Interim financial report, Q1 2019/20: Improved EBIT but top line facing challenges

Flügger Group A/S posted revenue of DKK 514 million in the first quarter of the 2019/20 non-calendar financial year, equivalent to a 3% decline measured in local currency. Earnings rose by DKK 5 million during the same period, from DKK 61 million to DKK 66 million.

Flügger posted net revenue of DKK 514 million, compared to DKK 538 million in Q1 of the previous financial year. The group’s earnings rose by DKK 5 million in Q1 to DKK 66 million, compared to DKK 61 million for the same period the previous year. 

The improvement in earnings is primarily due to the impact of initiatives in the group’s efficiency programme. The programme was launched in autumn 2018 and resulted in a number of one-off costs for items such as idle rents, severance payments and consultancy fees, but the efficiency improvements – such as consolidating the store network, streamlining the product range and tuning administration – are starting to have an effect. The initiatives contributed to savings of DKK 13 million during the quarter, while the one-off costs amounted to DKK 4 million over the same period.  

In Denmark (including Iceland, Greenland and the Faroe Islands), revenue decreased by 6% in local currency compared to the same period the previous year. Revenue in Sweden decreased by 1%, while revenue in Norway decreased by 8% in local currency. The decline is due in part to unsatisfactory sales of outdoor products during the first two months of the quarter.  

In Poland, revenue increased by 6% in local currency, while sales to other countries, including Exports and China, rose by 9%. 

CEO Jimmi Mortensen comments: 

“Declining sales for outdoor paints in May and June resulted in a challenging start to the financial year. This is particularly the case in the Nordic markets, which are quite stagnant. In Poland and in our export markets, we are seeing moderate growth.

We are now beginning to see tangible results from the efficiency programme we launched in autumn 2018. As a result of a number of initiatives, we improved our earnings by DKK 5 million in the first quarter, compared to the previous year. 

We will intensify implementation of the efficiency programme in the coming quarters, and initiate a number of other tactical measures to ensure that we reach our forecasts for the 2019/20 financial year.”