Earnings call transcript: Duell Oyj Q3 2025 sees marginal sales growth

Duell Oyj reported its financial results for the third quarter of 2025, showing marginal growth in net sales and a decline in profitability. The company continues to face challenges in the market, which were reflected in its stock price movement. Duell’s stock price increased by 6.31% to €4.55, following the release of its earnings report. According to InvestingPro data, the stock remains undervalued despite a challenging year that saw a 39.55% decline in share price. Despite the rise in stock price, the company revised its full-year guidance to reflect lower expected net sales and adjusted EBITDA.

Key Takeaways

• Net sales for Q3 reached €38.2 million, a 0.7% year-on-year growth.
• Adjusted EBITDA declined, with a margin of 5.4%.
• Stock price rose by 6.31% post-earnings announcement.
• Full-year guidance revised downwards for net sales and EBITDA.
• Central Europe market share increased to 51% of Q3 volume.

Company Performance

Duell Oyj’s performance in Q3 2025 showed slight improvement in net sales, driven by continued growth in the bicycle category and positive reception of new products from the Halvarsson rider gear brand. However, profitability took a hit, with adjusted EBITDA falling due to increased operating expenses and declining gross margins. The company has been focusing on maintaining inventory levels and improving its working capital, which showed a positive trend.

Financial Highlights

• Revenue: €38.2 million, up 0.7% year-over-year.
• Adjusted EBITDA: €2.1 million, down from the previous year.
• Gross margin: 21.7% for Q3, down from the previous year.
• Operating expenses: 15.4% of sales for Q3.

Market Reaction

Following the earnings announcement, Duell Oyj’s stock price increased by 6.31% to €4.55. This movement reflects investor optimism despite the company’s revised guidance. InvestingPro analysis reveals the stock’s RSI suggests oversold territory, while maintaining a healthy current ratio of 3.49, indicating strong short-term liquidity. The stock remains within its 52-week range, with a high of €8.16 and a low of €0.03, indicating volatility in its trading pattern. Subscribers to InvestingPro have access to 13 additional key insights about Duell’s financial health and market position.

Outlook & Guidance

Duell Oyj revised its full-year guidance, anticipating net sales to remain at the same or lower levels compared to the previous year, with adjusted EBITDA expected to decline in absolute terms. InvestingPro data shows the company maintained revenue growth of 3.52% over the last twelve months, though two analysts have recently revised their earnings expectations downward. The company has removed its medium-term guidance, citing the need for a strategic review. Key focus areas include improving profitability, managing working capital, and enhancing inventory efficiency. For detailed analysis of Duell’s financial outlook and comprehensive valuation metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Magnus highlighted the company’s growth in European markets, stating, "We continue to grow. We continue to demonstrate our ability to drive growth in the main markets of Europe." However, he acknowledged challenges in profitability, noting, "We hit the bump in the road when it comes to profitability development."

Risks and Challenges

• Weakening consumer confidence may impact sales growth.
• Variations in motorcycle registration data across Europe could affect market dynamics.
• Cold early summer weather has negatively impacted consumer activity.
• Competitive pressures and potential price wars in the market.
• Potential regulatory changes in Finland regarding bicycle benefits.

Q&A

During the earnings call, analysts inquired about potential acquisitions, which are not an immediate priority for Duell Oyj. Concerns were raised about the competitive environment and the potential removal of bicycle benefits in Finland, which could impact sales. The company remains focused on addressing these challenges while maintaining its market position.

Full transcript - Duell Oyj (DUELL) Q3 2025:

Pele Rojemerleinen, Investor Relations: Good morning, and welcome to US webcast for the nine months and third quarter two thousand twenty five financial results webcast. Webcast. We have here Magnus Myanmar’s CEO and CFO Kai Malmsteen, presenting the highlights of the financial report. My name is Pele Rojemerleinen from Investor Relations. During the webcast, there’s opportunity to send questions from the chat in Finnish and English.

And at the end of the presentation, we will come back to the questions in the q and a session. So I think we are ready to move on. So Magnus and Kai, stay to yours.

