Due to the cost of living crisis, the group behind kitchen manufacturer Magnet suffered losses of almost £70 million
The group behind kitchen maker Magnet lost almost £70 million after being hit by “unprecedented” inflation, “increased” energy prices and “extremely subdued markets” as a result of the cost of living crisis.
Delayed accounts from Nobia Holdings UK, a subsidiary of Sweden’s Nobia AB, show the Darlington-based company suffered a pre-tax loss of £68.9 million in 2022, compared with a loss of £9.9 million in 2021.
Accounts recently filed with Companies House also show that the company’s turnover increased from £417.3 million to £424.3 million over the same period.
The company said it had appointed a new management team in the second half of 2022 to lead plans for “significant cost reductions, write-downs of non-performing assets and exit from unprofitable businesses.”
Nobia Holdings UK’s results for 2023 must be filed with Companies House by the end of September this year.
Nobia AB, listed on Nasdaq Stockholm, took control of Magnet in a £123 million deal in 2001.
“A challenging market environment”
Nobia UK experienced “numerous challenges” in the 2022 financial year, according to a statement from CEO Kristoffer Ljungfelt.
In the statement, Ljungfelt said: “After a challenging period during the COVID pandemic, the company was faced with the impact of unprecedented commodity price inflation, increased energy prices and a significantly subdued market situation due to the cost of living crisis.
“In response to these challenges and the associated returns, a new management team was introduced in the second half of 2022 with a clear objective of restoring profitability by refocusing on the core business and capitalising on being the leading provider of mass premium kitchens in the UK.”
The CEO also said they had focused their attention and efforts on the fundamental aspects of their business while navigating a “difficult market environment.”
In order for the company to grow profitably again, Nobia AB had to carry out a “comprehensive restructuring” in the second half of the year, Ljungfelt explained.
This comprehensive restructuring consisted of “cost reductions, write-offs of non-performing assets and the exit from unprofitable projects”.
The company added that it had made a number of layoffs “due to ongoing difficult market conditions” and announced the closure of two factories in the first half of 2023.
“Ready for profitable growth”
However, Ljungfelt remains optimistic. He said: “After the restructuring, the company is in a position to grow profitably, mainly by improving the mass premium offering and striving for higher average selling prices.”
“This strategy includes exiting the lower end of the market, increasing sales in the premium mass segment through the Magnet brand and strengthening partnerships with key customers and suppliers through Gower,” the CEO added.
In addition, Nobia AB will continue to “take measures to strengthen the group’s financial position” and focus its resources on its “core markets in the Nordic countries and the UK”.
According to Ljungfelt, the company remains confident in the effectiveness of its strategic initiatives, which include a targeted return to the “competencies of Nobia AB and a targeted expansion into the mass premium market”.
He said: “We expect this approach to deliver robust earnings, drive profitable growth and ensure consistent cash flow performance from next year and beyond.”
