V-ZUG Group increases results and profitability in the first half of 2024

In the first half of the year, net sales of the V-ZUG Group amounted to CHF 284.1 million (previous year: CHF 298.2 million; - 4.7 %, currency adjusted - 4.2 %). Over the past six months, sales dynamics were positive again in most markets, except for the USA and in Germany. In the Swiss domestic market, net sales increased slightly (CHF 240.5 million, + 1.3 %) compared to the previous year, even though the previous year had benefited from clearing order backlogs racked up in 2022. Renovation business improved, whereas replacement business remained stable at a good level. New construction business continued to be sluggish. The overall decline is mainly attributable to the lower sales volume of an OEM partner in North America, who had built up an above-average level of inventory due to changes in the product range in the first half of 2023, which is now being reduced. Net sales of own brand products in International Markets increased by 18.5 % to CHF 39.3 million (previous year: CHF 33.1 million) and, when including the OEM products, declined overall to CHF 43.6 million (previous year: CHF 60.8 million). In the reporting period, the share of the international markets amounted to 15.3 % of total net sales.

Higher operating result thanks to gross profit margin and cost reductions

The operating result (EBIT) amounted to CHF 8.8 million, which is higher than the previous year (CHF 5.1 million). The EBIT margin rose to 3.1 % (previous year: 1.7 %). The gross profit margin increased by a further 2.5 percentage points, mainly due to the improved utilization of production capacities, lower quality costs and because purchases on spot-buy markets could be completely avoided, unlike in the first two months of the previous year. Besides the improved gross profit margin, various short- and medium-term cost reductions as part of the “Simplify V-ZUG” initiative as well as profit participation from the pension fund in the amount of CHF 1.8 million contributed to increasing the operating result. The Group net result doubled to CHF 8.7 million (previous year: CHF 4.3 million).

In the first half of the year, cash flow from operating activities amounted to CHF - 10.8 million (previous year: CHF 17.9 million). This deviation is primarily due to changes in trade receivables based on increasing business in the second quarter of 2024. As a result of the continued high investments in the site transformation, cash flow from investment activities amounted to CHF - 25.3 million (previous year: CHF - 25.4 million). Free cash flow amounted to CHF - 36.2 million (previous year: CHF - 7.5 million).

The balance sheet of the V-ZUG Group as of 30 June 2024 is solid with an equity ratio of 76.4 % (30 June 2023: 75.4 %). Cash and cash equivalents including securities amount to CHF 45.5 million (30 June 2023: CHF 56.4 million). V-ZUG continued to finance the high investment activities itself, without raising external funds. As of 30 June 2024, V-ZUG employed a total of 2,085 people (30 June 2023: 2,114).

Higher order intake in the Swiss market 

The Swiss market recovered in the first half of 2024. Net sales amounted to CHF 240.5 million (previous year: CHF 237.4 million). A consistently better order intake was observed in the first half of 2024, and the measures to increase sales proved effective. For instance, the new “Adora” dishwasher had a good start in terms of sales. In addition, the revised cooling portfolio – premium cooling appliances manufactured in Switzerland – is very well received by partners and end customers. The higher order intake, coupled with the new products and the measures taken, allow for a positive outlook for the second half of the year.

International: Strong growth in the own-brand business

Own-brand business developed positively at + 18.5 %, particularly in Asian-Pacific markets such as Australia, Singapore and China, where growth was very high at + 42.1 %. Development in Europe, with the exception of Germany, was stable. Demand from North America in the OEM business was characterised by high volatility in the past 18 months. More than 90 % of net sales for the year was earned in the first half of 2023, which shows that orders and, consequently, the increase in inventory were extraordinarily high. Deliveries to North America since the summer of 2023 are well below average due to excessively high inventory levels. Accordingly, the year-on-year comparison as of 30 June 2024 shows a decline in net sales by CHF 23.3 million, or - 84.4 % respectively, to CHF 4.3 million. The positive development in the rest of the V-ZUG Group has regrettably been mitigated by this decline. As a result, net sales in the International Markets reached CHF 43.6 million, which is a decrease compared to the previous year (CHF 60.8 million).

Wolfgang Schroeder is the new Chief Technology Officer

The V-ZUG Group appointed Wolfgang Schroeder as Chief Technology Officer (CTO) and member of the Executive Committee with effect from 1 July 2024. Wolfgang Schroeder began at V-ZUG as Head of Digital Transformation & Business Development in October 2021. There, he played a key role in advancing the digitalisation of V-ZUG products and information communication technology. He has extensive experience in product and portfolio management, digitalisation, innovation, strategy and marketing in B2B and B2C business. After his education as a graduate engineer at the Technical University of Darmstadt and Ecole Centrale de Lyon, he spent 13 years in various roles at Siemens.

2024 outlook

For the full year, V-ZUG expects an improvement compared to the previous year, although the challenges of the past two years are only gradually abating. V-ZUG anticipates increasing net sales and better results in the second half of the year compared to the second half of 2023. The “Simplify V-ZUG” initiative contributes to further reducing complexities and automating collaborative work and processes. “Simplify V-ZUG” is also having a positive impact on customer focus and product quality. In addition, V‑ZUG is benefiting from a gradually improving overall market situation overall, as well as from the now lower inventory levels of partners. For the full year 2024, V-ZUG anticipates higher net sales and improved profitability compared with 2023 – in both absolute terms as well as in relation to net sales.

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Further information

This ad hoc announcement is available at https://www.vzug.com/gb/en/investor-relations-news and the 2023 Annual Report at https://www.vzug.com/gb/en/financial-reports.

Key dates