Profoto

Financial summary July–September 2024

• Net sales totaled SEK 164m (172), a decrease of 4.4 percent. Organic growth totaled -1.1 percent, and the currency effect, -3.3 percent.
• EBIT amounted to SEK 39m (35) and the EBIT margin to 23.9 percent (20.2).
• Adjusted EBIT amounted to SEK 30m (35) and adjusted EBIT margin to 18.4 percent (20.2). Adjustments for the period related to a reduction of the liability for an acquisition-related earn-out of SEK 9m.
• Profit for the period was SEK 28m (27).
• The return on operating capital totaled 32.3 percent (56.5).
• Cash flow from operating activities totaled SEK 14m (29).
• Earnings per share (basic and diluted) totaled SEK 0.70 (0.67).

Financial summary January–September 2024

• Net sales totaled SEK 530m (583), a decrease of 9.0 percent. Organic growth totaled -7.7 percent, and the currency effect, -1.3 percent.
• EBIT amounted to SEK 110m (153), and the EBIT margin to 20.7 percent (26.3).
• Adjusted EBIT amounted to SEK 101m (153) and adjusted EBIT margin to 19.0 percent (26.3). Adjustments for the period related to a reduction of the liability for an acquisition-related earn-out of SEK 9m.
• Profit for the period totaled SEK 83m (119).
• Cash flow from operating activities totaled SEK 60m (147).
• Earnings per share (basic and diluted) totaled SEK 2.07 (2.96).

Continued cautious market climate – strong focus on upcoming product launches

In the third quarter, we saw a continued challenging market situation combined with a quarter without major product launches. Reported sales decreased by 4.4 percent to SEK 164m (172) with organic growth of -1.1 percent.

The adjusted EBIT result amounted to SEK 30m (35), corresponding to an EBIT margin of 18.4 percent (20.2). The decrease is directly attributable to the lower sales combined with marketing activities for upcoming product launches and strategic investments that initially provide negative economies of scale.

Market climate remains cautious
In line with recent quarters, both professional photographers and large studios continued to act cautiously, as a direct consequence of the uncertain macroeconomic situation regarding equipment purchases and investments. The underlying demand for our products therefore remains subdued in all our regions. Nevertheless, our business in North America showed positive development during the quarter, primarily due to selective product-specific marketing activities.

Strategic investments in launches and organization
During the quarter, we continued to strengthen our organization, primarily in product development and marketing, with several important key recruitments. It is gratifying to note that we now have an organization with a cost base that will allow us to continue to strengthen our market position and that will not increase at the same rate as the expected increase in sales.

Furthermore, we continued to invest in future product launches during the quarter, not least in products intended for film production and LED. We expect to start seeing the results of these investments in the coming quarters.

Executive summary
In conclusion, macroeconomic conditions remain uncertain, which has a direct impact on underlying demand and thus our profitability. At the same time, I am proud that our organization continues to work purposefully with what we can influence, such as innovation and cost control, and that this diligent work will lead to exciting and strategically important product launches and growth in the future.

Given this, I am confident that our disciplined approach will continue to deliver results, and I remain committed to our long- term financial targets of at least 10 percent organic growth and 25–30 percent EBIT margin.

Sundbyberg, October 24, 2024

Anders Hedebark
President and CEO