Interim financial report, H1 2021/22

Flügger’s revenue in Q2 rose by 20% compared to the same period for the previous year. Earnings before interest and taxes (EBIT) comes to DKK 67 million, which is just under the previous year’s Q2 record amount of DKK 76 million. EBIT for the first half of the year was DKK 191 million, compared to DKK 200 million for the same period in the previous year. Flügger expects delivery challenges and rising prices for raw materials to continue, thereby clarifies the EBIT 2021/22 to DKK 220–250 million.

Revenue increased by 20% in Q2 of the financial year – from DKK 549 million to DKK 657 million – and increased by 18% for the first half of 2021/22, from DKK 1,178 million to DKK 1,393 million. The increase in revenue was driven by the two most recent acquisitions, Eskaro and Malgodt.dk. Adjusted for acquisitions, growth was 1% for the quarter, and unchanged (0%) for the first half of 2021/22.

The initial activity in Flügger was affected by a normalisation of sales to consumers, which the year before was positively affected by the COVID-19 situation. There has been continued growth across markets for professionals.

In the first half of 2021/22, the price of raw materials increased by 20% compared to the same period last year, while the costs for packaging, transport and energy increased significantly. The industry also experienced major delivery challenges for several raw materials, which has meant that a number of products could not be delivered on time.

As expected, the Group’s gross margin was affected by lower margins from the acquired Eskaro, combined with pressure from the rising prices of raw materials.

This half year has been affected by the significant reorganisation of the Group’s Danish and Swedish production, where, among other things, a brand new filler factory close to Gothenburg began operation.

The Group’s EBIT was DKK 67 million in Q2, compared to DKK 76 million last year. Total EBIT for the first half of the year was DKK 191 million, compared to DKK 200 million the previous year. Eskaro contributed DKK 6 million to the EBIT for the first half of the year. Profit was negatively affected by the major price increases of raw materials, where sales prices and other measures have not been able to fully counteract the effect in the short term.

Sune Schnack, CEO:

“Just like the first quarter, the impact of the ongoing COVID-19 pandemic has been felt during the second quarter of the 2021/22 financial year. We have been hit hard by the price increases and shortages of raw materials in our supply chain, as well as major challenges related to transportation. We are pleased with our top line growth of 20% compared with the same period the previous year. EBIT comes in slightly under last year’s record level.

We expect the above trends to continue, and therefore narrow our EBIT outlook to DKK 220–250 million 2021/22. Demand in the Nordic countries and Poland remains high among professional customers, whereas sales to private individuals are levelling.

We are also seeing this trend in our segment 3 in the Baltic states, Ukraine and Russia, which is also negatively affecting our top and bottom lines.

We are continuing to work on our Going Green strategy, where we have recently launched a new vision and branding platform. We are also working on a number of new exciting product launches, which will hit the market over the next two quarters – this is part of our fifth strategic initiative around harmonising the general product range.”