Hello InderesTV viewers and listeners. Rapala just gave out their H2'25 report yesterday and we'll be going through the report and well how the company is doing with the company CEO Cyril Villard. Welcome Cyril to the interview.

Thank you, Thomas, for the invitation. It's always a pleasure to come and being able to well give more information about who we are where we're going. So thank you very much.

Always a pleasure to have you here. But if we start off with the big picture, you guys updated your strategy. This report so maybe could you brief us on what are the main points of this new strategy?

So really the core of our strategy is to be brand driven. It's brand first and creating brand value with dedicated expert teams that per brand that address defined. Clear segmented markets to address their brands. That's really the core with a particular focus on our flagship Rapala brand that must develop a growth that is superior to the market growth and to the rest of the other brands.

So instead of thinking more high level, are you now distributing? decision-making power and responsibility is down to the brand managers more or?

Much more so the we have dedicated brand teams that design products, source, also are very connected to our own manufacturing to really animate their brand like a sports team. They really identify themselves. with the brands and that creates emulation and growth really. And one thing you mentioned under this new strategy as well was leveraging your distribution networks, but how should we think about third-party sales or distribution of third-party products going forward? We have a global-wide distribution network, and today the part of our third-party brand distribution is very small, very small, so it reduced and we are very selective. We pick brands that are very complementary and we treat them as our own brands. That's really we want the ones we have is for long term and it remains a very small part of our business and they are also the fact that we are now very brand focused is also positive for them. Brands that give us their own distribution, but it remains very small, very small. Really our focus is the future is in strong brands with a lot of brand equity with connecting to their consumer communities. And one thing that's always important when talking about strategies, things you do not do, so how would you maybe articulate the things that you aren't going to do going forward? considering your new strategic focus areas. Well, our brands, even though we have quite a large spectrum of brands, they don't address all fishing techniques. So while we are not in fly fishing, for example, and so while we will not be in fly fishing in the coming years, our Rapala brand is a lure. Salt and fresh water predator brand on the medium to high for it's on innovation it's for competitors it's bringing really a strong value and so if there are segments where we even as one of the largest group in fishing in the world well we will not address. Okay, so you're focusing on the key strength areas. It's clear. Okay. If we move on to H2, how would you say H2 went for Rapala? Quite a noisy quarter based on the figures. Well, because we had the, what happened in H2 is we were, we benefited from a very strong winter fishing in North America, winter fishing deliveries. A bit weaker in Europe in the winter fishing, which we recovered in the Q1 of this year. But winter fishing went really well for North America. We also had, due to our softer continental European market, what we did is we moved forward some 2025 introductions in Europe. which were really successful. It was very, very well received by our customers, which allowed them to animate a weaker, softer fishing market in our main markets, which is France and Germany. So bringing forward. So for us, we in the given conditions. We were quite satisfied with our second half, in terms of turnover. Yeah, you had quite a strong growth in the United States, I'd say, especially when you consider the tariff headwinds that affected you and the weak U.S. dollar that actually, well, affected your sales directly. So what enabled this? Well, the U.S. is very innovation-driven. So we had a second very successful year in our third, third I would say third very successful year in our soft bait developments. So with new products, color extensions, size extensions, so really our across the range went really well. Again the winter that I mentioned that it was a second good winter year for us and we are very dominant in that segment. It's in our genes whether in Europe we are Nordics. And in North America, we have the Minnesotans. We're in Minnesota in Canada. So inside the large players in fishing, when winter comes, we're the kings, because we have brands like Strike Master, Mora, and under Rapala Urso, and ice drills, and all ice accessories, our people know what we call hard water fishing. And so when the hard water comes, it's a good year for us.

And I can imagine the consumer is holding up quite well in the United States currently. And what we see, and you probably see in other segments, that today the U.S. demand is keeping up quite well, and that's for us very positive, that our exposure to... North America and Canada. Canada has done extremely well for us uh uh last year. And uh and it's starting also extremely well. Yeah. Yeah, and if United States is holding up well, well, you could say that Northern Europe is currently the polar opposite to this. So how should we think about this development of this geography for you?

