Profoto

Financial summary October–December 2023

• Net sales totaled SEK 204m (230), a decrease of 11.5 percent. Organic growth totaled -10.1 percent, and the currency effect, 1.4 percent.
• EBIT was SEK 51m (80), and the EBIT margin, 25.0 percent (34.9).
• Profit for the period was SEK 37m (65).
• The return on operating capital totaled 49.0 percent (84.3).
• Cash flow from operating activities totaled SEK 65m (80).
• Earnings per share (basic and diluted) totaled SEK 0.92 (1.61).

Financial summary January–December 2023

• Net sales totaled SEK 787m (848), a decrease of 7.2 percent. Organic growth totaled -12.6 percent, currency effect 3.2 percent, and effect of acquisitions 2.1 percent.
• EBIT totaled SEK 204m (249), and the EBIT margin, 26.0 percent (29.3).
• Profit for the period totaled SEK 155m (194).
• Cash flow from operating activities was SEK 211m (236).
• Earnings per share (basic and diluted) totaled SEK 3.88 (4.85).

Significant events after the end of the period

• The Board of Directors has proposed a dividend of SEK 3.75 (4.00) per share, corresponding to a total amount of SEK 150m (160).

Good profitability despite weak demand

Sales for the full year 2023 totaled SEK 787m (848), which was 7 percent lower than the previous year. In the fourth quarter, sales decreased by 12 percent compared to the corresponding period the previous year to SEK 204m (230). Despite the lower sales level, we reached our profitability target, as the EBIT margin was 25 percent in the quarter and 26 percent for the full year.

Cautious market and few product launches
As in recent quarters, we continue to face a tough market globally, with the macroeconomic and geopolitical climate negatively impacting consumer spending and thus our customers' willingness to invest.

As we have not had any major product launches in 2023, we have worked extra hard through marketing activities to increase focus on our products through our retailers and get more business from our customers. Among other things, we have conducted campaigns focusing on attracting new customers to Profoto, which is particularly valuable since a photographer who starts using the Profoto system rarely changes. The campaign had a good impact, which confirms that many customers are interested in our products, but it is clear that the market is still hesitant.

Nevertheless, I am very pleased that we have managed to continuously increase the level of activity in sales and marketing during the year while reaching our operating margin target despite a decline in sales. That said, I am really looking forward to a new year, where I expect us to create more demand from our customers by launching new, innovative products and solutions.

Full focus on product launches for 2024
As I mentioned in the last report, our goal is to get back to our historical pace of one to two major product launches per year. Ulrika Björk, our VP R&D for four years, and her team are therefore working hard on a number of product development projects. I am very proud of the great work they are doing, and I expect us to reach the ambition of two major product launches as early as in 2024.

In 2023, we invested 13 percent of our revenue in product development, which is just above the previous year’s investment of around 10 percent. The investments made in recent years have increased the capacity in product development, and we now have a portfolio with several really exciting development projects in different phases. We are therefore looking forward to launching new products in all three of our growth areas: light for professional photographers, workflow solutions for e-commerce studios, and light for film production.

While it is difficult to predict when macroeconomic conditions will improve, I am confident about the future, as our customers are increasingly creating visual content, and our innovation is unique. For 2024, I am really looking forward to a year of more product launches, and I am very excited to see what our customers think of our new products. Profoto's super strong brand combined with new, innovative products will deliver results.

Sundbyberg, February 6, 2024

Anders Hedebark
President and CEO