Kährs Group’s turnover decreased by 11% organically in the Q2 2024 due to continued weak demand in a cautious market particularly in new construction in the Nordics and North America. Profitability was affected by the weaker sales but was held up by production capacity adaptations and good cost control. During the quarter, Russian assets were written down by SEK 70 million ($6.8 million) to adjust the value of the Russian operations to an expected sales price.
Total net sales for the Group totalled SEK 671 million ($65.1 million) for the Q2 2024 , which was a decrease of -15% . The decrease in sales slowed in line with the previous year compared to the Q1 but is largely explained by the Q2 2023 being significantly weaker than the Q1 2023. Residential continued to decrease due to a continued weak global market, where high inflation and high interest rates had a strong negative impact on demand for flooring products, not least in the new construction market.
Operating EBITA totalled SEK 34 million ($3.3 million), corresponding to an EBITA margin of 5.1% for the Q2.
During the Q2, Kährs Group observed continued price pressure in all markets but primarily in Europe. This has had to some extent an adverse effect on the operating EBITA margin.
During the Q2, Kährs continued to focus on optimising production to achieve the most cost-effective production without increasing inventory. Strict cost control and efficient production contributed to mitigating the impact of the decrease in sales on profit.
Operating profit (EBIT) for the Q2 amounted to SEK -40 million ($3.9 million), corresponding to an operating margin of -6.0%, of which items affecting comparability in the quarter amounted to SEK -70 million ($6.8 million).
1H 2024
Total consolidated net sales amounted to SEK 1,314 million ($129 million) for the first half of the year. This corresponded to an organic decrease in sales of -18%.
For the first half of the year, Kährs’ operating EBITA amounted to SEK 73 million ($7 million), corresponding to an operating EBITA margin of 5.6%.
Operating profit (EBIT) totalled SEK -6 million, corresponding to a margin of -0.5%, and was impacted by one-off costs, which amounted at the end of the first six months to SEK -70 million ($6.8 million).
President and CEO Johan Magnusson comments: “The high interest rates together with the concerns in the world continue to have an adverse impact on the residential segment in both Europe and the USA especially in new construction. However, we are seeing that the activity level and order intake are increasing connected to the renovation market in some markets in Europe. The USA is more cautious due to expected interest rate cuts. On a positive note, we once again have growth in region Europe in the Q2.
We expect the demand to gradually rebound during the second half of 2024 and further strengthen in 2025 even though we see continued low activity levels for new construction in Europe, particularly in Sweden and Finland, and the DACH region.
In the commercial segment, the activity levels linked to healthcare, schools and defence and correctional services are continuing to increase, offering possibilities for Kährs. The long lead times mean that these effects will have an impact in late 2024 and thereafter.
In both Europe and the USA we have continued our strategic focus on strengthening our market presence through processing new customers, combined with new product launches and an improved customer experience. At the same time we continue to improve our internal cost- and capital-efficiency through new ways of working and by reducing employed capital in stock.”
Kährs Group delivers sustainable and durable flooring solutions to more than 70 countries, being a market leader in hardwood flooring in Sweden and Finland.
