Fagerhult (FAG) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw a return to growth in order intake and net sales, driven by strong performance in renovation projects and continued momentum in smart lighting solutions, with regional variations and notable project wins.

• Gross profit margin improved year-over-year, though operating margin was impacted by higher operating expenses; corrective actions and cost control measures are underway.

• Sustainability remains central, with a 24% reduction in total emissions since 2021 and significant progress on SBTi-validated climate goals.

• Product innovation included launches from iGuzzini, WE-EF, and the 'X Hydro' recycled aluminium initiative, supporting sustainability and modularity.

• Strategic focus continues on renovation, smart lighting, sustainability, and M&A opportunities.

Financial highlights

• Q2 order intake reached MSEK 2,131 (+0.8% to +1.1% organic), net sales MSEK 2,167 (+0.9% organic); Q2 operating profit MSEK 196.4, EBIT margin 9.1%, EPS SEK 0.62.

• H1 2024 net sales MSEK 4,347 (-0.7% organic), operating profit MSEK 416.8–470 (margin 9.6%), EPS SEK 1.40.

• Operating cash flow for Q2 was MSEK 279.1–280 (down from 326.1–326), positive for nine consecutive quarters.

• Net debt at quarter-end was MSEK 2,579 (IFRS 16-adjusted: MSEK 1,842); net debt/EBITDA ratio at 1.9–1.94.

• Gross profit margin improved by 58 bps in Q2 and 129 bps in H1 year-over-year.

Outlook and guidance

• Actions to reduce operating costs and cost control measures are expected to improve margins in H2 2024.

• Anticipated market tailwinds include the ban on fluorescent lighting, increased renovation activity, and a potential recovery in new build markets from 2025, with regional differences.

• Continued focus on sustainability, smart lighting, and M&A opportunities.