Flügger Q3'25/26 preview: Will improving painter demand continue?

Flügger is expected to publish its Q3 2025/26 quarterly announcement on Thursday 19 March 2026. We expect the trading statement to confirm a continuation of the gradual recovery theme, with Poland maintaining double-digit growth and early signs of Nordic demand improvement extending into the autumn and winter months. Our attention is focused on the revenue trajectory in Denmark following the white-label phase-out, housing market activity, and professional painter demand. We reiterate our "Accumulate" recommendation and DKK 360 price target.

Poland sustains momentum as Denmark navigates the product mix transition

We estimate Flügger's Q3 2025/26 revenue (November 2025 - January 2026) to have been approximately MDKK 460, representing low-single digit growth (+3.0%) from the comparable period (Q3 2024/25: MDKK 447). Growth is expected to have been driven primarily by continued strong performance in the International segment, where Poland should have delivered continued double-digit growth supported by the full-year effect of new store openings and broad-based demand across customer groups. In the Nordics, we expect Sweden to have maintained its recovery trajectory from the +8% growth seen in H1, with continued favourable currency tailwinds observed in Q3 2025/26, while Denmark is likely to have remained roughly flat as the ongoing phase-out of private-label and low-price products continues to weigh on reported revenue. We expect Norway should have contributed modest positive growth supported by increased marketing activity. The Partnerships segment is expected to have stabilised following the weather-related weakness in Unicell's outdoor products seen in Q1, although uncertainty remains around Eskaro's development in Ukraine.

Improved product mix to support margin improvement Y/Y despite seasonal weakness in Q3 profitability

Q3 is Flügger's seasonally weakest quarter, falling in the low-activity winter months, and with focus on building inventory ahead of the summer. We estimate group EBIT of MDKK -40, consistent with the seasonal weakness over the winter and Christmas months (November 2025 to January 2026) but with continued operating margin improvement year-over-year from the (Q3 2024/25 EBIT: MDKK -49). The expected improving EBIT margin is supported by a sustained gross margin expansion, as observed in H1 2025/26, where the shift towards own-brand and professional customer sales drove gross margin to 56.5% (H1 2024/25: 54.9%). The continued phase-out of low-margin white-label volumes in Denmark, combined with higher capacity utilisation from recent factory investments, should have supported profitability despite the seasonal revenue dip. On the cost side, we note that the new POS system rollout across Scandinavian markets may carry some transitional costs, but the long-term benefit to operational efficiency is expected to be positive.

Guidance expected to be maintained but with possible energy shock impacts mid-term

The full-year guidance for 2025/26 calls for revenue of MDKK 2,200-2,400 (-3% to +6%) and EBIT of MDKK 100-120 (4.5% to 5.0% margin). Our full-year revenue estimate of MDKK 2,306 sits comfortably within the range, and our EBIT estimate of MDKK 111 implies a 4.8% margin, in the mid-to-high end of the guided 4.5-5.0% range. We do not expect the guidance to be revised at this stage, but management's tone regarding end-market demand will be closely watched. In particular, we will be looking for commentary on whether the professional painter recovery observed in H1 has broadened or deepened in the Nordic markets, and how the deliberate Danish revenue drag from exiting low-margin products is progressing. The recent US attacks on Iran and subsequent shock to European energy prices may also impact gross margins in the latter parts of Q4 2025/26. The ongoing sanctions compliance case remains a key risk factor for the investment case. Following the H1 report, we adjusted our price target to DKK 360 per share to incorporate a risk-weighted adjustment for potential outcomes. Any update on the timeline or expected resolution of this case would be highly relevant. More broadly, Flügger's combination of a ~7.7% dividend yield and modest earnings growth continues to support an attractive total return profile at current levels.

Disclaimer: HC Andersen Capital receives payment from Flugger for a digitalIR/corporate visibility subscription agreement. / Philip Coombes 15:53 18/03-2026