Baar, Switzerland – Forbo Group has posted a 12.8% year-on-year decline in net sales to CHF1,117.7 million (€1008.6 million) and operating profit (EBITDA) 17.8% lower at CHF192.0 million for 2020.
The declines reflected the impact of the Covid-19 pandemic and negative currency effects, the Swiss-based manufacturer of floor coverings, adhesives, power transmission systems and conveyor belts, said 4 March.
As well as market declines in Asia and then Europe and the Americas in the second and third quarters, Forbo had to close many of its production and assembly plants worldwide.
Construction projects were postponed and investments by ‘movement systems’ customers, such as airport-facility expansions and renewals at industrial manufacturing sites were deferred.
Overall, the Americas region was hardest hit with “nearly a double-digit percentage decline”, while the impact in Europe and Asia/Pacific was slightly less.
In response, Forbo reduced third-party costs, adjusted operational structures, and cut back recruitment, while also introducing efficiency and cost-saving measures. These steps, it said, had a “significantly positive effect on earnings,” in the second half of the year.
Despite the many difficulties, Forbo maintained targeted investments in growth markets, product launches, and innovative product developments so that investment actually rose versus the previous year.
“Since the fourth quarter some markets and customer segments embarked on an increasingly recognizable recovery,” according to Forbo.
“Measures taken in springtime in combination with higher capacity utilisation lifted earnings above average in the second half of the year,” the company added.
Forbo said it also benefited from improved productivity resulting from scaled-back and optimised operating structures and a downtrend in raw material prices, which however “rose sharply again” toward the end of 2020.
“On balance,” it said, “lower raw material prices in the first half for manufactured products plus price increases realized in the second half generated higher margins in the second six-month period.”
Looking forward, Forbo said it will target “selective capacity expansion in product lines with better-than-average growth, promoting of innovations coupled with digitisation advances and capitalising on external [market] opportunities.
“However, as in the past, Forbo will make acquisitions only if it can thereby create added value for its shareholders,” the Swiss company concluded.