Duell - Revving up the engine for summer

Q2 growth came in stronger than we expected

Duell’s Q2 net sales grew 10.2% y/y to EUR 28.2m (EUR 25.5m in Q2/23, EUR 25.9m Evli est.). The better-than-expected growth in Rest of Europe was driven by the TranAm acquisition and organic growth in Central Europe, especially in Germany. While the higher logistics costs had a negative effect on the company’s gross margin as we expected, the higher net sales increased adj. EBITA to EUR 1.4m, above our estimate of EUR 0.8m. The non-adjusted figures were weakened by the completed RI, the fees associated were in line with previously communicated which include fee of EUR 0.9m for the subscription guarantor. All in all, Duell’s cost base developed largely as estimated during Q2. With the RI completed during the quarter and lower NWC, the company’s net debt decreased over 50% y/y to EUR 29.9m.

Cautiously optimist for the second half of the fiscal year

Duell’s Q3 (March-May) is typically the company’s strongest quarter in terms of volumes and profitability. We have adjusted our estimates for net sales upwards as we expect growth in Central Europe to continue. In the Nordics, we continue to forecast organic sales decline for Q3 while for Q4 we expect slight growth driven mainly by the softer comparison period. In terms of profitability, we estimate higher logistics costs to continue to affect Duell’s gross margin. On the other hand, the company’s profitability improvement initiatives are expected to bear fruit. As a result of higher net sales growth and further self-help, we have increased our estimates for H2. For FY 2024, we now estimate net sales of EUR 125.7m (prev. EUR 120.9m) and adj. EBITA of EUR 6.8m (EUR 5.9m).

Long-term case remains intact