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Industrial fabrics producer Gamma Holding under pressure
28 Oct '08
6 min read
Lifestyle Fabrics
Turnover of the Lifestyle Fabrics sector rose by 10% to EUR 75 million (2007: EUR 68 million). Currency movements had an effect of -6%. Organic growth of turnover was 16%.
The repositioning of all the Exotic Fabrics brands is clearly starting to pay off. Organic growth of turnover was 45%, also aided by the positive economic developments in West Africa and an increased demand for virtually all brands. For the Vlisco top brand another collection was launched succesfully. This was also done for Woodin, which introduced a complete autumn line for both men and women for the first time.
On a comparable basis, turnover at Sleep Care Fabrics fell by 8%. Partly as a result of the global financial crisis and the stagnating housing market the business unit had to contend with declining demand. In addition, the shift from woven to knitted mattress fabrics continues, causing an overcapacity in the area of woven fabrics in Europe and increased margin pressure.
As announced in the press release of 26 September 2008, Sleep Care Fabrics has the intention to considerably lower production costs in Western Europe by closing the facility in Münchberg, Germany as well as a large part of the plant in Waregem, Belgium before the end of 2009.
Discontinued Operations
Turnover at Discontinued Operations came to EUR 13.5 million (2007: EUR 15.0 million). Turnover of Verseidag Ballistic Protection increased, also as a result of the delivery of bullet-proof vests to France and Sweden. Sailcloth had to contend with economic headwinds in this traditional low season, causing turnover to fall on a comparable basis. On the other hand, the increased focus on high-quality membrane sails was rewarded by the delivery of D4 sailcloth for the American super yacht segment.
Due to the current global financial crisis, a limited amount of capital is available in the financial markets for mergers and acquisitions. This development, combined with the lower results at Sailcloth, have a negative impact on the sales process of both Sailcloth and Verseidag Ballistic Protection. Therefore, Gamma Holding expects to be able to continue both processes in the spring of 2009.
Outlook
In view of the weak and uncertain economic situation in the many markets in which Gamma Holding is active, the pressure on its results will increase in the fourth quarter. The net group result for 2008 is expected to be 30% lower than last year, barring any unforeseen circumstances. The expected restructuring costs for Sleep Care Fabrics have not been taken into account.
As a result of the new strategy 'Towards leadership 2010', Gamma Holding announced its financial targets in January of this year. Given the global economic turmoil, these will have to be adjusted for the years to come. At the presentation of the annual results on 20 February 2009, the new financial targets will be announced.
Gamma Holding develops, manufactures and sells innovative, high-quality textile-based products throughout the world. The company has some 7,200 employees in 42 countries. Its headquarters are located in Helmond (Netherlands) and its shares are listed on Euronext Amsterdam.
Turnover of the Lifestyle Fabrics sector rose by 10% to EUR 75 million (2007: EUR 68 million). Currency movements had an effect of -6%. Organic growth of turnover was 16%.
The repositioning of all the Exotic Fabrics brands is clearly starting to pay off. Organic growth of turnover was 45%, also aided by the positive economic developments in West Africa and an increased demand for virtually all brands. For the Vlisco top brand another collection was launched succesfully. This was also done for Woodin, which introduced a complete autumn line for both men and women for the first time.
On a comparable basis, turnover at Sleep Care Fabrics fell by 8%. Partly as a result of the global financial crisis and the stagnating housing market the business unit had to contend with declining demand. In addition, the shift from woven to knitted mattress fabrics continues, causing an overcapacity in the area of woven fabrics in Europe and increased margin pressure.
As announced in the press release of 26 September 2008, Sleep Care Fabrics has the intention to considerably lower production costs in Western Europe by closing the facility in Münchberg, Germany as well as a large part of the plant in Waregem, Belgium before the end of 2009.
Discontinued Operations
Turnover at Discontinued Operations came to EUR 13.5 million (2007: EUR 15.0 million). Turnover of Verseidag Ballistic Protection increased, also as a result of the delivery of bullet-proof vests to France and Sweden. Sailcloth had to contend with economic headwinds in this traditional low season, causing turnover to fall on a comparable basis. On the other hand, the increased focus on high-quality membrane sails was rewarded by the delivery of D4 sailcloth for the American super yacht segment.
Due to the current global financial crisis, a limited amount of capital is available in the financial markets for mergers and acquisitions. This development, combined with the lower results at Sailcloth, have a negative impact on the sales process of both Sailcloth and Verseidag Ballistic Protection. Therefore, Gamma Holding expects to be able to continue both processes in the spring of 2009.
Outlook
In view of the weak and uncertain economic situation in the many markets in which Gamma Holding is active, the pressure on its results will increase in the fourth quarter. The net group result for 2008 is expected to be 30% lower than last year, barring any unforeseen circumstances. The expected restructuring costs for Sleep Care Fabrics have not been taken into account.
As a result of the new strategy 'Towards leadership 2010', Gamma Holding announced its financial targets in January of this year. Given the global economic turmoil, these will have to be adjusted for the years to come. At the presentation of the annual results on 20 February 2009, the new financial targets will be announced.
Gamma Holding develops, manufactures and sells innovative, high-quality textile-based products throughout the world. The company has some 7,200 employees in 42 countries. Its headquarters are located in Helmond (Netherlands) and its shares are listed on Euronext Amsterdam.
Gamma Holding
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