Earnings call transcript: Duell Oyj Q2 2025 shows revenue growth

Duell Oyj reported its Q2 2025 financial results, revealing a net sales increase to €29 million, slightly surpassing market expectations. The company's stock surged 13.29% following the announcement, reflecting investor optimism. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.78, indicating robust financial health despite a decline in adjusted EBITDA. Strategic improvements and strong regional performance contributed to the positive sentiment.

Key Takeaways

• Duell Oyj's Q2 net sales reached €29 million, a 4% increase.
• The stock price rose by 13.29% post-announcement.
• Central Europe now accounts for 48% of business.
• Online sales grew significantly to 33%.
• Operational expenses decreased to 18.9% of sales.

Company Performance

Duell Oyj demonstrated stable performance in Q2 2025, with net sales growing by 4% to €29 million. The company has effectively expanded its market share in Central Europe, which now represents 48% of its business. Online sales have also seen a notable increase, rising from 26% to 33%, reflecting a successful digital strategy.

Financial Highlights

• Revenue: €29 million (4% growth YoY)
• Half-Year Net Sales: €57.5 million (4.3% growth)
• Adjusted EBITDA Q2: €1.1 million (16% decline)
• Half-Year Adjusted EBITDA: €1.8 million (10.6% growth)
• Gross Margin: Approximately 24%

Market Reaction

Following the earnings announcement, Duell Oyj's stock rose by 13.29%, indicating strong investor confidence. The stock currently trades at €7.12, approximately 177% above its 52-week low of €6.08. InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors. For more undervalued stocks, visit our Most Undervalued Stocks list.

Outlook & Guidance

The company maintains its fiscal year 2025 guidance, expecting organic net sales to match or exceed the previous year. InvestingPro data reveals that net income is expected to grow this year, with analysts forecasting profitability. With an EBITDA of €5.89 million in the last twelve months and a revenue growth rate of 4.77%, Duell Oyj anticipates improved adjusted EBITDA and remains focused on capital efficiency and profitability. The outlook for the Q3 summer season is positive, driven by strategic initiatives and market expansion. Unlock 8 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Executive Commentary

CEO Magnus Mjermoys stated, "We are able to take our fair share of the market even in difficult times," emphasizing the company’s resilience. He also noted, "The strategy implementation is an ongoing journey quarter by quarter," highlighting the continuous focus on strategic growth.

Risks and Challenges

• Decline in adjusted EBITDA for Q2 could impact profitability.
• Challenging winter conditions in Nordic regions may affect future sales.
• Potential impacts from trade wars could disrupt operations.
• Inventory management remains a critical focus area.
• Consumer spending trends in Europe could influence future growth.

Q&A

During the earnings call, analysts inquired about the impact of potential trade wars and inventory challenges due to a weak winter season. The management addressed these concerns, emphasizing their strategic growth in Central Europe and the importance of adapting to consumer spending trends across different regions.

Full transcript - Duell Oyj (DUELL) Q2 2025:

Pele Rohe Hammerleiden, Moderator, Duel: Good morning and welcome to Duel's First Half and Second Quarter twenty twenty five Financial Report Webcast. The result will be presented by CEO, Magnus Mjermoys and CFO, Kai Malmsteen. My name is Pele Rohe Hammerleiden. During the webcast, there's an opportunity to send questions via chat. And at the end of the event, we will go through the questions and answers session.

Gentlemen, you're welcome. Thank you, Pelarvo.

Magnus Mjermoys, CEO, Duel: Yes. So welcome on my behalf as well. The second quarter, which comprises from November, December, January and February is a period where normally, the winter products and the winter categories is really at center stage in Dwells business. This year, in our quarter two, the weather conditions served up some challenges in this respect, and this changed the demand environment for Duel and, as such, a little bit different than what we had planned and hoped for. Despite these conditions, we were able to continue net sales growth of the company.