Magnus, CEO, Dwell: Thank you, Good morning, and welcome also on my behalf. The third quarter is normally the peak season in Dwell’s financial year. The the third quarter that goes from April March, April, and May. And this is the the peak season typically in our in our full year. Also this year also this year, this was the highest activity of of the season so far.

However, during these months of March, April, and May, we saw a clear change in the dynamics in the market with respect to demand if we compare the the first month and and particularly the month of May. And this, we believe, is partly, shown up to from the point of view that in the early months there in the third quarter, the activity is very much about delivering preorders that were committed agreed and committed earlier, and and it’s, let’s say, execution phase of those. Whereas in May, the market is more in the hands of so called daily sales, meaning the the to which degree consumers are are active on the shop floors of of our dealers and and what type of products and and in which regions. So here we saw a a clear shift between, let’s say, March, April, and and May, and and and a change which was not favorable. Nordics the demand in Nordics is is still not developing favorably in in our business.

And, also, we had some activities related to the the overall product assortment, brand portfolio, and some changes in in the distribution value chain there in France that also impacted this period. And and these dynamics in the market then, unfortunately, also impacted the the rate of profitability during the period. And and we can see overall in the market, let’s say, consumer market, also looking at comments and looking at data from overall consumer confidence, this seems to be, in this period, starting to to develop unfavorably in how consumers use their use their purchase power and to what what sort of categories and so forth. When we look a little bit peel open and look into markets and and product categories, we can we can note that in this type of dynamics in the market, it seems in our view that that customers to us, dealers that are playing a broader area, they’re serving perhaps a broader array of different types of consumers, they seem to have fared a little bit better compared to those who serve consumers very locally. And this has to do with with what type of price points with what type which regions the the activity then comes from.

This this is something we note. And and, of course, in a good part of the Nordics, I’m calling in today from in the, let’s say, yeah, West Coast of of and and it’s not motorcycle riding weather today. And and this the fact that we have had an unusually cold early summer has been against the activity of of consumers on on our dealer shop floors. This is something we can clearly note. On the more positive note, as many of you have picked up from earlier communications, our strategy is to gradually grow the business in Central Europe where we think the potential is is massive for Dwell, and this success continues also in quarter three.

And and more details about that here slightly later. And we can also see that some of the product categories that that Well has are continued to grow. The bicycle category has been on a positive note throughout the fiscal year, essentially every month, every quarter. And, of course, equally bicycle market peaks in this quarter three where essentially everybody that owns a bicycle used them actively in these summer months. Here here here also a slight change in in the month of May, but still on on positive growth trajectory.

So this is a category that we see very seen with very positive perspective. If I if I’m allowed to highlight a few activities, a few elements of our business also from the point of view that you get a little bit a little bit insight into what is behind behind the numbers and with a few few things to to raise here as usual. As I said, the growth in the Central European market continues. As a matter of fact, Central Europe was was the the clear clear star in in quarter three in in Joel’s equation. And this is very important for us to continue the the strategic efforts, the the investments we have done into achieving this, they they continue to gradually gradually pay off.

As said as said, the bicycle category is positive, particularly in The Nordics. The, you could say the trend of bicycling for various reasons is, is on a steady, positive note. However, of course, we can also hear note now reach at the some possible clouds on the sky with respect to market mechanisms and and and regimes that have so far had a positive support to this business. And now I’m talking about, particularly in Finland, the suggestion to change the the bicycle benefit that employers many employers offer to their employees and the and the taxation the taxation impact of this change. So so that’s, of course, unfortunate that otherwise positive drivers are are are, let’s say, possibly taken back and that remains to be seen what’s the impact then for the for the sector.

But but we note that this is a possible cloud on the sky around bicycle business going forward in The Nordics. The the third highlight is maybe a detail in in the overall equation, but about 70% of Dwell’s business is is technical parts. And, of course, this is a huge array of different items because they are some are specific for many of them are actually specific for the particular vehicle, so it’s a it’s a match to a make and a model. And so availability of technical parts is a key value to to our customers that do service on on vehicles. And we had decided to actually invest in a little bit higher inventory on certain, let’s call them, high runners, very popular parts that have a steady flow demand.

