the growth target and ambition for BA Fiskars is in the range of 3% to 5% for this period. BA Fiskars is an investment case. We like to invest in acceleration of innovation pipeline because we already have a proof point that it works. We like to scale the core categories where we already have a leadership position in the market. And thirdly, we like to invest in category expansions there, expansion in the new agencies. So two different approach here. This is very much where we're benefiting from the existing restructuring, what we have as well as ongoing plan, and Fiskars BA is very much an investment case. So that's about top line, moving then to profitability. On profitability, we have three levers for improvement. First of all , Vita turnaround, Fiskars continuing resilience what we have in that business; and thirdly, more efficient group functions. So Vita, currently, there are a bit -- about 4% -- 4.2% EBIT margin target being at or about 12% by 2030. The levers what we have behind for that one, the big one is the ongoing restructuring, delivering approximately EUR 28 million savings there. Most of those will be there in 2027, roughly 1/3 already this year. And then, as I already mentioned, profitability gains from improved product and channel mix. Then on BA Fiskars. The target being there at or about 14% by 2030. You can see that we are already now at 13% level, which shows that actually someone might say that is this ambition enough. It is ambition enough because, as I said already, we will invest in top line growth in Fiskars BA. And therefore, we consider this EBIT target reflecting right, the investment need what we have there to deliver this top line. top line growth. When it comes to group functions target is to have this unallocated EBIT to approximately minus 1% of net sales. And I'll get back to that on the next slide. When it comes to group target, delivering this at or about 12% by 2030. That's pure mathematics. It's a combination of those two BAs to get what we have. So we haven't layered up on top of that, everything is very much coming from BA's plans. This slide is actually for all those financial models that we have in the room or online, showing how different those two BAs are. What we have here is BA P&L structure for Vita, for Fiskars and then for group. Three observations. BA Vita has a stronger gross margin. We are a bit north of 53% there, but Vita also spend meaningfully more in marketing and sales, mainly because of the channel structure that we have. BA Fiskars gross margin at lower level, mainly due to the big box distributions, what we have, but that is very OpEx-efficient distributions we have there. Also, in BA Fiskars, we have simpler model in place, so it carries less G&A cost. Then on group level functions. Unallocated EBIT being this minus EUR 18 million or minus 1.6% of net sales. mainly consisting of employee cost and depreciation, what we have there, partially offset what we get from the forest. Target there is to get it down to roughly 1% -- minus 1% of net sales. Those who have been following the company for a longer period, might remember that we have said that when it comes to unallocated costs, it's typically EUR 1 million to EUR 1.5 million each month. Now the target is to be at the low end of that range. So key takeaway here is that the levers that we have are different in each BA and the framework we have put in place reflects that one. So that's about top line growth and profitability. Let's move then to the cash. We are expecting cash flow to significantly improve with a stable free cash flow EBIT ratio. And I'll start explaining this first -- explaining the chart first. So what you can see here on the bottom right is our free cash flow, how it's now defined, i.e., unlevered free cash flow and lease payment included, which means that the free cash flow, how it's now determined is roughly EUR 40 million less than what we have reported in the past because those lease payments are now part of free cash flow. The top chart shows the expected cash flow convention ratio. Free cash flow over rolling 12 months EBIT there is expected to be at or above 75%. The new way to measure it is less volatile. You might remember the previous one was based on the net profit. So it was much more volatile in that sense. Three drivers to improve our cash flow. On top of EBITDA, bearing in mind the top line growth, EBIT margin improvement. Obviously, EBITDA is one big driver there. But on top of that, trade working capital efficiency is the single biggest -- single biggest unlock of our cash what we have. And then CapEx discipline, keep CapEx now at or below 4% of net sales and the cap -- the group unallocated CapEx to EUR 4 million. So with the targeted net sales growth with a targeted profitability improvement and with the target free cash flow EBIT ratio, we expect that free cash flow will double from that -- from current position by 2030. When I highlighted the importance of trade working capital here, let's spend a bit more time on that one. Again, it's better to explain to Slide 1 because moving to the content. What you can see here is our trade working capital and net working capital as a percentage of sales. The top chart shows that we have now up from pre-COVID levels, which were approximately 30% there. We are almost 10 percentage points up from that level, pretty much unchanged top line. The bottom chart here shows the same in absolute terms. And as you can see, where this biggest potential is in inventories. They are roughly EUR 100 million up versus the comparison period throughout, and that's mainly in Vita.So once Vita can unlock the cash what we have there is we have an impact also at the group level. Meaningful progress will happen in 2027. So I'm also managing expectations here. This is not a short-term actions to get it back on track, but it goes to 2027. Then on CapEx here on the bottom right. As I said, we had -- or we have target to give it now roughly 4% or maximum 4% of net sales. Those peak years there '22 to '24 they are pretty much digital and IT driven, that cycle is now largely behind us. So the current level is a good proxy also for this '26-'30 period. Then net debt to EBITDA. And backgroud here, I said in the beginning of my presentation that we succeeded to keep net EBITDA at targetable until 2025. So what happened in 2025, was not that we saw a big increase net debt. Actually, net debt increase was quite modest there in 2025. But when we saw almost 20% decline in EBITDA it took net debt-to-EBITDA up to 3.3x. In the new financial frame, what we have built, EBITDA growth does most of the work and net debt decline is expected to be rather modest for this period. Target, what we have is to get back to 2.5x levels within the next two years. And we do prioritize deleveraging of the balance sheet in our capital allocation. I get back to that in 2 slides. So these were the four official financial target showing our ambition and where we are committed to. On top of that, I want to highlight 1 KPI. We will report more in detail from Q2 onwards. And that's return on capital employed. When I showed you earlier that it BA Vita, BA fiskars have quite different P&L structures. They do have it also when it comes to our capital employed. Let me first explain the group level numbers here. So as you can see, almost half of our capital employed is in non or slow-moving assets, be it goodwill fee trademark, be it other intangibles. And when we go to BA level, you can see that over 75% of our capital employed is in BA Vita. And out of that BA Vita numbers, roughly 60% is in slow or nonmoving assets. Fiskars built organically throughout hundreds of years is asset-light. The capital employed what we have in BA Fiskars because it's mainly working capital related. And then what remains at the group level is mainly the forest assets what we have. So this puts together the target we have set for growth and profitability. For Vita, bearing in mind that Vita assets are slow or not moving. For Vita, it's important to grow because that's the easiest way to improve asset turn, what we have there with nonmoving asset base. For Fiskars, Fiskars is already there. When it comes to returns, Fiskars is already there, I would say, satisfactory level with over 30% return on capital employed. Fiskars is an investment case. We need to invest there for sustainable growth to deliver this targeted 3% to 5%. So as I said, even though return on capital employed is not in our four core targets we are committed to. We will report this on a quarterly basis because this is the discipline we will apply also in our capital allocation. And that's a good takeaway then when it comes to capital allocation. If I start first with sources, and I have mainly covered them already earlier in my presentation, but the biggest potential we have to unlock net cash is in our working capital. Then all these cost takeout programs and efficiency improvements are the ones and then disciplined CapEx policy. So these are the sources of funds that we have. And how we are going to use these funds. First and foremost, to enable and secure organic growth, have enough spending power to R&D, have enough spending power to media there to boost the growth what we have, especially in Fiskars BA. Having said that, we keep also selective M&A in our toolbox, bearing in mind the commitment what we have when it comes to deleveraging of the balance sheet. And then when it comes to our dividend policy, it will remain unchanged, i.e., stable over time increasing. In summary, the financial framework for 2030 is built on a tougher operating reality and BA level accountability. BA specific growth based on brand enhancement and resetting the channel in the BA Fiskars -- BA Vita, and then innovation at scale in BA Fiskars. EBIT improvement coming from three sources, Vita turnaround, continuing resilience there in Fiskars BA and then more efficient group functions. On cash flow and balance sheet, as I said, reaching the targets, what we have for top line growth, what we have for profitability improvement and cash conversion that indicates that free cash flow, nearly doubling during this period by 2030. And then we get the balance sheet back to 2.5x levels in the next two years' time. Then on capital allocation, organic growth prioritized followed by disciplined deleveraging. So these are the targets and priorities, including then also the additional KPIs we start reporting now from Q2 onwards. Having said that, handing it over to you, Daniel.