And this change in demand picture, of course, also has a bearing and an impact also on the blended margins of the company. We'll get back to that a little bit. And the situation we had in the second quarter was that the snow conditions, the amount of snow in the Nordic countries, in Finland, Sweden and Norway, particularly in the mid and south regions of these countries, were significantly below historical levels. And of course, that meant that the conditions for snowmobile riders didn't at all materialize in a normal way. As you can see from the picture, while the green livery of the Arctic Cat Sled goes maybe well together with the green turf, it's not the natural environment for a snowmobile.

It should be a crisp white background, of course, snowy background for the snowmobile market. And this means that in those regions where the snow conditions didn't allow snowmobile riding, that it meant that sleds were left in garages to wait for better conditions and, in that sense, impacted the demand for snow category products. In the most northern regions of both Sweden, Finland and Norway, the snow conditions were good. There is still snow there. So in those regions where the conditions were, shall we say, normal, we were we could also see that the progress that we made in these categories were as planned, meaning that we are growing the business also in this category.

So the overall, the situation we had now in Q2 was very much driven by the circumstances or weather conditions. And this means that we ended up having to balance a little bit our activities and also pivot to focus more on other regions, other product categories. And in this respect, we succeeded reasonably well, particularly there the amount that we were able to grow the business in with Central European customers. A few highlights of the quarter. Despite and below average amount of snow in The Nordics, we are very happy to see that one of our youngest brands in the family, our house brand Amok, actually did a sales record in this winter.

And to some degree, of course, this is a situation that plays out already from preorders ahead of the season, but also throughout Q2, the progress with the Amok brand was very, very encouraging. We introduced new products in the range of products with under the Amok brand, and these have been well received in the market. So we're very happy with the progress of this product group and this brand. A warm winter means, of course, also that other categories, for example, bicycle, actually the market and the market window expands and the conditions to ride bikes bicycles was started earlier in The Nordics this year. And we have also now in Q2 brought in new products in the bicycle product range.

And one highlight here, Pirelli tires for bicycles. This, you could say, for Dual is a very natural progression in the sense we have been working with together with Pirelli as one of our major brand partners for several years on the motorcycle side. And it was very natural for us to also expand this cooperation with Pirelli to the bicycle category. Interesting new products that the reception in the bicycle market has been very, very positive, so we have positive expectations of this cooperation going forward. Still remaining with the bicycle category here a little bit.

During the period, we also held our own dealer event in Finland for the bicycle dealers in Finland. This is we continued on a concept that we launched last year. And now we were happy to see that, that setup and that approach even brought more dealers to our facilities for the annual dealer days. And this is a meeting point between our dealers, us and our expertise and we invite also a range of we had probably around 15 brands represented during our event there. And this is an example of how we implement our strategy where we say we want to be the select the best partner both for brands and for our dealers and this is a great example of how Dual creates that meeting point between parties and with the interest to further all of our businesses.

In Central Europe, our strategy to continue focus and drive growth in Central Europe, where we see that there's significant potential ahead. We also, in quarter two, continued that journey to expand the customer base, the dealer network in Central Europe. Currently, this is very much focused around motorcycle riding gear. And if I highlight a couple of regions in Central Europe, I would say, German and Benelux continue to be very promising potential for Duel in this with these categories and in this market. So strategy implementation continues.

Then highlights of the results. In the second quarter, we managed to grow our net sales with just about 4%, so it reached over €29,000,000 And this supported then that on a half year basis, we maintained a 4% growth and we reached €57,000,000 in the first half. The impact of this change in demand picture and the blended profitability profile in the second quarter did also create a challenge for us on gross margins. So on gross margins, we were down a little bit on compared to the previous year due to these circumstances and we managed to reach an adjusted EBITA of €1,100,000 On the half year basis, this meant that it supported us to reach more or less same levels of gross margins, 24% and change. And in absolute terms then, we managed to improve the adjusted EBITDA to a total of €1,800,000 in the first half of the year.

On the financial position, the lower demand snow categories, of course, deviate a little bit from our plans in terms of how we could turn around inventory sourced ahead of the season. And this impacts a little bit our net debt progression. And but nevertheless, the financial position with respect to net debt and with respect to leverage ratio is improved from the previous year position. The cash flow dynamics, if you look at the total year, this is the period where we're building inventory ahead of the peak season, which is the Q3, the start of the summer season, and also this year in a similar way. But as you can see from the comparison figures, we are gradually we are able to also make this a little bit more efficient.

