Fagerhult: Finally, the supply chain is becoming more flexible

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Another LED lighting supplier reported that sourcing logistics are finally getting easier. Fagerhult Group CEO told analysts ‘We see a more positive picture on the supply chain challenges that have been limiting us for a year’ as the company reported higher sales and profits in the third quarter .

The remarks by Bodil Sonesson, head of Swedish company Habo, came during a web call with analysts to discuss financial results for the quarter ending September 30.

Sonesson warned that the supply chain difficulties are “not completely over yet”. But, she noted, “the situation is clearly better than it has been.”

Fagerhult Chief Financial Officer Michael Wood reaffirmed his observations, noting that “with the previously reported supply chain challenges, which we see as easing, diminishing, other more geopolitical topics taking a little more importance”.

Like businesses in every industry, lighting suppliers have struggled to receive goods – and deliver them – due to the delayed shipping and transportation effects of the pandemic. It has been a theme in many quarterly reports, such as LED magazine chronicled, like three months ago with Fagerhult, when Sonesson said that the situation in the second quarter was even “slightly worse” than in previous quarters, although there were some positive signs.

The traffic jams now seem to be easing.

Sonesson and Wood’s remarks echoed last Friday’s comment from Javier van Engelen, CFO of Signify that “delays have reached a plateau and are decreasing slightly”. Based on the description of the two companies, Fagerhult could be further along in improving the supply chain. But the common thread between the two companies is that of improvement.

The improvement helped Fagerhult record a 19.3% increase in sales for the quarter ending September 30, to 2.08 billion Swedish krona ($188.3 million), from SEK 1.75 billion. in the same quarter a year ago. Net profit – profit after tax – was SEK 156.9 million, up 23% from SEK 127.6 million a year ago, supported by price increases which, according to Wood , helped offset increased costs, including energy and employees.

Order intake – a pre-sale activity through which customers book – slowed ever so slightly, by 0.2%, to SEK 1.891 billion.

Fagerhult owns at least 12 brands and divides its activities into four divisions: the design-oriented Collection division, with the brands iGuzzini (including Montreal’s Sistemalux), ateljé Lyktan, LED Linear and WE-EF; Premium, which focuses on European customers and tailor-made solutions through the Fagerhult and LTS brands; Professional, which focuses on indoor lighting in local markets and includes Eagle in Australia, Whitecroft in the UK and Arlight in Turkey; and Infrastructure, aimed at rugged environments and including the Designplan, i-Valo and Veko brands.

As with last quarter, results were healthy in three of the four divisions, but were what Wood described as “below expectations” in Professional, with that group’s UK and Australian operations struggling while its Turkish team did well, Wood said.

Three months ago the company began replacing management in the UK and Australia. Wood did not provide an update on management research other than referring to the interim management in place. He noted that the company has started taking steps to reverse the trend, which could take another two to three quarters.

He attributed some of the UK’s struggles to that country’s recently unstable government, in which three prime ministers have served in the past two months after leadership uncertainties prevailed over the summer months.

Market conditions with the interesting political situation were disruptive during the summer months,” Wood noted.

Meanwhile, the company is once again without a business division manager, as Gert van der Meer, who was head of infrastructure, has now joined the eldoLED components division of Acuity Brands, working in Eindhoven in the Netherlands. Low, according to der Meer’s LinkedIn page.

Fagerhult’s webpage lists CEO Sonesson as acting head of Infrastructure. Not so long ago, she held the same position, temporarily leading the company’s Collections division until Fagerhult hired a permanent head, Mario Dreismanin April.

Van der Meer had also served as Acting Head of Connectivity (IoT) until Fagerhult hired Johan Lembre to the newly created position of Chief Technology Officer.

On a divisional basis, Collection sales were SEK 946.3 million, up 24% from SEK 763.8 million; The premium increased by 14% from SEK 629.3 million to SEK 718.6 million; Professionals increased by around 2%, from SEK 262 million to SEK 267 million; and infrastructure jumped 32%, from SEK 178.7 million to SEK 236.4 million. Operating profit margin increased by more than 45% in the Collection to SEK 81.2 million; around 18% in Premium to SEK 115.3 million; and 42% in infrastructure, to SEK 33.1 million.

But he fell 73% in professional to 5.9 million SEK.

On the analyst call, Sonesson described a positive near term in which buyers are increasingly interested in LEDs as energy prices soar and a European ban on fluorescent lighting looms in September 2023. She also highlighted the company’s focus on design-oriented products. including the iGuzzini and LTS brands, among others. LEDs will report on this in a separate article.

BRAND HALPER is editor of LEDs Magazine and a journalist specializing in energy, technology and business ([email protected]).


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