UK transformation making progress at Nobia; sales fall

Swedish kitchen furniture group Nobia, owner of UK brand Magnet, has reported a decline in sales while confirming the completion of its Dewsbury divestment.

According to its latest trading update for the fourth quarter, total sales decreased to SEK 3,050m (3,780) with organic decline of -22%. The gross margin increased to 35.1% (33.4) while gross profit decreased to SEK 1,072m (1,261).

As for the UK in Q4, Nobia said: “Net sales in the UK region decreased to SEK 1,001m (1,196). Sales declined by -21% (5) on an organic basis, following lower market demand. The ongoing exit of certain unprofitable parts of the project business also contributed to the adverse sales development.

“The gross margin improved to 45.2% (40.2). The operating loss was reduced to SEK -25m (-72), despite substantial negative effects from the volume decline. Operating profit was supported by positive effects from price increases and cost reduction measures as part of the ongoing transformation program. Changes in exchange rates impacted by SEK -5m.”

The Group’s net sales for the full year ended 2023 decreased to SEK 13 373m (14,929) with organic decline of -14%. The Nordic region declined by -17%, the UK region by -15%, and Portfolio Business Units by -1%. The gross margin amounted to 34.7% (35.9) and gross profit was SEK 4,644m (5,363). Operating profit amounted to SEK -99m (191).

Commenting further on the UK, Nobia added: “The UK transformation program continues to progress well. Our local management team in the UK is driving a shift towards becoming a focused mass premium leader. Cost savings and restructuring measures are showing positive effects with, for example, a more attractive product mix, an increased average order value, and a clear gross margin improvement.

“We will continue to drive further improvements, for example, by adding asset-light distribution models, at the same time as we focus our own store footprint. This is a capital-efficient way to increase our distribution reach, which also makes us more agile in the front end and less volume-sensitive. We have recently reached an agreement for a shop-in-shop concept in partnership with Selco, a leading UK builders merchant.”

Elsewhere in the group, Nobia said that the construction of the new factory in Jönköping is running according to plan with installation, commissioning and testing of production machines progressing, while the search for a new CEO is “well progressed”. Jon Sintorn previously announced his resignation while Nobia has the “ambition to announce the replacement in the near term”.

Furthermore, Nobia has recently announced it has entered into an agreement to divest its subsidiary ewe, a leading kitchen supplier in Austria.

In line with this strategy and the divestment of Bribus in the Netherlands, Nobia has agreed to divest its subsidiary ewe to a buyer consortium led by ILAG (Industrieliegenschaftenverwaltung AG) and including FMMS (Franz Mayr-Melnhof Saurau Holding GmbH) and the management team. ILAG and FMMS are two Austrian investors.

“Following the sale and leaseback of the Jönköping factory property and the divestments of Bribus and ewe, we are committed to focusing on our core markets and to further strengthen our financial position.”, says Jon Sintorn, President and CEO of Nobia.

ewe reported sales of EUR 62 million and an operating profit of EUR 5 million on a rolling twelvemonths basis as of September 2023. The purchase price amounts to EUR 24 million (~SEK 275 million). The sale includes ewe’s net cash at the time of completion, which was EUR 2.4 million (~SEK 28 million) as of September 30, 2023. In addition, there are two earn-out payments of up to EUR 2.5 million in total (~SEK 29 million), conditional upon ewe’s performance in 2024 and 2025.

The transaction is expected to be completed during March 2024 and is subject to customary regulatory approvals by authorities and closing procedures. The transaction will result in a negative non-cash effect of approximately SEK -40 million, primarily related to goodwill, recorded as “discontinued operations” in Nobia’s interim report for the first quarter of 2024.

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