Appliance maker Groupe SEB said it maintained a historically high level of operating margin and continued to reduce debt in the first half of 2004. Backed by a solid balance sheet, the Group continued to assertively respond to the fast changes in the small domestic equipment market.
The company reported that in the 6 months ended June 30, 2004, consolidated sales were 991 million euros (approx. U.S. $1.2 billion), declining 3.5 percent at current exchange rates and by 1.6 percent at constant rates.
According to the appliance maker, business recovered in the second quarter after doing poorly in the first, while geographically, sales growth remained strong in more than half of the Group's markets that include Spain, the UK, Portugal, Scandinavia, South America, Russia, Eastern Europe, and Asia. Despite the strong sales, the company reported that sales were lower than expected in the U.S., France, and Germany.
At 59 million euros (approx. $71.2 million), or 5.9 percent of net sales, operating margin remained historically high, although declining from the 70 million euros (approx. $85 million) reported for the same period last year. Groupe SED said this was primarily due to the under capacity of several plants that are facing output competition from Asian imports.
The company reported 20 million euros (approx. $24.2 million) in restructuring costs, as net income for the 6-month period was 29 million euros (approx. $35 million), down from 54 million euros (approx. $65.2 million) from the 6-month period in 2003.
Inventory management was said to help enable a 40 percent year-on-year reduction in debt, to 195 million euros (approx. $235 million) from 324 million euros (approx. $391 million) reported the same period last year.
Groupe SEB said it planned to continue expanding in the global marketplace, maintain a good operating margin, and further reduced debt. Additionally, the company said it is confident that consumer spending will recover in Europe and that new products launched in the second half are expected to experience strong sales.
The company confirmed its full-year objective of a slight increase in sales at constant exchange rates, with operating margin experiencing similar growth. Margins are also expected to benefit from the consolidation over 5 months of earnings from All-Clad, whose acquisition was finalized in July.
Separately, the company announced that Societe Fonciere, Financiere et de Participations (FFP) has acquired a 5 percent stake in SEB S.A. Of the acquired shares, the company previously held 300,000 and the remainder were purchased on the open market. The acquisition is said to enhance the stability of the company's ownership structure.
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