Thank you, Jussi, thanks a lot. Thank you. All right. Well, good afternoon, everyone. So I'm Daniel Lalonde, CEO of Vita. I think I met some of you after a month, I started last year in Copenhagen. So I have a year since that time period. What I wanted to present to you today is three things, just a point of departure, where we're at today. how we've begun to lay the foundation for profitable growth and then talk about some of the path forward, some of the big levers that we've -- and the choices we've made to grow our business in a very profitable way. All right? So let me start. This is out [indiscernible] because this is our little mission of what we do at Vita. We build global, iconic and desirable brands across high-end Homeware where we're the leader today. and find branded jewelry through Georg Jensen, rooted in craftsmanship, material expertise in design, what we do at the core of our business, creating products people live with and collect. Think about the women, mugs and many other examples and shaping everyday moments and lasting relevance. So this is what we do. This is our mission. This is what we do every day when we go to work. We have 12 brands in our portfolio, and we've organized them into what we call three brand houses. And the brand houses are captured more from a design aesthetic of point of view and the first house being the house of Danish design icons. Here, clearly, it's Georg Jensen and Royal Copenhagen, defined by timeless Danish design, refine, sculptural, everlasting, pure enduring. This is where this business unit is housed in Copenhagen. Then we have the house of Nordic design Living, which is here. with beautiful brands that you know, the five of them in this house. And again, built on Nordic design DNA for everyday life, simple, warm, functional as all these brands do, and they're headed up by Head of Business unit here. And then last, the house of British and Irish design rooted in British and Irish design heritage character, craftsmanship ornamentation, contemporary renewal, et cetera. So these are design attributes and DNA codes that guide the development of these brands within these houses. So that's how we've organized ourselves. And it's also how we organized in the company today. So I have three business unit heads, each of these three houses. At a glance, Vita, Jyri presented some numbers. I'll go very fast because you probably know these numbers. If we look at LTM numbers to Q1 this year, so EUR 613 million in sales, comp growth, which is an organic growth of 4%, which is good, green shoots margin, which we'll talk aboUT later, we're about 5,000 people in the world. If I dissect our brand by -- our company by brand. So Georg Jensen is our biggest brand, followed by Royal Copenhagen, Wedgwood, Iittala, Waterford, Moomin Arabia. These are six core brands. So these brands represent roughly 88% of our business. So we've got to get them right. By category, I think it's the first time we show we're mainly centered. I've taken jewelry, which is Jensen, the only brand playing in high-end jewelry. If you strip that out, our biggest categories are tableware, home decor, drinkware and serveware, which is the core of our business. We have other categories, but they're very, very small today. By channel, again, as Jyri explained, we're mainly D2C-oriented about 53%. And interesting to note is the second biggest channel is e-com, which is also one of our most profitable channels and one of the fastest growing ones as well. And then by country, I think we've always given sales by region. So we've split it up a little bit more by country. So our #1 country in terms of sales is Denmark, followed by Japan, Finland, Sweden, China, U.S.A., Australia, U.K., and again, that's about 80% of our business, these top markets. So that's a little contextual of where -- what is Vita today, and I'll show you not an explicit detail like this of where we're going, but I think you can get a hunt of where we're focusing in the future. So our core brands, the six largest brands in our portfolio today are the following. I won't take you through them all in detail. The key message here I wanted to say is that our six core brands play in all of the homeware, high-end homework categories. So we play in all those four or five categories that I explained earlier. We've also worked a lot in the last six months to sharpen positioning of each brand. For example, Georg Jensen, which we've defined and position as the definitive Danish design house founded on silver with collaboration at it's core Iittala, finished design brand creating crafted statement pieces every day design icons and so on and so forth. So we've sharpened the positioning of all of our brands. In terms of presence, we're print in 80 countries worldwide, and we produced roughly 60% of what we sell. Through nine different manufacturing sites that you can see plotted here. There are two of them of which are in Denmark. From a distribution number, not value, we have about just under 1,000 points of sale in our DTC channels, mainly in concessions, which are operated in department stores, large department stores, where we run the business, the inventory is ours and the sales associates are ours. freestanding stores and outlets about 80 of each, maybe of those stores. In wholesale, roughly, we try to count them every month. We have roughly 11,000 points of sale in wholesale globally, and that's for all brands, of which about 300 e-tailers, so just wholesale partners that just play on the online space. So that's our footprint today. Where do we play? I presented this chart, I think, last year. We play in the high-end homeware category. Now this is a result of some framing of the market by Bain and Altagamma shows that the total luxury and high-end business worldwide roughly $1.5 trillion. Our category is pretty small within there. We're about a EUR 6 billion industry, high and homeware. And of that $6 billion, Vita brands, 12 brands together, we are the market leaders. We have a roughly 15% share of that market. I put in color as well the branded fine jewelry, which is a bigger sector, of which we're a niche player with Georg Jensen today. So how is this homeware business high-end homeware evolved over the past years? It was negative growth for many years from 2000 to above the mid 2015, '16. But from '19 to '25, it grew roughly 3% per year. The last three years have been relatively flat in growth. We have -- as we posted, as Jussi you've showed a little while ago, we posted a growth of roughly 3% last year on like-for-like sales. So we clearly gained market share last year, which was which was very good, and we are very happy with that, and that we'll continue to do every year. So that's a little bit of the context who we are, where we play. I wanted to share with you now some of the work we've been doing to lay the foundation for this -- for the turnaround. So here again, just to sit into the context, you can see our sales trajectory historical over the years. The light blue here is the like-for-like sales and the dark blue is the addition of Georg Jensen. So you can see it's been a negative trend in like-for-like sales since '23. Our EBIT you've seen before, I think it's important to stress by two things on the EBIT. We've had lower volumes than expected overall and that we have made conscious effort recently and at the end of last year is to produce less to produce less because we're very focused also on reducing our inventory, which is quite large and the number of days of inventory, and I'll show you a picture about that later. But we've had some green shoots, or some blue ones here that we're showing. Over the past three quarters, we've had like-for-like growth, like-for-like or comparable net sales growth. And it's been good growth. The quality of the growth has been through successful launches of line expansion to a lot of our key collections. It's been through a reallocation of assets and resources going to more profitable brands, more profitable channels, rather than averaging everything out. We made some very deliberate choices and many other activities as well. So it's been high-quality growth. It's not selling obsolete, for example. So we're very happy with this. And clearly, we have to continue for at least the next four years and then beyond. We've also announced in February, restructuring, or reorganization to rightsize the business, that's on track. In fact, we're slightly ahead of plan this year. So we have a very new and simplified org structure, that's already into effect. And here, it consists of three business units, the heads of each of the houses and then six global markets and we've moved from five BUs and nine global markets to 3 and 6. We also rightsized and selected several manufacturing and distribution sites. In Denmark, we've consolidated some of our sites for Georg Jensen and Royal Copenhagen, very high-end of them. In the U.S., we're in the process of moving through a 3PL in terms of logistics. And our Crystal factories also, we've reduced some of the cost base as well. So we're not sitting idle. There's a lot of movement happening to make this happen. Let me go back. I have a funny cryptic on my slides, but that's okay. We're also a brand-led organization that super, super clear. We have incredible heritage brands, and the brands -- the houses, the head of the Brand Houses are responsible for the future. They have antennas to the future on strategy, the product strategy, each customer experience the markets, execute the brand plans. So it's a very clear matrix with very clear responsibilities. It's made us as Jyri pointed out, made us able to go faster, more agile and to really home-in on the biggest opportunities. This is one of our biggest challenges because we have many brands, many markets, many channels, and it's about focusing on the big wins. We also have the plan that we announced in February about a restructuring plan. Worth roughly $28 million of savings and the run rate will start at the -- we'll be there at the end of next year at a full run rate. We're not going to stop there, obviously, and these are people and also nonpeople costs. So one of prioritizations that we have done recently is to prioritize our brands. Not all brands are equal. They're not all at the same level of their growth. And here, we've bucketed our brands into three categories: the global accelerators. Three brands. Iittala has just made it in recently. And these are brands that we feel are ready to scale. And here the axis is so that you get familiar on the y-axis, you have the relative financial performance and through different criteria on the x-axis is the potential to scale. They have the right product, they have the right brand awareness, likability, distribution, we're ready to scale. So these are the three brands where we're investing in to grow and they've been performing very well as of late. We have regional leaders, very strong brands, but that operate in a few markets, one market or two or three. And they're very profitable, as you can see. So this is great. So there's a discipline -- an approach of disciplined local execution, look at Rorstrand, which is celebrating 300 years this year, it's having an incredible year. It's great. And it's where it should be. Then we have the brand resets, which are five brands, which need to do a few things to revitalize the brand and the desirability and also get to the right level of profit before I scale them. So we don't want to scale a brand that's not as profitable as others. So there are steps to get there. When they get there, we will scale, but not until they get there. And what we are doing with these brands, just a little more color on the brands and the brand reset. I've taken the bigger ones, Waterford and Wedgwood, is we're rationalizing the product offer into much fewer collections and SKUs. And I'm talking about like 50% less. So we want to really focus the collections on the ones that our strongest to line extensions, activate them and make them successful. We're also developing a new price architecture to the Waterford line, which is an entry-level called Marquis. So there's a lot of working down the portfolio. on the product portfolio and number of SKUs. Markets, we're focusing on two or three priority markets for these brands, get the proof of concept and then extend. And last, and particularly for the Crystal factories that I know you know quite well is to align supply-chain, the capacity and capabilities with demand. And here, we're doing two things. We're optimizing I would say, the costs at the Crystal factories to date and also have very clear strategies to increase volumes into those factories, not only on Waterford or Marquis the entry level to Waterford, but also on brands like Rogaska and brands like the B2B business from Rogaska as well. So there's very, very clear plans. It's a very clear strategy. It will not happen this year, overnight. It will be something that will probably have a clear multiyear plan, but probably in the next couple of years. to reset and then obviously then scale. And the last point I wanted to talk about is inventory has been such a big issue for us. Here, we're plotting a chart on the days of inventory with a lot of history from 2020. So you see it has gone up. And we've only seen an inflection recently. Since Q2 last year, we're very, very focused to bring our inventory levels down and as a result of the days of inventory. All my leadership team have inventory and DOI as a big part of their bonus this year. So we're very, very focused on it and it's very material to all of us. What we've done is we've scaled down production to match demand. We've done that in Q1. I think we explained that. We have programs in place to sell some of our obsolete inventory. And again, it's not an average. Some brands are very well, doing very well. Some brands don't have enough inventory. But the ones that do have too much, we're really focusing on that. And then obviously, we have to look upstream to reduce the complexity of the collections. So there's a lot of work going on that, not only for Wedgwood and Waterford, but for the entire brands in our portfolio. So now if I project forward what's our path forward. There's a few trends that we see in our sector that I would call more tailwinds today. The first is -- and I go over these quite briefly is still this concept of cocooning. I think People are spending more time at home than they were three or four years ago. And that is a positive trend for us. There's the rise of expertly which is in and out of home, which our products are used for these experiences, either in the kitchen, in receiving guests at home, et cetera, et cetera, and in the B2B channels, too. What we've seen also is a lot of the luxury houses stepping into the home category. And we think that's good. We think that's good because this -- we want to grow two things, right? We want to grow market share within the high-end homeware. but we'd like to grow the pie. We want to grow the pie and our slice of the pie. And this definitely helps grow the pie. And lastly, we see a big trend in gift giving at the high end and a lot of our brands are very proactively involved in creating gift-giving moments. It's more than 1/3 of our business. We estimate that is all about gift-gifting. So we have a house as we're in the high-end homeware category, I won't take you through all the details of the house. But we have five or four pillars to drive profitable growth that apply differently to all our brands in our portfolio and the different houses. The first is about enhancing brand desirability. Without brand desirability, which is mainly driven by product, great desirable products and winning on social media, we need to start there. That's the essence of what we do. We have pillars and initiatives around building and expanding our distribution, about driving profitable channel mix and brandization. Brandization, I mean, mainly for the wholesale channel, when you go to our wholesale points of sale. We don't want to be displayed by category. We'd like to create shops n shops. So you feel are walking into a wholesale partner into a Royal Copenhagen environment into an Iittala environment. That's super, super important for us in wholesale. And last, we want to lock high-value revenue streams, and we'll speak about that either on B2B and the gifting part. So these are the actual pillars of our house. If I had more time, I would take you through all of the sub pillars and the enablers, which are super, super important to us. What I thought I'd do is I just would give you an example today of a an activation that we do within each of the four pillars, okay? So it's not exhaustive. It's just a few examples to highlight what our teams are focusing on. So on brand desirability, One of the essence there is about creating desirable products for the future and icons. So how do we build icons. And this is where our focus is today. So we start off, for example, in Georg Jensen with a beautiful piece designed by Bernadotte in 1938, a coffee pitcher. Beautiful. Great. But we're not going to let it stay there. So what we have done over many, many, many years, every year is we've built line extensions. We go to Candle stakeholders. We go to cutlery, bowls, tableware, glassware, toaster. I have a beautiful toaster at home and a kettle, beautiful products that was just in 2024. So every year, we activate it. We bring line extensions, make the franchise stronger we advertise it, we bring it into stores and create this space for Bernadotte. It's really, really important. Now you can tell a Bernadotte product, which we have some here, just by the shapes and the lines that you see. It's recognizable. And guess what? It's by far the largest collection within Homeware at Jensen and it's the fastest growing as well. So these are some of the approaches that our teams are working on. And we have many icons within our portfolio within all of the brands. I just gave you two pictures here. This one, you know all very well, celebrating a big anniversary this year, the Aalto Vase, Blue Fluted designed in 1775 as well is an icon, but they need to be enriched and the story needs to be told in many markets, they are discovering these icons as well. But not only important to work on and to build icons within our existing product offer, but we need to create new icons for the future, and this is what the teams are working on. The new Bernadotte for the future, the new Aalto base for the future. And we have across our six core brands, six creative directors. Their main job is to do this. So that on the product side. On the second pillar, which is our distribution. We have a very, very disciplined approach in the future that leverage the strengths of being a multi-brand portfolio. We are much stronger being 12 brands, then one brand, and I'll show you why. The first priority is prioritizing and focusing and selecting the key markets where we want to win. That means not selecting many others. At an aggregate level, for our group, we need to continue to win in the Nordics. I include Denmark in the Nordics. These are great markets, historical markets. We need to continue to grow there. We think there's a lot of potential for our brands and now in Japan and Korea. So these are priority markets. And we're resetting the growth model in the U.S. and China. We've had -- we've invested a lot in those markets, but we're changing having an inflection point on the model. An example is in China, we had a very strong approach on D2C stores, stores, stores and Tmall as well. And we've changed that a little bit to stress more profitable growth. So perhaps less stores, more distribution on wholesale and reducing a little bit the investment that we do on Tmall. So there's been a reset in the growth model in those markets, and it's showing some very, very tangible results. We also are going to strengthen presence in what we call the priority cities. There's 20 of them that we've identified throughout the world. and make sure we make big statements in what we call cathedral doors. Cathedral doors are Selfridges,Isetan and NK because I'm in Finland, Stockman, all these doors that receive a lot of traffic and our consumers, we need to make a big presence there globally. Second is leveraging the portfolio. So here, there's two big ideas. The first one is about bringing a new brand to an existing market where we can do that. So Korea, for example, Georg Jensen is not present in Korea today. Royal Copenhagen is very strong in Korea today. We have all the distribution that we need, all the key influencers, et cetera. So if we can leverage the portfolio and bring Jensen to Korea, and we will. Iittala to Denmark, the same thing. So there's many examples of how we're making this happen. And also because of our portfolio and our strength with our key partners, we're able to leverage that into, I'd say, commercial advantages, which is about having better spaces and better conditions, let's say, to transact. Last, there is -- there are white spaces out there. We're not going to tackle them in the short term. There's a lot to do now, but there's a lot of opportunities still existing in the Middle East, which is mainly the United Emirates, Saudi Arabia, not a great place right now, but we just had started before the crisis with Jensen and Royal Copenhagen to an incredible start in that region with the best partner. But there are other areas like Southern Europe, Southeast Asia. These are markets where we think there's a lot of potential, but we're not ready yet. So these are more midterm markets for us. Third pillar is about driving profitable channel mix and the brandization here, there's a different point of focus. So we want to really emphasize and choose two markets or two channels, which we think we have most potential and which are the most profit accretive ones that we have. And that's wholesale, again, with the strategy of brandization that wholesale and e-commerce, which are great channels, e-commerce is our second channel after wholesale. We're also in the process of having a common platform, Shopify. We've already put two brands on Royal Doulton and Moomin, and we have a plan before the end of the year at the beginning of next year. to bring all of our brands and markets on the Shopify platform, which will have some great, great, great synergies for all our brands. Physical retail is still important. We love physical stores. I love physical stores. but we have a very strong ROI lens on them going forward, i.e., if they can't meet a certain profit target, 4-wall margin target, then I prefer not to invest in building the retail stores. So there will be some, but perhaps less than there has been in the past. And last example is about unlocking high-value revenue streams. Here's a lot about gifting. So we have an annual clock in each country with the key gifting moments. We're activating all of them. Part of it is to reach new consumers, more frequency and to a little bit deseasonalize as much as we can our business by having a lot of gift-giving moments at the beginning of the year. We have a lot of examples here. I put one really fresh one. Royal Copenhagen fully did a Mother's Day or mother Mug, launched it 10 days ago, boom we sold out. We should have planned a lot more. So it's a massive success. So we're trying to get back into stock today. Moomin has -- had some of the similar examples. So these are great examples of gift giving in the first half of the year with our beautiful brand portfolio. So how does this work? We tried to give a small example to say, how does this -- how do you put this strategy into action. And one of the examples we used here, I like to use here is about Jensen. As you know, we acquired Jensen in '23 around this period. What we have done since then and particularly in the last year, on product, a real strong focus on the big four franchises and collections of Jensen Home. I talked about Bernadotte, but we've done the same thing with Cobra, with Bloom and Koppel. So a very strong focus on enriching these collections. We've strengthened the priority markets, really high-quality doors, few markets, but we went in full steam in them. We've also changed the equation or redirected the equation in terms of channel mix with a strong focus on wholesale and e-commerce, and we have closed on profitable stores. If a store can't make our profit target, and we have very specific product targets, our return on investment and 4-wall margin, we don't want to be there, simply put. So we've done that turnaround. And then the brand has created a lot of gifting moments, wine & bar is one example of a wine & bar set that was launched recently. So all of these actions together has led to some pretty incredible results in the past quarters. It's our fastest-growing brand today, which is great. It's also our biggest brand. So that's how we put our strategy, our four pillars into action. So as Jussi presented his chart at group level, our sources where we're going to get the investor on the money from to redeploy into areas that we want to grow SG&A is a big one. We talked about the savings program of EUR 28 million it's people and non-people cost. This is a very, very important initiative for us. Again, that we're slightly ahead on, the channel and product mix. So we're shifting our energy and our attention to higher profit channels and categories. And that's a very important part. We also think that's where there's most upside revenue as well. And last, turning around the reset brands that I showed to you before, will give us source of funding to redeploy into what, into building brand awareness and desirability, which is our most important pillar to fund also the journey of the acceleration, the global acceleration brands. and last to drive growth in the priority markets, but also to fund midterm the white space markets where we think there's a lot of potential. So what does it look like on the top line growth over the next four years? Again, this is maybe a simple way to look at it in a simplistic way. But from a brand point of view, a lot of the growth will come from our global accelerators. It will come also from the Nordics and Japan, could have added Korea there, and it will come from wholesale. Not exclusively, but those are the big chunks that we have to get right. In summary, so we have a very unique portfolio of brands, 12 brands with an incredible story, heritage, Codes, DNA, a founder, foundation story. And we are the leader in high-end homeware. We also have a very beautiful niche position in jewelry. We've made some choices in our plans for the future. Some important choices to go through focused collection priority markets and channels and brand choices. Not all brands are at the same level of their path for growth. And the turnaround is underway. As mentioned, it's early good signs of sales recovery, three quarters of like-for-like growth. which is good and expect it to continue for the future. And then all the restructuring efforts that we've made, we expect to see some meaningful results starting from H2 this year. There you go. I hope I didn't pass too much of my time, I see.

