Please find below all Forbo media releases listed by year.
Operating profit stronger despite a decline in sales – Marked increase in Group profit – Significant drop in net debt – Higher cash distribution
Forbo performed well despite difficult economic conditions. The Group generated consolidated net sales of CHF 1,782.4 million in 2009 (previous year: CHF 1,918.7 million), which is equivalent to a decline of 7.1%, or 2.2% in local currencies. The acquisitions made in the previous year added 8.3% to net sales in 2009. However, currency effects as a result of the strong Swiss franc shaved 4.9% off the sales figure. Operating profit (EBIT) rose from CHF 117.1 million to CHF 121.8 Mio, despite the decline in sales. The EBIT margin improved from 6.1% to 6.8%. Forbo also increased the return on invested capital from 7.7% to 8.6%. The improvement in operating profit, coupled with the elimination of exceptional charges, resulted in a marked increase in Group profit to CHF 76.1 million (previous year: CHF 16.0 million including exceptional charges). Forbo substantially strengthened its balance sheet, reducing net debt by CHF 149.4 million to CHF 255.1 million. Forbo is thus now very well placed to successfully tackle the challenges it faces going forward.
Baar, March 15, 2010
Sales performance hampered by fall in demand
Forbo’s presence in various customer segments and markets and the acquisitions made in 2008 led to differing sales performance in the three divisions. While Flooring Systems posted slightly higher sales owing to the acquisition of Bonar Floors in fall 2008, the other two divisions recorded an appreciable decrease in sales. In the Movement Systems division in particular, some customers in the plant engineering segment in Germany, Italy and Japan reported dramatic sales slumps, which then in turn impacted on sales at Forbo.
Operating profit stronger despite economic crisis
Forbo reported a significant improvement in its EBIT margin owing to the success of early structural adjustments, higher-margin products and improved efficiency and increased its return on invested capital. The Bonding Systems division additionally benefited from lower prices for raw materials, although the cost of integrating Bonar Floors into Flooring Systems and of structural adjustments at Movement Systems reduced profitability in these two divisions. The significant improvement in operating profit at Bonding Systems more than offset the decline in operating profit in the other two divisions.
Group profit up substantially
The improvement in operating profit, coupled with the elimination of exceptional charges, resulted in a marked increase in Group profit to CHF 76.1 million.
Performance of the three divisions
The Flooring Systems division saw net sales grow by CHF 11.5 million to CHF 904.4 million, which is equivalent to an increase of 1.3%, or 8.5% in local currencies. The negative effect of currency fluctuations was 7.2%. Bonar Floors, which was acquired in fall 2008, was the main growth driver, adding 16.8% to sales, but in organic terms sales declined by 8.3%. The costs of the integration of Bonar Floors and the substantial downturn in demand negatively impacted on earnings despite cost-cutting efforts and structural adjustments. Operating profit (EBIT) fell to CHF 100.8 million (previous year: CHF 111.6 million). The EBIT margin amounted to 11.1%.
The Bonding Systems division generated net sales of CHF 567.5 million, down CHF 87.1 million on the previous year. This is equivalent to a decline of 13.3%, of which negative currency effects accounted for 3.6%. In local currencies, sales were down by 9.7%. Despite the downturn in sales, Bonding Systems considerably increased operating profit (EBIT) to CHF 32.6 million (previous year: CHF -5.7 million) owing to lower prices for raw materials, systematic changes to cost structures and higher-margin products. The EBIT margin came to 5.7%.
The Movement Systems division posted net sales of CHF 310.5 million, a decline of CHF 60.7 million. Sales fell by 16.4%, or 14.6% in local currencies, year-on-year. The Transtex Belting acquisition in the summer of 2008 had a positive effect of 2.3%, which was slightly higher than the negative currency effect of 1.7%. The organic decline in sales was 16.9%. The market trends in Europe and Japan were primarily responsible for the fall in sales. The structural adjustments that were initiated began to have a real effect especially in the second half of 2009. Following an operating loss in the first half, Movement Systems reported an operating profit (EBIT) of CHF 0.5 million (previous year: CHF 24.6 million) for the full year. The EBIT margin amounted to 0.2%.
Significant improvement in the balance sheet
As at December 31, 2009, Forbo had cash and securities amounting to CHF 298.4 million. Net debt at year-end 2009 was reduced substantially to CHF 255.1 million thanks to the higher free cash flow generated by the Group (previous year: CHF 404.5 million). Shareholders’ equity increased in the same period to CHF 679.6 million, equivalent to an equity ratio of 38.9%. In addition, Forbo holds treasury shares which were valued at around CHF 152 million as at year-end 2009.
Substantially higher cash distribution
In view of the Group’s earnings-dependent distribution policy, the Board of Directors will propose to the Ordinary General Meeting on April 23, 2010 the distribution of a dividend of CHF 6.00 per shares (previous year: CHF 3.90) for the 2009 business year.
Group Executive Board strengthened
Effective April 1, 2010, the Board of Directors of Forbo Holding Ltd has appointed Tom Kaiser as Chief Operating Officer (COO) of the Forbo Group. Tom Kaiser, 54 years of age and a German citizen, has been a member of the Executive Board with responsibility for the Flooring Systems division since 2004. In this newly created position of COO, Tom Kaiser will assume operational responsibility for all three Forbo divisions. The new COO function will allow This E. Schneider, Delegate of the Board of Directors and CEO, to increasingly focus on the Group’s development and strategic mission in addition to his overall responsibility for the Forbo Group.
The Board of Directors has appointed Jens Schneider to succeed Tom Kaiser. Jens Schneider, who is 53 years of age and a German citizen, has been responsible for Finance and Administration at Flooring Systems since 2005.
Outlook for 2010
The signs of a gradual recovery of the global economy are mounting in the wake of the severe economic downturn, but it is still unclear whether the recovery will be sustainable. We therefore do not expect to see any long-term impetus for growth in 2010. The economic stimulus programs are being phased out, government debt has risen steeply and a change in interest rate policies is in the offing. The impact of all this is difficult to estimate.
Furthermore, Forbo believes that trends will diverge significantly in the different regions and industries.
These uncertainties make it difficult to make forecasts for 2010. Forbo has therefore decided to refrain from making any statement at the present moment on sales and earnings trends for the 2010 business year. If the economic conditions remain the same, operating profit should improve in the absence of integration and restructuring costs.
Forbo is a leading producer of flooring systems, adhesives, as well as power transmission and conveyor belt solutions. The company employs some 6,000 people and has an international network of 44 sites with production and distribution as well as 47 pure sales organiza-tions in a total of 35 countries worldwide. Forbo is headquartered in Baar in the canton of Zug, Switzerland.
Forbo Holding Ltd is listed on the SIX Swiss Exchange (security number 354151, ISIN CH0003541510, Bloomberg FORN SW, Reuters FORN.s).
This E. Schneider
Delegate of the Board of Directors and CEO
Phone +41 58 787 25 49
Fax +41 58 787 20 49