Kährs Group: Interim Report April-June 2024

Growth in region Europe is back, but low new construction continues to be challenging

Kährs’ turnover decreased by 11 per cent organically in the second quarter 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 to adjust the value of the Russian operations to an expected sales price. 
 

Second Quarter 2024

• Net sales amounted to SEK 671 million (787), which was a decrease of -15 per cent. Organic change, currency adjusted, was -11 per cent 
• Operating EBITA amounted to SEK 34 million (77), corresponding to an operating EBITA margin of 5.1 per cent (9.8)
• Operating profit totalled SEK -40 million (38), corresponding to an operating margin of -6.0 per cent (4.9) affected by a write-down of Russian assets
• Profit for the period amounted to SEK -76 million (-18)
• Cash flow from operating activities totalled SEK -28 million (-16)
• Non-recurring items in the period amounted to SEK -70 million (-35) and were attributable in full to the write-down of Russian assets. Non-recurring items had no impact on cash flow
   

January-June 2024

• Net sales amounted to SEK 1,314 million (1,650), which was a decrease of -20 per cent. Organic change, currency adjusted, was -18 per cent 
• Operating EBITA amounted to SEK 73 million (183), corresponding to an operating EBITA margin of 5.6 per cent (11.1)
• Operating profit totalled SEK -6 million (134), corresponding to an operating margin of -0.5 per cent (8.2) affected by a write-down of Russian assets
• Profit for the period amounted to SEK -88 million (35)
• Cash flow from operating activities totalled SEK 8 million (-42) 
   

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 second quarter. 

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. 

For the second consecutive year, Kährs won the prestigious Floor Covering News 2024 Award of Excellence. Voted by customers in the retail flooring trade in the USA, this recognition emphasises Kährs’ strong partnership with retail and our steadfast commitment to delivering exceptional customer value. 

We continue investments in our strategic shift: to grow faster in selected markets in Europe and the USA, to launch new innovative and more sustainable product platforms, and to continue to improve Kährs’ customer experience, with a high level of commitment and in cooperation with our distribution channels and partners. In parallel, we continue to adapt the business to a challenging housing market in the short term.
 
 

For further information, please contact:
Johan Magnusson, President and CEO
Phone: +46 70 540 13 96 
johan.magnusson@kahrs.com
 
Andreas Larsson, CFO 
Phone: +46 70 242 03 65 
andreas.larsson@kahrs.com  
 

About Kährs BondCo AB (publ)
Kährs BondCo AB (publ) is a leading manufacturer and distributor of flooring with the aim of providing customer experiences beyond expectations. Kährs innovations have shaped the industry throughout its history and the company is dedicated to offering flooring solutions for every room, environment and need. The company delivers sustainable and durable flooring solutions to more than 70 countries, being a market leader in hardwood flooring in Sweden and Finland and having strong positions in other key markets, such as Norway, the UK, USA, and Germany. The Group has approximately 1,100 employees and annual sales of SEK 2,9 billion (2023). www.kahrsgroup.com