PRESS FOLDER
Annual Press Conference
31 July 2014
Your contact persons:
Dr. Thomas Leissing
Head of Finance/Administration/Logistics EGGER Group
Spokesman of the group management
Walter Schiegl
Head of Production/Technical EGGER Group
Ulrich Bühler
Head of Sales/Marketing EGGER Group
For queries:
FRITZ EGGER GmbH & Co OGWood-based materials
Manuela Leitner
Weiberndorf 20
6380 St. Johann in Tirol
Austria
Phone+43 5 0600-10638
Fax+43 5 0600-90638
PHOTOS EGGER wood-based materials, reprints that quote the name of the copyright owner are free
Stable annual result for EGGER
The EGGER group concluded the 2013/14 financial year with a total turnover of 2.22 billion Euros, creating the basis for further growth.
A positive development of all key figures, a slight increase in turnover, and an EBITDA of 312 million Euros in the 2013/14 (30 April)financial year were presented by the EGGER Group Management on 31 July 2014 during the annual press conference at the headquarters in St. Johann in Tirol.
EGGER was able to further expand its market position during the previous financial year, and achieved turnover growth even in a difficult market environment. The consolidated turnover of the EGGER Group in the 2013/14 business year was 2.22billion Euros. The increase in turnover of 1.7% compared to the previous year was mainly due to turnover growth in Great Britain, while in the OSB sector it was due to the growth of the OSB plant in Radauti (Romania), which started operations in 2012. These areas compensated the partly currency-related decline in turnover in Russia and in the flooring sector.
The operative cash-flow also increased. EBITDA amounted to EUR 312 million and was 3% higher, compared to the same period last year. EGGER underlines its financial strength with an improved equity ratio of 39%.
Challenging environment
We were able to achieve the turnover and results growth in a challenging market environment, emphasises Thomas Lessing, Group Management spokesperson and Head of Finance, Administration, and Logistics: "Globally, there are signs of economic stabilisation, but the economic recovery in the Eurozone remains slow. The pressure to save public money and the distortions due to the sovereign debt crisis has affected the European construction industry, private consumption, and in turn EGGER as a supplier."
The recovery has continued over the past year in the Central European wood-based materials industry. However the unfolding situation in Russia has seen changes: while it was still a growth market over the previous financial year, in the past twelve months we have witnessed stagnation. The reasons for this include the devaluation of the ruble, as well as lower levels of domestic demand. In the flooring sector, EGGER is facing an overall European market with a tendency to decline. This is due to consumer reluctance, uncertain political developments in certain countries, as well as unfavourable exchange rates in countries outside the Eurozone.
The building products sector has developed positively. Increasing production levels, particularly in Eastern Europe, have met the increasing demand in many East-European markets. The future development of the political situation in Ukraine remains uncertain.
Wood prices at a new high
Raw material supply remains a main challenge for EGGER. The average wood purchasing price increased, following stabilisation during the 2012/13financial year, to a new all-time high during the 2013/14 financial year. In order to respond to this situation, EGGER continues to count on backward integration with its own forest management and wood recycling companies, as well as short rotation plantations, while it invests in harvesting and logistics systems. Despite short-term relaxation due to the mild winter, EGGER expects wood prices to increase once more starting in the autumn.
In the chemical sector (urea, methanol, melamine, glue, impregnation resins), the 2013/14 financial year saw a slight decrease in price compared to the previous year. A large part of the glue and impregnation resin demand is already covered through own glue factories in Wismar (DE), Radauti (RO), and Hexham (UK). In Hexham, EGGER is now investing in a comprehensive modernisation of the existing resin plant.
More than 200 million Euro invested
Maintenance investments and organic growth marked the investment activities of the EGGER Group during the 2013/14 financial year. A total of 207 million Euros were assigned as investments in property and equipment and intangible assets, such as acquisitions. Out of this amount, 64 million euros were spent on maintenance investments and 143 million euros on growth investments. The expansion of the EGGER Group headquarters in St. Johann (AT) with the latest generation short-cycle coating facility, a high-bay warehouse, as well as an administrative building was the largest investment of the 2013/14 financial year. The construction works for the high-bay warehouse and the administrative building are currently under way. The high-bay warehouse will start operations in November 2014, the new administrative building will be opened in the spring of 2015.
