Equity research Candles Scandinavia Q4 2025: Sustained double-digit growth

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Organic growth remained solid in the shortened Q4 2025 quarter, and newly acquired HashtagYou boosted sales significantly, helped by strong seasonality.  Also, the margin improvement is a promising step, expected to be further underpinned by production synergies in H2 2026. A new 5-year framework agreement with the largest customer provides visibility into growth.

Strong growth bodes well for efficiency gains in 2026

Candles Scandinavia’s net sales in the shortened Q4 2025 increased by 235 per cent to SEK 130m (38), primarily boosted by the acquisition of HashtagYou. For the Private Label business, we estimate underlying organic growth of ~26 per cent in the quarter, hence the growth momentum from recent quarters continues. The company says “2026 has every chance of becoming the company’s best year to date, both in terms of profitability and cash flow”. Candles cites several factors, including stronger planning conditions through a new 5-year framework agreement with the largest customer and increased orders from several Private Label customers. From summer 2026, production volumes will be added from the recently acquired HashtagYou, strengthening capacity and margins. The majority of the growth, profitability improvement and positive cash flow will be realised in Q3 and Q4 2026, according to the company. Our updated forecast implies about 11 per cent growth for the Private Label business in 2026 (R12M in net sales estimated at SEK 209m as of December 2025).

Promising margin improvement but cash flow trails in the short term

EBITDA increased to SEK 8.7m (-2.2), corresponding to a margin of 7 per cent, a result of higher volumes. While we judge that OPEX, including personnel costs, was higher than we had anticipated, we believe the margin uptick supports our view of a profitability improvement in 2026, especially in the second half of the year when synergies with HashtagYou are expected to kick in. Cash flow was negative, burdened by working capital and investments, and cash declined to SEK 18m vs. 35m in October 2025. However, we see good reason to expect gradually improved cash flow in the coming quarters.

New agreement provides some increased visibility for Private Label

Recently, Candles reported that it had signed a five-year framework agreement from 2026 to 2030 with one of its major customers valued at approximately SEK 150–200 million annually. We are encouraged by the continued relationship with the largest customer. We had already assumed that Rituals would remain the largest private-label customer in the forecast period. We adjust our estimates to reflect somewhat higher OPEX and slightly lower growth forecasts from 2027 onwards than previous forecast. This is influenced by slightly more conservative assumptions about Private Label organic growth in the medium term following the agreement mentioned above, as well as FX headwinds. The case for solid growth combined with significant improvement in profitability in the medium term remains. This contrasts with the low EV/sales 2026E multiple of 0.9x, compared to 1.4x for peers.

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