German woodworking machinery giant Homag announced that it will negatively revise its earnings forecast for 2019 as a result of a market downturn with the furniture industry, and a decline in sales in China.
Homag Group AG adjusted its earnings forecast for the 2019 financial year. From today's perspective, earnings after taxes and before profit transfer are expected to be between EUR 42 and 46 million.
Previously, Homag Group AG had forecast earnings after taxes and before profit transfer for 2019 above the previous year's figure (EUR 54 million).
Due to its function as a holding company, Homag Group AG's earnings depend on the earnings of its subsidiaries. These are determined by income from investments and profit and loss transfer agreements.
The main reason for the reassessment is that the subsidiaries of Homag Group AG are recording a market downturn in business with the furniture industry. Their results are burdened by declining margins due to the declining market volume. In addition, there will be a significant decline in sales in the higher-margin Chinese business and a disproportionate increase in material and personnel costs compared with sales. In the second half of the year, sales at HOMAG Group AG should be lower than previously expected.
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