Gabriel Q1'2025/26: Positive momentum continues in Q1’2025/26

The Q1 2025/26 results strengthen confidence in Gabriel's turnaround following the cyclical market downturn and FurnMaster restructuring. While headline results came in slightly below our estimates, the market share gains across geographies and solid margin expansion demonstrate sustained competitive advantages from the "grow with the biggest" key account strategy. Continuing operations can maintain positive development with demonstrated operating leverage and reduced execution risk. We also believe the FurnMaster restructuring progress in Q1 improves the business unit's attractiveness for carve-out, making completion in 2025/26 increasingly likely. With Q1 indicating that the 2024/25 momentum is sustainable, we maintain our recommendation of "Accumulate" with a slightly reduced price target of DKK 270 per share.

Market share growth continues in Q1 but with investments in growth slowing margin expansion

The Q1 results begin to show sustained momentum into 2025/26 as continuing operations grew 4.7% to MDKK 129.2 (from MDKK 123.5), slightly above the mid-point guidance of 0-8% growth, but below our estimate of MDKK 133, predicting top-end of guidance growth. Q1’25/26 also demonstrated EBIT margin expansion Y/Y to 7.1% (MDKK 9.2) versus 3.3% (MDKK 4.1) in Q1'24/25, demonstrating ongoing operating leverage as volumes recover. The margin performance, driven by gross margin expansion to 54.3% (from 53.1% Q1’24/25), validates that Gabriel’s production assets exhibit scale benefits, while the sales strategy enables favourable pricing with large global clients. However, the continuing operations EBIT margin was below HCA estimates of  9.2%, due to slightly lower revenue growth and some elevated costs related to investments in key account managers. Overall, the strategy to grow with the largest global clients maintains above market growth rates, which is showing early signs of recovery from a cyclically challenged low point.

Strong cash flow continues as FurnMaster approaches stabilization

Group operating cash flow reached MDKK 36.9 (vs MDKK 33.8 in Q1'24/25) with working capital improving to MDKK 134.5 from MDKK 141.7 at fiscal year-end. FurnMaster losses narrowed substantially to MDKK -3.5m from MDKK -9.4m, despite revenue declining 19% as unprofitable contracts were terminated. The FurnMaster unit has been significantly restructured, improving carve-out prospects despite the negative results. Management maintains that value should be at least in line with book value based on EBITDA multiples validated by auditors, which decreased to MDKK 208 from MDKK 242 at fiscal year-end, primarily as working capital was significantly reduced. Strong cash generation and further debt repayment have further deleveraged the balance sheet to around 3.5x on the group level (incl. FurnMaster) and may support eventual shareholder returns and accelerated growth investments following a FurnMaster resolution.

We reiterate our Accumulate recommendation as valuation now favors positive risk/reward

Management maintained full-year continuing operations guidance (revenue MDKK 510-550, EBIT MDKK 40-55) as growth was achieved across all markets and operating leverage benefited margins. Current valuation multiples of EV/EBIT 14.8x (FY 2025/26e) compress to 8.3x (FY 2026/27e), according to our estimates, and appear attractive given the potential for a sustained recovery with the market at cyclical low levels. The DCF valuation of DKK 285 per share also favours a positive risk/reward. We believe quarterly results showing sustained growth and margin expansion will unlock value, while FurnMaster completion at or near book value provides an additional catalyst.

Disclaimer: HC Andersen Capital receives payment from Gabriel for a DigitalIR and research agreement. / Philip Coombes 08:28 10/02/2026