Forbo H1 Profit Declines

Forbo reported a significant decline in first-half 2025 financial performance, with profit falling to CHF 33.4 million from CHF 48.4 million year-over-year and EBITDA decreasing 22.1% to CHF 67.6 million. Net sales were CHF 546.9 million, down 4.1% in reporting currency and 1.5% in local currencies, primarily driven by lower volumes. For the full year 2025, the company projects a significant profit decline and a slight year-on-year net sales decrease in local currencies, despite anticipating a minor profit improvement in the second half, contingent on stable geopolitical and economic conditions.

Analysis

Forbo has reported a sharp deterioration in its financial performance for the first half of 2025, signaling significant operational headwinds. First-half profit contracted substantially to 33.4 million Swiss francs from 48.4 million in the prior year, while EBITDA fell by 22.1% to 67.6 million francs. The 4.1% decline in net sales in the reporting currency was attributed entirely to lower volumes, indicating a pronounced demand-side weakness rather than pricing pressure. The company's forward-looking guidance reinforces a pessimistic outlook; despite projecting a marginal profit improvement in the second half relative to the first, Forbo anticipates a "significant decline" in full-year profit compared to the prior year. This profit warning, coupled with a forecast for a slight decline in full-year sales in local currencies, suggests that the volume-driven challenges are expected to persist, with recovery not anticipated in the near term.

Key Decisions for Investors

• Given the explicit guidance for a 'significant decline' in full-year profit and ongoing volume weakness, investors should consider adopting a bearish stance or reducing exposure.
• The primary driver of underperformance is declining volume, making industry-level demand indicators and future company reports on sales volume the most critical metrics to monitor for any potential turnaround.
• Scrutinize third-quarter results closely to validate the company's forecast for a slightly improved second half; failure to achieve this low bar could trigger further downward revisions and stock price pressure.
• The company's guidance is contingent on stable geopolitical and economic conditions, introducing a key risk that any further macro deterioration could lead to results even worse than the current negative forecast.