No. Thank you, Daniel. You're okay on time. So no worries. Now we have time for some questions. And just to remind you, we have the joint Q&A in the end, but we can take some questions already now. [Operator Instructions] But are there any questions here in the live audience, At least Maria over there.

Maria Wikstrom. Thank you very much for the presentation, Daniel. We indeed met a year ago, and then you've been one month in the business. And I mean, I know that you're a fast learner, so I could have asked the questions then, but I think I hold myself at that time, but now I would like to ask you that what has I mean with your experience on multiple consumer brands, what has surprised you, I mean, positively or negatively when you joined Vita?

Okay. Well, that's a good question. That's not Well, a lot of things. I think what surprised me positively is the depth of each of the brands. If I turn them all over, they've just an incredible, incredible heritage story DNA and that their perception from our consumers are still very positive, which is great. So none of the brands I thought I discovered were affected, had a bad impression about likability. They were all there. What they need to do is to renovate, innovate, become more modern, I need to bring in new designers to inspire from the past to make products for the future. So some of them needed to be revitalized for sure. But that the essence that I was working with that we are all working with were great brands. So we just need a rejuvenation. So that was good. That was really the positive thing. The negative. Okay, I have to be a little careful here. I think it was we're already complex, right? We have 12 brands, 80-plus markets. We play in all channels. The brands are all a level of -- a different level of their growth. We have nine factories. So all that for EUR 613 million. Wow, it's easier for one, right? One brand, 1 channel that level of sales. So I thought the complexity, we also had a lot of internal complexity, I thought as well on how we went to the market through organizations, through structure through ways of working, et cetera, I thought it was already a complex mix that we have, so we have to make choices, but we -- I found a complex working environment, which again, didn't give like what we want, just speed, clarity, agility who's on first, who's responsible here, who's setting the tone and making this matrix work because I think we're set up as a matrix is the way to go because we have so many markets, so many channels and brands that are almost global. We just have to make -- take the benefit of making a beautiful matrix work in a very agile way. So that was probably the -- I don't know if it's negative, but it was -- we complexified our ways of working in an already complex situation.

