Fagerhult Q1 2025 slides: Record orders amid sales decline, French acquisition announced

Introduction & Market Context

Fagerhult AB (STO:FAG) presented its Q1 2025 results on April 29, 2025, highlighting a record order intake despite challenging market conditions that led to declining sales and profits. The Swedish lighting solutions provider is navigating an unpredictable market environment where global political tensions continue to impact new construction investment decisions, though renovation projects are showing positive momentum.

The company’s stock closed at 43.40 SEK on May 16, 2025, down 0.46% for the day, and trading within its 52-week range of 36.90 to 74.90 SEK.

Quarterly Performance Highlights

Fagerhult reported a record order intake of 2,227 MSEK for Q1 2025, representing a 5.9% organic increase from 2,102 MSEK in the same period last year. However, net sales declined by 11.0% organically to 1,940 MSEK, down from 2,180 MSEK in Q1 2024.

As shown in the following financial highlights chart, operating profit before items affecting comparability (IAC) fell to 145 MSEK from 220 MSEK in Q1 2024, with operating margin decreasing to 7.5% from 10.1%:

Earnings per share before IAC dropped to 0.43 SEK from 0.78 SEK in the prior year, while operating cash flow decreased to 26 MSEK from 114 MSEK. Despite these challenges, the company emphasized its continued focus on improving gross profit margins and reducing its cost base.

The financial summary table below provides a comprehensive overview of the quarter’s performance:

Segment Performance Analysis

Fagerhult operates through four distinct segments: Collection, Premium, Professional, and Infrastructure, each targeting different market segments with specialized lighting solutions.

The company’s operating model organizes its various brands under these four segments:

The Collection segment, which includes brands like iGuzzini and LED Linear, reported an order intake of 1,022 MSEK, up 9.0% organically. However, net sales declined by 11.7% to 889 MSEK, with operating margin before IAC falling to 7.7% from 11.1%. A significant highlight was securing a 123 MSEK order for the King Salman Park project.

The Premium segment maintained relatively healthy margins at 14.6% (down slightly from 15.2%), despite an 8.9% organic decline in net sales to 694 MSEK. Order intake remained nearly flat at 726 MSEK.

The Professional segment showed the most dramatic contrast, with order intake increasing by 18.0% organically to 275 MSEK, while net sales fell by 18.6% to 210 MSEK. This segment struggled with profitability, reporting an operating margin before IAC of -2.2%, down from 7.1% in Q1 2024.

The Infrastructure segment demonstrated the most resilience, maintaining a relatively stable performance with an order intake of 203 MSEK and net sales of 206 MSEK. This segment even improved its operating margin slightly to 11.0% from 10.6%.

Strategic Initiatives

A key strategic development announced during the presentation was Fagerhult’s pending acquisition of Trato TLV, a French lighting solutions provider founded in 1947. The acquisition, expected to close in Q2 2025 pending regulatory approval, will position Fagerhult as the second-largest player in the French market for professional lighting solutions.

Trato specializes in retail lighting solutions, while TLV focuses on healthcare equipment and interior solutions. The acquisition aligns with Fagerhult’s growth strategy and expands its presence in key application areas.

The following timeline illustrates Fagerhult’s history of strategic acquisitions, with Trato TLV being the latest addition:

The company has also implemented cost reduction measures across all businesses, with benefits expected to materialize from Q2 2025 onward. These initiatives are designed to enhance operating results and improve profitability in the face of challenging market conditions.

Forward-Looking Statements

Despite the challenging start to 2025, Fagerhult expressed cautious optimism about future prospects. The company highlighted several positive indicators, including:

1. Record order intake suggesting potential revenue recovery in coming quarters

2. Cost reduction initiatives expected to improve operating results from Q2 onward

3. Increasing positive signs in the renovation market

4. Strategic positioning to benefit from the ban on fluorescent lighting

5. Expansion in smart lighting and sustainable solutions

The company’s conclusions and outlook can be summarized as follows:

Management emphasized that while the global political situation continues to negatively impact new construction investment decisions, renovation projects are showing promising signs. The integration of Trato TLV is expected to strengthen Fagerhult’s market position in France and contribute to future growth.

With net debt levels reduced significantly over recent years and a healthy order backlog, Fagerhult appears positioned to weather current market challenges while implementing strategic initiatives for long-term growth.

Full presentation:

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