GERMANY – Homag Group order intake was weaker than expected in the second quarter, according to preliminary figures released last week. The main reason for this is the decline in demand in the furniture industry, which is facing declining market volumes, increasing competition and falling margins in many markets.

In the higher-margin business in China, the Homag Group suffered further sales losses. In the first half of the year, sales generated in China halved year-on-year to around € 48 million. Earnings performance will continue to be impacted by higher material and labor costs, disproportionately high sales volumes, capacity utilization problems in individual production areas, and increasing price pressure in the machinery and equipment business.

Against this backdrop, the parent company Dürr AG has revised downward the sales and earnings forecasts for the “Woodworking Machinery and Systems” division and subsequently adjusted the expectations for the entire Group. According to updated forecasts, the order intake of the Homag Group in the current year should be € 1.10-1.30 billion, instead of the previously expected € 1.25-1.45 billion. Sales expectations were reduced from € 1.28-1.38 billion to € 1.20-1.30 billion. The updated figures are also below the previous year’s figures.

In 2018, the Homag Group had orders of € 1.377 billion and sales of € 1.248 billion. The earnings forecast has been adjusted even more. The EBIT margin is expected to be 5.5-6.3%. Starting from 6.6% last year, the Homag Group had previously set an increase to 6.7-7.5% target. The result after tax and profit transfer should actually be brought over the previous year’s value of € 54 million, according to the updated forecast, € 42-46 million is expected. By contrast, the sales and earnings expectations for the other Dürr business units are largely unchanged.