Risks and business uncertainties
Fiskars Group’s business, net sales, and financial performance may be affected by several uncertainties.
Fiskars Group imports and exports products from/to the UK. A ‘no deal’ scenario in the UK withdrawal from the EU, may have an adverse impact to Fiskars Group’s comparable net sales and comparable EBITA in 2019. It can also be assumed that the costs would increase, additional workload would emerge on both sides and exports and imports would be disrupted by tariffs and regulatory barriers. Long-term effects of changes in laws, regulations, taxes and other implications following from any kind of Brexit are difficult to estimate.
A considerable part of Fiskars Group’s business is in the U.S. The increasing uncertainty regarding trade in the form of e.g.tariffs might have an impact on the company’s business, as part of the product portfolio sold in the country is imported. Based on the information available at the moment, a further increase in tariffs might have a significant impact on the comparable net sales and comparable EBITA in 2019.
Demand for some of the Group’s products is dependent on the weather, particularly garden tools and watering products during the spring and snow tools during the winter. Unfavorable weather conditions such as cold and rainy weather during the spring or no snow in the winter can have a negative impact on the sale of these products. The sale of homeware products is heavily geared towards the last quarter of the year, and any negative issues related to product availability or demand during this quarter could affect the full-year result of this business significantly.
Fiskars Group entities are subject to tax audits in several countries. It is possible that tax audits may lead to reassessment of taxes. The tax reassessment claim raised by the Finnish Large Taxpayers’ Office in 2016, which obliged the company to pay a total of EUR 28.3 million in additional tax, interest expenses and punitive tax increases, will be appealed against by the company to the Administrative Court, and the process may take years. The dispute concerns intra-group loans forgiven by the company in 2003 and their tax treatment in subsequent tax years.
Fiskars Group operates globally with a considerable part of its business in the U.S. and in other countries outside of the euro zone. Weakening of the U.S. dollar or other currencies relative to the euro may have a material impact on the reported financial figures due to the translation exposure. Less than 20% of Fiskars Group’s commercial cash flows are exposed to fluctuations in foreign exchange rates.
Financial Statement Release, Feb 7,2019