Major North East employer Egger has seen profits fall after battling cost increases triggered by higher inflation.
The Hexham wood products manufacturer – part of a wider group of companies spread across Europe with its head office in Austria – produces wood panels for bedrooms, kitchens and offices. It also makes panelling and flooring which is used by a number of sectors include the hotel, retail and housebuilding industries.
The company weathered tough times during the pandemic and then bounced back in the period after, as demand rocketed within all its markets. But last year saw the business come up against more challenging trading as rising inflation and increased costs ate into its profits and sales.
Latest accounts for Egger Ƶ, covering the year ended April 2024, show turnover dropped only slightly, 0.6% from £432.6m to £430.1m, while operating profit fell from £52.1m to £41.8m.
Net assets decreased from £167.5m to £116.1m as profit reserves from the current financial year of £28.6m were transferred to the parent company Egger Holzwerksroffe, as well as a dividend of £80m. Employee numbers jumped from 760 to 817 and after adjusting for part-time and apprenticeship roles, accounts show the company had 730 full time equivalent employees, up from 716.
The company said it delivered strong financial results despite seeing the falls.
A report within the accounts said: “Despite the current uncertain economic outlook Egger Ƶ is well placed to sustain its financial performance based on its mix of customers, investment in employees, ongoing reinvestment in production technologies and product range and high levels of service in the long term.”
Following the publication of the accounts, Andrew Tait, commercial director for Western division, said: “Egger Ƶ is a major supplier into the kitchen, bedroom and bathroom sectors, as well as a key supplier into the construction industry. Market demand was reduced through 2023/4, due to the more challenging economic environment in the Ƶ and Ireland.
“This did have some impact on our performance; however we are pleased with our results in this context. We also benefited from the very successful launch of a new product collection, strong customer loyalty and successful actions to develop new and expanded trading relationships across all markets.
“We continue to work in close partnership with our customers to support them and for our mutual success, and we remain optimistic for the future, despite the current economic conditions.”
Bernd Steinlechner, financial director for Western division, said: “In the midst of a challenging environment, we are pleased to maintain and develop our market position, although significant cost increases, following a period of high inflation, had an impact on our profitability. Our focus remains on the future, and we are glad to have initiated significant investment projects, and despite market fragility, our solid financial standing and long-term strategy have allowed us to progress and expand.
“While we approach our turnover and earnings expectations cautiously, we are well-prepared for this challenging market environment. Our solid financial foundation, sustainable strategy, successful partnerships, and exceptional employees, numbering almost 850, are the cornerstones of our long-term success. We extend our gratitude to our dedicated team whose commitment truly sets us apart.”
During the year the company also made charitable donations totalling £42,000.
