Forbo earnings up 60% as production efficiencies take effect

Baar, Switzerland – Forbo Group has doubled its operating profit (EBIT) and increased earnings by 60% in the first half of 2021, helped by optimised operating structures.

First half operating profit rose two-fold to CHF82 million (€67 million) and earnings (EBITDA) was up 60.7% year-on-year at CHF110 million, on 15% higher sales of CHF623.1 million, Forbo announced 30 July.

Forbo linked the “disproportionate growth” in profits compared to sales to the increased utilisation of production capacity and the optimisation of operating structures.

Furthermore, cost reduction measures implemented in the second quarter of 2020 positively impacted profits despite higher prices for raw materials.

Forbo also attributed the strong results to a sharp rebound from the Covid-19 pandemic in 2020.

“From February [2020] onwards Forbo was confronted, unexpectedly at the time, with full lockdowns imposed at extremely short notice,” said the Swiss group. 

Forbo said its businesses were impacted by forced shutdowns, interruptions to supply chains and cancelled or indefinitely postponed customer projects during the first half of 2020.

“In many instances this was happening in countries where Forbo has major production plants, assembly centers and sales organisations,” it added, noting a partial recovery in the first half this year. 

For the second half of the year, Forbo said “the pandemic will remain with us and will continue to have negative effects in certain areas… albeit to a lesser extent.” 

As such, the group expects the significant base effect of the first half to be “greatly diminished” in the second half of the year.

Furthermore, Forbo expects price rise for raw materials and some bottlenecks in the availability of raw materials in the second half of the year.

For the full year, Forbo said it is cautiously optimistic and is increasing its outlook on sales and profit. 

Provided that there are no fundamental changes to the overall general conditions, Forbo said it anticipated a double-digit growth in sales and a 25% increase in group profit compared to 2020.