And we have done this in a couple of locations in our group, and the results that we have seen on this is very positive. So so, basically, driving above average growth by by ensuring that we have an improved service level. So this is this is good to see, but it also is maybe a good snapshot of the value positioning, the value chain position, the value added to its customers, particularly on these so called hard parts and where product availability is very, very crucial part of the value creation model. Then the final highlight in this season of early spring and early summer season ahead or season ongoing, then, of course, it’s also the prime time for rider gear motorcycle rider gear. And Duel has a couple of house brands on on rider gear, with Halvarsson’s being the the most, the largest one and the most, let’s say, high end one.

And this year, also, we have brought new products to the collection of Halvarsson’s rider gray gear, and the the reception of these have been very positive in the market. These these products have their pedigree very strongly in The Nordics, and the brand is established in The Nordics. So that’s the, we could say, main market. But, also, we know we know that that these brands have been favoring or fared quite well in UK where the, let’s say, the environmental situation is very, in many cases, very similar to Nordics that you might have both rain and shine during your long ride. And and the product has has found a good good start also in in The UK market.

So this is this is a good highlight to in this period for also one of our important house brands, Halivar Sopps. If I then move to the key figures for the period there, both the quarter itself and and the nine months cumulative, then the growth continued. The growth continued, albeit in the quarter three, it slowed down. So the growth was marginal and but still still growing year on year, reaching 38 and change in net sales, 38,200,000.0. This slight slowdown, of course, also is seen on the year to date where we had an over 4% growth in in the first quarter.

We were over 3% in the in the second quarter year to date. And and now at three quarters year to date, then then the rate is, if we round it off, percent slightly below as you as you can note, reaching almost 96,000,000. And and again, here, we see this this trend in in the end of q three with respect to consumer confidence. This dynamic of consumer confidence, the dynamic of of price points of the the total blended array of products sold, the the composition of which type of dealers favored stronger than others, the composition of which countries have a have have a positive sign in front of their growth and then which which don’t, then this also affect the blended gross margin development in an unfavorable way. So margin the blended margins were slightly lower than previous year.

And since the quarter three is the the dominant in volume, this also plays out in in the year to date that it didn’t reach on a year to date level, the gross margins either. And and equally, this is of a magnitude also trickles down to to profitability to adjusted EBITDA that did not reach on the on the quarterly level nor on the year to date, the the previous year’s levels. The on the financial position comparing to a year ago, the net debt is significantly lower. Dwell is tending to sticking to the the debt repayment plans that we have agreed with our with our bank relations. So this is going exactly as as expected as planned.

And at the end of quarter three, the leverage ratio was 3.4, the ratio net debt to adjusted EBITDA. The cash flow profile improved. In this period, it’s still slightly negative with the cycles of of high volume of incoming goods versus before they are delivered to the market and and payment settled. So so this is but comparing it to the previous year’s similar period, this is an improvement. So overall, we are very happy and proud to see that we are continuing to grow.

The market is shifting to a more difficult market. And even in difficult circumstances, Dwell is able to deliver the growth. And the challenge is more on this profitability side where where where it sort of indicates what is the market willing to pay in in this in this kind of circumstances in the market. But here, I hand over to Kai, and we open up these key he can help op open up these key figures a little bit more in detail. So Kai, please.

Kai Malmsteen, CFO, Dwell: Yes. So well welcome from my side as well. And if I open up the the key numbers a little bit more than starting from from the sales. So as the heading is say saying, role of Central Europe is increasing according to our strategy. So now now we have the weight in the quarter three turned over to the Central Europe’s favor.

So 51% of the volume there there. And on a year to date level, it’s 49. So re reaching fifty fifty soon, and we’ll continue to grow there. And overall growth then, as Magnus said, slowed down a little bit, still positive, 0.7%, and incomparable currencies, unfortunately, a lit little bit lower, so than a negative growth in comparable currencies. But all all in all, still still for the full year, a clear growth.

And say the the trends in the market continues also that that online sales is gradually growing now for the quarter, 30%. So clearly up from previous year, also year to date up. So that that market trend seems to continue. And then the important piece for us is the own brand sales that has kept during the whole year as well as in this quarter also on a stable level. So around now quarter for the quarter, 17%, and and the year to date, 19.