And then I had a second question on the profitability and the profitability target as such because I think you were given much tougher job, I mean, compared to Steffen.

Thank you very much for saying that. Yes.

Leave the profitability. My question is that, I mean, would you reach the profitability target by disposing, I mean, some of the brands from the portfolio.

That's -- Yes. maybe -- I guess I can answer that this way, that all not surprise to you, the P&L of all brands and the EBIT of all brands are very different, very different. So yes, to a certain extent, if there was some -- that didn't impact the overall, overall profit, the way it is, perhaps, but today, that's not my focus. That's not our focus. So my mandate is to turn around these brands accelerate these and the regional leaders maybe add one or two countries. We'll get there through a lot of initiatives, but the key ones are the EUR 28 million program that we talked about earlier. We're not stopping there. We can't stop there. So that's just now and then we'll come up with a lot of other initiatives going forward. And I see -- we see with my team where those cost savings are as well. That's one thing. And the second one is the choices we make. It's super important to make the right choices. So we're choosing not to add new categories, for example. That was something we had done in the past. It's very meaningless in terms of top line. It was not margin accretive. And it took a lot of time from my teams, my creative teams to add new categories when instead better to build on what we have and make the core much stronger. So that's a profit that's a positive on profit. The channels as well. We had a very strong focus in D2C. My most profitable channels are wholesale and e-comm. And guess what, my customers are there as well. So there's a big shift in channel mix as well. And then brands chosen which ones we fund, which ones we fund less. But every -- they're almost all funded equally in the past, not from a euro point of view but percentage of sales. et cetera. So it's about, I think, making also all those choices for what we think is good top line growth, but also more profitable top line growth. So I think we get there that way. and thanks for saying what you said at the beginning. Sorry, Steffen.

Do we have other questions? I think, yes, at least there in the back.

I'd like to also -- sorry Miika Ihamaki from DNB Carnegie. I'd like to also touch on the same profitability topic for the business. So the matter is improving top line and fixed costs as the gross margins are already at a quite high level. So now you expect the significant restructuring savings by 2027. But the growth strategy, as I understand, is presumably also on the spending on the marketing based on your actions to make the brand more desirable, optimize the channel mix and being more selective distribution. So my question is that how much of these savings will actually improve EBIT versus being reinvested. And if the revenue growth is weaker than you expect, is there a limit on how much you are willing to put more ammos on the SG&A side?

Okay. To put more what on the SG&A on the last...

More spend, more ammos on the SG&A. .

Yes. I think our spend today on marketing overall, if I take marketing, but there's some CapEx but a few stores. not much. It's already a decent level on aggregate. If I compare to luxury industry, we're maybe a little lower if I compare it to more accessible luxury and other high-end industry work in the right zone. So what we're doing is we're just investing those differently, putting a lot more on the bigger accelerator brands, less on the reset brands. So there's some of that. I think the SG&A plan we have in place is strange enough because I had the question from my team saying we're producing, I don't know, personnel costs by x. So my team has to do much more with fewer people, and my answer is no, I've taken a lot of the friction out of the system to simplify things. So there's less decision makers. You know who's responsible for all different items of your business, the decision makers, et cetera. So I think it's healthy anyways on the SG&A journey that we're going on is a healthy one that I would have done anyway because I think it makes us faster and more agile. And it's also -- it makes the teams focus on what the thing -- on the must wins, what we need to do rather than doing a whole bunch of things. So I would have done that. Now if there's a point in time, and I'll have to talk to Jyri and you usually at one point in time where we're continuing to accelerate, again, one or two brands, and we see we can even go faster. Clearly, we will make that happen. I will ask for more investment, but after we have proof of concept in it. But I think we're able to do that over the plan. And I feel like some of these brands on the global accelerators are already showing some really, really great signs. So last thing we want to do is limit their growth. We want to keep feeding them because they can become much larger. So I think it will be a very dynamic process in the future. But the SG&A would do anyways because I think it helped -- it's going to help our company focus and create less friction than we may have had in the past.

Okay. I think we still have time for at least one question. We have one. There.

Antti Koskivuori from Danske. I wanted to ask you on the market growth on high-end homeware. Do you mention that there was a 15-year period of negative growth. from Millennium onwards. Then a little bit of growth, I guess, driven by corona Boom, I guess, and now 0 growth for the past couple of years. What are the main drivers for that historic and what do you see for the future? And how that tallies up with your own growth ambitions in the market?

Yes, that's a good point. I think a lot of industries and a lot of sectors in the high end over the past years have experienced tougher growth in the industry. If you look at the luxury industry, look at the beauty industry, I think there's been a lot of deceleration in the past couple of years with a spike just post COVID. And the growth of the 3% that I was citing was from '19 to '25, okay? So it was a bit a wider period. I think part of our challenge as an industry. Here, I'm going to say that as an industry, how do we make the pie bigger is that we need to innovate more and create incredible products for a younger generation. millennials, younger people love to collect. We think also in the categories because it's not each category will not grow equally, the ones that we feel has the most potential is the home decor category. Frame spaces, all kinds of objects for decorating throughout the home. We think that has the most legs going further. But I think it's been a little bit of the supply, the demand is more of the supply, I think we need to all be much more creative as an industry and put incredible product proposals to our customers and aim for a younger customer. With some of the tailwinds and the trends coming up, we feel -- I feel very strongly that the pie will grow. And obviously, we need to make ours a little larger. I see what some of the other brands in our industry are doing. There are some good things happening. And again, the fact that luxury brands are doing tableware now or doing glassware -- some of them call us to help them. I can't say who they are. I think it's a good sign because I think about it like the luxury shoe industry. I don't know if you have any of you followed that. But when the luxury brand started and high-end brand started to enter also the luxury shoe industry, the whole thing blossom and they created a much, much larger category. There's been many examples of that in other industries. And I think that's about what's going to happen to ours.

Good. And just to remind you that we can take more questions than in the end of the event. And any questions in the chat that are related to other presentations, don't worry, we will take those in the joint Q&A. But now it's time to take a short break. And I think now we have time for a 15-minute break. So we will be back at 22:03 finish time. Thank you. [Break]

Hi, and welcome back to Fiskars Group's Capital Markets Day. Now let's continue with the agenda of today, and welcome Dr. Steffen Hahn, the CEO of Business Area Fiskars on stage. Go ahead, Steffen.

