Baar, Switzerland - Flooring, adhesives and belt group Forbo said its net sales declined considerably in the final quarter of 2008, compared to Q4 of the previous year, despite the fact that 2008's sales were stable up to then.
And the group said in a 23 Dec statement that due to different measures its customers took in December - closure of production sites, compulsory vacation and the introduction of short time work - net sales for the month are expected to be significantly lower than for the same month of the previous year.
In the first half of 2008, Forbo posted a record result and, despite the difficult economic environment, the company said earnings were still satisfactory in the third quarter of 2008.
Now, the profit situation has deteriorated considerably, commented Forbo, adding that debtor risks have risen distinctly. While it has taken cost-cutting measures which will partially offset the decline in sales, it is likely that Forbo's net profit from ordinary operating activities for the full year 2008 will be slightly below that for the previous year. Also, net profit could be negatively affected by potential provisions for restructuring.
A decrease in group profit from operating activities to CHF 80 million ($72.4 million) is possible, the company added.
Forbo also owns a ten-percent stake in Swiss automotive parts supplier Rieter Holding AG of Winterthur, which it said has been especially hard hit by the crisis, as reflected in its share price. Since Rieter's earnings are not expected to recover in the short term, Forbo said, it has decided to make an appropriate impairment as of the year-end, which could further reduce the net result by nearly CHF 70 million.
For 2009, Forbo said, it does not see rapid recovery of the market happening and therefore assumes that the coming year will be "significantly more challenging than 2008." Forbo is not making any forecasts of net sales or group profit for 2009 because conditions are so unpredictable.