Interim half-yearly report 2018/19: Currency headwinds and high raw material prices impacting results in Flügger

The result for the period is negatively impacted by the development in exchange rates, especially in SEK, and earnings are under pressure due to high raw material prices. Continued focus on reducing costs and consolidating the shop network.

Flügger’s revenue in the first half of the non-calendar financial year was significantly impacted by negative foreign exchange rates, especially the unfavourable development in SEK. Revenue for the first two quarters totalled DKK 1,013 against DKK 1,021 million for the prior-year period, corresponding to a decline of -1%. In local currencies, revenue increased by 2%. EBIT fell by 15% to DKK 91 million.

In the Danish and Polish markets, the group is enjoying growth, as revenue increased by 4% and 12%, respectively (4% and 14% in local currencies). In contrast, revenue in Sweden declined by 9% (-2% in local currencies), in Norway sales dropped by 1% (0% in local currencies) and Exports to other countries dropped by 4% (-5% in local currencies). Expenses for raw materials, including binder, titanium dioxide and fly ash, as well as transport costs, are characterised by significant price increases, which impacts earnings. Therefore, Flügger is continuing to focus strongly on reducing costs, among other things by consolidating its own shop network, optimising processes and renegotiating contracts.  

Jimmi Mortensen, CEO, says: 

- The market situation is still challenged by negative developments in exchange rates, especially in SEK, as well as by high raw material prices and transport costs. Raw material prices have stabilised to some extent, but the general price level is still markedly higher than previously. 

In the past six months, we have intensified the execution of the strategic initiatives aimed at reducing our fixed costs. This includes, among other things, consolidating our own shop network, streamlining our business processes as well as making adjustments in administration, production and at our warehouses. We have intensified this process, as we have been unable to pass on the higher raw material and transport costs to the market to a sufficient degree.