Flügger Q3'2025/26: Poland delivers again as Nordic core demand grows under the surface

Flügger delivered 1% revenue growth in Q3 2025/26 to MDKK 451 (Q3 2024/25: MDKK 447), bringing year-to-date revenue to MDKK 1,715. Poland remains the primary growth driver, with +10% local currency growth (+12% reported), while the Nordic segment was flat as the ongoing private-label phase-out saw a 6% decline in Denmark offsetting professional painter demand growth across the Nordic region. Q3 results were slightly below our estimate of MDKK 460, driven by a larger Danish decline than expected and a slight decline y/y in Sweden in Q3. Despite the softer topline, structural drivers of margin expansion from improved product mix and higher-margin Polish growth remain unchanged, and guidance is maintained. We reiterate our "Accumulate" recommendation and DKK 360 price target, though we note the emerging Middle East energy shock as a new risk factor.

Nordic coatings group with international growth engine

Flügger is a family-controlled decorative paints group with strong Nordic market positions and a growing Central European footprint. The group operates through three segments: Nordics, International, and Partnerships. While Nordic housing and renovation activity remains subdued, profitability is improving as demand from professional painters shows early signs of recovery and as Flügger continues to exit low-margin private-label volumes. The International segment, led by Poland, remains the key growth engine, delivering double-digit local-currency growth supported by new store openings. Partnerships (Unicell and Eskaro) provide stable earnings, with longer-term optionality linked to a rebuilding of Ukraine.

Modest top-line growth, and expanding margins to support rising EPS and shareholder returns

Year-to-date revenue grew by 1% to MDKK 1,715, held back by the private-label phase-out in Denmark but supported by strong Polish growth and positive Swedish currency effects. The improved product mix drove H1 gross margin expansion to 56.5% (H1 24/25: 54.9%), a trend we expect has continued in H2. Strong H1 cash generation enabled further deleveraging, with bank debt reduced to MDKK 118 (from MDKK 153). Guidance remains unchanged at MDKK 2,200–2,400 revenue and MDKK 100–120 EBIT. Our estimates of MDKK 2,298 revenue and MDKK 108 EBIT (4.7% margin) remain within guidance, with modest downward revisions following the softer Q3. The Middle East conflict and effective closure of the Strait of Hormuz represent a new risk. European gas prices and global oil prices have since surged which may present a medium-term gross margin risk (raw materials inflation), while a prolonged shock could dampen Nordic consumer spending and housing activity medium-term.

Absolute and relative valuation support a favourable total return profile

Our DCF-based model value of DKK 381 per share highlights the value to be unlocked from a sustained profitable rebound. Improving demand among core professional painters indicates the rebound is intact, despite restructuring of export market sales. The DCF value implies value creation potential even after a risk-weighted adjustment relating to the ongoing sanctions case. The estimated strong cash flow outlook also supports an attractive dividend profile with a sustained yield of >7%, while downside risk is reduced following deleveraging, and trading multiples are reasonably priced compared to peers. We believe that Flügger’s expected return exceeds the required rate of return over the next year and medium term, and we restate our “Accumulate” recommendation with a maintained price target of DKK 360 per share.

Disclaimer: HC Andersen Capital receives payment from Flügger for a DigitalIR and research agreement. Philip Coombes 08:30 20/03-2026, updated 08:59