Moving over to the profitability side, which weakened during the quarter, very much affected by the the prevailing market conditions. So so the adjusted EBITDA for for the for the quarter was two point one million and five point four percentage, so clearly down from a year back. And coming through the via the gross margin, which Magnus explained that we had 21.7 for the quarter and year to date, 23.2. So both both down on a on on a comparison to previous year. But on the positive note note here, we can see that the operating expenses in relation to sales is developing as we have forecast and expected to to develop.

So for the quarter, 15.4% offset compared to sales. And for for the year to date, other 18.3, so decreasing compared to the previous year, which is total according to plan. On the capital balance sheet side and the capital management side, the networking capital developed very positively during the the quarter, 52,500,000.0 compared to 57.7. So overall, a good development. If we then break it down, look into the to the inventory portion, then we can see we are on same level as last year, just below 50,000,000.

And here here, we have still the impact from from the weak winter season. So some snow category product is still in the inventory. And now with with the summer that start a little bit late and and it’s pretty cold, we have also summer products a little bit more than expected in in in the inventory. And then as we the same time during the year has decided to increase the availability of high runners or high demand spare parts, We still managed to to be on the same level inventory total as last year, but the expectation was to go go down a little bit, and that’s why we had to continue focus will continue to be on on the capital management. And if we compare the inventory to LTM sales, we are now 39%, year back 40%, so same level.

And here, the the goal is to quarter by quarter go downwards to improve the capital efficiency. Financial position then end end of the quarter, we had cash flow wise from the operations, good good quarter. So year to date now, we have operational cash flow might just on the minus side, minus 1.3 compared to a year back. So it’s an improvement of $77,000,000. And taking into consideration the profile of of the business we have, we have the the wintertime, springtime here, it’s more the most capital intensive part of of the year when the inventory is on the highest level and say sales is okay, but then it turns into receivables.

So it takes some time before we can turn it around. So here, pretty good development and shows also that the cash balance in end of the quarter, 5,900,000.0. And leverage also year by year has has improved now. End of quarter three, 03/2004. It’s so on on on a good level in this time of the year.

So I hand back to you, Magnus.

Magnus, CEO, Dwell: Thank you, Kai. As we communicated on Monday this week, we with the development of the the third quarter and the year to date, we revised the guidance for this fiscal year. And the new guidance that we now have communicated is that we expect that with respect to to revenue or net sales, that this fiscal year, we will end up at a point which is incomparable currencies at the same level or lower. And with respect to profitability, adjust expressed in adjusted EBITDA, where we see now after the peak season and after three quarters that we will not reach the same level in absolute terms as last year. So it will it will come in lower.

We also communicated on on Monday that we we decided to now remove our medium term guidance, and this we are now reviewing as a part of also the finalizing the the the planning for the next fiscal year starting in September. And we will come back then and issue a new medium term guidance for for the company around that time. And this the medium term guidance has several components. We decided to, let’s say, as a package to to to to take it off the board and and then review this and then come back with a with a new package. So that may have similar components or or this is to be seen, but but consider it as a as a complete unit that we that we will we are viewing, and we’ll communicate as soon as we are in that situation

Then closing with recap, I guess, recap of a highlight again what is the strategy of Dwell. We are continuing to grow in Central Europe. This is this third quarter is a super good example of this where in when the market demand and market dynamics change, Dwell is able to continue growing because we are gradually diversifying the addressable market that that the company has. And this is something we consider extremely important both for the resilience of the company, but primarily for the absolute growth potential of the company. We also saw in this quarter that the share of online sales slightly grew once again.

And this, of course, is something we believe is a a long trend. It reflects consumer behaviors. It was we also believe it it is gradually shifting the, let’s say, the ratios of of power in the industry that that we who is able to to do the things and and gain market share. And this is where we partly are want to be with with the big ones, and we are. But it’s also that we have capabilities in the company that allows also smaller players to extract and utilize these type of go to market channels.

