Nobia extended lead times impacts profit

Magnet Retail reported strong growth for Nobia in UK

23 Jul, 18

Strong Swedish project sales caused production disruption at Swedish kitchen furniture group Nobia, leading to a negative sales mix and short-term fall in EBIT compared to last year.

In its interim financial report, Nobia cited net sales for the second quarter amounted to SEK 3,503million from SEK 3,408million, in the previous year, with organic growth reported at a negative 2%.

Operating profit fell from SEK 413million to SEK 387million, with profit after tax amounting to SEK 297million from SEK 314million in the previous 12 months.

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In addition, Nobia stated currency gain had an impact of approximately SEK 10million on the group’s operating profit.

President and CEO of Nobia Morten Falkenberg commented: “We estimate that all markets in the Nordics grew in the quarter.

“However, the period was heavily impacted by manufacturing disruptions in Tidaholm on the back of strong project volumes, resulting in long lead-times and consequently a sharp drop in sales primarily to consumers in Sweden and Norway.

“We estimate that the production disruptions had a negative impact of SEK 20-25million on operating profit.

“During June and July we carried out extensive maintenance work and the situation has improved for Q3 deliveries.”

However, Nobia reported sales growth in the UK for its project business – Magnet Retail – with a continuing favourable outlook despite competition.

Morten Falkenberg said: “In the UK, competition intensified in the quarter, especially at the lower-end among builders’ merchants. I am therefore pleased that Magnet Retail managed to deliver double digit growth in the quarter, confirming that the new brand proposition stands strong in the current environment

“We are now extending this work to Magnet Trade with the ambition of finalising it before the end of the year. The exit from Homebase and the extraordinarily strong past year deliveries in project sales affected year-on-year growth in the UK by approximately -5%.”

He continued: “Going forward we believe that the Nordic kitchen market will continue to be strong, mainly driven by the Danish and Finnish project markets. The Swedish project market is holding up better than expected and we now estimate that our project deliveries in Sweden will grow during the first half of 2019, after which they will most likely normalise.

“Our UK project business has good momentum and the order book is more than twice as big as last year.”

Nordic recently acquired Dutch kitchen supplier Bribus to expand its presence in central Europe.