Letter to the shareholders
The Arbonia Group (Arbonia) continued to face a challenging market environment in the financial year. Some markets suffered from a further decline in the construction industry. This situation was compounded by the increasing political uncertainty in Germany, Arbonia’s most important market. Arbonia was able to counteract these difficulties with targeted measures: On the one hand, the acquisitions of Dimoldura in Spain and Lignis in the Czech Republic are worthy of mention and considerably reduce the dependence on the German market. On the other hand, the cost- saving measures already introduced last year are also having an effect.
The Arbonia Group (Arbonia) continued to face a challenging market environment in the financial year. Some markets suffered from a further decline in the construction industry. This situation was compounded by the increasing political uncertainty in Germany, Arbonia’s most important market. Arbonia was able to counteract these difficulties with targeted measures: On the one hand, the acquisitions of Dimoldura in Spain and Lignis in the Czech Republic are worthy of mention and considerably reduce the dependence on the German market. On the other hand, the cost-saving measures already introduced last year are also having an effect.
The sale of the Climate Division to the Chinese Midea Group announced in April 2024, was completed in February 2025 (closing). With the completion of the transaction, Arbonia will be focussing on the doors business and has already taken steps to significantly strengthen this with the previously mentioned acquisitions.
The focus involves several organisational changes, which is why the previous CEO of the Doors Division, Claudius Moor, has taken over the role of CEO of the Arbonia Group as of 1 January 2025. Consequently, Alexander von Witzleben gave up his executive role on the same day and will remain Chairman of the Board of Directors. With Uwe Schiller as the new CFO as well as the departure of Alexander Kaiss (CEO of the sold Climate Division) and the arrival of Markus Hütt in Group Management as of 26 February 2025, Group Management of the Arbonia Group has considerably changed overall.
Financial figures for 2024
In the 2024 financial year, Arbonia (continuing operations) recorded revenue growth of 10.2 % to CHF 556.3 million. This includes the acquisitions of the Spanish company Dimoldura, incl. Rozière in France, as well as the Czech company Lignis from the respective closing date. Without currency and acquisition effects (organic), however, a decrease of –5.4 % would be recorded. EBITDA (incl. one-time effects) increased by 107.8 % to CHF 66.3 million in the financial year. This corresponds to an increase in the EBITDA margin from 6.3 % to 11.9 %. In addition to the acquisitions, this also includes proceeds of around CHF 29 million (one-time effect) on the EBITDA level from the sale of the Zelgstrasse site in Arbon. This is offset by personnel adjustments, acquisition costs, as well as expenses for divesting the Kermi glass solution business from Kermi GmbH (Climate Division) in Plattling. As a result, the one-time effects amount to a total of CHF 24.6 million. EBITDA without one-time effects increased by 22.1 % to CHF 41.7 million; this corresponds to an increase in the EBITDA margin (without one-time effects) from 6.8 % to 7.5 %. EBIT without one-time effects fell from CHF –6.5 million in the previous financial year to CHF –7.7 million; the EBIT margin without one-time effects decreased from –1.3 % to –1.4 % as a result. Including one-time effects, EBIT amounted to CHF 16.9 million, compared with CHF –8.7 million in the same period of the previous year, meaning that the corresponding EBIT margin (with one-time effects) grew from –1.7 % to 3.0 %. The group result (without one-time effects) totalled CHF –18.6 million, compared with CHF –12.4 million in the previous year; including one-time effects, the group result grew from CHF –14.1 million to CHF 2.7 million.
With the acquisition of Dimoldura and Lignis, Arbonia has achieved important milestones in focussing on the doors business. If these purchases had already been fully consolidated (pro forma) as of 1 January 2024 instead of the respective closing dates, the revenue of the new Arbonia would amount to CHF 604 million. This corresponds to an increase in revenue of roughly 20 % compared to the previous year (see note 41).
None of these figures includes the Climate Division, which is treated as a discontinued operation. The antitrust approval of the EU Commission, which was still pending at the end of the year, was received on 28 January 2025, meaning that the sale was completed on 26 February 2025 (closing).
Market environment 2024
In Arbonia’s largest European markets, the development of the construction industry did not noticeably recover yet in 2024. Instead, the uncertainty that had already characterised the 2023 financial year continued, including a declining number of building permits and increased financing costs. Some of these general conditions, such as interest, energy and material costs, improved somewhat over the course of the year but did not yet lead to a noticeable recovery in most markets.