And of here, of course, elements like product information, digital collateral, etcetera, is very, very valuable to to our dealers. And and strategical, of course, we are continuing therefore to grow the to improve the profitability. Some of these are now actually these focus areas, you could say, shift in focus or demand even more attention in terms of the current the current performance we are reporting, particularly then profitability and and working capital management. These are elements that we have focused on, and now we need to just intensify the the focus on on these. We still believe that Dwell is positioned well in the in the market and the value chain and the fact that we can grow and we can deliver growth in these large markets where where we are up against other companies, some of them larger than Dwell, is is in our view clear evidence of that we have the competitive advantages required to be to have these ambitions.

And this broad portfolio that we have, the broad category assortment is a clear advantage to many many of our customers when they make decisions on on who they partner with and who are logical logical business partners in their business. And and this is what we what we strive for that we are the best logical partner both for the brands we represent, to the dealers that we we we do business with. And and in this mix, also, there is, we believe, room for for the house brands. And every period, every also this year to date, we have added brands to our portfolio. We have, rationalized our brand portfolio in some parts.

We have added house brand products, and we are all these, elements are constantly ongoing in the in a continue. So we believe the company has the the position to execute this strategy. So so if I summarize the the quarter three, we are growing growing year to date, but the trend of growth slowed down in quarter three. And as we have mentioned here earlier, the the role of the Central European market area was very important, and this is exactly in line with the strategy. So so in the future, if we look at some time down the road, of course, we can project and expect that that the Central European market data will be larger than Nordics in the in the long run.

Of course, individual quarters, there are isolated circumstances that that also affect these ratios. But overall, if you look at the the the long term vision, then then this can be expected. The result we managed to achieve in the quarter three was clearly not what we were shooting for. So such a dis disappointment. And as as I mentioned already in the beginning, the dynamics of of where activities, what price points in which particular country and region this impacted the profitability in this quarter.

So now when we go forward, what we will put focus on is that we will continue to work on the things that are addressing improved customer service level. As I mentioned, we have several examples of where we where activities focus on on this. It might be the certain product availability that we have in a certain period. As in one of the highlights I mentioned, it might be which assortment we carry in in a specific market, a specific country. We have had good good results in in some of some of the companies in the group with such actions.

And all of these is, of course, steps that serve how can we better serve the customer on speed of delivery, the right product at the right time. And and this will continue, and we just have to accelerate it. It’s obvious that we will have to increase focus on profit profitability improvement measures, any any equation, any any element that that is has a positive impact on that, everything from sourcing to pricing to to efficiency and everything. And now with that slightly slowed up demand, then, of course, we need to make sure that we have full focus, more focus, and and have our eyes on the ball with respect to the capital working capital efficiency. And, particularly, this is, of course, inventory being the largest component of of our our networking capital, but equally the other elements as well.

But how to manage the turnaround of of inventories is maybe the the easiest way to look at it. So so these these things are with intensified focus now going forward after this quarter three. And, this, brings us to the end of the presentation itself, and I believe, Elero, you can take over and guide us through any possible questions on online.

Pele Rojemerleinen, Investor Relations: Thank you very much, and let’s move to the questions. So first question is related to the, let’s say, view on on the net sales. So we are a bit ahead of to to last year, but how do you see the q four going forward? So how the the June started?

Magnus, CEO, Dwell: Yeah. We we today, we are we are reporting quarter three, so so we we are not in a position that we can forecast and talk about the quarter four. We will revert to that in in our full year release in in in October. And but, of course, I think it’s important here to note what we note and follow the consumer confidence trend in the market.

Pele Rojemerleinen, Investor Relations: And

Magnus, CEO, Dwell: and this, of course, there are some overall averages on European level, but but we also see that that individual countries have their own dynamics in this. So it’s not the one one wide paint branch across the board. It’s it’s line lines thinner lines with smaller smaller painting brushes.

Pele Rojemerleinen, Investor Relations: Very good. Then going going to the different markets. The European market, it’s the Nordics. So how do you see that do you have gained market share or have we lost? And what is the competitive situation in these markets?

