Nobia: 2007 Profits up 11% on Sales up by 7% - Mainly Due to UK Growth

Sales for kitchen company Nobia rose by 7 per cent in 2007 to SEK 16,622 million (15,590). Profit after tax rose by 11 per cent to SEK 958 million (865). Earnings per share amounted to SEK 5.50 (4.93) after dilution. The Board of Directors proposes a dividend of SEK 2.50 per share (2.00 after the 3:1 split).

Organic growth for the full-year amounted to 7 per cent (11). Growth is primarily attributable to increased sales in the UK, where organic growth reached 11 per cent, and higher sales of accessories. Operating profit for the year was strengthened and amounted to SEK 1,353 million (1,327).

Operating profit was negatively affected by more expensive raw materials and costs associated with shortcomings in delivery reliability, while increased sales and lower corporate taxes had a positive impact.

Fourth quarter
Operating profit for the fourth quarter amounted to SEK 349 million (347). The operating margin was 8.1 per cent (8.6)

Operating profit was positively impacted by higher sales volumes, but negatively impacted by more expensive raw materials and costs for shortcomings in delivery reliability and currency effects.

Towards the end of the year, demand for kitchens weakened in Nobia's primary markets, except for France and Sweden. Organic growth for the quarter amounted to 6 percent.

UK region

Operating profit was positively affected by higher sales volumes and improved productivity in the supply chain. Profit for the preceding year included a positive non-recurring item amounting to SEK 27 million. Excluding this item, operating profit improved by 21 per cent and amounted to SEK 130 million (107). Accordingly,the operating margin strengthened to 8.3 per cent (7.6).

The positive sales trend shows the strongest growth - figures for rigid kitchens in the Trade channel. This sales channel focuses on the small-scale professional construction sector. In 2007, Magnet introduced a new concept in its Trade
stores. The concept involves a narrower range of products, more products in stock and thereby improved availability of goods and a more active sales force.

The rapid roll-out of new and renovated kitchen stores and the new Trade concept are market activities that initially pressed the operating margin.
During the period, an agreement was reached to divest the UK bathroom chain C.P.Hart. This transaction was completed at the beginning of 2008.

The number of kitchen and Trade stores in the region at the end of the fourth quarter totalled 197. A further 100 Magnet showrooms are scheduled to open in the next few years.

The UK kitchen market noted a certain weakening towards the end of the period.

Comments from the CEO

'We are pleased that our delivery capabilities have been restored in the Nordic region, that our market position in the UK was strengthened and that we invested in the development of stores. Through the joint-venture Culinoma, we have made three acquisitions and thereby created a market position in Germany that can be further developed. We are continuing to pursue our work in line with the established strategy,' says President and CEO Fredrik Cappelen.

http://www.nobia.com