Profoto sees big drop in quarter 3 sales

Swedish lighting equipment manufacturer Profoto Holding AG announced third-quarter net sales from July to September dropped 26.8 percent SEK 235 to SEK 172m (235). Organic growth totaled -28.7 percent and the currency effect 1.9 percent.  Net income was SEK 27 million compared to SEK 54 million a year ago. Basic earnings per share from continuing operations was SEK 0.67 compared to SEK 1.34 a year ago.

For the nine months, sales were SEK 583 million compared to SEK 618 million a year ago. Net income was SEK 119 million compared to SEK 130 million a year ago. Basic earnings per share from continuing operations was SEK 2.96 compared to SEK 3.24 a year ago.

“During the last 12 months, we have had a turnover of SEK 813m (836), a decrease of 3 percent compared to the previous 12 months,” says Anders Hedebark, President and CEO. “Growth in the third quarter was unfortunately lower than that and our sales compared to last year decreased by 27 percent to SEK 172m (235). The low sales level meant that our profitability at EBIT level decreased to 20 percent (28), which is below our target of 25-30 percent. On a positive note, we succeeded in improving our gross margin to 70 percent (69) during the quarter. Naturally, we face a tough market. Our customers primarily create visual content for the sale of consumer goods, and inflation, higher interest rates and geopolitical uncertainty affect the willingness to invest among both consumers and our customers. In the dialogue with our customers and retailers, it is clear both professional photographers and e-com studios are cautious with their investments in these uncertain times.

“My conviction is that our fate is in our own hands and my experience is that we always need to give our customers strong reasons to buy our products today, and not wait until tomorrow, to get business in uncertain times. Profoto’s success has always been based on our ability to introduce new, innovative products that meet our customers’ needs. For the past 20 years, we have had one or two major product launches per year, driving annual growth of over 10 percent in a market that has grown 3-5 percent.

“Over the past year, we have unfortunately not succeeded in this,” he added. “We have not had a major product introduction in five quarters, which means that sales from new products have decreased. Looking back over the past three years, I can conclude that our reduced rate of investment in product development during the pandemic has caused the ”hole” in our product launch pipeline that we are now seeing the consequences of.”

Hedebark pledged the company would return to its rate of one to two major product launches per year within the next 12-36 months.