Brussels - Major foam group Recticel said its sales for the first half of 2011 rose 4.4 percent to Euro 699.8 million ($1011 million, while earnings (REBITDA) were Euro 47.5 million, a drop of 16.8 percent amidst "record raw material price increases." (REBITDA is EBITDA before non-recurring items such as restructuring costs).
Compared to the first half of 2010, sales increased in all segments, except in bedding, where sales dropped by 0.8 percent, said Recticel.
After positive conditions in almost all divisions in Q1, volumes started to slow slightly during Q2 in the comfort part of flexible foams and in bedding, said Recticel.
As expected, raw materials "continued to increase very significantly, to reach new all-time record levels in April, May and June 2011," said the group. The increases represented an additional chemical raw material cost of Euro 29.3 million during the first half of 2011 in comparison with the first half year of 2010.
Recticel said profitability was "slightly impacted by the unavoidable lead time necessary to pass the increases on to customers in most segments."
The group finalised its announced restructuring in automotive seating (Hulshout, Belgium - 141 jobs) and flexible foams (Spain - 87 jobs) by the end of June 2011.
Flexible foams' sales increased by 1.2 percent to Euro 302.2 million, but comfort sales (Euro 181.5 million; -4.3 percent) fell mainly as a result of the weaker demand in Spain and Finland. In other countries, Recticel said, sales stabilised in a very competitive market.
Technical foam sales (Euro 108.9 million, +13.7 percent) benefited from a sustained demand in the various industrial and automotive markets. Recticel said its composite foams business (Euro 11.8 million, -10.1 percent) experienced "poor world market prices for trimfoam and weaker sales of bonded foams product."
The group pointed out that earnings (EBITDA) in the "very competitive" comfort market declined as rapidly increasing raw material prices could not yet be fully passed on in the selling prices. The restructuring the group implemented in its Spanish activities is now complete and will result in cost savings as from the second half of the year, Recticel noted.
Bedding sales decreased by 0.8 percent to Euro 141.6 million. The group said its performance was particularly under pressure in Austria and in Switzerland, where the export activity suffered from the strong Swiss Franc.
Insulation sales, however, grew strongly by 22.9 percent to Euro 108.6 million. After traditionally weaker construction activity during the winter, sales in building insulation (Euro 101.1 million; +25.3 percent) increased strongly from February.
Recticel expects structural demand for high performing polyurethane building insulation products "to remain high as a result of stricter insulation standards and regulations, higher energy prices and ever growing awareness of the need for more and better insulation.
In this context the group decided in November 2010 to build a new factory for thermal insulation boards in France. The new factory project, in Bourges, is now ahead of schedule and should be in operation by end 2012.
Automotive sales increased by 4.2 percent to Euro 175.1 million on the back of higher volumes, said the group, with sales in interiors increased by +2.3 percent to Euro 90.0 million. Interiors mainly supplies the premium car segment, which remained strong in Europe, the US and in China, Recticel noted.
"Despite a quasi-stable automotive market," Recticel said, demand in the EU, seating (Proseat, the 51/49 joint venture between Recticel and Canadian group Woodbridge) increased its sales by +9.9 percent to Euro 78.1 million.