Interim report on the third quarter of 2019: Villeroy & Boch catching up on revenue and operating result

• Revenue and EBIT back at previous year’s level in third quarter after difficult first half-year
  • Business performance improves significantly in Bathroom and Wellness Division in third quarter, especially in main EMEA region
  • Tableware Division continues positive development
• Consolidated revenue (€ 587.9 million) and operating result (€ 22.3 million) down year-on-year overall due to first half-year
• Revised revenue and earnings guidance for 2019 confirmed (revenue target: € 825 to € 850 million; earnings target: € 48 to € 52 million as defined after the first six months)

Revenue development: 4.5 % below previous year

The Villeroy & Boch Group generated revenue of € 587.9 million in the first nine months of 2019, a decline of € 28.0 million as against the previous year. As forecast after the first six months, in the third quarter Villeroy & Boch succeeded in stabilising revenue almost at the prior-year level at € 194.7 million after the first two quarters. As a result, the revenue shortfall was reduced from -6.3 % after the first half of the year to -4.5 % after the first nine months.

Orders on hand developed positively and increased by € 14.9 million as against 31 December 2018 to € 74.7 million as at 30 September 2019. The Bathroom and Wellness Division accounted for € 59.5 million of this and the Tableware Division for € 15.2 million.

EBIT falls to € 22.3 million

Thanks to the improvement in revenue in the third quarter of 2019, Villeroy & Boch was able to generate an operating result (EBIT) of € 6.8 million for the third quarter, at previous year’s level. Thus, after the first nine months of the 2019 financial year, EBIT amounted to € 22.3 million, down by € 3.5 million compared to the first half of the year mainly on account of the revenue development.

Development in the divisions

The Bathroom and Wellness Division achieved a significant improvement in revenue in the third quarter of 2019 – the best quarter in the financial year to date. A key factor contributing to this was the gratifying increase of 4.5 % in the main EMEA region (Europe, Middle East, Africa) in the third quarter. Here there were strong increases on the core markets of Netherlands (up 49.6 %), Belgium (up 14.4 %), Germany (up 9.8 %) and Sweden (up 2.4 %). Developments overseas are primarily defined by the reduction in revenue in China, which was previously a growth region. Revenue there was also down significantly year-on-year in the third quarter (by 33.0 %), more than offsetting the positive revenue trend in the EMEA region. In particular, the decline in revenue to date in China was a result of the effects of the trade conflict with the United States and residential construction projects postponed on economic grounds. However, there have been significant increases in incoming orders since July 2019, and orders on hand in China have risen to € 25.5 million as at the end of September 2019. In total, the Bathroom and Wellness Division generated revenue of € 401.6 million in the first nine months of the year (previous year: € 436.1 million).

The Tableware Division continued its positive development in the third quarter of 2019 as well, generating revenue of € 184.1 million in the first nine months of the 2019 financial year, up by € 6.5 million or 3.7 % year-on-year. In particular, the main growth driver was the largest sales market of Germany (up 9.2 %), where revenue increased across almost all sales channels, including e-commerce in particular. E-commerce business in the EMEA region performed exceptionally well, climbing by 19.1 %. Significant revenue growth was also achieved in Eastern Europe (Poland especially). This offset the downturns in Northern Europe and Russia, with the result that the EMEA region grew by 2.3 % overall. Overseas revenue grew by 9.3 %, though this was partly on account of exchange rate effects in the United States (up 10.6 %). 

Investment volume in the first nine months of 2019: € 17.9 million

We invested € 17.9 million in the first nine months of the 2019 financial year (previous year: € 25.7 million). The Bathroom and Wellness Division accounted for € 14.8 million of this, acquiring new facilities for the sanitary ware plants in Thailand, Hungary and France in particular. In the Tableware Division, € 3.1 million in total was invested in new facilities and modernisation measures for the production facilities in Merzig and Torgau.

Outlook for 2019 as a whole

The Management Board of Villeroy & Boch AG is standing by its revised figures from July 2019, and is still forecasting consolidated revenue of between € 825 million and € 850 million and operating result (EBIT) of between € 48 million and € 52 million. In the Bathroom and Wellness Division, thanks to the implementation of the sales measures already initiated, ongoing strict cost management, higher booked business and rising incoming orders since July 2019, the company is confident of matching or outperforming its revenue and earnings figures for the previous year. As Christmas traditionally fosters business, Villeroy & Boch expects a strong fourth quarter in the Tableware Division. The good response to new products suggests that the positive revenue and earnings trend will continue.

Villeroy & Boch has been exclusively negotiating the sale of its former plant property in Luxembourg with a real estate developer since February of this year. The contracts are planned to be signed before the end of the year. The transaction is expected to generate high eight-figure income.