Revenue growth and cost discipline amid challenging external conditions

Q3 2026 Key Operating Results

  • Sales of goods and services amounted to ISK 51,147 million, up 8.6% year-on-year.
  • Margin from sales of goods and services amounted to ISK 11,901 million, down 1.3% year-on-year.
  • Margin level was 23.3%, down 2.3 p.p. year-on-year, or 0.8 p.p. excluding the effects of changes in exchange rates, fuel prices and public levies on fuel.
  • EBITDA amounted to ISK 4,988 million, down 6.2% year-on-year.
  • Profit amounted to ISK 2,309 million, down 12.9% year-on-year. Return on equity was 12.2%.
  • Cash flow from operating activities amounted to ISK 4,839 million, down ISK 1,825 million year-on-year.
  • Net interest-bearing debt, including lease liabilities, amounted to ISK 39,892 million, up ISK 6,945 million from year-end 2025, primarily reflecting increased working capital requirements associated with higher fuel prices, together with investments, share buybacks and the dividend paid in the first half of the year.
  • Total equity amounted to ISK 48,229 million and the equity ratio was 40.2% (41.2% at year-end 2025). Share repurchases amounted to ISK 921 million during the quarter.
  • Acquisitions of all shares in Skjáauglýsingar ehf. and the remaining 30% stake in Local ehf. were completed for a total purchase price of ISK 564 million, net of cash acquired. Additional consideration of up to ISK 300 million is contingent on Skjáauglýsingar’s performance in 2027 and 2028. The companies are expected to generate combined annual EBITDA of approximately ISK 150 million and will be included in the Group’s consolidated accounts from 1 October 2026.

Ásta S. Fjeldsted, CEO:

“The Group’s operating performance in the third quarter was satisfactory against a challenging external backdrop, although results varied across business units and overall earnings were below our expectations. Sales increased 8.6% year-on-year, while margin from sales declined 1.3%. Customer transactions increased 1.5% and units sold rose 4.7% across the Group.

The conflict in the Middle East has created significant uncertainty. Commodity prices, including oil, have risen sharply and volatility has increased amid concerns over supply chain disruptions. As anticipated, margin from fuel sales remained under pressure during the quarter, as there was limited scope to raise sales prices sufficiently to offset higher procurement costs. Margin from sales of fuel and electricity decreased by ISK 622 million year-on-year. Fewer tourist arrivals also weighed on sales across business units, while weaker demand in the consumer electronics market led to a 3.5% decline in margin from sales of electronic equipment. Krónan maintained its momentum in the grocery market and EBITDA for the quarter amounted to ISK 2,091 million, an increase of 15.1% year-on-year. Performance across other product categories was generally positive.

Inflation remains high, at around 6%, affecting product prices and operating expenses across all categories. Despite these pressures, the Group maintained strong cost discipline, with salaries and other operating expenses increasing by only 3.2% year-on-year.

Key Business Highlights:

  • Krónan: In-store transactions increased by 4.4% and units sold by 5.6%, while transactions and units sold through Krónan’s online store rose by 34.3% and 38.5%, respectively. Amid growing concerns over inflation and its potential implications for Iceland’s collective wage agreements, Krónan took the lead by freezing prices on 647 products from 24 September until at least year-end, prompting similar measures across the market. Krónan also introduced a new B2B service through its online store and is preparing to open its 27th store in Höfn in the second half of Q4 2026.
  • ELKO: The consumer electronics market contracted by 3% year-on-year, according to data from Meniga, while ELKO continued to gain market share. ELKO’s online store delivered a particularly strong quarter, with sales increasing by 15% alongside significant growth in gross profit. ELKO’s Snjallgreiðslur payment solution, previously only available in the online store, will be rolled out across all ELKO stores in November.
  • Lyfja: Transactions increased by 1.2% year-on-year and units sold by 2.3%, while sales through digital channels grew by 14%. Lyfja opened a new pharmacy at Norðurhella in Hafnarfjörður on 11 September, bringing its service network to 45 locations. The pharmacy is located in the same building as Krónan, near a large and growing residential area. Lyfja also reached an agreement with Iceland Health to provide vaccinations for priority groups and strengthened its dose-dispensing services, both representing further steps towards making healthcare services more accessible to households across Iceland.
  • N1: Elevated fuel procurement costs continued to weigh on margins, while fuel volumes declined by 2.8% year-on-year, primarily due to lower sales to high-volume B2B customers. In contrast, performance in N1’s Car Services and Energy divisions improved significantly, with EBITDA more than doubling year-on-year in both divisions during the first nine months of 2026. N1, which acquired a 70% stake in Local ehf. in February 2026, also completed the acquisition of the remaining 30% during the quarter. Local operates five restaurants in the capital region offering healthy fast food, including salads, bowls and wraps. Full ownership creates opportunities to further strengthen Local’s operations and make better use of the Group’s infrastructure, procurement capabilities and service network, in line with N1’s strategy to expand its foodservice business.
  • Skjáauglýsingar a new part of Festi: Skjáauglýsingar ehf. operates one of Iceland’s largest indoor digital advertising networks, offering advertising space on digital screens at more than 100 locations nationwide, including sports facilities, swimming pools, fitness centres and golf courses. The acquisition supports Festi’s strategy of developing new revenue streams and making better use of the Group’s infrastructure and assets. Skjáauglýsingar has significant growth potential, both within and beyond the Group, and Festi believes the acquisition can create substantial value for advertisers, partners and the Group as a whole.

“The outlook for the fourth quarter is positive. We remain focused on maintaining strong underlying operations and cost discipline, while continuing to invest in infrastructure, technology and new service offerings across the Group. All business units are expected to improve earnings, except Lyfja which remains under pressure from rising costs and fixed medicine mark-ups, which are regulated by public authorities and was last revised on 1 October 2023.

Overall, the Group’s financial position remains strong and we are well positioned for growth. Our 2026 EBITDA guidance is unchanged at ISK 16.0-16.5 billion.", says Ásta S. Fjeldsted, CEO of Festi.