Swedish kitchen furniture group Nobia, owner of UK brand Magnet, has reported a decline in fourth quarter and full year sales.
According to its latest Q4 trading update, total sales fell 7% to SEK 2,512m from SEK 2,642 against the same period last year.
Adjusted gross margin increased to 38.7% from 38%, while losses resulted at SEK -856m, widening from SEK -174.
Commenting on the results, Kristoffer Ljungfelt President & CEO, said: “During the quarter, we took further significant steps to enhance profitability in challenging market conditions. I am pleased with the improved performance in the Nordic region, which delivered higher earnings and achieved market share gains despite a substantial volume decline in the project market. In the UK, we continued to make progress in transitioning to a new business model, while also implementing additional cost-reduction initiatives during the period.
“Organic net sales for the Group declined -7% driven by the lower project market volumes. Despite the volume drop, our strong focus on margin enhancements and cost-reduction activities strengthened profitability and operating cash flow in the quarter.
“Adjusted operating profit in the Nordics increased to SEK 115m (44) and the adjusted operating profit margin rose to 8.2% (2.8), despite an organic sales decline of -11% due to a continued soft project market. Successful transition of resources to the consumer sales on all Nordics markets drove higher average order values with improved gross margins. The solid performance in HTH Denmark continued with market share gains in consumer and the Nordic supply chain performed well with normalized dispatch reliability and productivity improvements.
“We are making significant progress at our new Nordic manufacturing site, with the industrialization of fully automated production continuing and additional products and components being gradually integrated. A key milestone was reached in January with the delivery of the first assembled kitchens to external customers.
“Net sales in the UK was flat organically, with growth in consumer being offset by decline in project sales. Adjusted operating profit amounted to SEK -36m (-38). The weak market and consequently low production volumes and underabsorption continue to burden the gross margin. The cost reduction initiatives implemented earlier in the year are generating savings according to plan.
“As part of our previously communicated strategy, we are progressing towards an asset-light operating model in the UK, led by our strong and trusted Magnet brand. Consequently, Commodore, our brand serving project customers in London, has been fully integrated into Magnet’s project organization. Additionally, 14 underperforming stores were closed in the quarter. Cost related to this transition, including a non-cash, non-recurring goodwill impairment, was recorded as items affecting comparability in the quarter.
“Amidst an uncertain market outlook, we continue to drive margin improvements by leveraging group scale, capitalizing on our strong consumer brands and executing cost-reduction initiatives, expected to yield another SEK 150m in savings during the first half of 2025. With progress on our strategic agenda, including the launch of production at our new Nordic factory, and the renegotiation of long-term financing terms in December, we are better positioned to navigate soft market conditions and leverage our position as the number one kitchen specialist as the markets recover.”
As for the full year, sales were down 10% to SEK 10,538 from SEK 11,672 in 2023 with losses amounting to SEK -1,343, widening from a loss of SEK -347 year-on-year.
