Forbo Posts 1H Loss; Will Sell Flooring Division

Eglisau, Switzerland, August 20--Forbo Holding AG Friday swung to a first-half net loss due to value adjustment charges and it said it will dispose of its flooring unit, the company's largest division. Forbo posted a loss of CHF16.2 million ($12.9M) in the six months to June 30, compared to a net profit of CHF14.2 million ($11.3M) a year earlier. The latest figure included a CHF20 million ($15.9M) charge on security holdings, among others. The pre-charge result was largely in line with expectations, and the charge was less than the CHF100 million some market watchers had anticipated. "The bloodbath that some had expected didn't happen, but it's possible some more charges could come through in the second half," Bank Leu analyst Patrick Appenzeller said. The relatively modest charge seems to reflect better business, he added. The company's decision to dispose of its floor coverings operations, the cornerstone of its industrial activity, comes as a surprise, Appenzeller said. "At long last, they have realized that linoleum isn't a growth market," he said, adding that the disposal plan seems to be a direct consequence of the recent appointment of This Schneider as new chief executive. Forbo said it will now concentrate on two smaller divisions producing adhesives and conveyor belts, which had first-half sales of CHF297 million ($237.8M) and CHF153 million ($122.3M), respectively. Forbo said it is looking for a partner for floor coverings - which had first-half revenue of CHF377 million ($301.9M) - because it won't be able to successfully develop those operations on its own. Forbo's total first-half sales rose to CHF827 million ($661M) from CHF791.8 million ($632.9) while operating profit fell to CHF29.6 million ($23.7M) from CHF34.8 million ($27.8M). The company said it expects full-year sales slightly higher than last year's CHF1.6 billion ($1.3B), and a lower operating profit before special charges.

Related Topics:Coverings, Lumber Liquidators

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