Desenio Group Q1 2025 slides: sales drop 10% amid major debt restructuring

Introduction & Market Context

Desenio Group AB (STO:DSNO) presented its Q1 2025 results on April 30, 2025, revealing a challenging quarter marked by declining sales but improved profitability margins. The company’s stock reacted negatively to the results, falling 8.65% to SEK 0.18 per share, approaching its 52-week low of SEK 0.109.

The presentation highlighted the completion of a significant financial restructuring that resulted in a 95% dilution for existing shareholders but established a healthier capital structure. This restructuring comes as the company continues to navigate weak market conditions across all its operating regions.

Quarterly Performance Highlights

Desenio reported net sales of SEK 206.0 million for Q1 2025, representing a 10.0% decrease from SEK 228.9 million in the same period last year. Despite this decline, the company managed to improve its adjusted EBITA margin to 10.4% from 9.7% in Q1 2024, while the adjusted gross margin increased to 84.8% from 83.8%.

As shown in the following key performance metrics:

The sales decline was evident across all geographical regions, with Core Europe, Rest of Europe, and Rest of World each experiencing a 12-13% drop in sales. The Nordic region showed more resilience with only a 2% decrease.

The regional breakdown illustrates the varying impact across markets:

The company’s search share of voice data suggests Desenio maintains a competitive position in key markets despite the challenging conditions. The presentation included market positioning data for Germany, UK, Sweden, and the US, showing Desenio’s relative standing against competitors like Juniqe, Posterlounge, and Postery.

Financial Restructuring

A central focus of the Q1 presentation was the completed restructuring of Desenio’s bonds and capital structure. This major financial overhaul included a 75% write-down of bonds, a debt-for-equity swap, and the issuance of new bonds with extended maturities.

The restructuring resulted in a 95% dilution for existing shareholders, with 33% of total shares listed and tradable. The company’s legal structure and financing arrangements were significantly altered:

This restructuring is expected to substantially reduce Desenio’s interest expenses by approximately SEK 69 million, from SEK 103 million in 2024 to SEK 34 million in 2025. The impact on cash flow is illustrated in the following slide:

Cash Flow & Profitability Analysis

Despite the sales decline, Desenio’s presentation emphasized improvements in profitability and cash management. The adjusted operating cash flow improved slightly to SEK -17.7 million compared to SEK -19.1 million in Q1 2024.

The company’s EBITA margin bridge provides insight into the factors affecting profitability:

The operating cash flow breakdown reveals the impact of one-time items related to the restructuring:

The quarter included SEK 27.9 million in one-off items, with SEK 6.1 million related to warehouse consolidation and SEK 21.9 million connected to the bond refinancing. Excluding these one-time costs, the company’s underlying profitability showed some improvement, primarily driven by better gross margins and reduced administrative expenses.

Strategic Initiatives & Forward Outlook

Desenio’s management outlined a clear strategy focused on reversing the negative sales trend while continuing to leverage improved margins and reduced costs. The company plans to take advantage of its scalability and maintain its focus on cost reduction initiatives.

The Q1 summary highlighted:

CEO Fredrik Palm acknowledged the weak market conditions but expressed confidence in the company’s measures to improve profitability. With the restructured capital base, Desenio appears better positioned to weather the current market challenges, though the significant shareholder dilution and continued sales decline remain concerns for investors.

The company’s search trend data suggests market interest remains subdued, aligning with the sales performance. However, the improved capital structure provides Desenio with more financial flexibility to implement its turnaround strategy in the coming quarters.

Full presentation:

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