So while cash is going towards inventory in this period in the magnitude to which is slightly less than last year. So these are the highlights. And here, I'll hand over to Kai, and then we'll look at more details.

Kai Malmsteen, CFO, Duel: Hello from my side as well. Let's open up the numbers a little bit more. And starting from sales, here we see that the growth continues and quarter two fully organic growth of 3.9% with a total euro amount of €29,000,000 20 9 point 3 bringing the half year's numbers to €57,500,000 so a total growth of 4.3%. What's also what we have said before is continue that the share of business in Central Europe is increasing. So for the quarter, 48% compared to 44% a year back.

So strategy as such is working that focus on Central Europe is increasing. Our portion of own brand sales is stable, 20% compared to 2021. Then we can see an increase for the quarter in the online sales to 33% from previous year 26% and on a half year basis 29% from 25%. So business is gradually also moving towards online sales more and more. So I can say, looking at the development here, we have comparing quarters to similar quarter same year back.

This is now the sixth quarter in a row with growth, so slowly growing the business. And on the profitability side, we start from the half year side. We have in real euro numbers €1,800,000 EBITDA adjusted EBITDA compared to 1,700,000.0 a year back, so a growth of 10.6% for the half year. If we look then back on the quarter, quarter two number, here we have a decline of 16% due to the weaker demand in the snow categories. But all in all, cumulatively, it's progressing well.

We can also see that looking into the OpEx development and if we take it in terms of percent of sales, so now quarter two numbers, 18.9% compared to last year 19.7% and for the half year 20.4 compared to 21.1%. So here is we have said that the impact of the efficiency program is gradually coming into the picture. So bigger impact now quarter two. Quarter '1 was not really impacted at all. So this is working as planned.

Working capital is improving. We have a level of €58,500,000 compared to year back fifty eight point nine Here, the development was not in the level that we expected, but anyhow it's improving. And here, we also have the challenge from the weak winter conditions impacting. But all in all, the efficiency of the working capital management is getting better, improving 39% of inventory to LTM sales and here gradually improving. So from same period timeframe 2023, '40 '9 point '7 percent, now down to 39.5.

And this journey continues. The financial position remains stable with a leverage of four point zero compared to 4.5. Yes, a little bit above our medium target, but this is the time of the year when our leverage position goes up in a little bit when we are tying up money in the balance sheet. But looking to the details there, so cash flow negative, but improvement from last year. And cash and cash equivalent reserves €200,000 but we have an unused RCF facility of €18,800,000 So all in all, and if you see the leverage position improve, small improvement, 29.3% compared to twenty nine point nine percent one year back.

So to summarize the whole financial situation, I say this, on most of the parameters here, we are taking again one step forward and the development continues. So giving back to you, Magnus.

Magnus Mjermoys, CEO, Duel: Thank you, Kai. The development in the second quarter supports that we keep our 2025 fiscal year guidance unchanged. And to repeat, this means that we expect that the organic net sales with comparable currency will be on the same level or higher than the previous years. And regarding profitability, we expect that the adjusted EBITA will improve from last year's level. Then a quick reminder recap of Duel's strategy.

The strategy implementation is ongoing journey quarter by quarter. And also in this quarter two, you will have clear evidence of that this strategy is working, that we are able to onboard new dealers, new customer relationships, particularly in Central Europe, where the focus to expand is. As we saw from the figures and the key ratios, the online sales actually was very strong in the second quarter, and this is testimony to that Duel is a strong partner for all our customers that choose to utilize online channels to grow their business. And equally, the journey and the ongoing work to create an attractive brand portfolio and an attractive range of products with the highlights of Pirelli tires in the bicycle category and the highlight of house brands developing favorably and continuing to grow is a good those both are good testimonies that we have the ability and the know how to read the market opportunities, the market demand and match that with suitable attractive products for our dealers. We will continue to focus on developing the profitability as the trend supports, and this is a clear focus area also supported by our guidance.