Thank you, Essi. So good afternoon. Good morning to the West, also online. Good evening to the East. My name is Steff Hahn, and I'm the CEO of the fiscals business area. In the next 20 to 30 minutes, I'll talk you through the plans we put in place to drive our business back to profitable growth ahead of inflation. I will cover three areas. I'll first give you an overview of our business structure. Then I'll talk you through our growth model and then about how we plan to scale our plans to drive sales, profit and cash upwards. So let's look at the first area. We have a world diversified footprint. We are present in various subcategories. Gardening is about half of our business, crafting a fifth, what you see on the screen outdoor, that's the sixth that is our Gerber brand. and then cooking at 10. We have all year around relevance, we are skewed towards spring, but we have all year relevance with gardening and spring back-to-school and summer, axes in fall and snow tools in winter. When you look at our channel mix, we have a decisive wholesale model. 95% of our sales we generate with our partners, retailers and distributors. The DTC part that you see on the screen, the 5%, that is two specific channels. One is gerbergear.com. That's our online channel for the Gerber brand in the U.S. The other is through our sister business area, Vita, our cooking and crafting some of our cooking and crafting business that we sell through the Vita stores online and off-line. When you look at our country footprint, we have a very balanced distribution between both sides of the Atlantic. The other side down to the Pacific. So we have about 50% of our business in North America and the other 50% is in Europe and Asia Pacific. On the screen, you see 25% rest of world. What's in there is also mostly developed markets. However, we do have an expert organization with a relatively wide reach into export markets as well. I just had the privilege this morning to meet 25 of our distributors that happen to be here today that are also representing a large part of other countries. We're reaching more than 40 countries with that organization included. So this is our business, but now I have a question to you. Who of you -- first of all, those that are online, please follow along, but those of you who are in the room, please show hands. So who of you is somewhat passionate about cooking not eating, cooking. Who of you is passionate about gardening. Okay. That's the majority of our business guys come on. Who is passionate about wood splitting? You're using the axe at least once a year. Okay? Interesting gender bias here. And then lastly, who view is passionate about crafting, decorating, quilting, tailoring, Okay, so quite a bit. So I want you also online to think back to that one moment where you did the perfect cut. Now if you're cooking an onion, that last one, we just cut all the way perfectly symmetric, no flipping over pruning in the garden. You had the thick branch that you could barely fit between the blades. And then we did it all the way through that kind of superhero sensation, performance, gratification or when you use an axe, there are quite a few that use an axe, that big log, lots of branches, you hit it and it just splits on the first strike on crafting, when you have think material like leather or cardboard or like wobbly piece of cloth, and you're very concentrated, you don't want to mess it up, and it cuts perfectly all the way to the tip. That sensation of performance and satisfaction that is what we work for in the Fiskars business area. And that is what unites us Gerber and Fiskars our cutting competence. That's what we are about. So now let's look at the service network that we have to bring the sensation to our consumers. We have a factory in the U.S. in Portland for Gerber, where we produce predominantly knives, and we have two warehouses, one in Canada and one in the U.S. In Europe, we have two factories in Finland. One in Sorsakoski, where we produce our cooking equipment and one in business scissors and axes. And then we have a factory in Poland and Slupsk where we produce primarily gardening towards. We have also two warehouses in Europe, one in Finland, one in Poland. And then if we look to the Asia Pacific region, we have a warehouse in Australia, and we have contract manufacturing in Southeast Asia and China, where we complement the amount of products that we produce ourselves from countries like China, Vietnam, Cambodia. On the next slide, I'm highlighting a few strongholds that we have. Garden cutting, pruners, loppers, 3 pruners we invented -- Fiskars invented the current form. Then we have adult and kids filters and crafting tools. We are a market leader in this space. And then for Gerber knives, Gerber is one of the companies in the Mecca of knives in Portland. But about half of the business of Gerber is also in multi-tools, formation of multi-tools, that's a stronghold for us. And of course, I should add our axe business because we have a number of consumers that's not me saying it, legal disclaimer. We have a number of consumers that do say or tell us that they believe we have the best axes in the world, and we are very proud of them. When I started beginning of '24, and you saw some of the numbers from Jyri earlier, I made it my mission after this development, I made it my mission to improve the structure of our P&L. The green line is our EBIT margin. The orange line is our sales and absolute. I made it my mission to structure the P&L so that we free up resources to invest more in innovation and in media to tell people about the wonderful products we have while delivering good profitability. And while the orange line tells you that it's not sufficient, we have actually made good progress. In quarter 1, '25, we grew 3% organically. unfortunately, 2 days after the quarter was finished, tariff hit us, and that was a double-digit million hit for the Fiskars BA. In quarter 1, '26, you saw the results recently, we defended that sales level despite the run was starting on February 28. And what I dare to say is a pretty spectacular EBIT margin. We have successfully moved resources from cost to invest. And at the same time, we were able to deliver strong profitability and cash. And we will continue to flow through. This will fuel our growth model, which you see on the next slide. So the growth model. Our growth model is very simple: innovation, distribution and media. Or differently said, we want to bring more products, a wider range of products to people that they can buy in more places where they shop. And we want to increase the audience we tell about that over time, more products in more places and telling more people about it. This model has started to deliver benefits. We have an upgraded status with our customers, they see us supporting. We have increasing interest in our products from consumers, which we can measure in search volume and click-through rate as an example. And as a result, I'll come back to that a little later. We have gotten some great feedback on pretty much all the things we launched in the last 12 months, which is an effect that we've been working on since the beginning of '24. So let's look at this model and its components a little more closely. Innovation is our lifeblood. When I started in January '24, within 20 days, not even 20 days, but 19 days, I had my global leadership team here because it was very obvious we need to do more in this area. And so I had a 2-day workshop with them to discuss how are we getting more innovation out the door and on the street to support net sales growth. And now in '26, we start seeing the benefits. If you look at the net sales value of the innovation we are launching, which is, of course, a bit overcast by the external environment, that has more than doubled in the last 24 months. And we have a pipeline built that we are now continuing to execute against to again double that here it says 3 years, but our ambition is to do that in the next 2 to 3 years, net sales value from innovation. It's early, but have our recent launch has been successful. Yes. What we're seeing is very positive feedback from the consumers. You see some of the variance here, but it's very exciting to see to hear the consumers talk about our products and also our customers, what we get in terms of feedback. In a moment, I'll come back to power tools and show you the video that we have there, but that will in about a minute. And before that, I cover a bit of the other sessions the other launches as well. So we've gotten very good consumer feedback, and we're also able to build distribution. The one thing I would wish is that we are able to build distribution faster. You all know about the macroeconomic environment, which understandably drives our retail partners to very conservative behavior. Retailers are very focused on minimizing working capital, and they're also very focused on trying to keep costs down. For example, the expensive shelf rebuilds I try to avoid. Given that we've seen the results of our launches and that we now have data evidence that proves that they are successful, I'm, however, optimistic that we can accelerate that buildup in the future, particularly as we have fast follow-up. So you see on the very right side of the slide, you see that all the spaces we went into, we now have a follow-up to further build and expand so that we have a launch and leverage model, similar to what Dan shared with the [indiscernible] example. So we have plans in place to continuously scale our innovation pipeline and to accelerate our distribution based on data evidence we have in the market that what we've launched has been working. Retailers that did support us with the distribution see sell-out above our expectations. It's probably interesting for you to know. So let's look at one example, the power tools. It's very exciting. We now have 5 SKUs in this space, 4 products, 1 battery. You see the battery here. That is also a power bank, currently charging my phone has a USB-C port, which is a unique feature in our industry. And it's only one battery that fits in all our products. So we are the only one that can truly say we have only one battery now and for the foreseeable future. So let's look at what consumers have seen ever since we launched these products in spring. [Presentation]

Thank you. So that's what we had for a while. And I think this is a showcase of what I believe truly sets us in our industry peer group apart. Our capability to do product design that is intuitive, high performance highly agronomic, which for professionals is very relevant. Agronomics lead to less health issues when excessively using the products during the day. And also aesthetically pleasing. Our product design team is highly decorated. The Red Dot Award is the largest design award in the world, and our team has been awarded 67 times to date. This year alone, we won 3 awards, amongst others, the highest distinction, best of the best for our new power products. We are doing this for the first time. There are other players in the industry that have done this quite a bit, and it's quite remarkable what kind of a product we were able to launch in this space. I'm very proud of my product team. So that was innovation. The second point I said earlier is that we want to bring more products to more places where people shop. We build presence where the shoppers are. We focus on driving conversion by improving our shoppability online, offline, and we take responsibility for traffic, which our retailers look for, particularly when the consumer sentiment is low. This is reaping us benefits. We have a wide range of solutions for our retailers. And because they acknowledge that, in turn, we were, a, able to build net distribution points. So the number of doors and the number of SKUs per door is net increasing for us in a market environment that is rather suppressed. And we get a higher status with our -- as a supplier with our retailers. Retailers have classifications internally of how important you are to them, current business and also for the future. And these upgrades give us more bandwidth with our retail partners to further fuel momentum and build our joint business together. The last element of the growth model, I said is media. So brand management, marketing and then putting our assets out with media. What you see on the screen is some of the results. We've overhauled our brand management and media organization and our approach to it in the last 18 months. On the right side to you, you see the results on what's here, which is called view-through rate. 65% view-through rate is when you're on YouTube and you have the option to skip the video because you're not interested, how many people do that. The benchmark says that above 40% is excellent. All our 4 last launches have achieved levels above 60%, which is extraordinarily good. When we talk to the guys from YouTube and Google, they were checking the numbers if that can be true. For us, that means 2 things. A, we are in categories that are emotionally engaging, so people have an interest; and b, we, with our advertising are striking an earth with the consumers. So they find what we show relevant and intriguing so that they hang on. That's the quality of our advertising and what we put out there. On the left side, you see the quantity. I said that we are here to build scale, reach a broader audience. This spring, in a number of markets and categories, we've achieved the highest search volume as far as we can go back, higher than the COVID peak. And as far as we can go back, in most cases, means under 2004, 22 years, highest level of search volume. That isn't sales, but of course, consumer interest is preceding sales. And I find that a very encouraging result. That was our growth model. So let's now look at how we are planning to scale for profitable growth and to further drive cash. Our future launches are lined up to get into subcategories where we see intrinsically growing demand. So in-build tailwind, if you want. And I selected the 6 trends that provide ample of opportunity for Fiskars. The most defining is probably the battery electrification of cutting tools, reducing physically demanding task, the effort for physically demanding task, particularly in the context of an aging population. The second is emotionalization and ritualization. hedonism, active digital detox. We see, as an example for these trends, a resurgence of crafting in the U.S. The crafting market is growing. So people try to do to actively engage in occupations that have nothing to do with screen time. And for Gerber in the U.S., we see this fascinating hybrid of glamping and bushcraft at the same occasion, and we have a portfolio that we can expand to cater to these trends. The third trend is the growing professional market. So gardening services are on the rise. That means in turn, that landscapers are an increasingly attractive target group because they are growing as a consumer for our business. And our current entry and presence amongst this group is underdeveloped, which gives us a great opportunity. The fourth trend, pet ownership, I think particularly for the analysts here is well understood. There are some interesting businesses in the space focused primarily on pet care. Urbanization, you all know about this. Even if it's currently paused, in general, there is an inflation in real estate prices, which makes people buy smaller properties. And you have the trend to more dense populated areas, which then further reduces the space available. And we cater for these, for example, with our inner gardening tools. And then lastly, sustainability. There's sometimes this question, is sustainability really something that the consumers are interested in and willing to pay for. And I would say, yes, but the sustainability that the consumers are looking for, I would call leverage sustainability. Yes, people want lower carbon emissions. They want circular materials. They want compostability. And ideally, they would want to have things that leave no trace, but without compromise. Consumers want also more performance and more experience and fun, if you take the analogy of the car industry, electric cars were really interesting when they had a faster acceleration. You felt that you have electricity, which is better for the environment all in, not going into details. But when it was the faster accelerating car than a combustion engine, that's where it really became interesting. And for me, this is the trend that is also interesting for us, leverage, not frugal, sustainability. As I say, these trends create a lot of opportunity for us. And we will increasingly add new subcategories to our portfolio to grow. Having said this, we're not talking our plans until 2030. For the foreseeable future, our base business will be the lion's share of our revenue. So we must not lose focus on that. And we are actively bringing leverage innovation to our existing categories. You've seen this with our new generation of orange handle scissors with our ultra axes with dual action. So while we expand into categories, we will provide fuel to our existing footprint because we know that due to the scale, the lion's share also until 2030, this will be the primary source for us to generate profit from growth. How are we going after these categories and how are we commercializing them? So when it comes to new categories, we are looking for 4 things actually. So 3 on the screen. Is the subcategory growing? Is it structurally profitable? One thing that's not mentioned here that says this is it big enough to engage? And then is it also a natural fit with our brand equity? So we are looking for categories. And when you think back, pet care, Ultra axes, we look for things that build our P&L., but they also need to help build our brand, what we intuitively stand for so that we have that double whammy effect. For existing categories, we are primarily looking for next-generation improved versions of our products that provide a superior value proposition for the consumers in use, for the retailers, category value and for us, financial value. All of these categories, we bring to market with a disciplined approach with a specific priority by market and by customer that is broadly shared in our organization and everybody knows what's must-win, what's rocket, what's foundation, which is the internal classification we use. So how do we pay for this? As I said, I made it my mission to restructure or to structure or to improve the structure of our P&L. So we have shifted cost to invest, and we'll continue on this path. And so what you see here on marketing and innovation, we want to double the impact we have in the market, double the impact from innovation, which we measure as net sales value of what we are launching and double the impact on the consumer, which means doubling the reach and the impact we have on the audience that we address. We are funding this from 3 sources. gross margin. So all the categories we launch need to be gross margin accretive and all the things you've recently seen we have launched achieved just that. So every new launch that we had is gross margin accretive to the mix. We continue our COGS discipline, so bringing costs down. We look at our footprint. We've moved our warehouse from Poland to -- sorry, from Netherlands to Poland to shorten transportation ways, reduce costs. We are constantly reviewing our make or buy choices. So bringing our landed cost down is the second element and then SG&A. Of course, there is labor inflation and other areas that we are seeing. But we have in the recent past in '25 brought our SG&A down. And now we are in the effort to first tie it and then again reduce it as a percent of net sales. And the whole logic is that we basically find a number of points at the gross margin and then give 1 point to the bottom line and the rest into innovation and media and then whatever else we can find in SG&A to accelerate our growth. So on cash. We are in a good position on cash. We have consistent profitability. We have a lean and disciplined approach to manage our working capital and our CapEx. Having said this, I see substantial opportunity to further improve. On one hand, on our portfolio productivity, SKU productivity, the amount of sales and profit margin we generate on average per SKU, which, by the way, is not only interesting for us, it is also very relevant for our retailers. They are looking for faster turn rate and for more SKU productivity, too. So this is a complementary target where our customers and we have the same objective. And it also is beneficial for the shopper because if you have a tighter portfolio, it's easier to navigate and easier to shop for the consumer, which means on average, you actually see the conversion rate going up because it's not as intense to find a product that fits for you. That's one thing. So SKU or portfolio productivity. The second area is terms, supplier and retailer terms. Supplier longer, retailer shorter. We're putting a comprehensive package in place for the upcoming negotiations in fall that will make it a win-win for us and our partners because otherwise, you might wonder why should they say yes to that if it's a win-lose. We think we have a package that makes it attractive for our suppliers and for our retailers to work with us on this topic, and we expect some benefits for the Fiskars BA. And then the third area I already alluded to it a little earlier is reviewing our footprint. We have already done things to shorten the conversion and transportation time. I was just talking about the warehouse. We have also reviewed make or buy decisions. Some products are better done by others, not by ourselves. And in general, we are looking at how we are reducing our conversion time on one side, but also the quite substantial transportation time we have, particularly when we think about Asia to Europe and Asia to the U.S. So we've talked a lot about what we want to do with the business. But I also want to talk with you or I also want to share with you how we're developing our organization. And I've picked 3 topics as an update. The first one is that we want to increase the reflection of the markets we serve in our own organization. The number of nationalities we have here in Helsinki and in our headquarters in North America, close to Chicago for Fiskars and in Portland for Gerber because we believe it is of utmost importance that we reflect the markets we serve in our own organization to be able to deliver value propositions that resonate with the markets we serve. The second area is younger colleagues. We've recruited younger colleagues before, but we did have quite a focus on experienced hires, and we're now shifting that focus slightly more to graduates and young professionals. Digital native just have a more self-evident access to artificial intelligence and media than the average of the presenters today. And then lastly, women in leadership position. Our objective is that we reflect our workforce. We have 45% female colleagues and room to see that number also at the top of the leadership. In the last 12 months, we made 1 point progress, and we are now at 39. So there's some room to go, but we are taking this very serious because we think, as I said, with the cultural diversity, gender diversity is also an important source of sometimes friction, but it makes us better because we consolidate various viewpoints and the offers we make to the market. So if we conclude and sum it all up, we have a healthy cash and structural P&L where we successfully shifted from cost to growth to fuel profitable growth, and that's a path we will continue. We've started to prove our growth model, successfully scaling the quantity and the quality of our innovation, our distribution and our media. And we have evidence that we're able to attract additional consumer interest and retail space. And lastly, we have a clear, simple, disciplined way forward. We are scaling our model with a highly capable team to win with our most success defining stakeholders, our consumers and our customers. Thank you.

