Interim half-yearly report 2019/20: Solid growth in earnings
Flügger group A/S posted revenue of DKK 988 million in the first half of the 2019/20 non-calendar financial year, equivalent to a 1% decline measured in local currencies. Earnings rose by DKK 13 million during the same period, from DKK 92 million to DKK 105 million.
The improvement in earnings is primarily due to the impact of initiatives in the group’s efficiency programme. Launched in autumn 2018, the programme has resulted in a number of one-off costs, but the efficiency improvements – including the consolidation of our store network, streamlining of our product range and adjustments to the administration – are starting to have an effect. The initiatives contributed savings of DKK 13 million during the quarter, while the one-off costs amounted to DKK 6 million over the same period.
In Denmark (including Iceland, Greenland and the Faroe Islands), revenue decreased by 4% in local currencies compared to the prior-year period. Revenue in Sweden is on a par with the same period last year, while revenue in Norway is down by 5% in local currencies. 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 8% in local currency, while sales to other countries, including Exports and China, also rose by 8%.
CEO Jimmi Mortensen comments:
“In the latest quarter, we have been focusing more on streamlining our business. We can see that our efforts have paid off, and that we have succeeded in improving earnings in the second quarter significantly.
Since autumn 2018, we have accelerated the consolidation of our own stores, and we have closed about 6% of the stores in the current financial year. We have closed down outlets in sparsely populated areas and converted other stores to franchises, which will be a priority for the coming years.
Despite the impact from the decrease in the number of stores on the group’s total revenue, we have successfully managed to shift some of the revenue to nearby stores. We are following the plan to reduce our fixed and variable costs, thereby raising the group’s EBIT by more than DKK 60 million a year.
Competition in the Nordic markets is intense, and the market for building paints is stagnating. For some time, we have been actively evaluating the East European market for possible acquisitions with a good strategic match for Flügger. Our recent acquisition of a majority stake in the Polish paint manufacturer Unicell is therefore an important step in Flügger’s development, and in our efforts to realise the group’s long-term financial goals.”