In addition, the modernisation of the resin plant was driven forward in Hexham (UK), and a biomass facility including power generation was completed in Radauti (RO), along with the installation of a fuel processing line. Furthermore, the plants in Gagarin (RU) and Brilon (DE) each received the latest generation short-cycle press and the plant in Gifhorn (DE) received a continual laminate press, including recooling technology.
With these investments, EGGER underpins its focus on high-quality products, explains Walter Schiegl, member of the Group Management and Head of Production and Technology: "All of these new facilities are investments for the manufacturing of highly refined, design-oriented, functional products. The short-cycle presses are used for the lamination of boards with deep surface textures, synchronised pore surfaces on both sides and for manufacturing compact boards and coating thin boards. The new lamination line will also enable us for the first time to produce high-gloss laminates."
Production volume has increased
Maintenance investments and continuous servicing supported the quantities produced during the previous financial year. We were able to increase our production volume compared to the previous business year with 7.5 million m3 (257.8 million cubic feet) of rawboard (chipboard, MDF and OSB) including sawn timber (2012/13: 7.3 million 3).
7,200 award-winning jobs
The number of employees increased by about 2% in the past financial year, to reach nearly 7,215 group-wide employees (average for 2013/14).This slight increase is due to investments in the development of existing plants, particularly additional coating capacities in Austria and Germany, and the new lamination line at the Gifhorn plant (DE), as well as the construction of recycling facilities in Radauti (RO).
EGGER won numerous awards as an attractive employer, most recently in Wismar ("Responsible entrepreneur", "Top training company 2014" and "Company of the Year" in the category "Securing Skilled Labour & Family Friendliness"), in Brilon ("Excellent training company" seal of approval), and in St. Johann as well as in Wörgl (seal of approval for company-wide health promotion).
In order to maintain high levels of employee satisfaction and to strengthen the commitment to the company, EGGER invested approximately 5.3 million euros during 2013/14 in the training and development of its employees. In addition to this, the company has continued to work over the past financial year on securing junior staff by focusing on recruiting and employer branding. In order to attract young people to training options with EGGER, a targeted trainee campaign was put into place for Austria, Germany, and Great Britain. On 30 April 2014, there were 219trainees/apprentices (previous year: 200)within EGGER.
Significant increase in turnover for Building Products
Turnover varies according to product groups and markets.
In the 2013/14 financial year, the EGGER Building Products division (OSB and sawn timber) experienced a strong increase in turnover and the EGGER Decorative Products division (furniture and interior design) a slight increase in turnover, compared to the previous year. In the EGGER Retail Products division (flooring), the turnover decreased by 8.8%. For the 2014/15 financial year, EGGER expects a full utilisation of production facilities and an improvement in turnover across all its plants, with the exception of the EGGER Retail Products division.
Turnover from products for furniture and interior design is produced in the EGGER Decorative Products division and represents, with about 73.3%, the largest share of the Group's total turnover. Compared to the previous year, the turnover has increased slightly by 0.2%, with the most significant increase achieved in Great Britain and Central and Eastern Europe, while Scandinavia and Russia experienced setbacks.
The EGGER Retail Products division (flooring) produced 14.2% of the total turnover for the 2013/14 financial year, and thus recorded an 8.8% drop. "This is due, on the one hand, to the weak currency in Turkey, which diminishes our competitiveness when compared to local production. On the other hand, the flooring market was characterized by overproduction over the past year, particularly in Germany. We consciously chose not to pursue negative-return volume agreements," explains Ulrich Bühler, EGGER Group Management and Head of Sales and Marketing, on the reasons for the decrease in turnover for this products sector.