Magnus, CEO, Dwell: We we certainly gained market share in Central Europe. There’s no doubt. This is also where we are a relatively small player in in against those who are, let’s say, incumbents in in those traditional markets. And and also within the the Central European region, the individual countries are showing very different dynamics. Maybe maybe the easiest way to look at the market activity is a particular in this period that is very summer season oriented and and you could say motorcycle parts category is very, very center stage.

So looking at registration data is being like an underlying market activity there. There we can see huge swings between countries. Some countries heavily on the plus side and some countries significant on the on the negative side. And for example, Nordics, Sweden, Finland being the biggest markets in our equation, they are they’re clearly on the on the negative trend when it comes to new motorcycle registrations, unfortunately.

Pele Rojemerleinen, Investor Relations: Very good. Then we come to the, let’s say, the acquisitions that Dual has made in the past years. So how these companies have performed despite we don’t kind of open open a report by by the company, But, overall, what what is kind of the the current situation?

Magnus, CEO, Dwell: I would say, overall, extremely important steps in in the growth, excuse me, in the growth path of Duel. And and the fact that we are growing is is sell telling its clear message that we that we we are they are performed. Those acquisitions have performed. And but that said, integrating companies into and really extracting all the synergies, this is a journey, and I don’t consider us even close to the finish line on that that process, the integration process. So the the companies are have fared well and developed well in their own individual markets.

And and then we still have potential to extract synergies from from these from these companies as as as, let’s say, utilizing the total dual total dual capabilities. And, of course, this goes both ways. So we have we have examples of where where we have implemented product brands and and driven growth in in an acquired company using the, let’s say, prior dual, the the classic dual capabilities with respect to products and and assortment. And we have we have also the opposite where where we have been able to bring to Nordics products and brands that we didn’t have earlier. So so it actually is and this, of course, is the the whole point of it that we seek all synergies possible.

Kai Malmsteen, CFO, Dwell: Good.

Pele Rojemerleinen, Investor Relations: Communicated earlier during the q two that we are ready to, let’s say, look for some new acquisitions. But are those now off the table after this, let’s say, not that good result? And is this one of the reasons that we are removing the guidance if we think about the the older financial targets when it comes to the net sales level.

Magnus, CEO, Dwell: I think we have to we have to use the proper horizon for for this discussion. And and when we talk about strategic steps in general, whether they are of a, let’s say, organic nature or or inorganic nature, like acquisitions, we are not looking at those matters on a on a quarterly or even a fiscal year basis. It’s more of a a longer horizon. So so you could say that for on that horizon, nothing has changed. The timing and the priorities of the company might change depending on the situation.

And now we have a a situation where we have clear unfavorable change on profitability, and this needs attention. And this will get our attention. So so when we we talk about, let’s say, short term focus, then then other priority matters might take take precedence over over some longer horizon. So so this is how we normally shift the and share the total bandwidth between short term and long term focuses.

Pele Rojemerleinen, Investor Relations: Yeah. Related to this, so as we remove the the midterm financial targets, what was the kind of the the major reason behind

Magnus, CEO, Dwell: this action? The major the major reason simply being that now actually, you could say here the the fiscal year perspective played played a role into this that now when we saw that now we the development in quarter three doesn’t support maintaining the the fiscal year, full year guidance, and we have revised that, then decision was that now is probably a good time to also revisit the the medium term guidance. And but as that will require a little bit more analysis and and projection work, then then we simply simply decided now we’ll take take a small time out to do that work and then communicate that when we are when we are ready to do so.

Pele Rojemerleinen, Investor Relations: Yeah. Very good. If we could take few questions from the finances side. Looking for the, let’s say, the net working capital at end of q three, so there was a big change in in the payables. What was the reason behind this one?

Kai Malmsteen, CFO, Dwell: Of course, we work on on getting better terms with suppliers every day. So but the big a big portion here is that that we also had a little bit delays in incoming goods, which also then pushed the the payments forward to to a later point in time. And and I I can say we have it’s a result of a a job that has been done for a long time start to to pay off.

Pele Rojemerleinen, Investor Relations: Yeah. You mentioned earlier that our continuous focus is is to to kind of manage the the, let’s say, working working capital. So are there any concerns towards the end of q four that we won’t meet the the covenants?