In Germany, which continued to be Arbonia’s most important market, the negative development of the construction industry continued. The construction of new residential properties, especially single-family homes, was seriously impacted here. This was due to continuing economic uncertainty, high interest costs, and the resulting decline in the number of building permits. Construction plans that had not been approved or started in the previous year were construction projects that were missing in 2024. Although construction costs and the demand for mortgages are trending in the right direction, building permits do not show any recovery yet, meaning that the demand from this sector is likely to remain at a low level in 2025 again. On the other hand, the renovation business has shown a pleasing stability and should grow again in the current financial year following the shift in capacities to this area; other building construction (outside of residential construction) shows a similar trend as well.
In Switzerland, the demand for other building construction has improved again after two years, with demand occurring especially outside of residential construction and stimulating growth there. In the flats segment, however, the Swiss market has stabilised and will probably only record a small decline in the past financial year; nevertheless, as in Germany, the effects are mainly due to new construction, coupled with a robust demand for renovation measures. In the coming year, this recovery should gain momentum due to lower financing and material costs. Residential construction, though, is likely to continue to develop somewhat more weakly than other building construction. As in Germany, however, the high demand for flats remains unbroken, especially in metropolitan areas.
The market in Spain, which has become important to Arbonia, developed well in 2024. On the one hand, rents and property prices are continually increasing due to a decade of insufficient residential construction. Together with continuously improving profitability for developers, this should ensure that the construction of new homes continues to develop dynamically, with positive knock-on effects for the renovation sector. In other building construction, economic uncertainty remains, as in other European markets; this sector is therefore likely to have declined slightly in 2024. A recovery will probably be considerably less dynamic here. One ray of hope here, however, is the hotel sector, which continues to benefit from increasing numbers of tourists.
The construction industry in France will record a decrease in the past year as well as in the coming year. This is mainly because of the important domestic consumption, which was hampered by high inflation and increased interest rates; as a result, new residential and commercial property construction in particular is sharply decreasing. Only the renovation sector (residential construction and other building construction) was able to grow further and should also continue on this course. In the medium term, the improved economic conditions are likely to bring an improvement in new construction.
The Eastern European markets of Poland and the Czech Republic developed slightly differently in the past year. Polish residential construction experienced a significant recovery in 2024, with growth rates in new construction as well as renovation. In the Czech Republic, Arbonia was also able to achieve high growth rates. The upturn in Poland is above all due to new construction starts and the continuation of projects in the areas of single-family homes and rental properties, while the demand for owner-occupied flats in Poland was hampered by cost inflation. Outside of residential construction, other building construction developed unevenly: While the public demand for new educational facilities or their renovation in the Czech Republic supported the sector and should ensure increasing demand in the future, the demand from public authorities in Poland drastically decreased. In the next few years, however, other building construction should develop dynamically again in both markets.
Strategy and development of Arbonia
With the completion of the sale of the former Climate Division, the new Arbonia is focussing on the doors business with the goal of expanding its position as the leading manufacturer of interior doors made of wood and glass throughout Europe.
The new Arbonia made important progress towards this goal in the past year. On the one hand, the acquisition of the Spanish manufacturer Dimoldura enabled it to become the market leader in Spain, while its position in the French market was expanded with Dimoldura’s subsidiary Rozière at the same time. With the Czech project business specialist Lignis, Arbonia also acquired a perfect addition for market cultivation in Eastern Europe in conjunction with standard doors from Invado. By combining the product portfolios of both companies, Arbonia is creating a full-range provider for the Eastern European region that is excellently positioned to gain further market shares. With these acquisitions, Arbonia has progressed further in diversifying its distribution channels, since Dimoldura, for example, generates a significant portion of its revenue through the distribution channel of DIY stores. In addition, the Arbonia Doors Division acquired two German DIY store chains as customers, which now sell Arbonia doors as licensed brands. The new Arbonia was also able to diversify its distribution channels geographically, as Spain and France have become important sales markets, and thereby reduced its dependence on the development of the construction industry in Germany.
The difficult development of the construction industry in Europe, and especially in the important German market, considerably affected the business of the Wood Solutions Business Unit in the past year and led to bankruptcies among competitors. There was also a lack of warehouse orders; goods were ordered instead on commission in batch size 1, which led to significant additional costs at the large German production plants, for example, due to machine conversions. Together with an unfavourable product mix and a further decline in standard doors, this had a negative impact. On the other hand, the functional doors segment developed much better. In this target market and in the target market of hotels, Arbonia gained market shares and was therefore able to compensate well for part of the decline. Do to the decline in sales, personnel adjustments were made in the 2024 financial year. The project business also developed positively again and achieved double-digit growth rates for the second year in a row. All of this and the acquisition of market shares in various markets led to a further margin improvement.
