Eglisau, Switzerland, March 22, 2006--Forbo increased its sales in 2005 by CHF 79.7 million ($US 61.2M) to CHF 1,702.0 million ($US1.3B This equates to an improvement of 4.9 %, or 4.4 % in local currency.
All three of Forbo's businesses contributed to this growth. The operating income before depreciation and amortization (EBITDA, before special charges) increased by 5.6 % in comparison with the previous year, to CHF 135.1 million (US$103.7M). The consolidated loss fell substantially to CHF--16.5 million (US$12.4) (previous year: CHF--157.4 million) (U$127.7M) due to lower restructuring costs.
Increase in sales, particularly in the second half-year
Following the decline in sales in the first quarter of 2005, they grew more strongly than expected in the second half of the year. Primarily, the robust development of the economy in the USA and the dynamism of growth in the Asian markets generated the pleasing growth in sales.
High raw material prices affect profit
The operating result before depreciation and amortization (EBITDA, before special charges) declined from CHF 143.1 million (US$109.8M)to CHF 135.1 million (US$103.1M). Responsible for this reduction were, above all, higher raw material and market entry costs. The operating profit (EBIT, before special charges) improved despite the sharply higher raw material prices due to lower depreciation and amortization than in the previous year and amounted to CHF 64.7 million (US$69.6M).
The net profit was affected by non-recurring costs of CHF 40.8 million (US$31.3M)(previous year: CHF 161.9 million) (US$124.1M), within the framework of the CHF 200.0 million which were announced at the time. No further special charges are expected for 2006. The loss (including special charges) fell significantly and amounted to only CHF -16.5 million (US$12.4).
The net financial expenses developed favorably. They fell from CHF 26.8 million (US$20.6M)to CHF 18.8 million (US$14.4M), primarily due to the impairments of securities that were recorded in the previous year and a higher interest income.
Dividend recommendation to the Annual General Meeting
The dividend policy of the Forbo Group is orientated to the development of net profit. In view of the consolidated loss, the Board of Directors intends to recommend to the Annual General Meeting of April 28, 2006 that no dividend distribution be resolved for the 2005 financial year.
Development of business units
The flooring business achieved an increase in sales in 2005 for the first time in the last five years. They reached CHF 747.0 million (US$562.9M). This represents growth of 1.3 % compared with the previous year. In local currencies, the increase was 1.0 %. Particularly pleasing were sales of linoleum in North America and Eastern Europe. Whilst the business with vinyl floor coverings for the commercial business increased overall, the residential market in Western Europe recorded a decline, partly due to a rationalization of the range of products. The operating result before depreciation and amortization (EBITDA, before special charges) amounted to CHF 86.2 million (US$52.3M) and rose by CHF 9.1 million (US$6.9M) in comparison with the previous year.
The adhesives business increased its sales by 8.8 % to CHF 628.5 million (US$482M) or 8.1 % in local currencies. Whilst the European markets only recorded a positive development in the second half of the year, sales in the USA and exports to Asia showed generally impressive growth. The sharply higher raw material prices had a negative effect on the operating result before depreciation and amortization (EBITDA, before special charges) which fell by 21.6 % to CHF 42.0 million (US32.2M).
The belting business increased its sales in 2005 by 6.4 % to CHF 326.5 million (US250.4M). Growth in local currency was 5.9 %. Contributions to growth were made particularly by sales in the USA at an all-time high.
