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Duell

Duell, a Finnish distribution company, operates within the European powersports aftermarket. Founded in 1983 by Tom and Stefan Nylund, the company is headquartered in Mustasaari, Finland, and has established warehouses and sales offices throughout Europe. Its primary warehouses are situated in Mustasaari, Finland, and Tranås, Sweden, while additional warehouses are located in the Netherlands, United Kingdom, Finland (Tampere) and France. During FY 2023, 59% of Duell’s sales came from the Nordics and while the rest of the Europe accounted for 41%. Approximately 78% of the sales were generated through the distribution of third-party products, while the remaining 22% came from the distribution of Duell's own brand products, which are designed by Duell but manufactured in Asia.
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Overview

Duell, a Finnish distribution company, operates within the European powersports aftermarket. Founded in 1983 by Tom and Stefan Nylund, the company is headquartered in Mustasaari, Finland, and has established warehouses and sales offices throughout Europe. Its primary warehouses are situated in Mustasaari, Finland, and Tranås, Sweden, while additional warehouses are located in the Netherlands, United Kingdom, Finland (Tampere) and France. During FY 2023, 59% of Duell’s sales came from the Nordics and while the rest of the Europe accounted for 41%. Approximately 78% of the sales were generated through the distribution of third-party products, while the remaining 22% came from the distribution of Duell's own brand products, which are designed by Duell but manufactured in Asia.
After a period of strong performance in 2021 and the early months of 2022, the European powersports aftermarket has seen a marked slowdown towards the end of 2022 and into 2023. The market dynamics are largely influenced by the number of registered powersports vehicles and the willingness of consumers to spend on aftermarket products and accessories. While there remains a steady demand for essential parts, the sector as a whole has slowed down significantly in 2023. This downturn has impacted Duell's financial results, with a 4% drop in net sales for the fiscal year 2023, and the adjusted EBITA margin declining to 3.9%, a decrease from the previous year's 7.0%. The combination of a weak operational performance and a burdened balance sheet, exacerbated by elevated inventory levels, led the company to complete a rights issue in December 2023.

Financial overview

Equity research

Duell - Man standing in front of a motorbike.
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Duell - Onwards in a challenging market

Duell’s Q3 development was two-fold as growth in Europe was stronger than expected while revenue declined in the Nordics more than we estimated. Profitability missed our estimates mainly due to higher-than-expected operating expenses and lower net sales. We continue to anticipate an increase in profitability y/y for Q4 and consequently for the entire FY 2024.

Company update |
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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.

Earnings Flash |
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Duell - Expecting continued good progress

Duell publishes its business review for Q3 (March-May) on Wednesday 3rd of July. We expect continued good execution especially in Europe during the company’s most important quarter of the fiscal year. 

Preview |
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Duell - Revving up the engine for summer

Duell’s H1/24 showed promising signs while uncertainties still remain ahead of the important H2. With positive adjustments to our estimates, the long-term case is intact.

Company update |
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Duell - Self-help story continues in tough market

Duell’s Q2 net sales came in at EUR 28.2m, above our estimate of EUR 25.9m, driven by the TranAm acquisition. With the higher-than-expected sales and further self-help, adj. EBITA was also higher than estimated at EUR 1.4 (Evli est. EUR 0.8m).

Earnings Flash |
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Duell - Opportunity amid uncertainty

Duell publishes its Q2/24 results on Thursday 4th of April. We expect modest revenue growth driven by the TranAm acquisition despite a sluggish Nordic market. Valuation has become attractive, while uncertainties remain high.

Preview |
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Duell - Promising start for the fiscal year

Duell's results exceeded our estimates for revenue and adj. EBITA. The revenue beat was largely due to our cautious net sales estimates for Rest of Europe.

Company update |
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Duell - Inorganic growth supported the result

Duell was able to grow its revenue 4.9% y/y during the seasonally slow Q1 as the inorganic growth supported the company’s development. With the stronger than expected sales, the adj. EBITA was slightly higher than expected at EUR 0.3m (Evli est. EUR 0.0m)

Earnings Flash |
Duell - Man standing in front of a motorbike.
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Duell - Seasonal slowness ahead

Duell publishes its Q1 2024 business report on 18th of January. The company’s RI was successful as expected yet we predict that the market softness continued to affect the company’s performance during the seasonally slow Q1.

Preview |
Duell - Man standing in front of a motorbike.
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Duell - Rights issue terms announced

Duell announced the terms of its fully guaranteed rights offering. The strengthened balance sheet post RI lowers risk, yet continued market weakness is likely to hinder the operational performance.

Company update |

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Shareholders Date % of Shares % of Votes
Hc Dl Holding Oy Ab 31.03.2024 30.1% 30.1%
Sponsor Capital Oy 31.03.2024 10.1% 10.1%
Varma Mutual Pension Insurance Company 31.03.2024 4.6% 4.6%
Säästöpankki Fonder 31.03.2024 4.4% 4.4%
Danske Invest Finnish Equity Fund 31.03.2024 2.6% 2.6%
Erikoissijoitusrahasto Aktia Mikro Markka 31.03.2024 2.3% 2.3%
Keskinäinen Työeläkevakuutusyhtiö Elo 31.03.2024 2.1% 2.1%
Oy 4n-group Ab 31.03.2024 1.6% 1.6%
Evli Finland Select Fund 31.03.2024 1.3% 1.3%
Jarkko Ämmälä 31.03.2024 1.3% 1.3%

Equity Research Disclaimer

These research reports have been prepared by Evli Research Partners Plc (“ERP” or “Evli Research”). ERP is a subsidiary of Evli Plc.

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Company Facts

CEO Magnus Miemois
CFO Juha Lindroos
IR Pellervo Hämäläinen
Market cap (EURm) 37
Industry Consumer Durables
Ticker DUELL

Guidance

Market uncertainty and weakness will persist in financial year 2024. Continued inflation and the overall challenging market situation has lowered consumer confidence and demand. These factors will weaken the predictability and therefore Duell is not giving outlook for net sales for financial year 2024. Duell will continue its profitability improvement programme and plans to strengthen its capital structure in financial year 2024. Duell estimates adjusted EBITA to improve from previous year’s level.

Financial targets

Duell’s medium term (3-5 years) targets: Net sales in the range of EUR 200-300m in the medium term achieved through both organic and inorganic growth, adjusted EBITA-% at least 13%, net debt to adjusted EBITDA ratio 2-3x.

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