Duell - Quarter slightly better than feared after yesterday’s profit warning
Duell issued a profit warning yesterday ahead of its Q2 note, significantly lowering guidance for both net sales and adj. EBITA. Our estimates still reflected the old guidance. While Q2 performance remained challenging, the outcome was somewhat better than anticipated, given the magnitude of the profit warning, implying a weaker outlook for H2.
- Duell’s Q2 net sales declined -2% y/y to EUR 28.8m (EUR 29.3m in Q2’25, EUR 27.4m Evli). Net sales with comparable FX increased 0.4%.
- Adj. EBITA in Q2 amounted to EUR 0.4m (EUR 1.1m in Q2’25, EUR 0.7m Evli).
- Duell’s gross margin decreased from 23.5% in Q2’25 to 22.6%.
- Net sales in the Nordics were EUR ~14.7m (Q2’25: EUR 15.1m), in line with our EUR 14.6m estimate.
- In Central Europe, net sales declined slightly to EUR ~14.1m (EUR 14.2m in Q2’25, EUR 12.8m Evli). Changes in the French brand portfolio continued to weigh on both net sales and profitability in the area.
- Cash flow from operating activities in Q2 was EUR -2.2m (Q2’25: EUR -4.6m).
- Net debt at the end of the period was at EUR 25.5m (Q2’25: EUR 29.3m), and LTM net debt/adj. EBITDA increased to 5.4x (Q2’25: 4.0x). The covenants for Q2’26 were amended and the conditions were met.
- Net working capital decreased to EUR 54.2m, (EUR 58.5m Q2’25) while inventories as % of LTM net sales increased to 40.3% from 39.5% in Q2’25.
- Net sales performance exceeded expectations, and we believe that the company prioritized sell-through to improve net working capital and lower inventory levels, which had an negative impact on margins.
- Guidance (lowered prior to the Q2 report): Duell expects organic net sales to be around EUR 115m and adjusted EBITA to be around EUR 2m. Previously Duell expected organic net sales at the same level as last year (EUR 126.6m) and adj. EBITA at the same level as last year (EUR 4.9m).
- In addition, Duell expects NRIs of EUR 2–3 million, as the reorganization of its supply chain and the optimization of inventory levels have a one-off negative impact on its full-year results.
- The revised guidance implies a 12% decline in net sales and ~40% decline for adj. EBITA in H2 y/y.