Moderate increase in sales and sharp decline in earnings

Egger looks back on an extremely volatile fiscal year 2022/2023, as the environment was characterized by sharply rising interest rates, high inflation, declining new construction, highly volatile commodity and energy markets, and geopolitical uncertainties. Despite this, the Group generated sales of 4,449.7 million euros (up 5.1 percent on the previous year). EBITDA amounted to EUR 602.5 million (down 31.3 percent year-on-year) and the EBITDA margin was 13.5 percent (previous year: 20.7 percent). The equity ratio is 45.9 percent (previous year: 50.9 percent).

“We are pleased that we were able to close another successful fiscal year, especially in the current challenging macroeconomic situation. The last few years can be classified as exceptional for our industry, and demand for our products was extremely high during the pandemic due to the accompanying cocooning effect. We now see a return of our key performance indicators to a stable and long-term sustainable level,” said Thomas Leissing, Group Head of Finance/Administration and Spokesman of the Group Management, at the annual press conference at the headquarters in St. Johann in Tyrol. “Whereas growth in the past fiscal year was driven by prices, it was still volume-driven in the year before. Egger also had to cope with significantly higher costs from the raw material and production side. And we were not able to pass on all the costs.”

In the past fiscal year 2022/2023, investments including acquisitions totaled 540.6 million euros (previous year: 293.6 million euros). The investment focus was on the areas of circular economy, renewable energy and optimized logistics, as well as on further refining capacities. Already, 65 percent of the wood used by Egger comes from recycling or by-products of industrial wood processing steps, such as wood chips or sawdust. 70 percent of the energy used is obtained from renewable sources. The engineered wood manufacturer aims to increase both shares even further in the future. “As a manufacturing company, Egger believes it has a responsibility to actively contribute to climate protection and aims to steadily reduce its own climate-impacting emissions. These ambitions will be clearly expressed in future investment projects,” says Frank Bölling, Group Head of Logistics.

The Group produced 9.6 million m³ of wood-based materials and sawn timber in fiscal 2022/2023 – this volume saves 6.4 million tons of CO2. “We were able to utilize our primary plants well in the past fiscal year despite challenges in our supply chains. The general increase in demand for our most important resource, wood, is putting us under increasing pressure and once again underlines the relevance of cascading wood utilization, of which we have always been convinced,” says Hannes Mitterweissacher, Group Manager Technology/Production, describing the current situation.

Developments in the individual product areas varied in the past fiscal year. “The market situation is completely different from the past boom years. Demand is being impacted in particular by the increased cost of living and the decline in building permits,” says Michael Egger Jr, Group Head of Sales/Marketing. “This decline is, of course, a challenge. We also naturally view the recession in Germany with concern, as this is an enormously important market for Egger.”
The Decorative Products unit (products for furniture and interior design) generated unconsolidated sales of €3,783.4 million in fiscal 2022/2023 (up 8.9 percent / EBITDA down 16.2 percent on the previous year). With unconsolidated sales of EUR 511.1 million, the Flooring Products Division was also up slightly on the previous year by +0.8% (EBITDA down 63%). In both product areas, the growth in sales was mainly due to cost-related price increases. In the Building Products Division (building products such as OSB and sawn timber), unconsolidated sales fell by minus 18.7 euros to 434.8 million euros (EBITDA minus 80.6 percent). The market environment for building products is challenging due to the decline in new construction.

The number of employees is currently 10,987 (previous year: 10,629). “In addition, our employees are becoming more and more qualified on average, as requirements are increasing, for example due to digitalization. Here, of course, we continuously invest in further training,” says Thomas Leissing.

The outlook for the current fiscal year is subdued: the ongoing crisis in Ukraine, volatile energy and raw material markets, persistently high inflation in key sales regions and further looming geopolitical crises, as well as the enormous challenges posed by climate change, are determining elements in the overall economic outlook. For Egger, additional challenges arise from the currency development in Argentina. The outlook for sales and earnings development of the Egger Group is subdued. “It is extremely difficult to make a forecast for the coming months. Nevertheless, we are convinced that we have set the right course with our strategic focus on long-term growth under our own steam. We will continue to focus on product diversity, market diversification, stable relationships with our partners and constant innovation for our customers. In addition, we will focus strongly on further improving our sustainability performance,” says Thomas Leissing. “We will also invest at a similarly high level as this year. After all, investments are not annual topics for us. In addition, the Group is in a very stable financial position, so we not only want to afford investments but can do so.”
In these challenging times, Egger also sees opportunities in competition – also because the company is technically better positioned than some of its market competitors. “That’s what we need to take advantage of. Nevertheless, the coming months will certainly not be any easier,” Leissing emphasizes in conclusion.