Fagerhult Group’s quarterly financial results slipped again and this time even the order book dipped. But CEO Bodil Sonesson expressed a strong outlook based on eco trends, and attributed the order blip to the timing of an early Easter holiday and to a strong previous year’s quarter.
On another upbeat note, the Habo, Sweden–based company also indicated that it is scoping out acquisitions, with one possibility being a technology company that would complement Fagerhult’s two connected lighting platforms, Organic Response and Citygrid.
For the first quarter ending March 31, sales fell 2% — 2.2% on a currency adjusted basis — to 2.18 billion Swedish kronor (SEK; $201.6 million) from SEK 2.22 billion in the same quarter a year ago. Net profit fell by 12.4% to SEK 138.3 billion ($128.2 million) from SEK 157.9 billion in 2023’s first quarter.
Three months ago, orders rose as sales and earnings fell, prompting Sonesson to tell analysts that the order activity would reverse the financial decline. But that did not materialize in the first quarter. It could still come about. However, in the first quarter, orders — like sales and earnings — also fell. The order intake was SEK 2.1 billion ($194.2 million), compared to SEK 2.18 billion in the same quarter a year ago, a decline of 3.5%, or 3.3% adjusted for currency.
“The two main reasons for the decline are we had big projects in the same quarter last year, and the Easter effect that slowed down the order intake at the end of the quarter,” Sonesson said on a call with analysts today to discuss the financial results.
With the holiday now over, she said, the levels began coming back right away at the beginning of April — the start of the second quarter.
“Let us see what the second quarter brings without an impact from Easter,” added chief financial officer Michael Wood. He also noted that last year’s first-quarter sales figure were skewed high because they “included the final five to six weeks of the supply chain correction and all of the backlog catch up.”
Renovations ‘R Us
Sonesson was as charged up as ever over the business opportunities of providing smart lighting to renovation and retrofit projects for buildings in Europe, where she noted that the E.U. continues to strengthen its December 2023 European Energy Performance of Buildings Directive. The EPBD has cleared various hurdles and looks headed for final approval this spring, after which E.U. nations would have to adopt its requirements by the spring of 2026, according to Fagerhult.
As the E.U. notes, the overarching aim of EPBD is to establish a “fully decarbonised building stock by 2050.” LED lights with their low energy consumption are part of that, as is EPBD-mandated networked, smart lighting that automatically turns levels down or off when suitable, Sonesson noted. The EPBD starts applying to smaller existing buildings in 2028 and includes all existing buildings in 2030, imposing a mix of different requirements. New buildings will have to abide by “zero emissions,” she explained.
“We continue to see megatrends supporting our strategy, with updated E.U. directives with regard to the so-called European Energy Performance of Buildings Directive,” Sonesson told analysts.
Although Sonesson described the new build market as “subdued,” she emphasized that Fagerhult addresses “decarbonization” there and in the renovation and retrofit sectors in many ways. The group’s 12 operating lighting companies not only are 100% LED but increasingly provide connected Organic Response and Citygrid smart systems, with an aim of eventually including smart sensors in all products across all 12 brands.
Eco design
Like other lighting companies, Fagerhult is also coming up with new bio-based products. For example, this quarter its Swedish company ateljé
It is also constantly adding to the mix of products that use existing housings, thus cutting down on waste and the carbon emissions of fabricating materials.
Along the same lines, Fagerhult is reducing carbon emissions at its own operations. For example, its Italian company iGuzzini has now brought the number of solar panels up to 10,500 at its factory in Recanati, providing 55% of the facility’s energy needs, Sonesson said on today’s call.
These sorts of measures have been common across Fagerhult’s companies, such as its U.K. outfit Whitecroft, which provided details of its environmental measures at yesterday’s Net Zero Lighting Conference in London. Watch for upcoming articles from LEDs Magazine about the many insights from the lighting value chain at that conference.
Meanwhile, following the appointment last September of a new head of mergers and acquisitions, Magnus Haegermark, the company is scouting the acquisition trail.
“We’re busy with our funnel and our pipeline of activity in this area, screening lots of opportunities, narrowing it down to less than ‘lots’, and now beginning to engage with some very early conversations,” CFO Wood told LEDs.
He declined to reveal names, but elaborated on the type of company in which Fagerhult might be interested.
“We have some areas of the globe where we wish to have more representation, and we have some product portfolio areas that would be good as complementary to our other brands, and of course if there’s another smart lighting brand that would complement our solutions in areas where Organic Response or Citygrid do not operate, then we would be interested there as well,” he said.
Acquisitions are one area where Fagerhult might be “putting our surplus cash balances to good use,” he noted.
Fagerhult divides its 12 companies into four business areas. The largest of those — Collection — is design oriented and includes ateljé Lyktan and iGuzzini, Montreal-based Sistemalux, and Germany's LED Linear and WE-EF.
The second-largest division, Premium, focuses on European customers and bespoke solutions via the Sweden-based Fagerhult and Germany-based LTS. The third-largest division is Professional, focused on indoor lighting in local markets and including the U.K.’s Whitecroft as well as Australia's Eagle and Turkey's Arlight. The Infrastructure division includes the brands Designplan, i-Valo, and Veko.
Sales were roughly flat in Collection, slightly down in Premium, up in Professional, and down in Infrastructure. Orders were up in both Collection and Premium, and down in the other two.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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Mark Halper | Contributing Editor, LEDs Magazine, and Business/Energy/Technology Journalist
Mark Halper is a freelance business, technology, and science journalist who covers everything from media moguls to subatomic particles. Halper has written from locations around the world for TIME Magazine, Fortune, Forbes, the New York Times, the Financial Times, the Guardian, CBS, Wired, and many others. A US citizen living in Britain, he cut his journalism teeth cutting and pasting copy for an English-language daily newspaper in Mexico City. Halper has a BA in history from Cornell University.
