The EGGER Group, headquartered in St. Johann in Tirol (AT), closed the first half of its 2023/2024 financial year (reporting date 31 October 2023) with consolidated sales of EUR 2.1 billion (–7.0% as compared to the previous year).
The business environment was challenging due to persistently high inflation, high interest rates, volatile raw material prices and geopolitical crises. In view of this situation, the wood-based material manufacturer is satisfied with its stable development in the first half of 2023/2024.
"The first six months of our financial year have been very demanding," says Thomas Leissing, Chief Financial Officer EGGER Group and Speaker of the Group Management. "Persistently high inflation in many regions, stricter capital requirements for home purchases and global geopolitical uncertainties have led to a general weakness in consumption and a decline in demand in almost all markets. Thanks to the efforts of our more than 11,000 employees, we are nevertheless able to report Group-wide sales that decreased only slightly. We are particularly pleased that we could successfully initiate strategically forward-looking decisions in the first half of 2023/2024, such as the acquisition of our 22nd production plant in Markt Bibart (DE) and the EGGER Group's climate protection commitment to the Net Zero 2050 target."
Decline in demand recorded
During the first half-year 2023/2024, the EGGER Group generated sales of EUR 2,097.8 million (–7.0% as compared to the first half-year 2022/2023) and an EBITDA of EUR 299.2 million
(–15.4% as compared to the previous year). The EBITDA margin is 14.3%, the shareholder’s equity ratio is at the high level of 44.9%.
This result reflects the highly volatile general conditions of the past six months. Declines in sales and earnings affected the flooring, OSB and timber product areas disproportionately. However, the previous year period was still characterised in part by an exceptionally good market environment and margin level. Products for wood construction and flooring are now directly affected by the downturn in the construction industry.
The first-time inclusion of the Caorso (IT) plant, in which EGGER has held a majority stake since the end of 2022, had a positive effect on revenue development in the decorative products area for furniture and interior design. In addition, the plant in Lexington, NC (US) achieved volume increases due to further market expansion in the USA. Overall, these effects led to Group-wide sales and earnings slightly below the previous year's level.
Long-term investment strategy
The continuous development of the EGGER Group has always been part of its strategy. Even in the current volatile market environment, the wood-based material manufacturer is consistently adhering to this strategy and is constantly investing in existing plants in order to keep them at the cutting edge of technology or to expand them further. In the first half of 2023/2024, investments totalled EUR 238.6 million (EUR 229.7 million in the same period last year). The focus areas were the expansion of active backward integration and the further increase in sustainability performance. Efforts to promote the circular economy were a key topic, which EGGER addressed with investments in facilities for the processing of recycled wood and in its own collection sites.
For climate protection: The EGGER way to Net Zero
In the first half of the year, the foundations were also laid for substantial investments in the coming years. The EGGER Group adopted its climate strategy, which sets Net Zero 2050 as its ultimate goal. EGGER is committed to reducing its climate-impacting greenhouse gas emissions in line with the Paris Climate Agreement. The family company is explicitly focussing on reduction, not on compensation outside its own value chain.
Comprehensive measures in numerous areas of the company are on the strategic agenda, and pioneering interim targets have been set for the period up to 2030. By 2030, direct emissions from the company's own plants (Scope 1) will be reduced by at least 30%, indirect emissions from purchased energy (Scope 2) by at least 40% and indirect upstream and downstream emissions (Scope 3) by at least 10%. To realise the targets, measures such as additional biomass power plants and photovoltaic systems are being planned to further promote the decoupling from fossil fuels. The details of the climate strategy can be found at to.egger.link/climate-strategy.
Further growth: 22nd plant in Markt Bibart (DE)
The cornerstone for another milestone in EGGER's history was laid with the acquisition of the chipboard plant in Markt Bibart (DE). With this additional location in the core market of Germany, the EGGER Group now has 22 plants. The purchase agreement for the plant, which previously belonged to the Rauch Group, was signed on 8 September 2023. The successful closing followed at the beginning of November, shortly after the end of the first half of the financial year.
Outlook for the second half-year fraught with uncertainty
The overall economic outlook remains subject to great uncertainty, which is why EGGER is looking at the second half of the 2023/2024 financial year with subdued earnings expectations. The wood-based material manufacturer anticipates a further decline in demand, partly due to seasonal effects. However, EGGER believes it is well equipped not only to successfully weather the current macroeconomic downturn, but also to emerge from it stronger than before. The family company can rely on the commitment of its more than 11,000 qualified and motivated employees and the continued successful cooperation with its customers and partners worldwide. Together with them, EGGER is convinced that it can fully utilise the advantages of its sustainable business model, its strong financial base and the production advantages of its state-of-the-art plants.
