Duell - Profitability below expectations
Duell’s Q3 net sales came in at EUR 37.9m, slightly below our estimate of EUR 38.8m as the sales declined in the Nordics more than we estimated. On the cost side, the gross margin was a positive surprise while operating expenses were higher than estimated, leading to lower-than-expected profitability.
• Duell’s Q3 net sales grew 0.6% y/y to EUR 37.9m (EUR 37.7m in Q3/23, EUR 38.8m Evli).
• Net sales in the Nordics amounted to EUR 19.5m (EUR 22.5m in Q3/23, EUR 21.4m Evli), in Rest of Europe net sales stood at EUR 18.4m (EUR 15.2m in Q3/23, EUR 17.4m Evli).
• The Nordics had a bigger drop in net sales than we expected due to the persisting weak market situation.
• Adj. EBITA in Q3 amounted to EUR 3.2m (EUR 3.8m in Q3/23, EUR 3.9m Evli). The main reasons for the lower-than-expected adj. EBITA were slightly lower net sales than we estimated and more importantly, higher OPEX.
• While additional transport costs due to Red Sea shipping challenges and the Finnish strike had a negative effect on the gross margin, the margin improved y/y to 24.9% (24.7% Q3/23). The company has managed to pass on the higher logistics costs effectively to the prices.
• Net debt stood at EUR 27.1m, down y/y from EUR 48.6m. The lower net debt was the result of the completed rights issue and lower net working capital. While NWC declined to EUR 57.7m (EUR 61.8m), the company had to keep slightly higher stock levels to ensure product availability in the quarter.