Forbo robust at H1 despite higher costs

Baar, Switzerland – Product introductions and efficiency gains have helped Forbo Group to shrug off a “steep rise” in raw material prices in the first six months of this year, the Baar-based manufacturer said 27 July.

Forbo posted a 10.9% year-on-year increase in first-half operating profit (EBIT) to CHF75.3 million (€65.1 million), on net sales of CHF668.8 million – 10.3% higher than a year ago, or 5.8% higher in local currencies.

Profit from continuing operations rose 8.9% to CHF58.7 million, added the Swiss maker of floor coverings, building adhesives, power-transmission and conveyor belts. The gains, it said, were also achieved despite a higher tax rate.

Forbo’s belt products are used in the manufacturing, retail and service sectors, for example as conveyor and processing belts in the food industry, as treadmills in fitness studios or as flat belts in letter-sorting systems.

Movement Systems reported net sales of CHF206.1 million for the first half, a year-on-year rose of 8.2% - or 5.5% in local currencies.

Sales gains were driven mainly by Europe – especially Germany and southern Europe – though Asia/Pacific and the Americas also posted solid growth.

Operating profit (EBIT) at the division rose by 5.7% to CHF24.1 million, despite higher raw material prices so that EBIT margin dipped to 11.7% compared to 12.0% a year ago.

In the second half, Forbo said Movement Systems would “continue to work on optimising various global areas of operation… and increase both its productivity and its efficiency.”

For the full year 2018, Forbo said the overall environment remained “challenging because the currency exchange situation, raw material price trends, and developments on individual markets are still volatile owing to political and macroeconomic conditions.”

However, the Swiss group stuck by its previous forecast of a slight increase in net sales and group profit from continuing operations before one-off costs and special tax effects.

Forbo employs more than 5,700 people and has an international network of 25 production facilities and distribution companies worldwide. It generated 2017 net sales of CHF1,246.4 million.