Villeroy & Boch quarterly report: sales down by 3.9%
In contrast to the first quarter of 2002, the Group was unable to compensate for the domestic-market decline (-6.5%) with higher foreign sales (decrease of 2.7%).
The operating result (EBIT) fell from 7.0 million euro to 5.7 million euro. Cost-cutting measures were unable to completely compensate for this decline in profits.
There was also a fall in the number of people employed. A total of 10,884 persons were employed on average in the Villeroy & Boch Group during the first three months of 2003. When compared with the same period of the previous year, this represents a reduction of 251 employees. A third of this reduction was made in Germany, while two thirds was made abroad, particularly in Hungary, Romania, Italy and the USA.
Cash flow from operating activities was negative by 27.9 million euro (-32.4 million euro in 2002).
The volume of orders in the Villeroy & Boch Group as of 31 March 2003 totalled 53.9 million euro, as compared to 43.3 million euro at the start of this business year. Investments are also increasing. Villeroy & Boch invested a total of 8.2 million euro in the Group in the first quarter of 2003, 1.2 million euro more than in the same period of the previous year. 29% of this sum was invested in Germany and 71% abroad.
The in-focus section looks at the trends within the Tiles, Bathroom and Kitchen, Tableware and Wellness Divisions.
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With net sales of 146.8 million euro in the first quarter of 2003, the Bathroom, Kitchen and Tiles Division fell minimally short of the 150.9 million euro total secured in the first quarter of 2002.
The Tiles Division was particularly affected by the difficult economic situation.
Sales of 65.7 million euro (previous year: 68.5 million euro) were reported along with an operating result of -1.4 million euro, as compared with -0.4 million euro in the previous business year. Investment in the Tiles business segment totalled 1.0 million euro, 42% being made in Germany.
In addition to investments made in the Merzig factory, further rationalisation was carried out on production in France, Hungary and Italy.
The Bathroom and Kitchen Division succeeded in maintaining its market share in spite of a slight fall in sales, down from 82.4 to 81.1 million euro.
The operating result fell from 6.5 to 6.2 million euro. No fundamental changes are expected for the year as a whole, owing to the poor level of construction activity and consumer uncertainty about the economic trend.
The Bathroom and Kitchen business segment invested a total of 3.0 million euro, 18% of which being allocated to Germany, predominantly for the production sector. Investment was made in EDP systems in Hungary and in buildings and production facilities in Sweden.
The Tableware Division's business trend was influenced by the difficult underlying macroeconomic conditions throughout the world in the first three months of 2003, which particularly affected the willingness to invest in the hotel and catering sector.
Orders fell by 1% to 80.3 million euro. While the volume of orders received in Germany increased by 1% to a total of 29.2 million euro, it declined by 3% for the export market. A particularly pleasing trend was seen in the Italian, Norwegian, Swedish and Japanese markets along with a double-figure increase in orders received in Australia.
Sales declined by a total of 5.4% to 65.4 million euro. Factors which exerted a considerable influence on sales were the poor exchange rate of the US Dollar against the Euro (-20%), as well as weakened business in America. Despite the decline in sales, cost-cutting measures nevertheless made it possible to increase the result in the first quarter of 2003 to 1.3 million euro, as compared with 0.8 million euro in the previous year.
Investment made by the Tableware Division in the first quarter of 2003 totalled 2.8 million euro, 52% of which being allotted to Germany. Investment was made predominantly in the factories at Merzig and Luxemburg.
The Wellness division suffered the heaviest loss of sales. An extremely unsatisfactory economic trend was experienced in the Wellness Division's three main markets - the Netherlands, Germany and Italy - in the first quarter of 2003.
Due to heavy pricing pressure, sales fell by 6.8% to 25.9 million euro. Owing to this sales decline, the operating result in the first quarter of 2003 stagnated at 0.1 million euro. In spite of the market difficulties, this Division expects higher sales in 2003 than in the previous year.
Cost-cutting measures are also expected to bring improved results. Wellness Division investment in the first three months of 2003 totalled 1.4 million euro. Investment was not only made in improving production, but also in acquiring tools for use on new products.
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