Interim financial report, Q1-Q3 2019/20: Strong growth in earnings; revenue on a par with the prior-year period

In Denmark (including Iceland, Greenland and the Faroe Islands), revenue decreased by 2% compared to the prior-year period. Revenue in Sweden decreased by 4%, while revenue in Norway decreased by 9%. The declining revenue in Scandinavia is partly attributable to lower sales of outdoor products in the first two quarters of the financial year.

Revenue rose by 23% in Poland, while sales to other countries, including Exports and China, went up by 6%. In addition to a fair amount of sales from the group’s existing activities, revenue in Poland was positively affected by the acquisition of paint manufacturer Unicell Poland Sp. z.o.o. at the end of November 2019. 

The improvement in earnings is still attributable to the impact of the initiatives in the group’s efficiency programme, which is now entering its final phase. Upon completion of the programme in 2020/21, the initiatives are expected to reduce the company’s total costs by upwards of DKK 60 million.  

CEO Jimmi Mortensen comments: 

“In the first nine months of the year, we came close to doubling our earnings, which increased from DKK 30 million to DKK 58 million, and we maintained revenue on a par with the same period last year. The satisfactory results reflect our focus on reducing costs through our efficiency programme.
Since the launch of the programme, we have stabilised our business, created a profitable store network and strengthened our financial resources. We have launched digital and time-saving solutions for professional painters, including e-business, direct deliveries, professional centres, online ordering etc., which will make up a bigger part of our business in the long term. 

We are entering the final phase of the efficiency programme and are continuing to strengthen our franchise network in the Nordics by converting selected stores of our own into franchises as well as establishing new franchises. Growth outside the Nordics will primarily come from blended growth in Eastern & Central Europe, and we will continue to actively evaluate these markets for possible acquisitions with a good strategic match for Flügger.

The current market situation is heavily impacted by COVID-19 and governments’ measures to try to contain and mitigate the pandemic. Flügger has not been affected by the impacts of COVID-19 in the Q3 presented, as the temporary closure of our stores in China was not implemented until February. However, we are acutely aware that the situation is developing on a day-by-day basis for both people and businesses, and that COVID-19 will have an impact on the rest of the financial year. Our store network, production and administration may be at risk of a partial or complete shutdown in case of widespread illness among our employees or new regulatory measures. We are unable at this stage to assess the extent of the long-term impacts on our business, but we are monitoring developments closely.”