The Egger Group closed the first half of its 2022/2023 financial year (reporting date 31 October 2022) with consolidated sales of Euro 2.26 billion (+14.0% as compared to the previous year). However, the highly volatile general conditions are also a challenge for the wood-based materials manufacturer: it is forced to register a noticeable decline in demand.
The first half of the 2022/23 financial year was marked by a multitude of crises and uncertainties, both economically and politically. Thomas Leissing, CFO of Egger Group, said: "The very strong results of the previous year are due to the extremely high demand following the cocooning effect that resulted from the Corona crisis, and can therefore be classified as exceptional. This boom in demand has noticeably decreased since spring 2022. In the meantime, we are seeing a decline in demand in almost all markets. At the same time, we continue to face a multitude of uncertainties."
Demand noticeably declined
During the first half-year 2022/23 Egger Group generated sales of Euro 2,255.4 million (+14.0% as compared to the first half-year 2021/22) and an EBITDA of Euro 353.7 million (–26.1% compared to the previous year). The EBITDA margin is 15.7%, the shareholder’s equity ratio is at the high level of 51.2%. The increase in sales is primarily due to the sharp rise in costs for raw materials, energy and logistics, which led to higher sales prices. The many uncertainties and crises and their effects on the energy and raw material markets, as well as massive inflation and the resulting loss of purchasing power, have caused a noticeable decline in demand.
The decline in earnings is spread across all divisions, taking into account that the same period of the previous year was also characterised by an exceptionally good market environment and margin level in all areas. The decline was most pronounced in the Building Products Division, which had achieved record results in the previous year due to the construction boom. In the Decorative Products Division, volume increases were achieved only in the newest plant, in Lexington, NC (US). The Eastern European plants, where the effects of the Ukraine crisis were felt most directly, posted the largest declines in earnings. Earnings in the Flooring Products Division also declined due to falling demand, especially in the DIY sector.
Outlook for second half-year fraught with uncertainties
The overall economic outlook remains fraught with uncertainty for the coming months and will continue to be strongly influenced by the challenges on the energy and raw material markets. This means that earnings expectations for the second half of the 2022/23 financial year are also reserved. In the medium term, EGGER expects price levels to remain high and sales to remain stable, but with moderate demand from the main markets. In the long term, the EGGER Group will continue to exploit the production advantages of its state-of-the-art industrial base. Given its sustainable business model and strong financial base, EGGER will not only weather the current economic slowdown well, but will even emerge stronger.
Egger is one of the world's leading wood-based solutions suppliers. Egger produces an extensive product range of wood-based materials (chipboard, OSB, and MDF board) as well as timber.