Thank you, Steffen. And now we have time again for some questions, and we will have the joint Q&A still in the end, but let's take questions for Steffen. So do we have any questions here in the audience? Yes, go ahead, Maria.

Thank you for a very clear presentation. I'm actually curious on your views because, I mean, as it's quite evident to see that you have managed this U.S. tariff situation very well when it comes to the profitability. And I think me and I think quite a few of my colleagues were surprised on Fiskars BU profitability in the first quarter. So can you walk us through that? I mean, what has been the key factors for that success?

It is -- I probably repeat what I had in the presentation. We are just very aware that growth costs money. Return sales comes after the investment. And so from day 1, I said I need to make room in my P&L to be able to afford that. A classic mistake is that you do an annual plan, you start from a desired net sales result and then you do the math all the way through the P&L. You say, based on that, this is what I can afford. You start the year. The first quarter falls short because you haven't done the investment yet, so you can't expect the return and then you're in the catch-up mode. We haven't done that. We work with a target picture where we have a realistic assumption of what we can get before that investment happens and then we cut everything in place. And when we had the tariffs, it took us a week to say what is the likely expectation on our P&L. And then we basically went back to the war room and said, how do we no need to cut the different elements in place to make it. And that -- the benefit of that is that we can invest before needing the return because it anyways won't come in the same year. And that's the model we just continue. I have to admit that, of course, last year, April 2 and now this year, February 28, isn't exactly helpful because now you look at the commodities and that's again a hit. So you constantly -- every time we feel we can play offense, something externally happens to push us back on the defense. But my mission and the discussion I have with my team is forget the market. The market is what it is. We need to focus on how we can grow this business because there's ample of consumer interest out there. And our job is to mine that whether the market grows or not. So how do we expand our portfolio so that we attract more people to grow even if the markets don't.

And then my second question is on your sourcing model and the countries where you source. I mean, do you think you are currently optimally positioned? Or would you think you need to review still your sourcing model going forward?

So on the question, are we optimal? I think on July 24, we will know again if we are or not with the current tariff regime expires then, and then we expect Section 301 tariffs to kick in, which then might change the landscape of what optimal means. But we will have a review of our footprint in quarter 3. We are looking for various reasons. Cost is one thing, quality is another, but also sustainable competitive advantage. There's a number of categories that I wouldn't want to be done by a contract manufacturer because I think we can build proprietary knowledge about how to produce certain things that are strategically important for us for the future and those we want to make in-house. So yes, there is a review coming in quarter 3 for us internally. And yes, we will consider the tariff regime changes that are likely to happen on July 24 to be optimal. Right now, I think we are in a pretty good shape. but the shape is depending on what shape you have. So I expect that to change in quarter 3.

Any other questions for Steffen at this point? Okay. Thank you, Steffen. And then it's time for Jyri to present the key takeaways of today before we head to the joint Q&A. So go ahead, Jyri.

Thank you, Essi. I know I'm now between now and the interesting part when we get to the Q&A. So I'll be very focused and brief. So a few key takeaways that I hope kind of sticks with you today after this multiple presentations and deep dives into our BAs. So the role of the group as an effective portfolio and capital steward, which is an enabler of value creation in the BAs. The new targets, which I think is put nicely in the slide. As a reminder, it's not touching our guidance this year, they are reset from what somebody with perfect hindsight now can call was maybe discounted hopes and dreams, of course, in the boom of the post-COVID home nesting period that was maybe extrapolating some of the graphs that one could draw from the past years, but pretty recognizing the reality we live in. Steffen referred to July when there will be, for sure, a change in the tariff regime. Let's see what comes there. But we've tried to kind of take those things we can recognize that are in our current environment or in a way, announced to be hitting when we work through what are the long-term financial targets for the company. I think Daniel covered well why and how the turnaround is needed with Vita. It's been kicked off. It's again something that's already ongoing, and we know some proof points that things are happening. It's, again, not PowerPoints and exos and plans. And at the same time, with BA Fiskars, where we have our robust foundation when you look at the margin, EBIT margin, despite all the swings, despite the tariffs hitting us, et cetera, but really rebuilding the sales growth momentum through innovation, distribution and the brand relevance. So fairly condensed message for this. But important in my books is that when we look to the future, it's not just planning with a kind of a broad brush of some creating kind of the scenery, but it's based on things that have been already kicked off. We have proof points, new products here. We have other proof points, growth in Vita over the last 3 quarters. So things are happening. So we are not doing the one single data point extrapolation, but we have already multiple data points where we kind of take the extrapolation for us. But that is really the essence of our message today. So 2030, of course, is the time when the verdict will fall. How did we do with the 2630 targets? Of course, that's kind of the ultimate test to this. But I'm shutting up now here because I guess the bigger value will come in our next part of the session. So if I can ask the colleagues to come to the stage, we'll get some chairs.

Yes, please hold for a while, while we arrange the stage for the Q&A. And if I can have all the presenters on the stage. And just as a reminder, you can type in your questions in the chat if you're following the event online. Okay. But maybe we start with any potential questions here in the audience. And I can see at least Maria has her hand up. So if Noora can bring the microphone.

I actually had one question for Jussi. I think you were probably the best person to answer this. And I was a bit surprised to see how you define cash conversion that you chose to have the -- is it denominator where you had EBIT excluding extraordinary items. I would have thought that, I mean, you would do EBITDA, which is a bit closer to cash, so you can get...

That's very good point. So actually, we have been working with these financial targets now almost, I would say, last half year, making quite benchmarks with some of the advisers also. So what's the most common way to report this. The reason why we gave up this free cash flow, net profit was that we had a lot of volatility there when it comes to changes in deferred taxes and that kind of things. So we lifted it up. And it seems that, that seems to be the way. One thing to highlight here that EBIT, what we are using there is then EBIT less those lease interest what we have. So it is right comparable also the new cash flow, how it's defined, i.e., unlevered free cash flow less lease payments. So that's the way we have done it. We are not the only one. So when we made benchmark, we found out that, that's not so uncommon way to report it. And we believe that it's now more -- less volatile than our previous KPI.

And if I continue very briefly on that, while the targets are under the current GAAP. So we know that there are changes coming to IFRS, IFRS 18 being now the number, but that will also highlight operating profit, which in other circles is called EBIT is something that will become a mandatory measure in the template of an income statement. So maybe there was some foresight in terms of preparing to the new world where you can't go around the operating profit also known as EBIT.

Yes. And still not going too much into the details here when it comes to KPI, but using EBITDA there, then we should adjust it also with IFRS amortizations, which is made even more complex to explain.