The percentage of turnover from the EGGER Building Products division (OSB and sawn timber) has increased in the 2013/14 financial year to 12.5% (as compared to 10.6% in the 2012/13 year). The division was able to increase its turnover by 18.1%, due primarily to increased capacity in the new OSB production at the Radauti plant (RO). In addition, increased sales were achieved at the Wismar plant and the Brilon sawmill as compared to the previous year.
The distribution of turnover by customer group is constant across divisions. At 48%, distributive sales is the largest customer group, followed by the furniture industry, with 44%. The DIY sales channel represents 8%, which is a slight decrease compared to the previous year.
One third of the turnover from Eastern Europe
Due to political events and various economic situations, EGGER sales markets were highly differentiated. Western Europe remained EGGER's key geographical market in the 2013/14 financial year. Approximately 60.7% of the turnover was generated there. Germany and its very strong furniture industry are very important in this regard.
In addition, Central and Eastern Europe are important strong-growth markets. The same applies to Russia, even if it has recently experienced a decrease in turnover. These sales markets represent exactly one third of the turnover for the 2013/14 financial year. Non-European countries play an increasingly important role. They contributed 6% of turnover in the 2013/14 financial year.
New surfaces and support materials
In order to secure its strong market position, EGGER continues to count on highly refined, design-oriented, as well as functional products. Over the previous financial year, the company launched a surface offering with the double-sided synchronised pores series "Feelwood." They were also a focus for the successful ZOOM collection. The global market introduction of the 2014 ZOOM innovations took place from February to May 2014, with numerous trade fairs and distribution events, a cross-media campaign, as well as the distribution of more than 400,000 collection books, sample folders and sample swatches. In the flooring sector, the cork floor offer was expanded with the EGGER Cork+ collection, presented at the world's leading trade fair for flooring, Domotex, which took place in January 2014 in Hanover. In the service sector, the "Virtual Design Studio" family grew with an app for the visualisation of decors and room situations on mobile devices.
With regard to production developments, the 2013/14 financial year saw the inclusion of the compact board for interior design into the ZOOM collection. The range of fire-resistant wood-based materials was expanded to include an EGGER MDF Flammex E1 Carb2 Euroclass B variant. Two new fire protection products with mineral support board are now also available in the decor collection: the A2 laminated composite board and the A2 ProAcoustic board.
Focus on research & development
EGGER invests in new developments and in particular on the further development of products, processes and services. In this context, the innovation process is of great importance. The implementation of the innovation management system was completed for all business sectors in the previous financial year. The main focus of the research activity in the field of wood-based materials is improving resource efficiency, decreasing emissions, and continuing the development of production technology.
Positive outlook for 2014/15
The EGGER Group Management is cautiously optimistic for the overall development in the current 2014/15 financial year. A stabilisation of the overall economic situation or moderate growth can be expected in the key sales markets of Western and Eastern Europe. For this reason, EGGER is counting on stable and slightly increasing turnover in the producing plants of Germany, Austria, France, the UK and Romania.
Decreasing turnover is expected for Russia, due to the current market situation and the devaluation of the ruble. Slightly reduced turnover is also expected in the EGGER Retail Products division. The conscious avoidance of low-return volume businesses as well as the currency-related turnover losses in Turkish and Russian exports play a role in this.
A turnover increase is however expected in Western Europe. The overall economic recovery and the support of the British government for the creation of housing will contribute to this.
Greater uncertainty can be caused by the subsequent development of the commodities markets and the increasing scarcity of wood. EGGER counteracts this by commissioning additional refinement capacities and investments to improve the raw material and energy situation, as well as with the continuous optimisation of material use and costs structures.
EGGER Business Development 2013/14Turnover increased by 1.7% to 2.22 billion euros in a challenging market environment.
EBITDA increased by 3% to EUR 312 million euros.
Number of employees increased to 7,200 group-wide. / Investments of 207 million euros in existing plants.
Increased turnover in Building Products and Decorative Products, a decrease in Retail Products.
Positive outlook for 2014/15.