Recticel battles headwinds in H1 2018

Brussels— Belgium-based foamer, Recticel saw sales rise 2.4% to EUR 579.7m ($673 m) in the first half of 2018.

Olivier Chapelle, CEO said the increase would have been higher but for 'challenging market conditions in the comfort and bedding markets, and despite a -1.2% adverse currency environment'.While sales were up slightly, EBITDA grew by 28.1% to EUR 45.4m in the half. At the same time margin increased from 6.3% in the 2017 half to 7.8% in the 2018 half.

Looking at the company's sales by segment, the firm saw a 12.8% increase in sales in the automotive sector from EUR 174 m to EUR 196 m in the first half of 2018. The 51:49 seating joint venture with Woodbridge, Proseat, saw sales up 10.8%. Interiors sales rose 14.4%  and seating rose 12%, according to Recticel.

This was followed by the flexible foam business. Here sales grew from EUR 318 m in the first half of 2017 to EUR 330 m in the first half of 2018, up 4.1%.

Sales in technical foam increased 6.3% because of good demand in the industrial and automotive sectors in Europe, the US, India and Turkey. New converting sites in Wuxi, China and Tangiers, Morocco have been set up. The plant in Buren, the Netherlands will close by the end of 2018.

Sales in the insulation segment grew 2.7% to EUR 133m from EUR 129 in the first half of 2017. The bedding sector saw sales fall by 9.9% to EUR 125m in the first half of 2018. This compares with EUR 138m in the first half of 2018. Sales of Recticel's branded products fell by 7.6% while; white label products fell by 12% as a result of low levels of shop traffic.

In terms of profitability, at the REBIDA level insulation saw a 60% increase to EUR 23m because of improved efficiencies, product mix and price rises. The company's automotive sector benefitted from new programme start-ups. This new business kept the margin between 7% and 8%. Additionally, the company has been able to increase prices to reflect higher materials prices. This  helped offset the increasing strength of the Euro against the dollar and China's Yuan.

Flexible foams made EUR 21.6 m at the REBITDA level compared to EUR 23.3 m in the 2017 half. This is a drop of 7.2%. This is 'as a result of the time lag, although very limited, required to pass on the substantial first quarter 2018 raw material prices in selling prices,' said the company.

REBITDA in bedding dropped to EUR 5.4 m from EUR 7.7 m in the first half of 2017. This is a 29.9% fall half to half. Lower volumes offset improvements in product mix and operational efficiencies, Recticel said.