Then I still had one more question directed to Daniel. Given that, I mean, you have been given this turnaround job and -- is this something that, I mean, you have done before that you have like a certain like turnaround plan in your toolbox and now you are just executing it for Vita? Or is it something that, I mean, you kind of needed to come up with a scratch how to improve the profitability -- almost double the profitability, I mean, for the business, actually more than just doubled, yes?

Yes. Yes. Well, thanks again for the question. Thanks for your other question at the beginning or at the end of my presentation. I guess is this in my toolbox. I think I have done over my experience, some turnarounds and especially some scaling up. I've had the chance in a couple of roles under private equity ownership to scale businesses from EUR 400 million to EUR 1.2 billion in a span of 4 years. So the top line helped a lot necessarily, but I think along the path as well, clearly had an eye for a return on investment and obviously not growing the SG&A as fast as top line. So I think this is -- there are some similarities to some of my past experience as to what we're going to go through here because again, as I mentioned, there's a lot of different buckets of choices we've made towards profit accretive channels, brands, markets. And the skill sets to bring the global accelerators up, I feel obviously super comfortable. I think I've done that for almost my entire career. That helps a lot. That helps a lot if we can get them to a certain trajectory. They're already profitable today, as you can see. So that helps a lot the economic equation. So yes, I feel super comfortable. I have to pull back from some of my past toolbox. One of the most important things is going to be making sure that the brands in our portfolio today are desirable. I keep using the word desirable. I replaced the word desirability in our company, not replace, replace the word luxury with desirability because I was leading on a different path. And I think the more desirable our brands are we'll certainly make it. It's just that I have to have different paths of growth for the different brands. So yes, very comfortable. I have also made sure that the teams in each of the brand houses and in the markets reflect the skill set that I'm looking for in those -- either brands or those market resets as well. So I'm trying to tailor it to, obviously, the leadership team to the challenges we have, and that's super important. We're almost there as well with making that happen.

Good. I see one question over here.

Yes. One for Jussi as well. The net working capital and the inventory drawdown of roughly EUR 100 million that you mentioned, you also mentioned that it's not going to be short-term target. It's going to take some while to get there. Just curious if you could walk us through the kind of your thoughts about the timetable, when you expect to be in the goal? And if the current environment, higher oil prices, et cetera, is impacting or has impacted in some way of your thoughts about that target?

That's very good point. First of all, if I start first on net debt/EBITDA, when we said that the target is to get it now to 2.5x in the next 2 years' time. That's heavily linked to the working capital reductions, what we have in place. So they go hand in hand. On that one, we see some development already this year. It's very year-end biased or year-end loaded. And therefore, it's better to say that it takes 2027 when we start seeing some visible changes there. One thing is, of course, the current environment. Are there more this kind of black swans coming? The good thing is that when we talk about working capital overall, there's also a supply side, sourcing side, which is very much in our own hand. And we can have -- we have the kind of levers that we can pull to manage to get it down. So I would say we have high conviction case in place to get it now done as planned. Of course, big part that is in Vita and already Daniel explained the ways we are getting it done.

Maybe a follow-up. Do you see any risk that those moves could restrict your growth short term in any way? Or is that completely separate issue?

As said, of course, we do need growth there to get inventories down. That goes without saying. But then as I said, we have a lot of own manufacturing. We have a big sourcing organization. So those are the ones where we have only levers to pull, but we do need top line. Do we need the top line this mid-single-digit growth or less actually plans what we have in place short term are now based on the situations what we are living at the moment.

Just to comment or build on Jussi's comment and actually Daniel's comment that the situation is not exactly the same across all the brands and the brand houses. So there are differences, which then again, as you mentioned, some places we should or could have even more inventory to be able to sell more. So the good news is in a way that the issues are not all over the place, but they are more encapsulated and hence, more focused actions are there to address that.

Thanks. I think we could take one question from the online viewers at this point. And Jussi, I think you could take this one. You highlighted in the materials that the intention is to reach the leverage target within the next 2 years. However, let's say that the geopolitical tensions persist and consumer confidence doesn't pick up as expected, leading to continued subdued profitability development. In this scenario, would you be willing to relax on your dividend targets in order to drive down net debt and leverage? A long question.

Yes, long questions and this has long answer. First of all, we do have conviction case in our plans, as I said. Jyri just explained that we do have already many proof points there. It's not only one point what we are using now to predict the future. So we have proof points. And therefore, conviction case in place to deliver the cash flow, which is ultimately one big lever there to get this back to 2.5. So that's one conviction case in place. Then dividend won't be the first lever to pull if something needs to be done. We do have working capital. We have CapEx. We continue driving cost-out actions and the likes. So therefore, that's one thing. It's not the first thing to start figuring out. And the third one is that it's a policy, not carving stone. Having said that, of course, dividend ultimately is about owner's choice. Management is tasked to deliver the plan we have now put in place to deliver the stable dividend, what we have now guided as a policy.

Thank you. Are there any other questions here in the live audience? Yes, Rauli, please.

Yes. Rauli from Inderes, one from Daniel. I think looking at the brand positioning, at least Waterford and maybe some other brands of the WWRD acquisition has been kind of in the turnaround category for the whole 10 years that Fiskars has owned them. So there has been quite a few people, I guess, trying to do that turnaround already. So what can you do and will do differently to actually make it happen?

Okay. Good question. I don't know exactly what all of my predecessors have done. I'm sure they might have tried different recipes and so on and so forth. I guess my conviction is -- and I'm spending as much time as I can with the teams in Barlaston and Waterford. The first one is really about collections. I -- there's too many collections. So we have to make it much, much more simple along the lines of rooting out the icons and doing things that making them stand out. That's really important. There's a number of collections. I think we have a plan to reduce by more than 50% the number of collections and SKUs that go along with it. We just have too much complexity. And I guess I'm getting a little bit granular here, but we may have had a mindset in the past to produce what the markets would like. And I want to stop that. We need to produce and develop collections that reflect the DNA of the brand, the values of the brand and that have appeal globally rather than just serve different markets. That's very dangerous. So that's a big, big change. The team is getting there. I think we're almost there on the collection, on the merchandising, on the future collections, which one they've chosen. I think these are the top 7. We're going to build on those and create global icons. So I think that's an important one. Also within Waterford, we have resurrected marquee, which was the entry level. And I think that's an interesting play that can go to a different channel than necessarily Waterford. So that's one of the, I guess, solutions there. Selective markets, but I want to expand on that because I think that's fairly clear. The biggest market for Waterford is the U.S. We doubled down on there. Wedgwood was China as well. So it's just going to change the model and not just do D2C only. So those things we're doing. And then it's the industrial footprint that you know. So here is probably we have a plan in action. It's a challenging one, granted, and you probably know it, just on making sure that the investments and trying to optimize the costs that we have running the factories, mainly the crystal factories. And we need to bring more volume to those factories. We have plans in place to do that. We let go some of the volumes over the last 3 years, and there's a very specific plan to build that up again. And that will be very helpful, obviously, on the gross margin. So this is one of the bigger challenges. So I don't know if that's very different from the past, probably not the last 2. But I think the first one is just a big key for me to success.

I would actually like to build on what you said, Daniel, because this question that you just asked was one that I asked myself very intently before I started. Now I've been here a bit more than 2 years, but I also want to share some of the reflections on the themes that I think are common. When I started, I considered myself the fourth leader on that business in a very short sequence. Those that have followed a longer know that there was quite some changes. And so I asked myself, how do I make sure that I'm not just the fourth in further changes? What will I do different? And so there was one conclusion for myself, which was I don't need to postulate now my 5-year vision. The people have heard this 3 different versions of it in the last 2 years. If I now come and so no, we are going there, nobody will believe me and nobody will follow because they go like I've heard this every 12 months, there's no point. And I think the common themes you hear there, and I think the differences in the execution is a simplification. You heard Daniel talk a lot about that. You heard me talk a lot about that. I think it's clarity of direction. We are not avoiding the trade-offs. We are making them, and we are also asserting them into our organization and say, we don't want you to try to do it all. We want you to focus on a few priorities and make those things exceptionally well. And I think the third thing I have the privilege to be in one of the sessions that Daniel did when he announced this restructuring. And what you did there and what I think what I have done with my organization is that we make more effort to bring the organization along. When this turmoil happens, a lot of employees are, of course, concerned. They have seen the results. They have seen our profit warning. So the first thing is, is my job in jeopardy? What is happening? Where are we taking this business? So we've introduced a measure on a monthly basis in our town halls to ask our people, do you understand our direction and do you agree with that, a monthly poll quantified, we can see how the data goes up. And the second is, are you clear what you need to contribute to this direction? And again, we can see the measures up. We started -- when I started, we were about 3.1. We are now 4.3 consistently. And what we've seen at the early times is every time when something happened, it immediately dropped and now we have basic resilience. Iran was started, no change in poll because people feel our direction is robust. And so bringing the organization along, I think this is what I'm seeing, what you're doing is an effort -- and I would also considering after I've spoken to my predecessors, by the way, my sense is that this is truly a difference even the concept as such, you might have feel have heard before.

And just -- sorry, I build one last thing I could add to that. So I agree, obviously, with what Steffen is saying. And sometimes simplifying is much more powerful for sure. One of the things also on these 2 brands in addition to rationalizing, but meaningfully, I'm talking like from many, many collections to very few, is the customer at heart. And we have to modernize, and that's why we're bringing new talents, new design talents to both brands to create products that are desirable for younger consumers, millennials because we don't want all our customers to say, I inherited this from my grandmother or that's not good. I don't like hearing that. It's great because they're passed on and they add value in time. But no, I want the cool 35-, 40-year olds to say, I can afford it now. I love this brand. I love this design with a great designer, world-class designer and to pick up that way, too. So that's a big focus of ours as well, just on rationalization a lot, but also new designs to appeal to a younger consumer.

Okay. Great. Very comprehensive answer. I have another one, hopefully. A bit shorter to answer. On Iittala since it's now in the global accelerator, which sounds glamorous for Iittala, which has maybe been known for more of a regional Nordic and I guess, Japan brand. So are you planning to accelerate that in the new geographical regions or mostly the current ones?