The market for the Glass Solutions Business Unit was also greatly impacted by the renewed decline in demand during the past year. The material costs for glass products, which remain very high, are an additional burden. As a consequence, further personnel adjustments were made in Germany that will contribute to increased efficiency together with various measures. Furthermore, the decline in new construction business was partially offset by existing customers as well as orders in the renovation segment. The segment of glass partition systems for offices also had an extremely successful development in the past year; Interwand reported its highest revenue in the last few years, which resulted from adapting offices to new employee requirements. On the other hand, the split of Kermi GmbH in Plattling should be mentioned as an exceptional burden, since part of the company will remain in the Glass Solutions Business Unit while other areas are part of the sale of the Climate Division.
Despite these impediments on the demand side, the Arbonia Doors Division was able to gain further market shares, even in Germany. This is due to its industry-leading productivity as well as the targeted strengthening of the project business, which was able to win many prestigious projects, such as, for example, the 4 Towers construction project in Frankfurt (Germany). The acquisition of Interwand in the past year also successfully opened up the office segment, which had been largely untapped previously. In addition to the market leadership in Spain, the acquisition of Dimoldura and Rozière also created an optimum platform for opening up the important DIY markets in France, the third-largest construction industry in Europe. This has made Arbonia the market leader in continental Europe.
On the cost side, the new Arbonia has made important progress: Structured energy purchasing has significantly reduced costs. Further reductions in energy costs will result from the new CHP plant in Prüm, which now generates a large part of the energy and heat required at the site itself. Additionally, lower material costs have also had a positive effect on profitability, as have the personnel measures announced in the 2023 financial year.
Intensification of sustainability
As part of the focus on the doors business, Arbonia has reorganised its sustainability management and provided it with more personnel know-how, in order to intensify its efforts to achieve sustainable and economic success again. This is due to the further increasing requirements, both regulatory and from external stakeholders, but not the least from employees and Arbonia itself. In the 2024 financial year, Arbonia therefore formally committed to developing a path for reducing CO2 in accordance with the rules of the Science-Based Targets Initiative (SBTI). In other words, a science-based emission reduction along the entire value-added chain (Scope 1–3), including suppliers and customers. Sustainability management is also preparing for the implementation of the Corporate Sustainability Reporting Directive (CSRD) as well as the EU taxonomy, which will be reported on starting in the current financial year.
From a sustainability perspective, however, there are not only new challenges; the focus on the Doors Division also presents opportunities, as the most important raw material here is wood, which stores CO2 throughout its entire life cycle.
Outlook
The supply of properties, especially in residential construction, has not grown in line with demand in large parts of Europe. The past years have only exacerbated the imbalance here, meaning that the market outlook is very promising in the medium term. In the short term, however, the subsiding after-effects of the Corona years, such as increased interest rates, inflation, and the general economic uncertainty, are hampering the development of the construction industry. The delay between improved economic conditions and the development of new projects, the approval of these projects, the start of construction, and finally the installation of the doors, hampers the recovery of Arbonia’s end markets. However, the Arbonia Doors Division is cautiously optimistic about the future since the general conditions are continually improving, the renovation business is going well, and the demand for mortgages continues to be robust.
This optimism comes from the fact that the focused Doors Division is very well positioned in its target markets despite adversities. With the completion of the investment programme of the last few years, Arbonia has assumed the cost leadership as well as the innovation leadership among European competition. With automated and efficient production sites, which increasingly allow automated order processing of over 40 individual parameters per door. These include, for example, external size, surface finish, technical requirements, pre-drilling for the construction site, as well as the dimensions of the door. This high degree of automation means that additional production volumes or a higher utilisation of production capacities following a recovery in the construction industry will lead to a further considerable margin increase, as hardly any additional personnel needs to be hired. This is also important in view of the continuing shortage of skilled workers. Together with the considerably reduced debt and a solid capital basis after the sale of the Climate Division, this margin increase allows the new Arbonia Doors Division to pursue a progressive distribution policy.
In addition, there is a comprehensive product portfolio, from high-quality, customised shower enclosures, partitions and glass doors, to large quantities of standardised wooden interior doors, up to technical doors with complex requirements and solid wood doors. With this comprehensive product portfolio, Arbonia is a market leader in many parts of Europe and can therefore offer solutions for residential construction as well as for other building construction projects such as hotels or offices. And this applies to new construction as well as renovation.
Alexander von Witzleben
Chairman of the Board of Directors
Claudius Moor
CEO
