Villeroy & Boch has released its interim report into the first quarter of 2022 citing positive results. However, they warn Russia’s prolonged war in Ukraine, as well as inflation, energy prices and the continuing impact of Covid-19, particularly in China, make the forecast for the global economy “more difficultâ€.
The company’s Dining & Lifestyle Division generated revenue of €75.5 million in the first quarter of 2022 – an increase of 19.1% on the previous year (€63.3 million).
In their statement the company said:
“In the first quarter of 2022, the Villeroy & Boch Group generated revenue (incl. licence income) of € 248.5 million, up € 25.2 million or 11.3 % on the same period of the previous year. The Group is continuing to benefit from the sustained trend towards home and bathroom renovation and refurbishment as people choose to beautify where they live. Adjusted for currency effects, i.e. using the same exchange rates as for the previous year, revenue rose by
10.0 %. Incoming orders increased in the first quarter of 2022, rising by €29.4 million as against 31 December 2021 to € 216.2 million. € 177.2 million (31 December 2021: € 165.1 million) of this relates to the Bathroom and Wellness Division and € 39.0 million (31 December 2021: € 21.7 million) to the Dining & Lifestyle Division.
Total EBIT climbed to € 20.4 million in the first quarter of 2022 (previous year: € 18.6 million), mainly thanks to the revenue growth in both divisions.
Development in the divisions
The Bathroom and Wellness Division generated revenue of € 172.1 million in the first quarter of 2022 (previous year: € 159.3 million), up 8.1 % on the previous year. Revenue growth was achieved in all business areas. The rise in revenue of € 12.8 million was mainly attributable to the business areas of ceramic sanitary ware (€ +6.4 million) and fittings (€ +3.0 million). Thanks to strong revenue performance in particular, the Bathroom and Wellness Division closed the first quarter of 2022 with EBIT of € 17.7 million (previous year: € 16.6 million), although streamlining and savings measures were only partially able to offset the sharp purchase price rises at present.
The Dining & Lifestyle Division generated revenue of €75.5 million in the first quarter of 2022, an increase of 19.1% on the previous year (€ 63.3 million). The Division achieved revenue growth across almost all sales channels in the first quarter of 2022. This is reflected in particular in revenue at its own retail stores (€ +7.7 million). All in all, this positive revenue performance was based on the successful business model transformation, a targeted product range policy, the expansion of the communication strategy (“Love The Moment†campaign) and increased digitalisation in marketing and sales. Thanks in particular to the encouraging revenue development, the Dining & Lifestyle Division ended the quarter with operating EBIT of € 2.7 million, up € 0.7 million year-on-year.
Investments
The Group invested € 5.1 million in property, plant and equipment and intangible assets in the first quarter of 2022 (previous year: € 3.7 million).
The Bathroom and Wellness Division accounted for € 3.5 million, with the remaining € 1.6 million attributable to the Dining & Lifestyle Division.
Investment activity in the Bathroom and Wellness Division concentrated on glazing lines at the sanitary ware plants in Hungary and Romania as well as new bathtub moulds in Belgium. In the Dining & Lifestyle Division, the Group mainly invested in the maintenance and modernisation of the production facilities in Merzig and Torgau, the acquisition of new pressing tools and the modernisation of its own retail stores.
Outlook for 2022 as a whole
The expected global economic growth is slowed down by the effects of the war in Ukraine. The length and extent of the war cannot be predicted at present. The associated uncertainty as well as currently rising inflation and the effects of the COVID-19 pandemic, especially in China, make the forecast for the global economy more difficult.
The International Monetary Fund (IMF) therefore lowered its forecast for global economic growth in 2022 to 3.6 % in April due to the consequences of the Russian war of aggression in Ukraine.
Above all, the Villeroy & Boch Group is concerned about risks affecting energy supply and rising energy prices. It is currently facing extraordinary increases in the cost of gas and electricity as well as freight, packaging and raw materials. As the resulting price rise risk can only be partially offset through hedging and savings, some price adjustments were already necessary in the first quarter. Depending on how things progress, the possibility of additional cost increases being passed on to customers cannot be ruled out.
Despite these uncertain general conditions, the Management Board of Villeroy & Boch AG is confident that it will be able to achieve the forecast for revenue, earnings and the operating return on net assets for 2022 as a whole due to the course of business in the first three months and the increase in incoming orders. However, it cannot be ruled out that the further development of the Ukraine war could have a more pronounced economic impact on the construction sector and future private consumer behaviour, thereby negatively impacting the performance of the Villeroy & Boch Group in the second half of 2022.”