Equally, growth. And again, we have, as highlighted, we have a track record now of being able to deliver growth in a number of quarters, and this is also supporting the work going forward. The capital efficiency, this is a clear challenge of this type of business, and this means that this will never go out of our focus window. So this is an ongoing process also to step by step sequest to have better capital efficiency in the business. So ongoing strategy implementation.

Duel's position in the market is strong. We are we have a product assortment and a product category offering that is many of our competitors don't have this broad offering. And this means that we have abilities to be a partner for many different types of dealers and customers, whether they are specialty shops that they focus only on one product category, let's say they are a service workshop for bicycles or if they're an e commerce dealer with focus on every category or if there's a retail store with focus on some or several of these, we have the ability to match then both the product offering and the, shall we say, the value package to various types of dealers. The mix of both our own brands and strong, well recognized leading brands in the industry is a formula that we see and we believe is the right way to go. And this gives us both agility and gives us also a margin a blended margin profile that supports development.

And this is also an ongoing process with the amount of brands we have and with over 500 brands and the amount of products. This is obviously an ongoing process all the time. The fact that we are, despite tough conditions in a given quarter like this second quarter, we can grow the business, we also read as an indication of that, that we are able to also take our fair share of the market even in difficult times. So going forward, we believe this is a good position for Doel to continue the work and seek the growth and profitability development ambitions we have outlined in our strategy and our guidance. Summarizing quarter two, we are very happy about that we managed to continue growing the sales.

And again, the very important component in this equation is the continued growth in Central Europe. And this is, as I highlighted, very much the sweet spot of Duel's growth strategy. The conditions in The Nordics, particularly, were disappointing, were difficult, and this meant that a little bit of the sweet spot that we would normally have in this time of the year with the winter and snow categories didn't fully materialize. But it's encouraging when we look at the details there, as I highlighted earlier, when we look in the regions where the conditions were normal, there the formula works and there the results that and the targets we had set out to achieve materialized. And then the disappointing side of the equation is that the conditions didn't support it throughout the Nordic countries.

But all things considered in those conditions, we are reasonably happy with the quarter two performance. That rounds off the details, the things we wanted to present to you. And then we also have room for possible questions from the audience. So over to Pele.

Pele Rohe Hammerleiden, Moderator, Duel: Yes, thank you. So there are many questions related to the market and specific questions to financials. So we can start with this hot potato, the trade war. How do you see the impact of this to our business? And if we think that we have a big part coming from China, the goods.

So, what kind of how do you see this could affect our business?

Magnus Mjermoys, CEO, Duel: Well, maybe the first comment is that, of course, this sudden and maybe even to some degree unpredictable changes to global trade patterns, it, of course, has an impact. Can we see the picture yet clearly what how it will shake out? I think it's a little bit early days. If I start with The U. S.

Tariffs, then Duel doesn't have dealers and customers in The U. S. Our strategy is about Europe. So from that point of view, we don't have a clear and immediate challenge there. We do have suppliers to some suppliers in some product categories from The U.

S. But by and large, most of those suppliers, we have also alternatives in other countries. Now Dennis, maybe more I think the question was also related to China and then, of course, Europe. Maybe China, Europe, yes. And now I think it's simply too early to say how will that shake out when there's no clear things to address there.

But yes, we most of the products that Dwell sells, they are in the end of the day consumer products. And when you talk about consumer products, by and large, Asia is a big, big producer of consumer products. So yes, it would, for sure, have some impact. Now today, I don't dare to predict the outcome of things that haven't really materialized yet.

Pele Rohe Hammerleiden, Moderator, Duel: Yes. As said, so the predictability is close to zero as all these changes happen overnight. Difficult to comment, about the pure poor winter conditions? Will those still affect the Q3 figures? And let's say, if we got some extra inventory for winter goods, will they kind of affect the business in, let's say, next winter season and the profitability?