Kai Malmsteen, CFO, Dwell: Of course, as with the with the earlier questions there, I cannot really comment on on on the future here on end of q four, but can say say it the other way around. Since since the capital injection sometimes back, we have we have managed the covenants all the time, and we work for that every day. And that that works continues also during the fourth quarter and and forward.

Pele Rojemerleinen, Investor Relations: Yep. If we dig then to the profitability, so in in the q three, so what were the kind of the the major reasons behind the the lowering gross margin? Is it kind of a sales mix, product mix, competition, or or bunch of these?

Kai Malmsteen, CFO, Dwell: Yeah. If I if I okay. I I think you have a mix of everything. You you cannot put put, so to say, pinpoint is this or or that. It is we can market situation, mix, products, customers, whatsoever.

So it it it’s it’s a mix of of everything, and so hard hard to say it’s this or that.

Pele Rojemerleinen, Investor Relations: Mhmm. Yeah. So how do we see the, let’s say, the competition and and the price pressure? So will it continue as as we told that the consumer confidence is is lowering? So will this set new pressure for our company?

Kai Malmsteen, CFO, Dwell: I leave that question to you, Manus.

Magnus, CEO, Dwell: Yeah. Yeah. I think always when when there is a change in how consumers or and that, of course, plays an effect on our customers, the the dealers’ considerations of what to buy, you know, what quantities and and and when to buy. Absolutely. Of course, it is it’s a challenge that goes through the entire entire chain.

And and, again, as Kai was pointing out, this is a this is a total equation that has many many factors that is is it the high end product that is of the consumer’s interest? Is it more an entry level product? Again, just one just that component has a bearing on both both the value, meaning the the the revenue, so to speak, or that particular transaction. And and the margin, the earnings profile is not totally homogeneous across brands and and and particularly neither on on price points. So then this is why I talk about blended margins.

This is what we and depending on who who buy, what they buy, and and also also to some degree the the geographical spread there.

Pele Rojemerleinen, Investor Relations: Okay. Have there been any, let’s say, changes in this competitive environment? Think about the biggest European players?

Magnus, CEO, Dwell: Oh, I would say only the natural aspect that in a market that is starting to show signs of slowdown then and everybody trying to do their efforts to to to secure the the volumes they need. So so including Dwell, but not also also the com the the main competitors. Then again, if we talk about have we seen any significant strategic shifts, any new establishments, these kind of major things in the in this period, no. Not not not that I could see what I mentioned.

Pele Rojemerleinen, Investor Relations: Okay. Then we have a, let’s say, related to the bicycle business. One question for the Finland. So how do you see the the possible impact if if the government decides to remove the the bicycle benefits from employees?

Magnus, CEO, Dwell: It’s certainly not positive. It it it cannot be seen as anything else than a cloud over the over the bicycle business in Finland. Now we have to remember that there are different mechanisms in Sweden. There are also incentives in in Sweden, but but they are not, let’s say, structured in the exact same way nor is there a discussion about changing those in Sweden. So so this is only related to to the Finnish part of our bicycle business.

And nor nor is it affecting, of course, the French bicycle business we have. And but in The Nordics, the the while we’re not, of course, reporting particular product categories and and the the geographical revenue split on those, then but just from the point of view that we have our warehouse for bicycle parts for The Nordics in in Finland. So we have the best service level in the industry to this this sector better than anybody, even huge companies in that in that sector. So so that this change is affecting the the Finnish market is, of course, kinda like hitting where we have the the most unique competitive advantage. Personally, I’m positive that that it will not undermine the bicycle market and the trend in which we all utilize bicycles on a on a daily basis, I believe those fundamentals are are linked to other things than than a small benefit of of some tens of euros per month from from taxation authorities.

But as said, incentives are typically the effect are are bigger than the the nominal value. So so, yes, medically, it’s a small ticket, but but how it impacts on particularly how it impacts on bringing more enthusiasts and users of of bicycles. This this remains to be seen. So it’s certainly not a positive trend, not at all.

