Brussels — Belgium-based foamer, Recticel saw sales rise 5.9% to EUR 566m in the first half of 2017 despite a tough material supply position.
Olivier Chapelle, CEO said: ‘During the first half of 2017, the group has faced very challenging raw material supply conditions: several forces majeure at suppliers, unprecedented raw material price increases and MDI supply shortages have constituted very serious headwinds for the business.
‘This was complemented by the further weakening of the Pound Sterling an overall appreciation of the Euro,’ he continued. Referring to the fire at its automotive interiors factory in Most, Czech Republic, he said that the problems it created are ‘in the process of being gradually solved. Reconstruction of the most facility is ongoing and the plant will be fully operational again by mid-October 2017.’
While sales were up 5.9% in the first half of the year, gross profit fell by 16.4% to EUR 91 m, compared to EUR 109 m in the first half of 2016. This, the company said, can be explained by: an additional EUR 17 m in costs due to alternative production solutions and operational inefficiencies linked to the fire incident in Most. The lag between price rises from suppliers and the firm’s ability to pass these on to customers also accounted partially for this.
Looking at the company’s sales by segment, the firm saw an 18.1% increase in sales in the automotive sector from EUR 147 m to EUR 174 m in the first half of 2017. This was followed by the insulation business where sales grew from EUR 118 m in the first half of 2016 to EUR 129 m in the first half of 2017, up 9.4%. The largest fall was in the bedding sector where sales slipped from EUR 148 m in the first half of 2016 EUR 138 m in the first half of 2017.
In terms of profitability, flexible foams made EUR 23.3 m at the REBITDA level compared to EUR 28.2 m in the 2016 half. At this level, bedding dropped to EUR 7.7 m from EUR 7.9 m, insulation from EUR 17.8 m to EUR 14.2 m. In the Automotive segment, there was a large increase in REBITDA of almost 28% to EUR 13.5 m in the first half of 2017 compared to EUR 10.5 m in the first half of 2016.
In the flexible foam segment, operational efficiencies and product mix were improved during the half compared to the same half in 2016. However, the impact of increasing raw materials costs hit profitability. The insulation segment saw profitability decrease ‘temporarily as a result of the time lag needed to pass on the higher raw material prices to the market and the impact of the of the shortages in MDI supply in the second quarter of 2017,’ Recticel said. High prices also hit the volume of product sold, the company said.
In the automotive sector, Recticel benefited from higher volumes in the interior sub segment because of new interior programs and solid market demand.