“We are pleased that we were able to close another successful financial year, especially given the currently challenging economic situation,” Thomas Leissing, Chief Financial Officer and speaker of the group management, said at Egger’s annual press conference on July 27. He pointed out that the past few years can be described as exceptional for the industry. Demand for wood-based products was particularly high during the pandemic thanks to the cocooning effect that came with it. “Now, our key figures are returning to a level that is stable and sustainable in the long-term,” Leissing explained.
In the fiscal year 2022/2023, Egger generated group-wide sales of €4,450 million (+5.1% year on year). EBITDA amounted to €602.5 million (-31.3% compared to the previous year) and the EBITDA margin was 13.5% (previous year: 20.7%). The increase in sales was the result of price-related effects. In the past fiscal year, Egger faced rising costs for all of the raw materials used. Meanwhile, however, the manufacturer of wood products is seeing an inversion of the trend. For example, after the price of wood had risen massively last year, it is now falling sharply again.
Construction products most challenging
In the past fiscal year, the various segments saw different developments. “The current market situation is completely different compared to the previous boom years. The increased cost of living and the decrease in building permits in particular have had a negative impact on demand”, Michael Egger jun., Chief Sales Officer, explained. In the Decorative Products segment, which focuses on furniture and interior design, €3.8 billion in unconsolidated sales were generated (+8.9% year on year). Unconsolidated sales of the Flooring segment totaled €511 million and thus increased slightly by 0.8% compared to the previous year. In both segments, sales growth is mainly the result of price increases due to higher costs. The Building Products segment focuses on construction products, such as OSB and lumber. In the past fiscal year, this segment saw its unconsolidated sales fall by 18.7% to €435 million. “Due to the decrease in new constructions, the market environment is particularly challenging for construction products,” as Egger jun. emphasized.
Production sites utilized to a good degree
In the fiscal year 2022/2023, Egger Group produced 9.6 million m³ of wood products and lumber. “Our production output decreased compared to the year before. Nevertheless, we were able to utilize our primary plants to a good degree despite challenges in our supply chain. The general increase in demand for our most important resource, i.e. wood, is putting increasing pressure on us and once again emphasizes the relevance of a cascading use of wood, which we have always supported,” Hannes Mitterweissacher, Chief Technology Officer, explained.
Focus on sustainability
In 2022/2023, the group made investments and acquisitions for €541 million (previous year: €294 million), with the focus being on the areas of circular economy, renewable energy and optimized logistics as well as on additional finishing capacities. Egger’s group management places particular importance on a circular economy. “We have to do our part to make sure that wood doesn’t end up in landfills. It’s important that we keep it in circulation. We collect wood waste from all over Europe and, more recently, from the US, too,” Leissing emphasized. “Forests used to be our raw material supplier, now it’s the cities,” Mitterweissacher explained. “65% of the wood used by Egger comes from recycling or by-products of industrial wood processing, such as wood chips or sawdust. In addition, 70% of the energy used comes from renewable sources,” Leissing added. The group wants to further increase both percentages in the future. “We see it as our responsibility to actively contribute to climate protection,” Frank Bölling, Chief Supply Chain Officer, said.
Lowered expectations
The ongoing conflict in Ukraine, the volatility of the energy and raw material markets, high inflation in important sales regions and other imminent geopolitical crises as well as the challenges relating to climate change are determining factors in the overall economic outlook. For Egger, currency developments in Argentina pose additional challenges. “It is extremely difficult to make forecasts for the coming months. We expect a modest development of Egger Group’s sales and earnings,” Leissing said.
