Clear reduction in growth forecast for Germany in 2002
A further deterioration in the underlying economic conditions has been experienced during the third quarter of 2002. Throughout the world, economic growth is clearly below the level anticipated at the start of the year. In addition, worries about the speed and duration of the economic recovery � also in view of an impending Iraq war and rising unemployment figures � have become considerably greater. The growth forecast for Germany in 2002 has once again been drastically reduced. Expectations have also again been lowered with regard to forecasts for the USA and the Euro zone. In Germany, a particularly negative influence has been exerted on the economic trend by the poor business climate in both the building trade and retail sector.
High proportion of foreign sales
Despite the poor underlying economic conditions during the first nine months of 2002, Group sales reported a 1.1 % increase when compared with the corresponding period of the previous financial year, bringing the total to Euro 734 million. When structurally adjusted to exclude sales by the newly acquired companies (Acomo in Belgium and Villeroy & Boch Wellness Italia) a slight sales decline of 2.9 % was reported.
In comparison with the branch as a whole, Villeroy & Boch was thus able to maintain a clearly better hold of the market. A considerable contribution was made to this position by foreign sales, which once again increased their share of total sales and now account for 69.3 %.
The volume of orders on 30 September 2002 rose to Euro 49.6 million, as compared to a total of Euro 44.9 million at the beginning of the year 2002.
Operating result below previous year's level
During the first nine months of 2002, the operating result in the Villeroy & Boch Group fell to Euro 6.1 million, as compared to Euro 7.4 million in the corresponding period of the previous financial year.
The reasons for this trend are to be found above all in the intensified price war � particularly on the tile and sanitary�ware market � as well as in the shift in demand towards ranges/products with lower contribution margins. In addition, the operating result was burdened by idle capacity and capacity adjustments. In contrast, use of synergies in the Wellness Division is now showing the anticipated positive effects.
Higher level of investment activity than in previous year
In the first nine months of 2002 a total of Euro 38.1 million (previous year: Euro 32.6 million) was invested by the Villeroy & Boch Group, 49.2 % of which was made in Germany. The Tile Division invested essentially in a new body preparation plant in Merzig and also in a sorting belt. Investments made in the Bathroom and Kitchen Division were used to modernise the fittings factory in Sweden. Tableware Division investment concentrated on die-casting techniques at the Mettlach and Torgau locations as well as conversion of the production facilities in Merzig. A new building and new production machinery are just two items on the list of investments made by the Wellness Division.
Comparatively stable trend of Villeroy & Boch share
The Villeroy & Boch preference share experienced a better trend in the reporting period 1 January to 30 September than the German stock market indexes. While leading indexes such as the DAX (minus 46.4 %), MDAX (minus 33.9 %) or SDAX (minus 31.4 %) reported considerable losses, the Villeroy & Boch share made a comparatively stable impression, reporting a price decline of 8 %. Most recently, however, the Villeroy & Boch share has not been able to oppose the general negative trend.
In the third quarter, the volume of trading in our share maintained the higher level which has been observed since May 2002. Owing to this trend � which is positive in comparison with the market in general � we saw a further improvement in our SDAX position.