Brussels - Foam group Recticel has reported sales of Euro 1328.4 million, up 5.6 percent from sales in 2009, as rising raw material costs eat into profits.
The Belgian company attributed the rise in sales to growth in the insulation and automotive markets, which both increased by about 12 percent in 2010. But gross profit at the business was Euro 216.9 million, down by 6.6 percent from 2009 levels.
Despite the increase, total sales of Recticel's polyurethane products are still down about 12 percent from 2008 levels.
Earnings (EBITDA) for the year were Euro 83.5 million down 18.3 percent from 2009, mainly due to rising raw material prices, as well as costs involved in restructuring activities.
The company noted in its end of year report that all business lines reported an increase in sales. The strongest surges were in the insulation and automotive sectors, which rose by 12.6 and 12.2 percent respectively.
In the insulation business, which comprises of building and industrial insulation, sales reached Euro 187.4 million. However, EBITDA declined, as the group was unable to "offset the sharp rise in raw material prices in all markets," Recticel said in the report.
Sales in the automotive unit were Euro 324.9 million in 2010. The company attributed this growth to higher sales volumes in its Interiors division as a consequence of significant economic recovery in the premium car market.
However, Proseat - Recticel's seating business for the low-to-mid range car market - grew only marginally by 4.5 percent to Euro 136.6 million. The company said this was due to "the progressive reduction of various governmental incentive programmes for car renewals which had boosted demand in the previous year."
Sales in the flexible foams business line were Euro 602.7 million, an increase of 5.6 percent from 2009, which Recticel attributed to higher volumes in the division. However profitability was down in the unit due to rising raw material costs. Due to substantial operating losses of Euro 1.6 million in Spain, the group recently announced that it is closing some of its 'Comfort' activities there, leading to about 90 redundancies.
In the bedding sector, sales rose by 5.8 percent to Euro 293.3 million in 2010. But profit was down due to "difficult market conditions" in Poland, Germany and Switzerland.
Recticel said it expected to see overall sales increase in 2011. Rising raw material costs would still be a factor, the Belgian group said, but it intended to compensate for this with "improved activity levels, adequate pricing policies and cost efficiencies" as a result of its restructuring measures. LMH