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Villeroy & Boch recently announced its financial report for the third quarter of 2020, with sales of €208 million in July-September 2020, up 6.8% from €195 million in the same period last year. This means that Villeroy & Boch rebounded in the third quarter after a contraction in the first half of the year, especially in the second quarter due to the epidemic. As a result, Villeroy & Boch raised its full-year 2020 forecast, forecasting sales down only 6% from last year and EBIT between €30 million and €35 million.
Strong Performance In The Third Quarter.
Offsetting Second Quarter Losses
Villeroy & Boch reported sales of 549 million euros in January-September 2020, down 6.7% from the same period last year. The decline was significantly narrower than the first half of the year, when sales were down 13.4% compared to the previous year. This was mainly due to an improvement in the third quarter, where sales increased by 6.8% to €208 million.
Germany accounted for €180 million of the €549 million in sales in the first three quarters, essentially unchanged from the same period last year, while €369 million came from outside Germany, a decrease of 9.7 percent from the same period last year, reflecting the impact of the outbreak on Villeroy & Boch’s overseas operations more than on its home markets.
The excellent performance in the third quarter enabled Villeroy & Boch to end the first nine months of 2020 with an EBIT of €10.3 million, which fully offset the loss in the second quarter. This was mainly due to a significant improvement in sales in the third quarter, as well as good results from strict cost management. However, there is still a gap compared to the EBIT of 22.3 million euros in the first three quarters of 2019.
Bathroom & Wellness Up 6.5% In Third Quarter
Villeroy & Boch said that orders reached €100.5 million as of September 30, 2020, more than doubling from €44.8 million as of December 31, 2019. Of this, €80.7 million came from the bathroom and health division, while the remaining €19.8 million came from the tableware division.
In fact, Villeroy & Boch’s Bathroom & Wellness division had a strong third quarter, with sales of €138 million, up 6.5% from €130 million in the same period last year. The Health business, which grew 16.7 percent, was Villeroy & Boch’s top performer in the third quarter, while the Bathroom business also posted a 4.6 percent increase in sales. Based on the strong third quarter, Villeroy & Boch’s Bathroom & Wellness division posted sales of 384 million euros from January to September, down only 4.4 percent from the same period last year and more than half the 9.7 percent year-over-year decline seen in the first half of the year.
The tableware division’s results in the third quarter were also “very encouraging,” in the words of Villeroy & Boch. Sales rose by 8.0% year-on-year to €69 million, resulting in an 11.5% decline in sales for the first three quarters of the year, better than the 21.7% decline recorded in the first half of the year, and bringing the division’s sales to €163 million for the first three quarters of the year.
E-Commerce Business Grew By 30%
40% Reduction In Fixed Investment
Villeroy & Boch’s financial results also reveal the results of the company’s “embrace” of e-commerce. This year, in the face of the epidemic, Villeroy & Boch has been aggressively developing its e-commerce business, with sales from January to September up 30.9% over the same period last year. In contrast, retail sales were down 23.5 percent, and sales from partnerships with hotels, restaurants and other clients were down 47.6 percent, reflecting the continuing impact of the epidemic on the company’s engineering business.
In addition, Villeroy & Boch said it invested €10.7 million in property, plant, equipment and intangible assets in the first three quarters, down from €17.9 million in the same period last year. This year, Villeroy & Boch has invested about 7 million euros in the bathroom and health sector, mainly in new facilities for its sanitaryware plants in Thailand and Hungary. Investments in the tableware division amounted to approximately 3 million euros, mainly related to the maintenance and modernization of a logistics center in the Merzig region and the acquisition of a plant in the same region.
Sales For The Full Year Are Expected To Decline By 6%.
EBIT Up To 35 Million Euros
The Board of Directors of Villeroy & Boch believes that the company’s performance in the third quarter was generally satisfactory following the outbreak in Europe that began in the second quarter. In light of this, the Board of Directors has significantly increased its 2020 forecast and believes that the current strong performance will continue into the fourth quarter, resulting in total sales for the full year down at most 6% from last year. Frank Göring, CEO of Villeroy & Boch, commented, “If the increase in coronavirus infection rates does not have a negative impact on the economy, then it is likely that the increase in EBIT during the traditional peak selling season will have a negative impact on the economy. The good growth trend will continue in the fourth quarter”.
For its part, however, Villeroy & Boch also noted that the new performance expectations are based solely on the assumption that governments will not take any further significant steps to contain the epidemic, which could negatively impact the economy. In addition, the Villeroy & Boch Board of Directors agreed that in addition to the epidemic, global trade conflicts and global events such as the UK’s no-deal Brexit are dampening the company’s growth prospects.
