Equity research Candles Scandinavia: First impression Q4 2025 – Strong growth confirmed

Today, Candles Scandinavia published its interim report for the shortened fourth quarter of 2025. Below is a compilation of our first impressions of the outcome

The acquisition of HashtagYou powers a 3x revenue jump. The Private Label business grew by 23 per cent and contributed to a profitability swing, from loss to profit at every level. Looking ahead to 2026, Candles Scandinavia believes that the company is well-positioned thanks to:

• Stronger planning conditions through a new 5-year framework agreement with the largest customer (see below)
• Increased orders from several private label customers.
• From summer 2026, production volumes will be added from the recently acquired company in Germany, which will strengthen capacity and margins.
• The company estimates that the majority of the growth, profitability improvement and positive cash flow will be realised in Q3 and Q4 2026.

On Monday, 9 February, Candles reported that it had signed a five-year framework agreement from 2026 to 2030 with one of its major customers. Based on historical call-offs and current assumptions, the indicative contract value is estimated at approximately SEK 150–200 million annually during the term of the agreement. Candles does not disclose the name of the customer, but based on estimated volumes of the agreement, we conclude that it is Rituals, Candles’ largest Private Label customer. If so, we view it as a promising sign that the relationship will continue over a multi-year period. Indeed, we consider Rituals a vital component of continued growth. The timing of the new agreement is likely related to the completion of the capacity-expansion and automation project at the existing production facility in Örebro. However, there are no guaranteed orders under the agreement. We had already assumed that Rituals would remain the largest private-label customer in the forecast period.

We did not have updated estimates for this shortened quarter. However, we believe the report supports our view of a solid growth outlook and gradual profitability improvement in 2026. We do not expect any major changes to our estimates. The Q4 print should drive a positive market reaction.

• In the shortened (two months) Q4 2025, Candles Scandinavia reported net sales of SEK 126,5m, corresponding to a 235% growth. HashtagYou contributed SEK 80.1m. The Private label business grew 23% to SEK 46.4m. The growth rate is stronger than we had expected considering solid revenue already in Q3 2024/2025, although our previous estimates were preliminary due to a lack of data for the exact comparison period in 2024.
• Reported EBITDA increased to SEK 8.7m (-2.2), corresponding to a margin of 7%. Profitability was overall in line with our expectations, with some evidence of operating leverage at higher utilisation.
• Cash flow from operations was negative due to an increase in working capital.

We intend to provide an updated research report of Candles Scandinavia shortly. Read the last research update report here.

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