Financial result for 2018/19: 3% growth in local currencies, and solid growth in operational EBIT
Flügger group A/S is posting net revenue growth of 3% in local currencies. In Danish kroner, revenue totalled DKK 1,824m against DKK 1,818m last year. EBIT totalled DKK 41m, corresponding to an EBIT margin of 2.2%. In 2019/20, Flügger expects a flat development in revenue, and an EBIT margin of 4%.
EBIT totalled DKK 41m compared to DKK 58m the previous year, corresponding to an EBIT margin of 2.2%. The decline in earnings is attributable to non-recurring costs of DKK 25m, which included DKK 10m in costs associated with the dispute between Flügger and Datacon, as well as approx. DKK 15m for implementing the efficiency programme. In mid-May 2019, the outlook for the EBIT margin for FY 2018/19 was revised downwards from 3-4% to 2.2%-2.4% as a result of the decision in the legal case against Datacon. The development in revenue was in line with the outlook, which was stated in connection with the publication of the 2017/18 annual report.
Despite market challenges throughout the financial year as well as continued high raw materials prices and a battle for market share, there was a satisfactory growth in sales in Q4 of 6% measured in local currencies. In addition, the operational earnings showed solid growth: adjusted for non-recurring costs totalling approx. DKK 13m, earnings were DKK 23m up on the previous year. This shows that the efficiency programme, which was launched in autumn 2018, is starting to take effect. The growth in underlying earnings is expected to continue in the coming financial year, however still impacted by restructuring costs for optimising our store network and the product range as well as for making organisational adjustments.
As regards sales to the group’s Scandinavian market, Flügger has seen a growth in revenue in local currencies of 2% in Denmark*, 0% in Sweden, 2% in Norway and 16% in Poland. Revenue in Sweden has been impacted by the negative development in the Swedish currency combined with a reduction in the number of stores.
Sales to China and Export have shown positive signs with a growth in revenue of 5% in local currencies.
Jimmi Mortensen, CEO of Flügger group A/S, says:
The 2018/19 financial year was challenging on several fronts, yet we saw progress within a number of strategic initiatives, and the results are satisfactory, particularly in Q4. In addition, we are beginning to see the effects of the efficiency programme launched in autumn 2018 with the aim of reducing variable and fixed costs. Again this year, we have closed about 5% of our own stores across our main markets. At the same time, we have expanded and improved selected existing stores, while opening other stores in new and better locations, and this development will continue in the coming years.
The market for building paint in the Nordic region has been stagnant for several years, and there is a tough battle for market share. Our ambition is to consolidate Flügger’s position in Scandinavia, and as part of this we are therefore assessing the potential for acquisitions in our existing markets.
We are maintaining our target for 2020/21 of DKK 2bn in revenue, and expect an EBIT margin of min. 6%.
*Incl. Iceland, Greenland and the Faroe Islands
