Rapala VMC: Recovery Reels In Strong H1, But Tariff Spark Fades

North America's 19% surge and cleaner inventory offset European drought; IEEPA refunds cushion the bottom line.

RAP1V.HE · Earnings Call · 2026-08-21

Recovery on Track

Cyrille Viellard opened the call with a clear message: the recovery plan is working. “the implementation of our recovery plan is proceeding as planned” — Cyrille Viellard, President and CEO · 2026-08-21, citing a 19% jump in North American comparable sales that powered a group-wide 11% growth in constant currency. The drought conditions and heat wave that crushed the European season were partially offset by „favorable developments in Northern Europe," but the real engine remains the U.S. consumer, which has been pulling products off shelves rather than waiting for replenishment.

Regional Contrasts: North America Leads, Europe Drags

The European market dampened overall results—Q2 sales fell 4% in constant FX—while North America grew 18% in the same quarter. Miikka Tarna highlighted “very good resilience” and cited a strong consumer pull. This divergence underscores the company's heavy dependence on the U.S. (now nearly 60% of sales), a dependence that paid off handsomely but also exposes it to tariff volatility. The company noted that renewed “geopolitical instability and tariff volatility” — Miikka Tarna, Chief Financial Officer · 2026-08-21 remain the top external risks.

Tariff Refunds and Guidance

The H1 reported EBIT of EUR 15.8 million included a EUR 2.5 million windfall from “IEEPA tariff refunds in the U.S.” — Miikka Tarna, Chief Financial Officer · 2026-08-21—a theme echoed across the market as retailers like TJX and Lowe's also reported refund benefits. This one-off enabled the company to reaffirm its full-year comparable EBIT outlook of EUR 12-14 million. Yet the path forward is clouded: consumer sentiment in Asia remains weak, and the July Section 301 tariff changes, while less punitive than feared, still add uncertainty.

The new Section 301 tariffs that we now are ... have been published are not as unfavorable as we had expected. That's quite -- was important. So there's still more news to come after Labor Day in September
Cyrille Viellard, President and CEO · 2026-08-21

Inventory and Cash Flow Improve

Beyond the top line, the most striking change is in operational discipline. Inventory fell EUR 2.1 million year-over-year despite currency headwinds, and cash flow from operations surged EUR 10.5 million to EUR 16.7 million. The inventory level is now being actively managed with a focus on turns, including a higher net realizable value provision to clear slow-moving items. Deleveraging is progressing—leverage covenant dropped to 2.28x, and net debt decreased by EUR 13 million since Q4 2025. This cleaner balance sheet gives management room to reinvest in the innovative products they believe will drive future growth.

Winter Fishing and Brand Investment

CEO Cyrille Viellard is already looking ahead to the winter fishing season, which he described as “clean” thanks to strong pre-sales. The company will gradually increase marketing spend in H2 to support its flagship brands—Rapala, VMC, Sufix, and Okuma—while carefully balancing inventory turns. The strategy is to grow without breaking the balance sheet, a tightrope that has so far yielded results. Whether the tariff tailwind persists will determine if this recovery is sustainable, but for now, the company is reeling in the gains.