Jotul AS announces publication of Q3 2024 Interim Report and provides a financial update

The Jøtul Group (representing Jøtul AS together with its subsidiaries; the Group) is one of the three largest suppliers of fireplaces in Europe and a significant player in North America. The company, with a history dating back to 1853 through its legacy as one of Norway's oldest companies, distributes stand-alone stoves, inserts, frames and accessories for fireplaces. The Group's main brands are Jøtul, Scan and Ravelli. The Jøtul fireplaces are manufactured from cast iron and appear timeless...

Kråkerøy, 29/11/2024 (informazione.it - comunicati stampa - economia)

The Jøtul Group (representing Jøtul AS together with its subsidiaries; the Group) is one of the three largest suppliers of fireplaces in Europe and a significant player in North America. The company, with a history dating back to 1853 through its legacy as one of Norway's oldest companies, distributes stand-alone stoves, inserts, frames and accessories for fireplaces. The Group's main brands are Jøtul, Scan and Ravelli. The Jøtul fireplaces are manufactured from cast iron and appear timeless and robust, with Norwegian origins. The Scan fireplaces are manufactured from plated steel and are characterized by modern Danish design, while the Ravelli pellets stoves are characterized by Italian design and technology. Manufacturing takes place through own production in Norway, Poland, France and the USA, in addition to a range of bought-in products. The products are sold through one of the most wide-reaching global networks in the industry, consisting of own sales companies and distributors. The products reach the end consumers through specialty shops, and in Norway also through building materials retail chains.

In the first nine months of 2024, the Group's revenue decreased by 38.3%, to MNOK 745.3, compared to MNOK 1,207.1 in the same period of last year. The sales to most of the Group's key markets have shown significant contraction in the first nine months of the year. While in the first half of 2023 the sales were record high due to large opening order-book carried forward from 2022, starting from Q3 2023 the sales situation gradually deteriorated due to weakening marked demand and overall unfavourable macroeconomic conditions. More specifically, the downturn in demand is driven by lower cost of energy (both electricity and natural gas), higher interest rates, lower home improvement spending, and slowdown in the construction industry (notably related to new houses and recreational homes). For wood burning stove manufacturers, the impact was further exacerbated by a significant accumulation of excessive inventory in the industry and at dealers' stores, driven by a large build-up and strong order intake during the peak of the demand in late 2022 and in the early months of 2023. This has been observed as a major reason of weak sales in late 2023 and continued to be an issue throughout most of the 9 months of 2024 in key markets like North America, Northern Europe, Italy and Germany. Although the Group notes that the overstocking issue is largely resolved, the demand remains weak due to overall weak consumer spending in this sector.

During the first nine months of 2024, the Jøtul Group incurred a consolidated net loss of MNOK -227.5 (September YTD 2023: profit of MNOK 76.3). The operating loss amounted to MNOK -141.3 (September YTD 2023: profit of MNOK 126.0). The total comprehensive loss was MNOK -211.3 (September YTD 2023: profit of MNOK 90.6). EBITDA was MNOK -68.5 (September YTD 2023: MNOK 191.0) and Adjusted EBITDA (net of non-recurring items) was MNOK -42.8 (September YTD 2023: MNOK 200.6).

In a press release dated May 27, 2024, related to initiating a written procedure to amend and waive certain provisions of the Bond agreement, Jøtul provided updated guidance on full-year projections for 2024. Specifically, Jøtul estimated that the Adjusted EBITDA for 2024 would likely fall well below the previously forecasted range of MNOK 250 – 300, as indicated in the guidance from a December 7, 2023, press release. Subsequently, in the interim financial report for the half-year ended 30 June 2024, the Group estimated that the revised forecast for 2024 for Adjusted EBITDA would be in the range of MNOK 50 – 100. The latest forecast of the Adjusted EBITDA for 2024 indicates a range of MNOK -75 to MNOK -25, however, due to the prevailing uncertain market conditions, FY24 results may deviate from this forecast. The Group notes that destocking of excessive dealer inventories has largely run its course across most key markets, and that order intake has begun to increase. However, demand remains dependent on customer sentiment, and the Group observes the ongoing impact of unfavourable overall market conditions. Liquidity has been weakened due to financial performance year to date. Given seasonal sales effects, the Group does not expect liquidity to recover until the second half of 2025.

In response, management continues to work on reducing the Group's cost structure (including the number of FTEs) and improving the working capital. The Group is also considering other strategic initiatives relating to its portfolio for the purpose of securing a healthy liquidity development in the coming months.

However, given the Group's year-to-date financial performance and the continued weaker market demand, there is a risk that covenant compliance cannot be secured in 2025, and that a new round of negotiations with relevant stakeholders will be required to identify and agree remediation actions.

Nils Agnar Brunborg
Tel: +47 906 05 578
E-mail: Nils.Brunborg@jotul.no

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