Risks and business uncertainties

Fiskars Group’s business, net sales, and financial performance may be affected by several uncertainties. Fiskars Group has presented the overall business risks and risk management more broadly in its Annual Report.

The Group operates globally, with a considerable part of the business in the U.S. and several suppliers in Asia. 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.

Global supply chains in general have been impacted by various disturbances caused by the war in Ukraine and the Covid-19 pandemic, which may affect Fiskars Group’s operations. Fluctuations in the price or availability of the most important commodities, including energy, may have
a negative impact on profitability. Fiskars Group has two glass factories, in Finland and in Slovenia, which use gas in manufacturing. The company has plans for alternative energy sources in these factories, but challenges with gas availability could cause production disruptions in the
short term. To secure product availability, the company has also prepared for potential disruptions with safety stocks.

Fiskars Group’s actions to mitigate product availability risk related to supply chain disturbances throughout the year have led to increased levels of inventories. Inventories are also higher than normal due to the cold spring in 2022, which impacted demand in the gardening segment. Higher inventories have impacted cash flow negatively and increased short-term indebtedness. While Fiskars Group has put measures in place to mitigate inventory growth, the company is not expecting any significant decline in inventories during the fourth quarter of 2022.

The geopolitical tensions, broad-based inflation and rising interest rates have reduced consumer confidence in many markets, which may affect demand for Fiskars Group’s products. Fiskars Group’s strong brands and product categories have generally been relatively resilient to some level of decline in consumer confidence.

The intermittent Covid-19 related restrictions in China, especially in the Shanghai region where the majority of the Group’s stores in China are located, have a negative impact on local business due to store lockdowns.

People are at the core of Fiskars Group’s strategy as the most important asset and enabler. 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 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 result. The seasonality of demand may differ from a typical year due to the current volatile market conditions.

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.

Fiskars Group depends increasingly on centralized information technology systems that hold critical business information. Cyberattacks may therefore impact Fiskars Group’s business and operations. The company mitigates IT-related risks by applying high-quality IT solutions and maintaining, developing and testing their function and integrity with leading service and technology providers.

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. A change in the exchange rate of the U.S. dollar or other currencies relative to the euro 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 may lead to reassessments of taxes.

Updated October 28, 2022