Financial results for 2019/20: Flügger generates sound growth and doubles its earnings

Jimmi Mortensen, CEO:

“Events in the spring of 2020 took Flügger and the whole world by surprise. The COVID-19 crisis has both had both positive and negative effects on Flügger’s markets in Q4, i.e. the months of February–April 2020. In Q4, we experienced rising demand, particularly in Denmark, where revenue increased by 28%, and partly in Sweden, where revenue increased by 6%. Together, Denmark and Sweden account for more than 60% of our revenue. Conversely, the early shutdown of our dealer network in China and the substantially restricted consumer spending in Poland adversely impacted our revenue. In Norway, the sharp devaluation of the Norwegian krone has also adversely affected our revenue. Overall, we posted organic growth of 10% in Q4, which we are very pleased with, given the uncertain market conditions.

In the 2019/20 financial year, we stepped up our efficiency programme, which means that we now have a customised, sustainable portfolio of stores and a stronger platform from which to generate profitable growth. In 2019/20 we closed 16% of our own stores and enlarged the network of franchise stores by 7%. Overall, we closed more than one in five of our own stores during the strategy period. We are also continuously working to optimise our production, distribution, procurement and administrative functions, and these initiatives have already had a positive impact on our consolidated earnings, which we have managed to more than double.”

• Revenue was DKK 1,895 million compared to DKK 1,824 million last year, equating to 4% growth. The positive trend was primarily generated in Poland, where revenue increased 38%, influenced by the acquisition of Unicell, and 5% revenue growth in Denmark. Revenue generated in Sweden, Norway and sales to other countries decreased by 2%, 9% and 10%, respectively, due to factors such as COVID-19 and a sharply declining Norwegian exchange rate.
• EBIT more than doubled to DKK 83 million from DKK 41 million last year, corresponding to an EBIT margin of 4.4%
• The acquisition of controlling interest in the Polish paint manufacturer Unicell in November 2019 contributed revenue amounting to DKK 62 million.
• Our original target of using the efficiency programme to reduce consolidated costs by more than DKK 60 million p.a., once cost-cutting measures were fully implemented in 2020/21, has already been achieved in the 2019/20 financial year.
• Flügger has prepared an updated strategy aimed at 2023/24. The Group’s long-term milestone is to generate revenue of DKK 2.5 billion and an EBIT margin of +6% in 2023/24. Flügger expects most of its growth to be generated through further acquisitions that consolidate the Group’s position in Central and Eastern Europe.
• In the 2020/21 financial year, revenue is expected to be roughly DKK 2 billion and the EBIT margin around 6%.