No, that's a good question. So I would say Iittala just made it into the beginning of the global accelerator. So it's a junior global accelerator today. But it's picked up. We had a good year last year. The profit picked up, et cetera. So we brought it to that category because of all of our brands, it's one of the ones that has, I would say, the highest likability also from an icon point of view, has a lot of incredible icons like the Aalto Vase and many others as well. Very strong appeal in the Asian markets. Japan, Korea is a big opportunity, and we think China as well one day. So we just think that the brand has the right portfolio today. They're very -- they play in many categories, but well. There's a good degree of likability. People recognize a little bit of the brand globally because of the -- mainly the Aalto Vase, to be honest, and a few other icons. We thought it was just ready to scale. Now the countries we're not going to go -- I will not scale as much as I plan to with Jensen. Jensen could be a really, really large brand, and it's ready for many markets. Iittala is going to be step by step, mainly pointing to the Asian markets. Japan is our largest market outside of the Nordics. Korea, we're not big yet, but we think we have a big opportunity there. As I mentioned, China, our key markets. The U.S. is more midterm. I want to make sure that we build on strength on strength first before attacking or before launching in the U.S. So we have the U.S. more earmarked as a midterm plan, but we think there's potential there as well. So there's a lot of great things. We're working on a brand-new collection in 1.5 years, which will be multi-category with a big designer worldwide as well. So there's a lot of great initiatives on the brand, and we think it's just at the beginning of its scaling today, but it won't be the same as Jensen and Royal Copenhagen yet. Yes. So those will be the countries we're looking at. On online, too, online, it's our second biggest channel for Iittala. And so we're going to try to obviously boost that as well.

Okay. I think we have a question here.

Joni from Nordea. Maybe as Fiskars has a long heritage, so maybe a question a little bit further to the future. So I think historically, you have been speaking that maybe Vita has higher margin potential compared to Fiskars. But given you're now maybe focusing more on the wholesale. So is there some structural change that could have changed this picture so that maybe Vita's long-term margin potential is not as high as before?

I'll take this. Here, when you look at the extrapolation from the COVID, post-COVID home nesting, that was something that was directing upwards. You recall in some of these strategic pillars, we had certain markets, but then we had gross D2C and gross margin as, kind of, key performance indicators for the business. And in the belief, if that trajectory would have been, kind of, staying, holding, then the consequent EBIT margins that were projected at that time would have been potentially quite realistic. We know that the consumers are not living on that curve after the COVID where people stayed home. And they made also some of their critical purchases and some of tableware stuff, you actually can have over generations. Maybe some other kitchen utensils and the frying pans, they wear out and so forth. There are new technologies, which require people then to renew those. So I think it's kind of the reality check to the economic realities and consumers' spending patterns. But growth, as you can see also on the target setting on the organic FX adjusted net sales growth, there, we see more opportunity and kind of more potential from the category perspective and our geographical footprint and the reach out with multiple brands. There are some geographies on this planet where gardening is not a big business, and there are some geographies where you are not allowed to be dealing much with sharp objects like knives, et cetera. So there are that type of restrictions when I compare kind of the 2 businesses from my perspective.

Okay. I think we could take a question from the online viewers, and this is for Daniel. In your presentation, you said that closing some brands that are losing money could improve margin. You also said that, that is not on the agenda. When will it be on the agenda?

It's not on my agenda right now. That's not the mandate that I have. Today, I said it because mathematically, yes, it just -- it would be the case. So listen, I think, today, what our teams have built a long-term plan. We're in the process of finalizing our -- also our long-term plan soon. We've had the lens of improving each brand at the right time, the right pace with the right levers. I don't know. I would just say, just like on the M&A side, we didn't really talk about that. I think if there is -- a couple of things. Organically, if we want to scale further a brand today, we see the potential, I think the group will get behind it. So I think that would be good. On the other side, listen, I think I can just say again, my mandate is to build -- to improve the performance of all our brands today. But we're very attentive to things that could happen as well along the way, stay agile, but that's not the current mandate.

Any questions here? Okay. We have one on the front row. If you wait for the microphone.

Yes, Martin from Ilmarinen. So what would be the magnitude of the Vita loss-making businesses if there are such, like, in terms of, let's say, the free cash flow? Would it be like EUR 20 million that you could spare for your business? Or what would be the magnitude just to get it right because it's easier to cut than grow?

It's easier to cut than grow, especially when you are making the world's greatest cutting tools. That's, of course, the recipe is from that perspective. We have not disclosed brand profitabilities. We have actually, today, disclosed the volumes of some of our key brands in the revenues. But easily, when you look at the chart, you can see that some are performing less good than some others are, but we have not gone into that detail of disclosure. And that's -- I know for your and many others' Excel models in this room might be an interesting data point, but that doesn't help when the guys are visiting our customers and distributors showing that, "Hey, here we make this much money." I know exactly what that would lead then as a discussion that how much of that actually belongs to the wholesalers or distributors, retailers, how much better terms they need to do because we are doing so fine with a certain brand. They don't actually have any concern if there is a brand that's, kind of, feeling bad or even bleeding, you won't get that type of a support from distributors.

There's also -- maybe just a little added point on that. There's also -- as we were mentioning, each brand has their own path, their own trajectory, and that's what we're guiding towards. There are some brands that can have a more tactical business model as well. Some of the smaller brands on the reset, for example, can have a different model, i.e., exclusives by country with a partner or more of a partner model that could be more beneficial for us as well and for the partners. So there's also that, that can be part of the way forward as well.

There is a follow-up on the brand question I asked Daniel. And now I need to ask it from Jyri or that's the guidance from the viewer online. How patient, Jyri, are you with the small brands or the ones that are not there high above in profitability?

If they are really small, then that correlates somehow inversely to the patience. Of course, it's always the big stones you put to the jar and then the sand and then the water. And if it's, kind of, on the water category that fills the last spots, then the impact. It's about capital allocation. It's how much bang we get for the buck. So if we invest in some of our global accelerators and get a return here and then we have a small brand by fixing it somehow, there might be a cost associated with that. How much does it move the needle? So we need to choose our battles because you'll see it's not promising from the petty cash unlimited budgets for everything.

On that one, actually, releasing the cash as such is not only the brand issue. You have also different type of supply chain models you have in place. And I know that you have been already attacking or have attacked already on those ones. So it's not only brand side, it's also supply chain side where we can release a lot.

I see that we still have at least 2 questions here in the chat. Are there any questions here at the audience? Maria?

The compensation report, I think you can look, I mean, what are the CEO compensation based on, like, what metrics. I'm not really sure that if that's going to be included, I mean, for Daniel and Steffen going forward. But maybe a bit more elaboration that, I mean, what would be the priorities? I mean, if we think about growth, profitability, return on capital employed. So how Jyri and you will compensate for your 2 leaders sitting besides you?

It's compensating...

On my behalf, Maria.

This is a paid question apparently. So the variable parts of these 2 gentlemen sitting next to me are related to top line growth, not with a huge weight because there are some fundamentals in the turnaround that need to be done. EBIT being a big one and quite equal weight with cash flow. And historically, how we could measure and how still the budgets for this year and the plans for this year were made. We didn't have the legal structure. So cash flow is a partial cash flow, which is the operating cash flow, including the CapEx element and the inventory change, but we were not technically able to separate accounts payable and accounts receivable because we had in most countries where we have both businesses, one legal entity and even certain distributors were dealing with both products. Starting next year, that will be then a more total kind of net working capital performance. But now inventories is definitely something that this gentleman can control in their domain.

Good. I think we're soon running out of time. So maybe short answers on the last questions. And for Jussi, this one is for you. How do you see cost volatility affecting your ambition achieved?

Cost volatility on long term, i.e., for '26-2030 period or it's not...

It's not. No, no.

You were asking for a short answer, yes. So of course, the main components, what we have seen in the prices when it comes to logistics and that kind of things which are oil related. Those are the ones, especially, Steffen, you have been successfully mitigated so far. So those are the ones what we have. Then the main raw materials, be it aluminum, in smaller scale, also gold and silver, what you have, those we have hedged. So that's well in line. When we have planned our 2026-2030 period, of course, we have assumed a standard inflation in, therefore. Having said that already earlier, if there are this kind of black swans to come, which actually are picking up then in cost side or dropping out the revenues, then we need to go back to those levers what we have to pull. We can run cost-out programs. We can scale down some of the operations if so needed there. So instead of having a very detailed plans, how the cost volatility will impact, we are more focusing on that toolbox what we have to mitigate different type of ups and downs.

Thank you, Jussi. And then a final one from the online viewers. And Jyri, this one is for you. It's a big theme, digitalization. How is that seen as an enabler to achieving your ambitions for the group -- for the group and the BAs?

It's a very broad topic. Digitalization, it has to do with our own efficiencies where we always have potential to improve, and that's what we are, every day, working on. And fortunately, there are many other companies around the world helping us with their work, contributing with new tools and to improve there. In Daniel's presentation, the e-com topic was addressed. And when you look at the CapEx numbers, historical CapEx numbers in Jussi's presentation, you can see that there was a period where we invested a lot into digitalization. That was a lot into the e-com but different platforms. And then through acquisitions, we inherited different platforms. That's now all going under one SaaS type of a model where we are not taking kind of the role to develop the platform. And you mentioned Shopify, which probably is the largest of its kind in the e-commerce industry. Then to ride with those developments and their budgets are slightly bigger than our revenues just to develop the platform. So that's one of those elements. When we talk and read the newspapers, there is always AI mentioned in every places. I have a hard time figuring out how AI would change the fundamental utility function of our products, meaning if you are a law firm and you are selling legal advice, it might be easier that some of the simpler stuff, you might get through a dialogue with AI solved. But still your roses in the garden won't be cut. And when you eat and drink, because we won't be -- our nutrition won't be kind of -- we don't plug into AI ourselves, and we want to enjoy the nice moment with good food and then have the beautiful tableware and the glassware in front of us to enjoy, make that moment perfect, that's where digitalization is likely to have a very small role in our situation. But on the access to the market, getting the consumers' awareness, Steffen showed only one nice video, but there are many on the -- on track split and so forth that people, consumers are watching through way more than any advertising of sports cars or anything like that. And that describes that it's a channel topic, but I don't see it as a threat to us as a business.

Good. I think maybe it's good to end on those words and wrap up this Capital Markets Day. So thank you all for participating, and have a nice rest of the week.