So North Europe actually gives you a bit of a, in some way, not fully correct view as fishing is holding. In Finland, thanks to a... So we know a strong team and very good relationships with key customers in Finland, key players. We are doing well. The challenging part is we have a winter sport. We have a great brand and a great team. But it's... Challenging, even though we had the Winter Olympics, we had a lot of cross-country skiing was high on the agenda in Europe and we had snow, it was still a soft year for us and that is reflected in the overall numbers when you look at North Europe. Okay. How about the rest of Europe then? So rest of Europe is also we have a dynamic fishing scene in Eastern Europe and you have slower markets in the mature ones and we are more our market share historically is very strong in France and Germany due to past merger between the Rapala group and the VMC group some 20 years ago and for our relatively high exposure to these markets they were softer really softer and that has impacted us more maybe than competition that are less exposed to these markets where we are we're having a good dynamics is in the UK where we are in market share gains and so we are we can we can grow and there's a lot of room to grow for our brands so it's a mixed view that we need to convert into something more positive stronger so we have not we are not relying as we are today on our North American activities. Yeah, and I can imagine since Europe is so mixed the same approach doesn't work for every market. You have to approach the market by market currently or? Completely really are in all our portfolio of brands our relative market share is very different for historical reasons. And price points are different, techniques are different. Europe is a mosaic which also gives us opportunities because this complexity, it's our home turf. So we should, we must. be able to manage this complexity better than competition. So I can imagine We're competition at home. coming from outside of Europe doesn't necessarily appreciate all the complexities that come with the area. Top with language. And our leisure is cultural. So even that gives it another dimension. You won't fish carp the same way in Romania or Hungary or France because you fish the way you've been taught and you want to practice it as an art.

And if Europe is mixed, I can imagine the rest of the world due to its wide geographic footprint is also a very mixed bag of Asia being somewhat difficult and Latin America developing more favorably. What are the dynamics here?

So Latin America, we've been there for long. We have a good understanding of the markets. We have our own subsidiaries and great teams, strong teams. And so it's not easy markets, but we are really maximizing opportunities in these markets. In Asia, all players are suffering in Japan. Japan is very slow. We're here. It remains the second largest market in the world in fishing. But it's been slow. We're trying to maximize opportunities in these markets. We're a small player and focusing on where we... We offer really something unique.

Got it. And if we move on to look into the future, for this year you guided improving comparable EBIT. So how do you internally think about the development going into this year? How are we achieving this improvement in profitability?

Well, it's a lot of small streams. What I can say is that we are... We are improving our messages, continuous improvement. Yeah But we are far today from the normative profitability we should be in. And our business is built on long cycles. We have really, in our, since we are seasonal. And then it's our business is yearly cycles, very long cycles. And so it's we are continuously improving. And I know from everything we are doing and we control that we will improve this year. There is A big storm that is with the Middle East disruptions that are difficult to assess, but with the given conditions and how we've started the year, the innovations we have, the dynamics in our margins, in our fixed cost reductions, all that we have in the pipe. I am we as a team confirm our statement that we would improve Yeah. continuously improve. Yeah. Based on your webcast earlier today, would a fair takeaway be that you're expecting revenue growth in Northern America and, well, reduced costs, a really reduced cost structure here in Europe that, well. somewhat aids in this goal. We'll have a similar, we have a, the trends are, our markets are very stable, so we don't anticipate booming European markets. What we have in the pipe is, we have significantly reduced our warehouse footprint in Europe. I think we mentioned this in our previous discussions. And we will integrate our Prague warehouse, for example, so from April onwards, everything will be delivered from the French warehouse and we have further efficiency projects in the making, and that are going according to plan. There's no reason for significant hold-ups. back so that would be yes growth in North America improvements in gross margin because as we renew new products coming in they come in with with better margins and and control the fixed cost overheads. And going into investments this year, or at the end of last year you managed to successfully refinance your balance sheet, but how do you... yourself see your potential for future investments considering the current balance sheet position and the covenants that come with this new refinancing deal. Well, I see us respecting our covenants as we have done since I've been named. So again, continuous improvements and we will meet. All are the expected requirements. We have one big driver for us is inventory management and here our brand organization leads to stronger focus on end-to-end flows and we see and there are a lot of initiatives to improve our our portfolio can imagine that we have we have tens of thousands of SKUs won't give you the exact number but it's tens of thousands so it to manage this complexity You need dedicated, focused people per flow. And there they are. A lot of initiatives to improve our working capital. And I can imagine thinking about new potential growth initiatives, you are very selective and only going for the most lucrative ones. Yes, we are, again, we're very cautious because we know we are... We are on a very nice recovery path but still don't have the the freedom of action that we would like to have to take every single opportunity. Things are controlled, the strategy is understood and the team is aligned behind the strategy which allows to get real momentum. Nevertheless, we are cautious and people know that the deleveraging of the company is vital and that will give us as soon as possible again more freedom to be more ambitious.

Thank you, Cyril, for the interview and have a really nice spring. Always a pleasure to talk to you.

Pleasure to share, Thomas. Thank you very much for the invitation.