Risks and business uncertainties

Macroeconomic and political
A prolonged recession and weak consumer demand in Fiskars Group’s main markets, as well as political uncertainty including trade disputes, sanctions, import restrictions and geopolitical tensions may have a material adverse impact on the net sales and profit of Fiskars Group. In the long-term, these risks are mitigated by having a diversified commercial footprint, both in terms of geography and the product portfolio.

Geopolitical tensions, broad-based inflation and rising interest rates witnessed in 2022 have reduced consumer confidence in many markets, and may further weaken the demand for Fiskars Group’s products if prolonged. In Europe, the growing uncertainty, heightened tension in the labour markets and their implications may have an
adverse impact on the company’s business in the short- term. In China, the wave of Covid-19 infections since the end of the fourth quarter may have a negative impact on the local business due to store closures.

Supply chain and suppliers
Fluctuations in the price, availability or quality of the most important raw materials, energy, components and finished products from suppliers can have a negative impact on the profitability of Fiskars Group. Furthermore, global supply chain disturbances, increases in shipping costs and regulatory actions such as tariff increases, and emission trading systems can affect profitability negatively. Dependency on any single source of supply, can cause business interruptions and result in a lack of product supply for several months.

Fiskars Group manages the price, availability and quality risks with multiple source contracts and ongoing research on alternative sustainable materials. The company also mitigates the dependency on a single source of supply by constantly seeking alternative suppliers and by maintaining extensive business interruption insurance. In addition, to secure product availability, the company may also prepare for potential disruptions with safety stocks.

Consumer behavior
Failure or slowness to respond to changing consumer behavior, changing preferences or increased competition may weaken the competitive position and thus lead to a potential loss of net sales and profit. Fiskars Group’s focus is on growing in the direct channel, including e- commerce and the company’s own stores, as well as on sustainability by innovating new business models to address the needs of the modern consumer.

Fiskars Group’s products are sold to wholesale and retail customers, as well as directly to consumers through the company’s own stores and e-commerce. Fiskars Group is exposed to risks from structural changes in the retail landscape. Failure to meet customer demands may result in Fiskars Group losing customers or category listings with customers. Fiskars Group is constantly developing its sales organization and supply chain operations to meet the changes in customer demand.

People are at the core of Fiskars Group’s strategy as the most important asset and enabler. The execution of the Growth Strategy is heavily reliant on having the right people in the right positions. An inability to attract and retain talented and committed professionals in the competitive employee market may have an adverse impact on the achievement of Fiskars Group’s strategic objectives. Employee engagement is promoted notably by providing opportunities for professional growth through leadership training and skills development and by committing to an inclusive culture.

IT systems and cybersecurity
Fiskars Group depends increasingly on centralized information technology systems and suppliers that hold critical business information. Breaches, malfunctions, cyber-attacks and fraud attempts towards Fiskars Group or its suppliers may cause interruptions in the company’s operations on either a regional or global level. Such interruptions may have a material adverse effect on the net sales, profit and reputation of the Group. The company mitigates IT-related risks by deploying high- quality IT solutions and by maintaining, developing, and testing their function and integrity according to an internal IT control framework and industry best practices. Critical service and technology providers are required to have continuity and recovery plans for their services in the event of disruptions.

For the gardening category in the Terra segment, the second quarter of the year is seasonally the most important. The back-to-school and holiday seasons are important for the sales performance of Crea during the second half of the year. For the Vita segment, the fourth quarter of the year is the most important. Any negative developments related to product availability, demand or increased costs in manufacturing or logistics during the important seasons may significantly affect the full-year net sales and profit. The seasonality of demand can differ from a typical year due to the current volatile market conditions. Fiskars Group’s strategy is to balance seasonality by diversifying and developing its product portfolio according to customer needs.

Demand for some of Fiskars Group’s products depends on weather conditions, especially for garden tools during the spring and snow tools during the winter. Unfavorable weather conditions such as a cold and rainy spring and summer and snowless winter can have a negative impact on the sale of these products, whereas favorable conditions can boost their sales. The company seeks to balance the impact of changing weather conditions by a broad and diverse product portfolio and broad geographical footprint.

Currency rates
With a significant part of the business in the U.S. and in other countries outside the eurozone, Fiskars Group is exposed to fluctuations in foreign currency rates.
Changes in the exchange rate may have a material impact on the reported financial figures as a result of the translation exposure.

Fiskars Group entities are subject to tax audits in several countries. It is possible that tax audits will lead to reassessments of taxes.

päivitetty 8.2.2023