Swedish kitchen manufacturer Nobia, which owns the UK Magnet chain in the UK, has said sales in the brand’s retail business had doubled over its April-to-June period.
In an investor presentation after releasing Q2 earnings, Nobia said that Magnet Retail, with its 200-plus showrooms around the UK, had been a bright spot as the firm reported lower group quarterly profits for April to June and a 5% sales drop in its overall UK business. It also said that the loss of its Homebase supply contract was continuing to take its toll.
The company, which also owns UK kitchen supply brands Commodore, CIE and Rixonway, said that despite “extreme competition” in the UK, business was “in good shape” with a strong order book for its mid-range Commodore and high-end CIA brands and “decent” margin.
It said Magnet Retail benefited in the quarter from its 2017 November/December winter sale and dropping prices.
Overall, the group did not have a great quarter, largely impacted by manufacturing disruptions in Tidaholm on the back of strong project volumes, which resulted in long lead times and a sharp drop in sales mainly in Sweden and Norway.
Profit after tax for the three months was SKr297 million (£255.5m), down from SKr314m for the same period in 2017.
It also reported a decline in cash flow to SKr184m, down from SKr193m.
A week ago, the firm announced a €60m purchase of Dutch kitchen supplier Bribus Holding which it said would give it a “solid platform” to grow in central Europe
“In the UK, competition intensified in the quarter, especially at the lower end and among builders merchants. I am therefore pleased that Magnet Retail managed to deliver double-digit growth in the quarter, confirming that the new brand proposition stands strong in the current environment,” said Morten Falkenberg, Nobia president and chief executive.
“We are now extending this work to Magnet Trade with the ambition of finalising it before the end of the year. The exit from Homebase and the extraordinarily strong past year deliveries in project sales affected year-over-year growth in the UK by approximately -5%.”
Nobia’s UK business has struggled over the past few years against currency volatility, as the UK prepares to leave the EU, and consumer sentiment hit by stagnant wage growth and high living costs.
Falkenberg said the deal with Bribus was financed through a renewed SKr2 billion syndicated loan and suggested that the firm’s “strong balance sheet” could fund further acquisitions.
The Bribus deal included a variable consideration of a maximum of €5m conditional upon business performance until the end of 2020.
“This acquisition is the first step in our growth strategy to expand to attractive and adjacent kitchen markets,” Falkenberg said after the announcement last week.
“Bribus has a strong offer and a number-one position in the Dutch project market for kitchens, and we see good growth potential and opportunities for further expansion,” he added.
Bribus was founded 90 years ago and has been bought from Bernhard ten Brinke, who remains in the company.
Bribus is a full-service provider of kitchens to professional customers in the Netherlands, mainly social housing providers and large-scale property investors.
Kitchens are produced in a modern factory located in Dinxperlo in the eastern part of Netherlands.
Bribus revenues for 2017 were about €65m. It has 270 employees.