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Pro Blog

Forbo, Marmoleum Flooring Manufacturers Sales Off in 1H

By FAF Staff Writer, (835 words) Posted in Linoleum Flooring on August 19, 2009
There are (22) comments permalink

Forbo is top manufacturer of flooring systems, adhesives, and movement systems. Forbo’s Flooring Systems division offers a large range of eco–friendly Marmoleum floors, high–end vinyl flooring, carpet tiles, and entrance matting. With a market share of over 65%, Forbo is a world market leader in linoleum (Marmoleum) and vinyl floor coverings.

One of Forbo's most popular flooring types is Marmoleum, which is made from renewable and natural ingredients making it an eco–friendly flooring option. Marmoleum also repels dust and dirt due to is anti-static properties making in allergy friendly.

For more information about Forbo, read the latest sales figures for first half of 2009.

Baar, Switzerland, August 18, 2009 –– The Forbo Group as expected, posted a decline in sales which had begun in the last three months of 2008 continued in the first half of 2009. With net sales down by 7.8 percent to CHF 886.1 million, (US$825.3M) the operating profit (EBIT) margin for the first half of 2009 was 5.3 percent. The early and consistent implementation of restructuring measures from the third quarter of 2008 onwards had a correspondingly positive impact on the Group's results.

Sales trend continues to reflect world economic conditions

In the first half of 2009, Forbo generated net sales of CHF 886.1 million (US$825M), 7.8 percent lower than in the same period of the previous year. Whereas currency effects had a negative impact on sales of 3.8 percent, the acquisitions done in 2008 made a positive contribution of 9.7 percent. Sales growth was recorded in key market segments and in various countries, further strengthening the company's market shares in all three divisions. This is attributable, inter alia, to the investments of the last few years in innovative product lines and in the development of growth markets.

Positive margin level thanks to structural adjustments and cost–cutting measures

The operating profit (EBIT) margin amounted to 5.3 percent in the first half–year of 2009, which represents a decrease of 3.1 percentage points compared with the prior–year period. The measures adopted starting in the third quarter of 2008 with a view to securing earnings, optimizing structures and processes, and consistently reducing costs have cushioned the margin contraction.

Early implemented measures generate positive impact on results

Thanks to the early implementation of measures in response to the economic crisis, the Group was able to prevent a more significant impact on its results. At CHF 46.7 million (US$43.5M), its operating profit (EBIT) was 42.1 percent lower than the previous year's level. Compared to the prior–year period, Group profit was reduced by 47.1 percent to CHF 28.5 million (US$26.5M).

Refinancing secured

In recent weeks and months, Forbo secured early refinancing as well as extensions of existing credit lines, and on July 6, 2009 successfully launched a bond of CHF 150 million (US$139.7M) with a maturity of 4 years. Together with its current credit facilities and private placements, this has considerably increased Forbo's financial flexibility and secured the Group's financing for the years to come.

Performance of the three divisions

Forbo Flooring Systems reported net sales of CHF 451.9 million (US$420.9M) in the first semester of 2009, corresponding to a growth of 3.2 percent versus the same period of the previous year. The acquisition of Bonar Floors made a positive contribution of 21.3 percent, while the impact of currency effects was negative at 6.2 percent. After adjustment for acquisitions and in local currencies, this corresponds to a decline in sales of 11.9 percent. Due to the strategic focus on the commercial market, the various benefits resulting from economic stimulus packages and the rapid and successful integration of Bonar Floors, the decrease in operating profit (EBIT) to CHF 43.5 million (US$391.9M), or 19.7 percent compared to the prior-year period, was kept within limits. The EBIT margin came to a gratifying 9.6 percent.

Forbo Bonding Systems reported net sales of CHF 281.5 million(US$262.1M) in the first half–year of 2009, corresponding to a decrease of 16.9 percent versus the prior–year period. The drop in sales came to 14.3 percent in local currencies. Operating profit (EBIT) amounted to CHF 14.3 million (US$13.3M), which represents a decrease of 36.7 percent versus the prior–year period, but a significant improvement on the second half of 2008. This is primarily attributable to the measures adopted to improve efficiency. These, in conjunction with enhanced key account activities in segments with a higher added value and an easing in raw material prices, led to an increase of the EBIT margin to 5.1 percent.

Forbo Movement Systems generated net sales of CHF 152.7 million (US$.142.1M) in the first half of 2009, corresponding to a decline of 17.3 percent versus the prior–year period (17.1 percent in local currencies). Plummeting order intake among Forbo’s customers resulted in a significant drop in sales in some of Movement Systems' key markets. The slump in sales could only be partially offset by the new distribution channels and markets developed over the last few years. Movement Systems therefore reported a negative operating profit (EBIT) of CHF –2.8 million (US$–2.6M) for the first half–year of 2009 (CHF +11.5 million (US$10.7M) in the prior–year period).

Outlook for 2009

Provided that economic conditions do not deteriorate any further, Forbo expects net sales in the second half to be on par with the first six months and forecasts a slightly higher operating profit due to the implemented restructuring measures, albeit with considerably higher financing costs.

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Comments (22)

Love Forbo posted on: September 6, 2009

I think Forbo has a great product and with so much push going to eco-friendly materials and products, they should be kicking butt. Yes, the economy is in the toilet, but I think advertising is key. Flooring manufacturers rely on their retail chains to push their products and I truly believe if the consumer were more aware about the brand, more product would be sold. I'm no CEO or marketing guru, but to me it just makes sense! Why is it flooring manufacturers do very little marketing to the consumer?

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