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[April 2006]
Villeroy & Boch in the 2005 Business Year
Despite the difficult underlying conditions, in the 2005 business year the Villeroy & Boch Group was almost able to maintain its prior-year level of sales, after adjustments were made to exclude divestments. Sales of 893.2 million euro saw a 0.9% decline from the adjusted prior-year value (-6.9% before adjustment).
Within the Villeroy & Boch Group domestic sales fell 2.7% to 274.3 million euro, while foreign sales of 618.9 million euro virtually reached their prior-year level and were thus able to soften the effects of the decline in domestic sales. After adjustment to exclude the divestments made in 2004, the foreign share of sales increased slightly from 68.7% to 69.3%. In the 2005 business year Villeroy & Boch AG secured sales of 555.7 million euro, which is 1.7% lower than prior-year sales of 565.4 million euro.
In 2005 the Villeroy & Boch Group operating result (EBIT) saw a decline of roughly 9.5 million euro, falling from the prior-year figure of 33.8 million euro to 24.3 million euro. This trend was only partly compensated by the financial results, which improved by 2 million euro. The 16.1 million euro result from ordinary operations (EBT) is 7.5 million euro lower than that of the previous year (23.6 million euro). Reasons for the drop in EBT are the reduction in gross operating result brought about by sales in the Wellness Business Segment and also the cost-cutting measures initiated in the Tableware and Wellness Segments, which will not have a positive effect on result until future periods.
The Supervisory Board and Management Board will propose to the General Meeting of Shareholders on 9 June 2006 that retained earnings, to the amount of 16.2 million euro, be used to distribute a dividend of 0.37 euro per individual preference-share certificate and of 0.32 euro per individual ordinary-share certificate. Therefore, the distribution volume totals 9.7 million euro.
Sales in the Bathroom and Wellness Division increased 1.9% in 2005, bringing the total to 430.6 million euro. However, the trend in the individual Business Segments was varied. An improvement was seen in the Ceramic Sanitary Ware and Kitchen Business Segment, where sales increased from 271.7 million euro in 2004 to 283.9 million euro in 2005, and in the Furniture and Fittings Business Segment sales rose from their prior-year value of 54.9 million euro to 58.5 million euro in 2005. In contrast, sales in the Wellness Business Segment declined 7.7 million euro in 2005.
In the year under review the Bathroom and Wellness Division achieved an operating result (EBIT) of 20.3 million euro and, in so doing, fell 5.7 million euro short of the 26 million euro result reported in the preceding year. Measures undertaken in the second half of the year to reduce costs and reorganise production in the Wellness Business Segment did not lead to any improvement in the short term, but will have positive effects in future.
Due to considerable divestments in the second half of 2004, the Tile Division sales in 2005 fell 35.2% from 221.8 million euro to a total of 143.7 million euro. A decline of 11.2% results after structural adjustment. The Division reduced its EBIT losses by 5.7 million euro, from minus 12.4 million euro in 2004 to minus 6.7 million euro in the year under review. The result takes account of substantial non-recurring expenses. These are contrasted by the reversal of provisions carried as a liability in the previous year, which had to be formed due to the risks arising in connection with the Tile Division divestments at the time. Introduced in the second half of 2005, the cost-cutting programme should reduce costs by more than 10 million euro in 2006, said V&B.
The Tableware Division was able to increase its prior-year sales to 318.9 million euro, which corresponds to a rise of 0.6%. However, this increase involved a clearly higher level of expense. With its focus on asymmetric tableware in 2005, the international marketing strategy proved successful and sales of this range increased roughly 28%. Totalling 10.7 million euro, the Tableware Division operating result (EBIT) was clearly lower in the 2005 business year than in the previous year.
Overall, Villeroy & Boch AG reports net income of 15.1 million euro (2004: 9.6 million euro) for the 2005 business year. This positive result trend is essentially due to the 31.1 million euro result from investments (2004: 5 million euro) arising from the transfer of results from subsidiaries.
Regarding the outlook for 2006, V&B said that world economic growth of 4.2% expected for the year 2006 is on prior-year level. Growing foreign demand should also have a positive effect on domestic demand. The year 2006 shows the first signs of a slight improvement in the construction industry, so that V&B expects an increase in demand in the bathroom sector.
By acquiring three sanitaryware factories in Mexico and concluding a cooperation agreement with a Chinese manufacturer of hotel porcelain, V&B is strengthening its global presence in the growing Asian and American markets.
Even though demand for semi-luxury products is not currently rising greatly in Europe, the company nevertheless expects a slight sales increase and improved operating result in all Divisions. Announced in February 2006, the cutback in the number of persons employed by the Tableware Division at the Luxembourg location and by the Wellness Business Segment at Roden in Holland will give rise to non-recurring expenses, which will have a negative effect on the 2006 results for the year. The measures to cut costs and adjust structures will only partly influence 2006.
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ENDS