Gabriel Holding A/S Navigates Turbulent Markets with Resilient Q2 Profit Growth

Gabriel Holding A/S, a Danish multinational focused on textiles and furniture manufacturing, has delivered a stronger-than-expected performance in the second quarter of its 2024/25 fiscal year, defying headwinds from geopolitical tensions, inflation, and macroeconomic uncertainty. The company’s ability to maintain its full-year guidance underscores strategic pivots toward its core fabric businesses, even as it grapples with lingering challenges in its discontinued furniture division.

Q2 Results: A Resilient Core Drives Growth
Gabriel reported a 3% year-over-year revenue increase to DKK 248.7 million in Q2, with its continuing operations—comprising the global fabric and SampleMaster divisions—showing particularly strong momentum. These segments saw 10% revenue growth to DKK 138.1 million, driven by cost-cutting and a focus on higher-margin products. EBITDA for continuing operations surged to DKK 27.1 million, nearly doubling from the same period in 得罪2023/24.

The company’s resilience is further evident in its full-year guidance, which remains unchanged: revenue is projected to range between DKK 485 million and DKK 530 million, with EBIT expected to hit DKK 20–30 million—a modest but meaningful improvement over the prior year’s DKK 19.7 million.

The Shadow of Discontinued Operations
While the fabric division shines, Gabriel’s furniture business—now marked as discontinued—continues to weigh on results. The FurnMaster unit, being carved out and sold, faced restructuring costs tied to discontinued loss-making contracts and advisory fees. These expenses reduced overall profitability, though a forensic audit found no evidence of fraud in the Mexican subsidiary’s operations.

The sale of FurnMaster remains critical. Management has stated it will focus resources on the core business, but delays in finalizing the deal could complicate cash flow. Analysts note that while the carve-out is “satisfactorily progressing,” geopolitical risks—particularly U.S. tariffs on Mexican exports—threaten to prolong uncertainty.

Navigating Macro Uncertainties
Gabriel operates in an industry strained by inflation, currency volatility, and interest rate hikes. The company highlighted these challenges in its Q2 release, noting that geopolitical risks—including trade disputes and energy costs—could further dampen demand for furniture.

Yet, the fabric division’s performance suggests strategic agility. By scaling back non-core operations and prioritizing efficiency, Gabriel has improved EBITDA margins in continuing operations to 11.7% in 2023/24, up from 10.3% the previous year. This discipline has positioned the company to weather broader market turbulence.

The Road Ahead: Caution Amid Growth
Analysts have tempered optimism with caution. While Q2 results support the company’s guidance, consensus estimates for 2024/25 project a diluted EPS loss of DKK -3.83, reflecting lingering headwinds. The delayed sale of FurnMaster and potential tariff impacts on Mexican operations remain key risks.

However, Gabriel’s focus on its profitable fabric segments and cost controls provide a solid foundation. The 9% revenue growth in continuing operations year-to-date (to DKK 261.5 million) and surging EBITDA margins signal that the company is on track to meet its targets, even if the path is uneven.

Conclusion: A Cautious Buy for Long-Termists
Gabriel Holding A/S’s Q2 results demonstrate that its strategy—sharpening its focus on textiles and divesting underperforming assets—is bearing fruit. Despite macroeconomic headwinds, the company’s core business has delivered double-digit revenue growth and improved profitability, while maintaining full-year guidance.

Investors should, however, remain mindful of risks: a stalled FurnMaster sale or tariff-driven demand slump could disrupt progress. For those with a long-term view, Gabriel’s valuation—trading at a forward P/E of 12x (if earnings materialize as guided)—offers potential upside if the company executes its turnaround.

In a sector fraught with uncertainty, Gabriel’s resilience in Q2 suggests it may yet navigate these challenges—and emerge stronger on the other side.