Villeroy & Boch in the financial year 2008
Changeful year in the context of the economic crisis
- Group turnover of 2008 with 841 million euros on previous year’s level
- Operating profit (EBIT) decreases to 24.1 million euros (2007: 38.8 million euros)
- Result after tax increases to 11.0 million euros (2007: 7.2 million euros)
- March 2009: Package of measures to increase competitiveness
Turnover of the group on previous year’s level
Under the influence of the negative global economic development in the course of the financial crisis, Villeroy & Boch group yielded a turnover of 840.9 million euros in the financial year 2008, after 848.6 million euros in the previous year and thus remained almost stable -0.9%. If the exchange rate impacts are adjusted, the group even yielded a plus of 0.5 % compared to 2007.
Turnover increase on domestic market of +5.1 %,
decline on foreign markets of -2.9 %
On the difficult German market, the group reported an increase of 5.1 % in 2008. The foreign market decreased by 2.5 % from 672 to 655.3 million euros, mainly influenced by the markets which were affected by the real estate crisis especially early and strongly: USA: -30.0 %, Great Britain -16.5 % and Spain -24.0 %. In contrast, clear increases in turnover could be yielded in Asia, (+9.8 %) and in Eastern Europe (+23.1 %). The turnover abroad amounted to 77.9 % in the year under review.
Decrease in the operating profit (EBIT)
The operating profit (EBIT) decreased to 24.1 million euros in the financial year 2008 (previous year: 38.8 million euros). The EBIT margin of the group was +2.9 % compared to +4.6 % in 2007. The result after tax amounted to 11.0 million euros compared to 7.2 million euros in the previous year. The result of 2007 includes special expenses amounting to -16.6 million euros in connection with the deconsolidation of the Tiles division of the company.
Dividend suggestions
The Board of Directors and the Executive Board will suggest to the general meeting on May 15, 2009 to use the net profit to distribute a dividend of 0.37 for the preference share (-12 % compared to the previous year with 0.42 euros) and 0.32 euros for the ordinary shares (-13.5 % compared to the previous year with 0.37 euros).
Development in the individual divisions
In 2008, the company division Bath and Wellness yielded a turnover of 521.1 million euros (2007: 522.2 million euros) and thus remained almost constant compared to 2007 despite the strong effects of the crisis on the building industry. Without the acquisitions, a turnover decrease of 2.9 % was reported. In Germany, an increase in turnover of 4.4 % could be achieved taking the acquired Sanipa Badmöbel GmbH into consideration. The course of growth in the past years continued on the Eastern European and Asian markets. However, in some countries, business was more and more affected by the economic crisis in the course of the year. Above all in the USA, the turnover slumped from the middle of the year (- 47%), and sales clearly declined in some markets in Western Europe as well.
The company division ended the financial year with an operating profit (EBIT) of 15.4 million euros and thus decreased by about 5.7 million euros compared to the previous year. Apart from the turnover decrease adjusted according to acquisitions, the noticeably increased purchase prices in the energy and raw material sector, as well as additional expenses in connection with the development of new growth markets and the integration of the new acquired stakes were decisive factors for this development.
The division Table Culture could almost maintain its position in the financial year 2008 in a market environment which was characterised by turbulences and, with a turnover of 319.8 million euros, altogether reported a slight turnover decrease of 2.1 % compared to 2007. In Germany, the most important single market, the turnover could be increased by 4.2 % compared to the previous year, which can also be attributed to the marketing activities of the 260th anniversary. In Italy, too, the turnover was clearly above previous year’s level. The dynamic growth of the Eastern European markets, where Villeroy & Boch constantly extends the distribution, also continued with an increase in turnover of 20 %. With a two-digit growth rate, the company could consolidate its leading position in the Middle East.
In Western Europe, above all Great Britain and Spain reported drops in turnover. In the USA as well, the crisis very strongly affected the turnover (-37 %). This negative trend was intensified by the currency devaluation of the pound on the British market as well as of the dollar on the American market compared to the euro.
In company division Table Culture, the operating profit (EBIT), above all depending on turnover, decreased to 8.7 million euros in the financial year compared to 17.7 million euros in the same period in the previous year.
Investment volume slightly under previous year’s level
Investments in tangible assets and immaterial assets in the financial year 2008 amounted to 26.7 million euros (previous year: 28.4 million euros) in the Villeroy & Boch group. 32.6 % of the investments were made on the domestic market. 9.5 additional million euros have additionally been invested for the acquisitions in Thailand and Germany.
Decrease in net liquid funds due to acquisitions
Net liquid funds amounted to 22.9 million euros on the balance sheet date. Thus, they decreased by 25.4 million euros compared to the previous year with 48.3 million euros. This can mainly be attributed to the acquisitions made in the financial year 2008. Moreover, the group financed partially in advance advertising material in the company division Table Culture in Italy in the second half of the year.
Forecast and development 2009 - Package of measures adopted to increase competitiveness
In the board meeting in the middle of March this year, Villeroy & Boch adopted a comprehensive package of measures for the European locations, which will further increase the efficiency and competitiveness of the company. The package focuses on the specialisation of locations, the creation of competence centres and the advancing automation of production processes. Within the framework of this programme, the company plans to reduce the 9,250 jobs worldwide by approx. 900.
After termination of all measures, Villeroy & Boch reckons with an annual saving volume of approx. 50 million euros. However, in the current financial year, the related costs amounting to approx. 60 million euros will still clearly affect the result. For the years 2009 and 2010, the entire group has planned investments amounting to approx. 25 million euros exclusively for this programme.
As the length and extent of the effects of the economic crisis are currently unforeseeable, no precise statements on the business development can be made at the moment. “The business year 2009 will certainly not be easy”, predicts Frank Göring, board spokesperson at Villeroy & Boch. “We expect another decline of the economic situation and a related drop in demand which might also affect our company divisions. However, with the programme to increase our competitiveness we have just adopted, we confront this market development with effective measures.”
The complete annual report 2008 can be downloaded as a pdf file.
For further information:
Almut Hähner-Ural
Manager Press and Public Relations Department
Phone: +49(0) 68 64 - 81 13 97
E-mail: presse@villeroy-boch.com