Consolidated revenue up 2.0%

The Villeroy & Boch Group increased its revenue by 2.0% to € 836.5 million in the 2017 financial year. On a constant currency basis, i.e. assuming unchanged exchange rates against the previous year, revenue growth amounted to 2.7%. Negative exchange rate effects resulted in particular from the depreciation of the pound sterling, the Chinese renminbi, the Swedish krona and the US dollar.

Operating EBIT up 8.5 % year-on-year

In the 2017 financial year, operating earnings before interest and taxes (EBIT) improved by 8.5% to € 49.8 million (previous year: € 45.9 million). The EBIT margin rose from 5.6% to 6.0 %. This was primarily due to the improved operating margins in both divisions.

Development by division

In the 2017 financial year, operating earnings before interest and taxes (EBIT) improved by 8.5% to € 49.8 million (previous year: € 45.9 million). The EBIT margin rose from 5.6% to 6.0%. This was primarily due to the improved operating margins in both divisions.

The Bathroom and Wellness Division increased its revenue by 6.4% to € 558.1 million in the 2017 financial year. On a constant currency basis, divisional revenue rose by 7.0%.

In the company’s home market of Europe, revenue increased by 1.5% to € 452.1 million. Development was driven in particular by the high level of demand for rimless DirectFlush WCs and thin-walled TitanCeram washbasins. Although the corresponding production capacities have been expanded, it was not possible to fully meet the enormous demand for these products. This is reflected in orders on hand within the division as a whole, which increased from € 32.8 million to € 96.2 million. In selected European markets including Germany, growth was also curbed by a shortage of fitting capacity.

Revenue outside Europe increased by 34.0% to € 106.0 million. Growth of 25.6% was recorded in the Middle East/Africa region thanks to successful project business. This was driven primarily by the Gulf States (+40.7%), where construction activity developed positively in preparation for major international events. Revenue growth in the Asia-Pacific region was even stronger, with China in particular standing out with a growth rate of 45.0%. 

Positive revenue development and optimised revenue quality thanks to improved margins meant that the operating result in the division increased to an above-average extent, rising by 13.3% to € 41.0 million. 

The Tableware Division reported revenue of € 278.4 million in the 2017 financial year (-5.8 %). This represented a reduction of 4.9% on a constant currency basis.

Revenue performance in a number of markets was impacted by the global downturn in visitor numbers at retail stores, as well as the company’s withdrawal from unprofitable business. Villeroy & Boch also pressed ahead with focusing on higher-margin trade channels while pursuing a more restrictive discount policy.

Revenue in Europe declined on the whole (-6.2%). Revenue in the United States also fell by 6.9 %, due among other things to site closures by a major distribution partner. By contrast, South Korea (+20.5%) and – thanks to strong project business – the Gulf States (+18.9%) enjoyed notably positive performance.

The operating result in the Tableware Division amounted to € 8.8 million in the past financial year (previous year: € 9.7 million). Thanks to the more restrictive discount policy, the lower revenue volume was partially offset in earnings by an improved operating margin. Costs were also reduced through the closure of unprofitable stores, while savings were generated in sales, marketing and logistics structures and administrative areas. This was accompanied by higher income from licence business.

Orders on hand and net liquidity

Orders on hand amounted to € 107.0 million as at 31 December 2017, up significantly on the previous year (€ 73.9 million). The Bathroom and Wellness Division accounted for € 96.2 million of this figure, with the remaining € 10.8 million attributable to the Tableware Division. Net liquidity amounted to € 57.6 million at the reporting date.

Investments

Investments in property, plant and equipment and intangible assets amounted to € 35.9 million in the past financial year (previous year: € 26.2 million). At 81%, the majority of this figure related to the Bathroom and Wellness Division, where investment activity focused on the acquisition of new production facilities in order to increase capacity. Investments in the Tableware Division also concentrated mainly on new production facilities, as well as the optimisation of the retail network.

Dividend

The Management Board and the Supervisory Board will propose to the General Meeting of Shareholders on 23 March 2018 that the unappropriated surplus of Villeroy & Boch AG be used to distribute a dividend in the amount of € 0.57 per preference share and € 0.52 per ordinary share, € 0.04 more than in the previous year in each case. 

Assessment of the company’s position

“I am pleased by the good result with which we closed 2017. This was thanks in particular to the strong revenue performance in the Bathroom and Wellness Division. As there is no sign of an end to the growth trend in this area, we are continuing to invest extensively in the expansion of our production capacities,” commented Frank Göring, CEO of Villeroy & Boch AG.

For the 2018 financial year, the company is aiming to increase its consolidated revenue by between 3% and 5%. “We are anticipating year-on-year growth in our operating result of between 5% and 10%,” Göring added.