Eglisau, Switzerland, August 23--In the first half-year 2005, Forbo achieved net sales of CHF 829.4 million, (US$652.9 million) compared to the previous year's CHF 827.0 million (US$651.3 million).
The operating result (EBIT) after special charges amounts to CHF 15.4 (US$12.4 million) compared with CHF 29.6 million (US$23.3) in the previous year. For the entire year, Forbo is expecting slightly higher sales than in the previous year and a positive result before special charges.
In the first half-year 2005, Forbo recorded a slight increase in net sales by 0.3% (1.8% in currency-adjusted terms) over the previous year. The lengthy auctioning process that lasted until April 2005 had a negative impact on the first half-year figures. The high non-recurring costs of the process itself also affected the Group results.
The profit-enhancing measures planned in fall 2004, which had been seriously delayed by the auctioning process, were resumed and intensified in the second quarter by the new Board of Directors and the Executive Board. The first positive effects of these measures will manifest themselves in the second half-year at the earliest.
The sales decline in the first quarter could be largely offset by clearly higher sales in the second quarter. In addition, the stronger US Dollar and the stable Euro resulted in a slight improvement of the currency situation. As far as costs were concerned, especially the adhesives business suffered from high raw material prices that could not be completely transferred to the products.
The operating profit before depreciation and amortization (EBITDA) decreased to CHF 47.9 million (US$37.7 million)(previous year: CHF 79.2 million US$62.4 million) as a result of the direct costs of the auctioning process (CHF 5.9 million US$4.6 million) and restructuring charges (CHF 15.1 million US$11.9 million). The operating profit after depreciation and amortization (EBIT) is CHF 15.4 million (US$12.1 million), CHF 14.2 million (US$11.2 million) lower than in the previous year.
Before special charges, the operating profit decreased by CHF 3.7 million (US$2.9 million) to CHF 30.5 million (US$24 million) compared with the previous year. The positive effects due to goodwill amortization, which used to be reflected in the operating profit but is no longer admissible according to IFRS, amount to CHF 4.9 million (US$3.9 million).
The Group loss is CHF 6.1 million (US$4.8 million) (previous year: Group loss of CHF 16.2 million US$12.8 million). The loss includes special charges of CHF 15.1 million (US$11.9 million) (previous year: CHF 20.0 million US$15.8 million).
The flooring business achieved sales of CHF 370.8 million (US$292 million) or 1.6% (in local currencies 0.8%) less than in the corresponding period of the previous year. The operating profit (EBIT) before special charges at CHF 20.0 million (US$15.8 million) is CHF 0.5 million higher than in the previous year as a result of the lower depreciation of fixed assets.
The adhesives business increased sales by 2.1% (4.0% in local currencies) to CHF 302.7 million (US$238.4 million) compared with the corresponding period of the previous year. At CHF 19.1 million, (US$15 million) the operating result (EBIT) before special charges is above the previous year’s result of CHF 17.9 million (US$14.1 million) due to goodwill amortization and amortization of other intangible assets (CHF 4.2 million US$3.3 million) that is no longer admissible according to IFRS.
In the first half-year 2005, the belting business recorded a sales plus of 1.5% (3.7% in local currencies) to CHF 155.9 million (US$122.7 million). The operating result (EBIT) before special charges and lower depreciation of fixed assets is CHF 3.4 million, (US$2.7 million) meaning that it is still unsatisfactory (previous year: CHF 1.0 million (US$787,407).
