Gabriel FY2024/25 - Market-share gains and strong cash flow support positive re-rating

The 2024/25 results strengthen confidence in Gabriel’s turnaround, after a cyclical market downturn and restructuring of its FurnMaster (discontinuing) Mexican subsidiary. While headline results were pre-announced, we believe the market share gains across geographies demonstrate a sustained competitive advantage from the sales strategy to grow with key accounts supported by global showrooms. Continuing operations can therefore maintain positive development with more stable markets and reduced tariff uncertainty. We also believe the FurnMaster restructuring in 2024/25 is improving the business unit’s valuation, making a carve-out more likely in 2025/26. Following a year of strong execution, we believe the latest guidance for 2025/26 is slightly conservative, while valuation favours a positive risk-reward, and we upgrade our recommendation to “Accumulate” with a new price target of DKK 280 per share, from “Reduce” and DKK 210 previously.

Robust performance amid market weakness underscores the strength of Gabriel’s global strategy.

Gabriel is a Danish textile and furniture solutions group operating through three business units: Fabrics, which designs and produces premium upholstery textiles for global furniture manufacturers; SampleMaster, which develops sampling concepts and marketing tools for the furniture and interior industry; and FurnMaster (discontinuing) provides contract furniture manufacturing for OEMs from facilities in Europe and Mexico. In 2024/25, the continuing operations growth, driven by North America (+50% YoY) and Asia Pacific (+30% YoY), was very strong despite slow market recoveries. Stable development in Europe (+0.2% YoY) overcame falling markets and demonstrated strong execution of the strategy to grow with the largest ~70 furniture OEMs and build relationships with key architects and designers via showrooms.

Strong cash flow in Q4 and FY’2024/25 strengthens balance sheet and enables dividend

The reported Q4’24/25 results were broadly in line with estimates, given the pre-announcement, while FurnMaster revenue was lower as unprofitable contracts were reduced. However, cash flow continued to surprise positively as working capital was further reduced.  For 2024/25, Group operating cash flow was MDKK 119.7, with a large contribution from working capital improvement, and enabled an unexpected dividend of DKK 5 per share (a 38% payout ratio vs continuing operations results). We revise our revenue estimate for 2025/26 (including FurnMaster) lower to reflect terminated contracts, but maintain EBIT estimates as contracts were unprofitable. We also expect cash flow to remain strong, with continued working capital improvement and limited CAPEX expected in 2025/26e, and introduce a dividend estimate of DKK 7.0 per share for 2025/26e.

We switch to an Accumulate recommendation as valuation favors current risk/reward

In our view, current 2025/26e valuation multiples of EV/EBIT 13.2x and P/E 14.1x are nearing normalized levels and still assume a conservative recovery of FurnMaster. The DCF tells a similar story now favouring a positive risk-reward following greater confidence in the continuing operations recovery and greater value assigned to FurnMaster. We assume that quarterly results showing sustained growth and further margin improvements will be key to unlock this value, while a sale of FurnMaster at or near its book value would also unlock value vs our estimates. We believe relative and absolute valuation have now skewed to the upside.

Disclaimer: HC Andersen Capital receives payment from Gabriel for a DigitalIR and research agreement. / Philip Coombes 08:32 24/11/2025