Egger Group concluded the first half-year of its financial year 2017/2018 with a consolidated turnover of EUR 1.32 billion (+11.1% compared to the previous year).
The result before interest, taxes and depreciation (EBITDA) increased to EUR 222.5 million (+17.4%). The EBITDA margin increased to 16.8 % (previous year: 15.9 %). Egger Group now has more than 9000 employees and finds itself in a growth phase and it expects a positive development for the full financial year 2017/2018.
Over the past half-year, Egger was able to profit from the largely positive economic situation and the growing building and renovation activities. The company managed to increase its turnover in Europe and all relevant geographic markets, as well as in all product segments.
The largest turnover increases (+11.0%) were recorded for Egger Decorative Products, which sells products for furniture and interior design. The largest development of this segment, with 76% of all sales, was in Central and Eastern Europe.
The successful worldwide introduction of the Egger Decorative Collection 2017-2019 had a particularly positive effect on the Decorative Products segment. Minor losses due to the exchange rate were recorded only in the UK. The overseas segment grew significantly, particularly in Asia and North America. The turnover of the new plant in Concordia, Argentina, which joined the Group on 1st October 2017, are also included.
Egger Flooring Products (Laminate, Comfort and Design flooring) achieved an increase in turnover of +6.4%, as compared to the same period during the previous year despite a still difficult market environment. The overall increase in the turnover primarily depends on the gradual marketing of the new flooring capacities in the Gagarin (RU) plant. However, the EBITDA development was negative, due to the incomplete utilization of capacities, as well as increased costs for wood and chemicals.
Egger Building Products also achieved a turnover increase of +9.2% in a market marked by increasing raw material costs and availability bottlenecks. The sales of OSB products and of timber also increased. The largest growth in the OSB segment was recorded in Eastern Europe. On the other hand, timber sales increased in Germany and certain overseas markets. In this segment the EBITDA is also under the level of the previous year, which is again due to the increase in raw material costs for wood and chemicals.
Intensive investment activity
The first half-year of the financial year 2017/18 was very eventful for Egger and marked by significant growth. The company took over a chipboard and MDF plant in Concordia, Argentina, on 1st October 2017. A further step is already in preparation in the US: Egger is planning a Greenfield project in Lexington, North Carolina. The announcement was made on 24th July 2017. Construction will start in 2018. The construction of Egger’s 19th plant has already began during the last half-year in Poland. In Biskupiec, in north-east Poland, an ultramodern production plant for 650,000 m3 of chipboard will be built by the end of 2018.
This growth strategy was already reflected in the first half-year of the financial year 2017/2018 in investments worth EUR 264.4 million (previous year: EUR 145.6 million). EUR 228.1 million (previous year: EUR 109.2 million) were spent on growth investments, including acquisitions. The main investments during the first half-year 2017/2018 were primarily the acquisition of the plant in Argentina, but also the start of the plant construction in Poland. Investments were also made in energy in France, as well as in logistics and automation projects in Austria and Germany. EUR 36.3 million (previous year: EUR 36.4 million) were spent on maintenance investments.
Positive outlook for the second half-year
The company is also expecting a stable development of its business activity for the second half of the financial year 2017/2018. Given the positive situation in Western Europe, the new plant in Argentina, and the strategic move of volume from weaker regions to alternative markets, Egger is expecting to increase turnover and maintain stable results throughout the Group for the financial year 2017/2018.
Egger’s current efforts outside Europe also mean market diversification and a secure future for the entire group, its customers and its employees. Thomas Leissing, spokesman of the Egger Group Management, commented: “We are pursue a conservative growth strategy, commit to moderation, and make sure that every step the organisation makes is viable. A solid financial basis supports long-term supply relationships with customers and suppliers, as well as further stable growth based on our own performance.”