Interim report on the first half-year of 2021: Excellent business performance continues in second quarter

• Consolidated revenue rises 32 % to € 449.6 million in first half-year

• Operating EBIT up significantly year-on-year at € 39.0 million (previous year
  € -10.0 million)
• Revenue and earnings forecasts again raised considerably for 2021 in light of continuing excellent business performance

Revenue development: Up 32 % on previous year

Following an increase in revenue of +22.4 % in the first quarter of 2021, the Villeroy & Boch Group’s revenue rose by +43.0 % in the second quarter, though the same quarter of the previous year had been severely impacted by the COVID-19 pandemic. Overall, consolidated revenue (including licence income) climbed to € 449.6 million in the first half of 2021, a year-on-year increase of € 108.9 million or 32.0 %.

Incoming orders increased in the first half of 2021, rising by € 65.8 million as against 31 December 2020 to € 166.6 million. € 134.4 million (31 December 2020: € 85.1 million) of this relates to the Bathroom and Wellness Division, while € 32.2 million (31 December 2020: € 15.7 million) relates to the Dining & Lifestyle Division.

Operating EBIT rises to € 39.0 million

EBIT climbed to € 39.0 million (previous year: € -10.0 million) in both divisions in the first half of 2021, mainly thanks to the increase in revenue and the structural measures implemented. However, the previous year’s earnings had been squeezed by the slump in demand as a result of the COVID-19 crisis and the plant shutdowns and restrictions that followed.

Development in the divisions

The Bathroom and Wellness Division generated revenue of € 323.1 million in the first half of 2021 (previous year: € 245.4 million), up 31.7 % on the previous year, though this had been impacted by the COVID-19 crisis in the second quarter especially. Revenue growth was generated in all business areas in the current financial year. The rise in revenue of € 77.7 million mainly took place in ceramic sanitary ware (€ +47.8 million) and the wellness business area (€ +11.8 million). Mainly as a result of the gratifying revenue performance, the Bathroom and Wellness Division closed the first half of 2021 with an operating result (EBIT) of € 36.3 million (previous year: € 8.6 million).

The Dining & Lifestyle Division generated revenue of € 125.1 million in the first half of 2021, an increase of 33.2 % on the previous year (€ +93.9 million). Revenue was significantly lower in the previous year due to the officially ordered worldwide closure of Villeroy & Boch sales outlets and the global slump in demand as a result of the COVID‑19 crisis. Revenue growth was generated in almost all sales channels in the first half of 2021. Above all, this is reflected by the revenue with our retail outlet partners (€ +16.7 million) and in e-commerce (€ +15.6 million). Meanwhile, there were revenue declines of € ‑1.4 million at Villeroy & Boch retail stores, which were forced to close again on account of the second lockdown in the first and second quarters of 2021. The Dining & Lifestyle Division ended the period with operating EBIT of € 2.7 million, up € 21.3 million as against the previous year, which was also affected by downtime costs at the plants in Merzig and Torgau.

Investments

The Group invested € 8.6 million in property, plant and equipment and intangible assets in the first half of 2021 (previous year: € 7.1 million). The Bathroom and Wellness Division accounted for € 6.1 million, with the remaining € 2.5 million attributable to the Dining & Lifestyle Division. In the Bathroom and Wellness Division, new facilities were acquired in particular for the sanitary ware plants in Hungary and France, as were tools for ViClean production. Investment in the Dining & Lifestyle Division essentially included the maintenance and modernisation of the logistics centre in Merzig, new acquisitions of pressing tools, the energy optimisation of a kiln and the modernisation of Villeroy & Boch retail stores.

Outlook for 2021 as a whole

In light of continuing excellent business performance in the first half of the year, the Management Board of Villeroy & Boch AG has significantly raised its revenue and earnings forecasts for the 2021 financial year. As was already announced in the ad hoc disclosure of 30 June 2021, it is now forecasting that consolidated revenue will rise to around € 885 million (+10.5 %) and that the operating Group result will grow from around € 50 million in the previous year to more than € 75 million. The earnings forecast has been raised primarily on account of the extraordinarily positive revenue performance in the first half of the year and sustainable, structural cost savings.

“The excellent business performance has continued in the second quarter as well. We are experiencing consistently high incoming orders. People are prioritising their homes, which is driving demand for our products considerably,” said Frank Göring, CEO of the Villeroy & Boch Group.

Not least in light of the high level of orders on hand, the Group does not expect a significant change in momentum for the remainder of the year, though it should be noted that the second half of 2020 was very much characterised by the recovery of lost ground in terms of revenue and production and consistently strict cost management. Consequently, the earnings improvement in the first half of the year cannot be extrapolated on a straight-line basis. Based on the revised targets, the return on net operating assets is expected to range between 22 % and 25 %.