So,

Magnus Mjermoys, CEO, Duel: in Q2, it's kind of like the prime, normally the prime, the peak of the market for these winter categories. Q3 isn't. Q3 is very much the peak and the start of the summer season. So but yes, of course, with the lower demand for these categories, to some degree, dealers will, for sure, have more stock of Inter products that they have to carry over from over the season now to next fall and equally for Duel. So from that point of view, it has also an impact that will be seen a little bit over the next few months.

But particularly where the hotspot for the business is, Q3 is about the summer products and you could say everything else than snow, all the other categories than snow.

Pele Rohe Hammerleiden, Moderator, Duel: So this is a good bridge to Q3 or summer season. How have the dealers taken kind of the summer products so far in? Or are they still expecting to make kind of big buys or fast buys instead of kind of preorders?

Magnus Mjermoys, CEO, Duel: I wouldn't go as far back as the last fall when we started the pre sales process for this summer season and has now started. Then very much dealers said, well, they had a good season behind them last summer. And this, of course, encouraged also appetite for plans for the next season. And the next season is now. So we are positive about the Q3 outlook.

Also now when the winter was mild, the season started sooner. So if you go to, let's say, South Sweden, we've already had or our dealers have had season opening kind of events, etcetera. And when you look at when we participate in them and look at the amount of people on the move and on out there looking at new products, etcetera, we get a good sentiment from that. Now the game is on and in a few months, we'll be back here to report that.

Pele Rohe Hammerleiden, Moderator, Duel: Like the, let's say, spring started a bit earlier in southern part of, let's say, Finland and Sweden. Did we have the goods also for the market already in place?

Magnus Mjermoys, CEO, Duel: Let's say, the cycles of particularly preorders and preorder deliveries, they're not timed for, let's say, February or early March kind of activities, while you even could see some the most diehard enthusiasts were testing the streets already in what we would normally would consider winter months. But it's not really the market. There's some diehard enthusiasts that really can't wait. But in terms of the actual market demand and our, let's say, sequencing, this is well synchronized between us and dealers. So I would say normal.

Okay.

Pele Rohe Hammerleiden, Moderator, Duel: As the winter season was pretty challenging, what were the actions that we kind of boosted to kind of get the negative side

Magnus Mjermoys, CEO, Duel: to positive? Like I touched on, in the regions where snow conditions were normal, actually, some northern regions in the Nordics, even more snow than So of course, it meant that we pushed hard in those regions where the demand environment was positive. And then the other obvious is to just pivot to try to compensate then with other product categories, other customers, other regions. And this, can also see in the results for both the geographical split and the e commerce

Pele Rohe Hammerleiden, Moderator, Duel: ratio there, those two Related to the, let's say, online e commerce, the online sales was exceptionally high. So, did that come from a big bunch of customers? Or were there just only a few big customers behind that sales?

Magnus Mjermoys, CEO, Duel: A blend. It is a basket. But in that basket, there are bigger players and there are a bigger amount of smaller players. And I would say everything. But what we clearly could see that those with capability also to make deals, were active in this And

Pele Rohe Hammerleiden, Moderator, Duel: these came mainly from Central Europe? Yes. Yes. Okay. Few questions related to financials.

So the cash flow was negative. How do we make sure that we have enough liquidity

Magnus Mjermoys, CEO, Duel: going forward?

Kai Malmsteen, CFO, Duel: Yes. We have a pretty good RCF facility. So as such, we are not running out of cash and that's meant for this season of the year when the capital is to a large extent tied up in the balance sheet. But this is part of the longer term development to improve the working capital efficiency.

Pele Rohe Hammerleiden, Moderator, Duel: Okay. So it's this also much to do with the seasonality? We are taking the summer goods in for the high season.

Kai Malmsteen, CFO, Duel: Yes, very much to do with the seasonality.

Magnus Mjermoys, CEO, Duel: Yes.

Pele Rohe Hammerleiden, Moderator, Duel: Then about the cost efficiency program that we started. So, of the impact came to Q2. How what magnitude was that?

Kai Malmsteen, CFO, Duel: Hard to say exactly the magnitude of it because it's coming in gradually. But what we can see there, when you have both personnel related part of efficiency program and then other cost types of and they are coming into the picture gradually here. Difficult to say how much really the impact, but continue going forward, the full impact is coming here during the year.