Pele Rojemerleinen, Investor Relations: What about the the bicycle has certain kind of support from the, let’s say, EU part as well? So dual has bicycle business in in The Nordics, Finland, Sweden, and France. So do you see the opportunity to expand the bicycle business to other countries as well in addition to current markets?

Magnus, CEO, Dwell: Yes. Clearly on on paper, so to say. If you start with the, let’s say, the theoretical point there. So every country where Dwell has activities have a clear bicycle market. No doubt.

How what is the barrier to entry to enter that market in very well established markets with very well established players and value chains? This is the the real question. And and I I think for to organically enter that, it would be a very slow process. So so just as Dwell has entered the Nordics and the French bicycle market, in a big way through acquisition, this would be probably the most likely strategic approach to to entering a new country, a new market for for this product category. But that’s that’s just an, let’s say, objective analysis of of the the barriers to entry.

Pele Rojemerleinen, Investor Relations: Okay. Let’s move back still to the q three and also to q q ’2. So as you stated that the weather conditions were pretty bad in in The Nordics. So did we have a a big amount of winter products or snow category products in the inventory and what will happen to them?

Magnus, CEO, Dwell: Yeah. As we as we commented already at our q two report that, yes, when when the snow conditions were unfavorable, of course, it had an impact on on that category. And and, of course, what that effect kinda, like, is carried through this period. So so, obviously, there’s has no been no has been no opportunity in the third quarter to to correct. And let’s be let’s say, very simple and say that it has been no opportunity to sell snowmobile parts in q three that that didn’t have a demand in q two.

So that that correction, that opportunity comes comes towards the fall when when the when when our dealers start to to gear up for for the winter season again. So so so it kinda carries through. This is why also, as Kai mentioned there, when we looked at at the inventory, that was a highlight. We have that, let’s call it, a little bit handicap throughout this quarter three and quarter four for on that that element.

Pele Rojemerleinen, Investor Relations: Very good. Think we are pretty much going through the the the questions. We have a similar kind of questions from several participants. But now when we have come out with the lowered guidance and removed the the low let’s say, funds of targets. So what are the focus areas that Dual is now really kind of working on?

And and what are the key key things that are on top of the agenda.

Magnus, CEO, Dwell: As as I mentioned earlier, we we clearly recognize that now we need to, how shall we say, re re reshift and intensify focus on a number of things. All of those things that we prioritize going forward now aren’t new. There are items that has been on our focus and continue to be. Now we just need to further intensify. And they are, of course, on profitability improvement measures, making sure that we have we manage our particularly, inventory well.

And and and let’s say that we can, as quick as possible, move back to the plan, the longer term plan of improvement, the improvement trend that now got a little bit of a of a stagnation and slowdown. And and the fundamentals that we continue to have enough efforts on on improving availability, improving what we offer in which location at and and keep keep on stocking for those customers, recognizing that most of our warehouses serve the within a a certain circle. And, of course, this is purely for logistical from logistical driver point of view that you cannot be too far away from the customer because your time time to the customer’s doorstep is too long on outbound logistics. And and this this work continues. And like I said, we have seen very positive effects in in a number of places when we had we have taken steps forward on on matters like this.

So so this this remains because we just have to shift gears and and put in a put in a the next gear on our on our machine and and and throttle wide open. So so I look at this mostly as intensified focus on priority matters. And as we discussed when we talked about mergers, acquisitions, etcetera, it doesn’t mean it’s off the table, but the priority matter prioritization shifts a little bit.

Pele Rojemerleinen, Investor Relations: Very good. I think you could have still the the closing words for the whole nine months and and q three despite you you went through kind of the focus areas.

Magnus, CEO, Dwell: Yeah. In in really, really then just with the closing closing words, we continue to grow. We continue to demonstrate the our ability to drive growth in in the main markets of Europe. So the strategy that Dwell has is is is working. We hit the bump in the road when it comes to to profitability development.

This is this is why we we need to shift priority focus now to making sure that we we correct this as soon as possible.

Pele Rojemerleinen, Investor Relations: Thank you very much, and thank you for all the participants who followed this webcast. And we will come back with the full year results in October. So thank you very much, and have a pleasant summer days.

Magnus, CEO, Dwell: Thank you. Thank you.

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