Villeroy & Boch : 06/30/2023Interim Report

INTERIM REPORT

1 January to 30 June 2023

INTERIM REPORT

1 January to 30 June 2023

• Consolidated revenue down 10.7 % to € 437.8 million in first half of the financial year due to downturn in construction industry in particular.
• EBIT at € 38.7 million by 6.3 % below previous year.
• Full-yearrevenue and earnings forecast for 2023 revised.

THE GROUP -		1/1/2023		1/1/2022		Change		Change
AT A GLANCE	- 30/6/2023	- 30/6/2022
		in		in		in
		€ million		€ million		€ million		in %
Revenue		437.8		490.3		-52.5		-10.7
Revenue - Germany		125.5		148.1		-22.6		-15.3
Revenue - Abroad		312.3		342.2		-29.9		-8.7
On a constant currency basis		444.3		490.3		-46.0		-9.4
EBIT		38.7		41.3		-2.6		-6.3
EBT		36.8		40.2		-3.4		-8.5
Group result		25.8		28.1		-2.3		-8.2
Return on net operating assets
(rolling)	28.0 %	31.5 % (1)	-		-3.5 PP
Investments (without leasing)		16.1		10.3		5.8		56.3
Investments "Leases"- IFRS 16		4.4		13.2		-8.8		-66.7
Employees
(FTEs as at end of period)		6,099 FTE		6,384 FTE		-285 FTE	-4.5

1. Return on net operating assets as at 31 December 2022

German Securities Code Numbers (WKN): 765 720, 765 723

ISIN: DE0007657207, DE0007657231

Villeroy & Boch AG • 66688 Mettlach • Germany

Phone: [phone]• Fax: [phone]

Internet:http://www.villeroyboch-group.com

Villeroy & Boch AG

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INTERIM REPORT ON THE FIRST HALF-YEAR OF 2023

INTERIM MANAGEMENT REPORT OF THE VILLEROY&BOCH GROUP

GENERAL CONDITIONS	FOR THE FIRST HALF-YEAR OF 2023
OF THE GROUP		exchange rates as for the previous year, revenue
The basic information on the Group as pre-	Adjusted for currency effects, i.e. using the same
sented in the 2022 Group management report	fell by 9.4 %. Negative currency effects, particu-
remains unchanged. Information on changes in	larly relating to the Swedish krona and the
the consolidated Group and on research and	Chinese yuan, outweighed the positive effects of
development costs can be found on page 14 and	the stronger US dollar compared with the
in note 15 to the consolidated financial state-	previous year.
ments.								Revenue in the region of EMEA (Europe, Middle
ECONOMIC REPORT						East, Africa) declined by 13.9 % or € 56.1 mil-
					revenue fell by 14.6 % or € 24.7 million. By
								lion. This is due in particular to the weak
								performance in Central Europe, where our
General economic conditions				contrast, revenue in Southern Europe increased
			by 9.7 % or € 2.0 million.
According to the Organisation for Economic	Overseas, we were able to increase our revenue
Co-operation and Development (OECD), the	by 4.1 % or € 3.5 million, which is mainly due
global economic recovery is progressing only	to revenue growth in the project business in
slowly. However, the situation on the energy	China.
markets and regarding supply chains has eased	Incoming orders increase in the first half-year of
considerably, with the result that the high levels
of inflation around the world are receding. The	2023,	rising by €	11.2	million	as against
ramifications of the ongoing war in Ukraine are	31 December 2022 to € 148.5 million.
continuing to have a pronounced impact on the	Orders on hand in the Bathroom&Wellness
world economy. This is especially apparent in	Division amounted to € 116.0 million (31 De-
Europe, which is feeling the effects of lower	cember 2022: € 116.9 million). The lower level
consumer spending and a downturn in residen-	of incoming orders in Europe was offset by the
tial construction in particular. In Germany, this	positive impact of resurgent project business in
situation is exacerbated by the uncertainty	China.
surrounding the country's energy policy.		Orders on hand in the Dining&Lifestyle Divi-
								sion amounted to € 32.5 million (31 December
Course of business and position of the		2022: € 20.4 million). This increase was due in
	particular to the orders that have been already
Villeroy&Boch Group
			placed for our Christmas range.
Based on the first six months of the current
finanical	year,	the	Management	Board	of	We generated EBIT of € 38.7 million in the first
Villeroy&Boch	AG	considers	the	economic
half-year of 2023, 6.3 % below the previous year
position	of the	Group to be	positive on	the
(€ 41.3 million). The downturn in earnings due
whole. Economic development is also a source of
to revenue development was only partially offset
considerable uncertainty.
			by cost savings and income from currency
We generated consolidated revenue (including	hedges.
The	non-operating	result	of	€	0.3 million
licence income) of € 437.8 million in the first
included in EBIT comprises income from the
half-year	of 2023, which is € 52.5 million	or
partial recognition of the gain on the disposal of
10.7 % below the same period of the previous
our former plant	property in	Luxembourg,
year due to economic conditions.
						Villeroy & Boch AG					3

INTERIM REPORT ON THE FIRST HALF-YEAR OF 2023

which was largely offset by expenses from a write-down on an equity investment and project expenses in almost the same amount.

The Group's rolling return on net operating assets decreased to 28.0 % as at 30 June 2023 (31 December 2022: 31.5 %). This was due to the increase in rolling net operating assets, especially inventories, and the reduction in rolling operating earnings.

