- Consolidated revenue in first nine months down 8.8 percent year on year at € 650.6 million (on a constant currency basis)
- EBIT of € 56.8 million, 11.7 per cent lower than in previous year (€ 64.3 million)
- Full-year revenue and earnings forecast for 2023 at lower end of forecast range
Consolidated revenue: €650.6 million
The Villeroy & Boch Group’s consolidated revenue (including licence income) adjusted for currency effects, i.e. using the same exchange rates as for the previous year, in the first nine months of 2023 was 8.8 % below the same period of the previous year, largely due to economic conditions. Nominal consolidated revenue of € 650.6 million was down € 77.7 million or 10.7 % year on year. Revenue in the region of EMEA (Europe, Middle East, Africa) declined by 13.0 % or € 76.4 million. This is due in particular to the weak performance in Central Europe, where revenue fell by 13.5 % or € 32.9 million. By contrast, revenue in Southern Europe increased by 9.6 % or € 3.1 million. Overseas, revenue in China increased by 13.1 % or € 8.9 million, thanks chiefly to good project business. This limited the revenue decline overseas to 0.9 % or € 1.3 million.
EBIT: € 56.8 million
EBIT in the first nine months of 2023 came to € 56.8 million, down 11.7 % on the same period of the previous year (€ 64.3 million). The downturn in earnings due to revenue development was only partially offset by cost savings and income from currency hedges.
The non-operating result of € -1.0 million included in EBIT comprises income from the partial recognition of the gain on the disposal of our former plant property in Luxembourg, which was largely offset by slightly higher expenses in connection with a write-down on an equity investment and project expenses related to the acquisition of Ideal Standard.
Division performance
Revenue (on a constant currency basis) generated by the Bathroom & Wellness Division in the first nine months of 2023 was 11.5 % lower than in the strong previous year (€ 506.3 million), due chiefly to economic factors. Nominal revenue of € 435.8 million was down 13.9 % on the same period of the previous year. The downturn in revenue was observed in all business areas. It was particularly pronounced in the ceramic sanitary ware business (€ -39.9 million) due to the slowdown in Europe’s construction industry and in the wellness business (€ -14.4 million). By contrast, new products such as toilets with new TwistFlush technology met with a positive market response. Thanks to the sustained strength of our project business, on the other hand, we achieved substantial revenue growth in Asia with market-specific products including our ViClean shower toilets in particular. The Bathroom & Wellness Division closed the first nine months of 2023 with an operating result (EBIT) of € 45.7 million (previous year: € 53.9 million). The downturn in earnings due to revenue development was only partially offset by falling procurement prices, especially for energy.
On a constant currency basis, the Dining & Lifestyle Division’s revenue in the first nine months of 2023 was also down 2.7 % year on year (previous year: € 219.5 million) as a result of economic developments. Nominal revenue of € 212.3 million declined by 3.3 % or € 7.2 million compared to the same period of the previous year. In terms of revenue performance, project business with hotel and restaurant customers saw particularly strong growth of € 1.6 million on the back of our pronounced focus on the high-end segment. Revenue generated in retail stores came to € 61.8 million, slightly higher than in the previous year.
E-commerce business saw a downturn in revenue (€ -8.0 million), again in line with the general trend in online retail. The Dining & Lifestyle Division recorded an operating result (EBIT) of € 12.1 million, slightly lower than in the previous year (€ 12.6 million).
Investments
€ 24.6 million was invested in property, plant and equipment and intangible assets in the first nine months of 2023 (previous year: € 18.6 million). The Bathroom & Wellness Division accounted for € 16.9 million, with the remaining € 7.7 million attributable to the Dining & Lifestyle Division. Investment activity in the Bathroom & Wellness Division concentrated on pressure casting machines and a photovoltaic system in Hungary, a washbasin pressure casting system in Romania, a new vertical moulding machine in Belgium and new moulds for the wellness plant in the Netherlands. Investment in the Dining & Lifestyle Division mainly related to the modernisation and acquisition of new production facilities and pressing tools in Merzig and Torgau as well as the modernisation of our own retail stores. In addition, the location development project “Mettlach 2.0” was continued.
Outlook for 2023 as a whole
The market environment remains characterised by an unusually high degree of uncertainty. This relates in particular to the continued development of the construction industry and the negative impact of the further rise in interest rates on the propensity to invest. Adverse effects could also result from a renewed escalation of the trade dispute and the political conflict between the US and China.
Given the further deterioration of conditions in the European construction industry in the third quarter of 2023 and negative currency effects, the Villeroy & Boch AG Management Board expects that the forecast range adjusted at the end of the first half of the year – with a reduction in consolidated sales (at previous year exchange rates) of 3.0 % to 6.0 % and operating EBIT of 5.0 % to 10.0 % – will narrow further to the lower range as a result of the sales and earnings development in the fourth quarter. Based on the revised targets, the return on net operating assets is expected to range between 23 % and 25 %. The forecast for investments in property, plant and equipment and intangible assets remains unchanged at an expected € 50 million.
