Quarterly result 2017/18: Bottom line growth despite slight decline in revenue
Flügger A/S experienced a slight decline in revenue of -3% in Q1 of the 2017/18 financial year relative to the same period last year, but saw a solid +8% increase in earnings. The growth is attributable primarily to Poland and China, which are compensating for the declining revenue in the Scandinavian markets.
Flügger posted net revenue of DKK 539 million against DKK 557 million in Q1 of the financial year compared with the same period last year, corresponding to -3%. In spite of the declining revenue, Group earnings grew by +8% in Q1, an increase from DKK 76 million in the same period last year to DKK 82 million this quarter.
In the Danish market, revenue declined by -4% relative to the same period last year. In Sweden, revenue declined by -9%, and Norway saw a revenue decrease of -2%. Outside the Nordic region, i.e. primarily sales in Poland and China, revenue increased by +14%.
The Group has initiated optimisation of processes within sales, production etc., and at the end of Q1, these optimisation efforts had affected interest-bearing net cash and cash equivalents, which rose by +66% relative to the same time last year. This optimisation is also expected to impact the top line going forward, as well as positively impacting earnings and cash flows.
Flügger maintains its outlook for the 2017/18 financial year, i.e. revenue on a par with the previous year and operating profit corresponding to an EBIT margin of 2-3%.
Jimmi Mortensen, CEO of Flügger A/S, says:
- The rainy summer with little sun in Scandinavia impacted our sales negatively – particularly within outdoor paint and wood stain, where we saw significantly lower sales than in previous years. This was further enhanced by a decline in sales to segment 2 – sales of non-Flügger-branded products to DIY stores.
- We’re progressing according to plan and continuing the initiatives we launched earlier this year – including the consolidation of our own store network as well as internal streamlining initiatives that are to contribute to further strengthening our business. In addition, we’re now focusing strongly on streamlining our product range with a view to reducing the complexity and creating synergies across markets.