Financial results for 2017/18: Higher earnings despite drop in revenue
Despite a slight 2% decline in revenue (from DKK 1,849 million last year to 1,818 million), EBIT rose 32% to DKK 58 million. Flügger expects to see a 0-2% rise in revenue and an EBIT margin of 3-4% in 2018/19.
EBIT was DKK 58 million (compared to DKK 44 million the previous year), corresponding to an EBIT margin of 3.2%. The rise in earnings can be attributed to the Group’s strategy focusing on reducing costs and increasing efficiency. The forecast for the 2017/18 financial year was revenue on par with 2016/17 and an EBIT margin of 2-3%.
Sales came in at DKK 1,818 million, compared to DKK 1,849 million the year before. Measured In local currencies, consolidated revenue was essentially on par with the previous year. Revenue has been impacted by several challenges. Bad weather in summer 2017 and spring 2018 reduced demand in the Scandinavian market, leading to a significant drop in demand for outdoor products, primarily for private customers.
The industry has also been affected by rising commodity prices, which the Group has had difficulty passing on to customers in the short term.
On the Scandinavian market, Flügger A/S saw a decline in revenue of 1% in Denmark, 6% in Sweden and 4% in Norway. Net revenue in Sweden and Norway has been impacted by a weakening in the Swedish and Norwegian currencies.
Sales to countries such as Poland and China and general exports have risen (10%), similar to previous years, particularly due to good growth in the Polish market.
Jimmi Mortensen, CEO of Flügger A/S:
We anchored our strategy during the 2017/18 financial year, and are beginning to see the effect of the strategic initiatives. We will further accelerate its implementation in 2018/19, and focus on initiatives to lower our costs without reducing revenue. We are focussing on greater efficiency, and on reducing the complexity of our value chain, product range and store network. We are maintaining our target for 2020/21 of DKK 2 billion in revenue, and expect an EBIT margin of 6-8%.