Tarkett Reports Declining First Half Net Profit Despite Growth in Sport and Europe

TeFirst-half sales came to 1,4 billion euros, helped by positive currency and consolidation effects, and by moderate organic growth, the group announced in a statement on Tuesday.

But in the second quarter, growth slowed, with -0,6% organically after + 3,7% in the first quarter.

Several factors explain this slowdown in activity: a slowdown in North America and in the CIS zone (especially Russia), a high comparison base in the second quarter of 2018 which was very buoyant, a reduced number of calendar days.

The Sport segment (almost a quarter of turnover) stood out again with sales up 17,4% in the second quarter.

"Sport and Europe continue to drive growth, and even if the market is more difficult in North America and the CIS, we consider that we have fared relatively well," commented the president of the Fabrice Barthélemy Management Board, during a conference call.

But he admitted that the gross operating margin (Ebitda) was "a little disappointing". In question, impairments linked to inventory adjustments in the United States and an unfavorable product "mix".

The adjusted Ebitda margin before application of the new IFRS 16 standard stood at 7,8%, down 90 basis points in the first half of 2018.

To these elements are added restructuring costs linked to site closings announced at the start of the year and increased financial costs. In the end, the half-year net profit plunged to 7,7 million euros, against 28,7 million a year earlier.