PROFINE
Sales increase in 2007 below expectations / Earnings still positive / Decline in sheet business / Eastern Europe by far the strongest region, German market in decline / Further growth in 2008
With a sales rise of 5% to EUR 888m, the 2007 performance of leading European PVC window profile manufacturer profine (Troisdorf / Germany; www.profine-group.com) in 2007 was not in line with expectations, according to its new CEO, Marco von Maltzan. Speaking at “Fensterbau Frontale”, the trade fair for window and façade technology in Nuremberg / Germany (www.frontale.de), Maltzan blamed unfavourable general economic developments, as well as the mounting cost of oil, raw materials, energy and transport. The company’s original target was sales growth to nearly EUR 1 bn – see Plasteurope.com of 26.02.2007.
 Although the 2007 performance was below expectations, Marco von Maltzan (centre), managing board chairman at Profine, was in confident mood at “Fensterbau/Frontale”. Flanking him here are managing board members Hans Herpoel (left) and Dr. Christoph Schug (right) (Photo: PIE) |
Despite “distinctly positive” earnings, the second highest in the company’s history, Maltzan said Profine was not entirely satisfied with the bottom line last year. Production volume declined 1% to 349,000 t (including 315,000 t of profiles).
Capital spending in 2007 totalled EUR 49m (EUR 48m in 2006), with the German home market accounting for 60%. The workforce increased slightly from 3,684 to 3,715 employees, despite the elimination of 150 jobs between October 2007 and February 2008.
The profiles business, which expanded its sales by 6% to EUR 768m, essentially drove Profine’s growth last year. Sales of the biggest-selling brand “Kömmerling” were up 4% to EUR 314m, “KBE” climbed 6% to EUR 309m and “Trocal” rose by 8% to EUR 146m. The much smaller sheet segment saw sales fall 8% to EUR 77m, reflecting in major part the real estate crisis in the US. Here, business declined 13% against 2006.
Geographically, central Europe was difficult for the profiles business, with sales dipping 9% to EUR 187m. The picture was dominated by developments in Germany, where the axing of the homeowner deduction and the increase in the value added tax had a decidedly negative impact. Sales in western Europe (France, UK, Italy, Spain) rose by 6% to EUR 169m, with southeastern Europe recording the biggest increase, of 15% to EUR 164m. Business in Bulgaria (up 40%) and Romania was well above average.
Eastern Europe cemented its position reached in 2006 as Profine’s most important market. Nevertheless, the growth surge of 40% in 2006 could not be repeated in 2007, and the turnover increase of 6% to EUR 287m was far more modest. Poland and the Baltic states in particular showed significant growth. A new plant in Ukraine, set to go on stream at the end of 2008, should help to satisfy burgeoning demand there.
The geographical shift is reflected in the list of the company's main customer countries. With sales of EUR 168m, Russia has expanded the leading position it acquired in 2006, due certainly to the fact that business in the second largest market, Germany, clearly deteriorated. The two leading markets are followed more or less equally by Ukraine, France, Spain and Poland, a managing board member told PIE.
The first quarter of 2008 showed an improved performance against an already strong Q1 2007, although the CEO said the company was not satisfied with either earnings or cash flow. The sheet business, for example, continued to suffer from the US real estate crisis, with no end in sight. In spite of these negative factors, management expects significant improvement in full-year earnings against 2007.
Profine has introduced a number of measures to lift its profitability, including expansion of production in Berlin / Germany, Wroskresensk / Russia and Huntsville, Alabama / USA. Von Maltzan stressed also that the company also will have to increase its selling prices to compensate for rising costs. The streamlining of the organisation, including improvements on the production and technology side, should help to boost the bottom line.
Other factors contributing to business improvement could be full utilisation of capacities at the 34 plants in Russia and the start-up of the new plant in Ukraine. In 2008, Profine expects eastern Europe to continue to provide the greatest impetus for business, with Russia again posting double-digit growth.
Capital spending in 2007 totalled EUR 49m (EUR 48m in 2006), with the German home market accounting for 60%. The workforce increased slightly from 3,684 to 3,715 employees, despite the elimination of 150 jobs between October 2007 and February 2008.
The profiles business, which expanded its sales by 6% to EUR 768m, essentially drove Profine’s growth last year. Sales of the biggest-selling brand “Kömmerling” were up 4% to EUR 314m, “KBE” climbed 6% to EUR 309m and “Trocal” rose by 8% to EUR 146m. The much smaller sheet segment saw sales fall 8% to EUR 77m, reflecting in major part the real estate crisis in the US. Here, business declined 13% against 2006.
Geographically, central Europe was difficult for the profiles business, with sales dipping 9% to EUR 187m. The picture was dominated by developments in Germany, where the axing of the homeowner deduction and the increase in the value added tax had a decidedly negative impact. Sales in western Europe (France, UK, Italy, Spain) rose by 6% to EUR 169m, with southeastern Europe recording the biggest increase, of 15% to EUR 164m. Business in Bulgaria (up 40%) and Romania was well above average.
Eastern Europe cemented its position reached in 2006 as Profine’s most important market. Nevertheless, the growth surge of 40% in 2006 could not be repeated in 2007, and the turnover increase of 6% to EUR 287m was far more modest. Poland and the Baltic states in particular showed significant growth. A new plant in Ukraine, set to go on stream at the end of 2008, should help to satisfy burgeoning demand there.
The geographical shift is reflected in the list of the company's main customer countries. With sales of EUR 168m, Russia has expanded the leading position it acquired in 2006, due certainly to the fact that business in the second largest market, Germany, clearly deteriorated. The two leading markets are followed more or less equally by Ukraine, France, Spain and Poland, a managing board member told PIE.
The first quarter of 2008 showed an improved performance against an already strong Q1 2007, although the CEO said the company was not satisfied with either earnings or cash flow. The sheet business, for example, continued to suffer from the US real estate crisis, with no end in sight. In spite of these negative factors, management expects significant improvement in full-year earnings against 2007.
Profine has introduced a number of measures to lift its profitability, including expansion of production in Berlin / Germany, Wroskresensk / Russia and Huntsville, Alabama / USA. Von Maltzan stressed also that the company also will have to increase its selling prices to compensate for rising costs. The streamlining of the organisation, including improvements on the production and technology side, should help to boost the bottom line.
Other factors contributing to business improvement could be full utilisation of capacities at the 34 plants in Russia and the start-up of the new plant in Ukraine. In 2008, Profine expects eastern Europe to continue to provide the greatest impetus for business, with Russia again posting double-digit growth.
10.04.2008 Plasteurope.com [210567]
Published on 10.04.2008
German version of this article...