COURSE OF BUSINESS AND POSITION OF THE DIVISIONS

Bathroom&Wellness

The Bathroom&Wellness Division generated revenue of € 298.9 million in the first half-year of 2023, down 14.0 % on the strong first half- year of the previous year (€ 347.7 million). Revenue declined by 12.2 % on a constant currency basis, with negative currency effects resulting from the Swedish krona and the Chinese yuan in particular.

The downturn in revenue was observed in all business aeas. It was particularly pronounced in our ceramic sanitary ware business (€ -21.5 mil- lion) due to the economic slowdown in Europe and in our wellness business (€ -14.4 million), where revenue from outdoor hot tubs declined as consumers became more reluctant to invest in light of the political restrictions imposed as a result of the energy crisis. By contrast, new products such as toilets with new flush technology met with a positive market response. Thanks to the sustained strength of our project business, we achieved substantial revenue growth in Asia with market-specific products including our ViClean shower toilets in particular.

The Bathroom&Wellness Division therefore closed the first half-year of 2023 with an operating result (EBIT) of € 33.3 million (previ- ous year: € 37.9 million. The downturn in earnings due to revenue development was only partially offset by falling procurement prices, especially for energy.

The rolling return on net operating assets declined to 28.9 % (31 December 2022:

35.6 %) as a result of the lower operating result and the increase in rolling net operating assets.

Dining&Lifestyle

The Dining&Lifestyle Division generated revenue of € 137.2 million in the first half-year of 2023, down 2.6 % or € 3.7 million on the previous year (€ 140.9 million).

Our project business with hotel and restaurant customers saw particularly strong growth of

• 2.7 million on the back of our pronounced focus on the high-end segment. Revenue with our own retail stores increased slightly year-on- year to € 41.1 million. Our e-commerce business saw a downturn in revenue (€ -8.0 million) in line with the general trend in online retail.

The Dining&Lifestyle Division recorded an operating result (EBIT) of € 5.1 million, slightly above the previous year (€ 4.9 million).

The rolling return on net operating assets decreased to 33.0 % (31 December 2022:

35.4 %) as a result of increased rolling net operating assets.

Capital structure

Our equity decreased by € 6.4 million as against the end of 2022, amounting to € 366.1 million as at 30 June 2023. The main changes were the net income for the first half of the year (€ +25.8 million) and the dividend distribution for 2022 (€ -31.1 million).

At 40.2 %, our equity ratio (including non-controlling interests) was 2.2 percentage points higher than in the previous year (31 December 2022: 38.0 %).

Investments

We invested € 16.1 million in property, plant and equipment and intangible assets in the first half-year of 2023 (previous year: € 10.3 million). The Bathroom&Wellness Division accounted for € 11.8 million, with the remaining € 4.3

Villeroy & Boch AG

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INTERIM REPORT ON THE FIRST HALF-YEAR OF 2023

million attributable to the Dining&Lifestyle Division.

Investment activity in the Bathroom&Wellness Division concentrated on pressure casting machines and a photovoltaic system in Hungary, a washbasin pressure casting system in Romania, a new vertical moulding machine in Belgium and new moulds for the wellness plant in the Nether- lands.

Investment in the Dining&Lifestyle Division mainly related to the modernisation and acquisition of new production facilities and pressing tools in Merzig and Torgau as well as the mod- ernisation of our own retail stores.

The Group had obligations to acquire property, plant and equipment and intangible assets in the amount of € 21.3 million as at the end of the reporting period (previous year: € 16.2 million).

Net liquidity

Taking into account our financial liabilities of € 84.8 million, the cash and bank balances of € 186.5 million resulted in net liquidity of

• 101.7 million as at 30 June 2023 (31 Decem- ber 2022: € 141.2 million). The decline in our net liquidity is mainly due to the distribution of the dividend for the past financial year (€ 31.1 million).
  We also have unused credit facilities of € 282.0 million at our disposal.

Balance sheet structure

Total assets amounted to € 910.9 million as at the end of the reporting period as against

• 980.2 million as at 31 December 2022, a decrease of € 69.3 million.
  The share of total assets attributable to non-cur- rent assets increased by 1.8 percentage points to 31.1 % (31 December 2022: 29.3 %).
  Current assets decreased by € 67.8 million as against 31 December 2022, mainly as a result of

the decrease in cash and cash equivalents (€ -40.1 million), trade receivables (€ -26.1 mil- lion) and current financial assets (€ -25.0

million), which was partly offset by a increase in inventories (€ 20.9 million).

On the equity and liabilities side of the statement of financial position, the biggest changes as against the end of 2022 were within current liabilities (€ -54.9 million), with mainly a reduction in other current liabilities (€ -41.1 million) and trade payables (€ -10.3 million). Non-current liabilities decreased by a total of € 8.0 mil- lion, mainly due to the reduction of other non- current liabilities (€ -4.1 million), pension provisions (€ -2.2 million) and non-current lease liabilities (€ -2.0 million).

REPORT ON RISKS AND OPPORTUNITIES The risks and opportunities described in the 2022 annual report are unchanged. As pre- viously, a regular, focused re-examinationof all risk areas is continuously performed. The continuing relaxation of the procurement markets and the resulting decrease in purchase prices, especially for energy, have further reduced the risks in this regard. By contrast, the consequences of the slowdown in the European construction industry could intensify.

There is no evidence of any individual risks that could endanger the continued existence of the Group at this time.

Outside of our operating business, we believe there is further earnings potential to be generated from the development and marketing of our property in Luxembourg that is no longer required for operating purposes in addition to the income recognised in the second quarter of 2023.

OUTLOOK FOR THE CURRENT FINANCIAL YEAR

The market environment remains characterised by an unusually high degree of uncertainty. This relates in particular to the continued development of the construction industry and the

Villeroy & Boch AG

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