12.08.2011 Stable business in Germany and positive economic signals increase sales and earnings
Group interim report for first half and second quarter of 2011
Stable business in Germany and positive economic signals increase sales and earnings
Consolidated sales up 5.9%; Germany and Eastern Europe make major contribution to improvement in sales; single-digit increase in sales expected overall for year as a whole
Korntal-Münchingen, 12 August 2011
Consolidated sales of VBH Holding AG, Europe’s largest trading house for window and door fittings, improved by 5.9% from € 344.9 million in the previous year to € 365.3 million in the first half of 2011. Order backlogs and encouraging signals from the general economy had a positive influence on the development. EBT was also considerably up on the previous year, improving from - € 3.1 million to - € 1.3 million. Business momentum has declined in comparison to the first quarter of 2011. The upturn in the first half of the year was largely driven by the segments Germany and Eastern Europe, which increased their sales by 6.5% and 10.4% respectively.
As at 30 June 2011, the VBH Group employed an average of 2,960 staff. In comparison to the first six months of 2010, the number of employees increased by 64. Working capital did not rise as strongly in comparison to the same period of the previous year, moving up by € 4.6 million to € 184.9 million. Inventories increased slightly by € 4.2 million from € 125.4 million to € 129.6 million. The VBH share price was stable to the middle of the year. However, it did not escape the recent general market turbulence and is currently priced at around € 4.00. Fully diluted earnings per share benefited from the positive earnings development, increasing to - € 0.02 per share.
Sales show correlation with the development of local markets
Germany remains the segment generating the highest sales in the Group. Despite a high level of competitive intensity, it has developed into the earnings anchor of the Group. The market is benefitting from energy modernisation and good prospects for residential and commercial construction. VBH gained additional market share in the Germany segment during the reporting period and increased sales by 6.5% from € 181.1 million to € 192.2 million. Despite slightly lower growth rates in commercial construction, esco Metallbausysteme GmbH also increased its sales in this business area.
Growth in the international segments varied in the first half of 2011, showing a strong correlation with the development of local markets. The markets in Eastern Europe have recovered from the turbulence of the international financial crisis and generated solid growth with sales climbing from € 95.4 million to € 105.3 million.
General conditions in the Western European markets Belgium, Greece, the UK, Italy and Spain remain tense and do not show any signs of positive change. The Netherlands posted a rise in sales, favoured by tax incentives in the construction industry. In the Western Europe segment, sales decreased again by 1.0% year-on-year from € 65.8 million to € 65.1 million. Successful restructuring in Italy and Belgium partially compensated for sales-driven declines in earnings.
Although the half-year result in the Other Markets segment (Asia, Middle East, Turkey, Mexico) was negatively impacted by currency-related turbulence, operating earnings increased. Total sales rose from € 14.2 million in the previous year to € 16.4 million. Turkey is still holding its ground as the largest individual market in this segment. The activities in South and Central America are also developing positively.
Outlook
On the basis of the strengthened market situation in Germany and Eastern Europe, the Executive Board of VBH Holding AG anticipates a single-digit increase in sales for the current financial year. Growth in operating earnings is expected to outstrip sales development. Germany is benefiting from increasing construction permits, a continued favourable interest rate level and decreasing unemployment. Rainer Hribar, Chairman of the Executive Board of VBH Holding AG, comments: “The current discussion in the German federal government on additional subsidies for heat insulation measures for buildings in order to achieve the ambitious energy-saving targets by 2020 makes us confident that current growth in Germany will also persist in the medium term, particularly in the area of renovation.” In some countries such as Spain, Ireland, Belgium and Greece, there are still substantial risks, whereas in Eastern Europe, assuming stable exchange rates, the Executive Board anticipates mid-single-digit growth.
Note for editors:
The full Group interim report for the first half and second quarter of 2011 is available for download at www.vbh-holding.com from 12 August 2011.