Magnus Mjermoys, CEO, Duel: Yes.

Pele Rohe Hammerleiden, Moderator, Duel: Do you expect to so we'll gain more in Q3 and Q4 compared to Q2? Or is it more or less same?

Kai Malmsteen, CFO, Duel: More or less same.

Magnus Mjermoys, CEO, Duel: Yes.

Pele Rohe Hammerleiden, Moderator, Duel: Then about the currencies, which currencies were the positive ones that impacted mainly for our result?

Kai Malmsteen, CFO, Duel: It's and especially for sales side there, especially the Swedish krona, which we have big volume in. Then also the small portion Norwegian krona and British pounds, but main part Swedish krona.

Pele Rohe Hammerleiden, Moderator, Duel: Okay. Then we have a question about the inventory. Does the financial position limit the ability to build the inventory for, let's say, high season for summer? Or do we need to restrict it somehow?

Kai Malmsteen, CFO, Duel: If we look from a financial position point of view, that's not a restriction for building an inventory, that's more to focus to keep the inventory levels on a reasonable level with good turnover. But it's not from a financial side, it doesn't restrict us.

Pele Rohe Hammerleiden, Moderator, Duel: Okay, good. Then to larger picture about the, let's say, consumer confidence and their spendings for free time. How do you see let's say, motorcycling going forward? Are people still kind of keeping the money at bank? Or are they more eager to spend the money to their hobbies?

Or

Magnus Mjermoys, CEO, Duel: are

Pele Rohe Hammerleiden, Moderator, Duel: there differences in Europe compared to Nordic countries?

Magnus Mjermoys, CEO, Duel: Yes. Maybe my thoughts on this is one perspective, if you look at quarter two or even this first half of our fiscal year, and then when we read the headlines every morning, we start to maybe be have a little bit of worries on our foreheads, wrinkles on our foreheads. Overall, we can see that the pressures that is affecting consumer sentiment has eased. And now talking about interest rates and similar. We can also, of course, read something from the statistics of registered vehicles, where particularly Central Europe is a little bit more positive note than what the trend is in The Nordics still.

And this is also why you see a little bit easier for Duel to make progress and growth in those regions than in the traditional markets. And but like I hinted, now we seem to be heading into times where major things might affect also consumer demand. You could maybe even use a stronger word than might in that sentence. And this is something we have to follow very, very closely now that how is demand, consumer sentiment developing with all these changes and all these surprises in the world.

Pele Rohe Hammerleiden, Moderator, Duel: Yes, okay. Then going back to Central Europe. So the growth has continued. What are the kind of the factors behind the growth? What are the actions that we have been successful with?

And how we are developing the businesses in Central Europe?

Magnus Mjermoys, CEO, Duel: I would say, when we talk about strategy in sort of simple terms, we talk about the right product, at the right price, in the right time. And this is really the core. And this is what is center stage when we talk when we engage discussions with a new customer, we have an attractive product offering and we have a formula that makes sense commercially for us and for them. And this is the basis. And the broad offering is a resource to dealers in the sense that it's a partnership that they can grow, can actually serve them wider.

And this, I would say, maybe particularly once we haven't established, we have an opening and then the journey continues. But it's not really more complicated than that, that we have the right products and we can be a great partner for new customers. Then in terms of activity, of course, it means really grinding work, finding those customers, convincing them. It's really traditional business development work. Very good.

Something we're very good

Pele Rohe Hammerleiden, Moderator, Duel: at. Yes, that's good. Those were all the questions that we have had in this session. And thank you for all of these. We will then come back on July 3 with the Q3 result.

But if you want still to summarize and conclude the session, so Yes.

Magnus Mjermoys, CEO, Duel: Maybe I'll focus the final comments on the half year. We continue to grow. We're continuing to develop the profitability. We had some challenges in quarter two that we found ways to largely overcome, and I want to thank the entire Duel organization for well done work and good efforts in quarter two. And we'll meet again in early July for quarter three.

Thank

Pele Rohe Hammerleiden, Moderator, Duel: you. Thank you.

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