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Introduction & Market Context
Profoto Holding AB (STO:PRFO) reported continued market challenges in its Q2 2025 presentation on July 18, with net sales declining 13% year-over-year to SEK 171 million. The photography equipment manufacturer is responding with a dual strategy of expanding into the LED lighting market while implementing significant cost reduction measures.
The company’s stock closed at SEK 24.20 on July 17, up 0.83% ahead of the earnings presentation, but remains near its 52-week low of SEK 23, reflecting investor concerns about persistent market headwinds.
"Q2 result is affected by a persistent challenging market," management stated in the presentation, echoing similar sentiments from Q1 when the company cited weakened demand particularly in the US market.
Quarterly Performance Highlights
Profoto’s Q2 financial performance showed deterioration across key metrics, with organic growth at negative 7%. EBIT fell to SEK 18 million from SEK 36 million in the same quarter last year, resulting in an EBIT margin of 11% compared to 19% previously.
The company experienced sales declines across all regions, with APAC showing the steepest drop at 21.2%, followed by EMEA at 11.1% and Americas at 9.2%. When adjusted for currency effects, Americas was essentially flat, suggesting the region may be stabilizing after the demand slump noted in Q1.
As shown in the following regional sales breakdown:
On a trailing twelve-month basis, the financial picture shows a continuing downward trend. Net sales LTM decreased by 6% to SEK 700 million, while adjusted EBIT LTM fell 24% to SEK 117 million, resulting in an adjusted EBIT margin of 17% compared to 21% in the prior year.
The following chart illustrates this ongoing trend in both sales and margins:
Strategic Initiatives
The most significant strategic development in Q2 was Profoto’s entry into the LED lighting market with three new product launches. The company unveiled the LP2000C, L600C, and L600D at the Cine Gear Expo in Los Angeles, targeting film production and studio applications. Additionally, Profoto launched successors to its popular B10 series with the new B20 and B30 models.
Management reported that initial customer response to these launches "surpassed expectations," though shipping for the LED products won’t begin until Q4 2025, with limited financial impact expected this year.
The strategic importance of the LED market entry is highlighted in the following visualization showing how it expands Profoto’s total addressable market from SEK 3.5 billion to SEK 14.7 billion:
The company’s updated product portfolio now spans four distinct categories: Studio lights, OCF lights, Clic, and the new LED segment. This expansion represents the culmination of nine successful product launches over the last twelve months.
As illustrated in the product portfolio overview:
Cost Efficiency Measures
In parallel with its market expansion, Profoto is implementing significant cost reduction initiatives. The savings plan announced in Q1 is expected to reduce the company’s cost base by approximately 20%, corresponding to an improved annual cash flow of SEK 60-80 million, with about SEK 30 million positively affecting EBIT.
The company reported that these cost-saving efforts are beginning to show results, with quarterly expenses decreasing from SEK 105 million in Q1 2025 to SEK 93 million in Q2. Management expects the full effect of these measures to be visible by Q4.
The following chart demonstrates the expense reduction trend:
A key component of the cost reduction strategy involves normalizing R&D spending. After significantly increasing R&D investment to develop its LED product line, Profoto aims to reduce R&D expenditure from the current 20% of net sales to a historical level of 10% by the end of 2025.
This R&D spending trajectory is illustrated in the following chart:
Forward-Looking Statements
Looking ahead, Profoto maintains a cautious outlook, noting "no change in market demand" but emphasizing that the company is "well equipped to handle the challenges." Management is closely monitoring developments regarding tariffs, which could impact market conditions and competitive positioning.
The company expects its updated flash product line and new LED offerings to strengthen its market position, while the full impact of cost reduction measures should materialize in Q4. With shipping of LED products also set to begin in Q4, Profoto is positioning for potential recovery in 2026, though it anticipates limited financial contribution from LED sales in 2025.
Profoto’s next quarterly report is scheduled for October 23, 2025, when investors will be looking for signs that the company’s strategic initiatives and cost-cutting measures are beginning to yield results in a challenging market environment.
Full presentation:
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