COVID-19 impacts affect
revenues and earnings
Frauenthal Group in 2020:
COVID-19 impacts affect revenues and earnings
- Different pandemic impacts on the two divisions
- European automotive market under pressure
- Frauenthal Trade with revenue growth
- Outlook 2021: Cautiously positive
In 2020, Frauenthal Group suffered significant losses due to the pandemic: Revenue of MEUR 874 was MEUR 77.2 lower than in the previous year. The revenue decline was entirely attributable to the Frauenthal Automotive Division, which was severely affected by the COVID 19 fallout. Frauenthal Trade increased its revenue by MEUR 15.9. 74% of the revenue was generated by Frauenthal Trade and 26% by Frauenthal Automotive. The EBITDA amounted to MEUR 37.7 after MEUR 67.1 in the previous year.
"In the exceptional year 2020, the focus in both divisions was on securing liquidity, strengthening customer relationships, and improving the cost structure. We have thus laid a solid foundation for successful future development," explains Hannes Winkler, CEO of Frauenthal Holding AG and responsible for the Frauenthal Trade Division. Erika Hochrieser, CFO of Frauenthal Holding AG, adds: "By acting intelligently and with foresight we are in a good financial position despite the Corona circumstances. Liquidity is and will remain the number one issue in the future, whether as a buffer for revenue fluctuations or to be able to quickly access interesting acquisition opportunities at short notice."
Pressure on margins in plumbing supplies and building services wholesaling
The Frauenthal Trade Division held up well despite the difficult conditions, and increased revenue by 2.5% to MEUR 645, driven by the healthy state of the construction sector and the increased willingness of private households to invest in their own homes as a result of COVID-19. However, trade margins declined as a result of predatory pricing and a shift in the customer mix. The EBITDA amounted to MEUR 30.7 in 2020, down from MEUR 33.7 million in the previous year.
The European auto market has been hit hard by the COVID-19 crisis. Registrations in the passenger car market fell by -24.5%, in the commercial vehicle market by -19.4%, and in the important heavy commercial vehicle segment by -28.3%. Accordingly, Frauenthal Automotive suffered a 28.9% drop in revenue to MEUR 229. Business in the increasingly important Chinese market had a slightly positive effect, as did the above-market performance of the most important single customer. The EBITDA of MEUR 7.8 was MEUR 25 lower than in the previous year. "Through structural adjustments as well as encouraging new business - also in the USA - we were able to improve our foundations for profitable growth. In a supply industry that is likely to be marked by numerous insolvencies, we continue to be a stable partner for our customers," stresses Michael Ostermann, Frauenthal Holding AG Executive Board member responsible for the Frauenthal Automotive Division.
The aggressive price war in the plumbing and building services wholesale sector will continue in the coming years. Frauenthal Trade is therefore focusing intensively on customer benefits and aims to further improve customer service through investments, process optimization and employee training. Barring any drastic external measures such as a construction industry lockdown or setbacks in the vaccination strategy, the positive development from the second half of 2020 and first quarter of 2021 is expected to continue.
Frauenthal Automotive assumes a positive outlook for 2021 due to the significantly improved cost structure as well as new business won, provided that market conditions do not deteriorate unexpectedly. Production capacity will be expanded, particularly in Slovakia and the USA.