Interim financial report, Q3 2021/22

Revenue grew by 18% both in Q3 and for the first nine months of the financial year. The growth was driven by recent acquisitions (Eskaro and Adjusted for acquisitions, growth was flat in Q3 and -2% for the first nine months of the 2021/22 financial year. Revenue was affected by a normalisation of sales to consumers after high sales at the beginning of the COVID-19 pandemic.

The price of raw materials, energy and transportation increased more than expected in Q3. In the first nine months alone, the group has seen an increase of an average of 20% in the cost of raw materials. The developments now appear to have stabilised at this level.

Final EBIT for Q3 came in at DKK -39 million. It is usual that Q3 incurs a loss for the group. EBIT for the first nine months was DKK 152 million, compared with DKK 200 million in the previous year, which was boosted significantly by increased consumer sales due to the COVID-19 pandemic.

Segment 3 (Eskaro) contributed DKK -1 million towards EBIT in the first nine months of the financial year, of which DKK -7 million was accounted for in Q3. Revenue from Eskaro was affected more than expected by the large price increases of raw materials, where sales prices and other measures could not counteract the effect in the short term.

The conflict between Russia and Ukraine is being closely monitored, as this will have a large impact on the group’s presence in the affected markets. The conflict has not affected financial figures for Q3, but will affect the financial outlook for segment 3 for the rest of the year.

After the end of the accounting period, the group agreed to acquire a distributor of Flügger products in Lithuania, with a view to fully integrate them into the group. The distributor has four stores of its own as well as 21 dealers in Lithuania.

CEO Sune Schnack explains:

“Q3 of our non-calendar financial year 2021/22 has been affected by price increases. Overall costs have been higher than expected and are currently only partially transferred to the market. Gross margin is expected to be affected for some time yet, while a number of initiatives from the procurement and R&D departments are being worked on to help the margin in addition to increased sales prices. Overall, we are landing a satisfactory top line, which helps to maintain good earnings. The situation in Ukraine escalated after the end of the quarter, affecting both our employees and our operation. We are monitoring the situation closely, but it creates significant uncertainty for the whole year for segment 3.”