12.11.2009 VBH: Slight recovery despite declining sales in the third quarter of 2009
Group interim report for the third quarter of 2009
VBH: Slight recovery despite declining sales in the third quarter of 2009
Domestic market grows by 1.8%; Group sales down by 14.7%; own greenteQ brand performs positively
Korntal-Münchingen (Germany), 12 November 2009
Despite a slight recovery within the VBH Group, Europe’s largest trading house for window and door fittings was not able to escape from the general trend. Against a background which continues to be dominated by weak general economic conditions, in the first nine months of the 2009 fiscal year Group sales at VBH Holding AG fell by 14.7% to euro 554.2 million (previous year: euro 649.8 million). After adjustment for currency translation effects, this represents a sales decline of 9.4% year-on-year.
At quarterly level, the sales performance was slightly positive with a decline of 12.8% compared to the second quarter which saw sales decline by 16.7%. Fortunately, the Group’s domestic German market had a stabilising effect with a sales increase of 1.8% in the first nine months. By contrast, some VBH customers in Southern Europe experienced liquidity crises in addition to the market weakness, which impeded further deliveries. As in the previous two quarters, VBH reported sales declines of approximately 30% in Eastern Europe, particularly in the CIS countries. Almost half of these losses were brought about by currency effects. With a decline of more than 21%, sales in Western Europe also continue to be under severe pressure. On the other hand, sales in Other Markets almost doubled during the period under review. In particular, the future markets in Asia (Singapore, Shanghai, Beijing and Malaysia), in the Middle East (Dubai and Kuwait) as well as in Turkey developed very positively with sales of euro 18.2 million compared with euro 9.3 million in the previous year.
During the quarter under review, irregularities were discovered at the VBH company in Greece, many of which had their roots in previous years. This impacted earnings to the amount of approximately euro 2.1 million in the period under review.
During the first nine months of the current fiscal year, the Group’s earnings before taxes (EBT) fell to euro 6.5 million due to the decline in sales and taking into account the non-recurring effect described above (previous year: euro 26.5 million). The gross profit margin remained stable and rose slightly from 24.1% to 24.4% despite the difficult market situation. In the third quarter of 2009, EBT decreased from euro 12.6 million to euro 6.0 million due to the drop in sales and the special effect caused by the Greek company. The fully diluted earnings per share (EPS) fell in the first three quarters of 2009 from euro 0.42 to 0.09 per share. Earnings stabilised during the reporting period as a result of cost reductions amounting to almost euro 8 million compared with the previous year.
Outlook
Despite the slight recovery compared with the previous quarter, the Executive Board of VBH Holding AG expects a sales decline of 12% to 13% for the whole of the 2009 fiscal year, as there appears to be no improvement in the market situation in Western and Eastern Europe. Even given this forecast, from today’s perspective EBIT will be between approximately euro 15 million and euro 17 million at the end of the year and VBH expects to post a clear profit.
The new greenteQ brand has made an excellent start, with the product range increasing steadily since March 2009. The Company now offers its own brands for 12 product groups with approximately 400 different items which, to date, have generated a sales volume of around euro 8 million with considerably higher gross profit margins. VBH will therefore also push ahead rigorously with strengthening its own brands and international market penetration over the coming months. The Company also aims to expand its services package further. This includes the new Widaba knowledge base, which more than 400 business partners now use every week for the purposes of exchanging information, and the CE-fix CE platform. A new scanner version is also been prepared for connecting VBH customers online to the LOGOS material procurement system.
Note for editorial teams: The full Group interim report for the third quarter of 2009 will be available for download at www.vbh.de as of 2 pm.