Some early results of the research “Financial analysis of the major furniture players in Europe” give us the opportunity to draw some considerations on the “state of health” of the European furniture industry.
At the moment, the sample includes 300 among the major furniture manufacturers on a European scale, for a total turnover of about EUR 18 billion (approximately EUR 60 million per company).
From 2007 to 2011, these companies registered an average turnover increase of 9% (2% per year), not too bad considering the global economic scenario. But profits before tax were slowing down by -12% in the whole period (almost -3% yearly) and the result was even worse (-4% yearly) if we consider profits after tax.
Nevertheless, the 300 entrepreneurs of the sample showed willingness to move forward, increasing by 30% their own funds in the company. Return on own assets (ROE, return on common equity) after tax is still not bad (around 12%- 13%) but total return (ROA, return on assets, after taxes) is lowering from around 7% to 4.7% in the period under examination.
Also in terms of EBITDA, profitability of the furniture sector seems to slow down from about 8.5% to 7.5%. Until 2011 the employment had remained stable (about 130,000 units) and the level of debts quite modest (1.5 debts for 1 of owned assets). Till when? That’s the question.