Duell - Should still improve despite headwinds

All quiet on the Nordic front

During the first nine months of the fiscal year, the company’s organic net sales decreased 2.6% y/y as the Nordic market remained challenging. Consumer confidence in Finland and Norway is still low, and although it has improved in Sweden, there are no significant changes in consumer spending year-over-year. The search engine traffic for the largest Nordic powersports aftermarket e-commerce platforms mirror the development as the search volumes have decreased during the summer. Our interest in the report lies on the market commentary and outlook for FY 2025. Due to the unpredictable market, Duell could give a relatively broad guidance, similar to this year’s.

Should still improve y/y against weak comparables

We have reduced our net sales forecast slightly for the Nordic region for Q4. However, we still expect Q4/24 growth from other European markets, with a slower decline in Nordic sales (vs. 1-9/24) due to the weaker Q4/23 comparison period. We also expect an improved gross margin as the company’s inventory levels have declined and therefore need for discount sales is lower, which lowered the margins for the comparison period. Nevertheless, we expect discounting and higher logistics costs to continue to put strain on the gross margin in Q4. For 2025E, we project that growth will remain fueled by the rest of Europe, with improved margins resulting from operating leverage and the company’s ongoing profitability improvement program. 

BUY with a TP of EUR 0.04

After only minor estimate adjustments, we keep our rating and TP unchanged. The long-term potential remains high, while visibility into the projected turnaround is still relatively low.