connect.
Half-Year Report 2013Market conditions remain challenging
EBIT margin maintained at healthy level
Group profit rises by approximately 10%
Earnings guidance confirmed

2

Forbo Half-Year Report 2013

The Forbo Group – a leading manufacturer of floor coverings, building andconstruction adhesives, as well as power transmission and conveyor belt­solutions – reported net sales of CHF 592.5 million in the first half of 2013
(prior year period: CHF 603.1 million), representing a slight decline of 1.8%.
Operating profit (EBIT) decreased by CHF 2.4% to CHF 56.9 million (prioryear period: CHF 58.3 million). The EBIT margin came to 9.6% (prior year
period: 9.7%) and thus stayed at more or less the same healthy level. Group
profit amounted to CHF 46.9 million (prior year period, net income from operations from continuing operations: CHF 42.7 million), which is equivalent
to an increase of about 10%.
Dear shareholders,
As expected, market conditions remained very challenging in the first half of 2013. The economic environment,
especially cost-cutting measures in the public sector and softness in many of Forbo’s important markets, ­demanded
great flexibility. As Forbo is to a large extent exposed to European markets and is significantly dependent, ­directly
or indirectly, on public spending, cost-cutting in the public sector as anticipated impacted on the sales trend at
Flooring Systems. Forbo, however, partly was able to offset this impact by pursuing its strategy adjustment that
focuses on new market segments outside the public sector also, by expanding existing sales channels, and by
opening up new markets.
By systematically and continuously adapting structures to market conditions and taking further measures to­increase efficiency, we succeeded in maintaining the EBIT margin at a healthy level despite a challenging macroeconomic environment. Group profit rose by about 10%, an improvement that was due in particular to higher
financial income and to lower interest payments owing to the reduction in interest-bearing debt.
The first-time adoption of the revised IAS 19 accounting standard resulted in changes in the accounting of employee benefit obligations. As a result, prior year period financial statements were restated and are therefore not
the same as shown in the 2012 Half-Year Report. Operating profit for the first half of the year thus improved by
CHF 3.1 million in the previous year and by CHF 0.5 million in the year under review.
Moderate sales trend, as anticipated
In the first half of 2013 Forbo generated net sales of CHF 592.5 million (prior year period: CHF 603.1 million), whichmarked a slight decrease of 1.8% (– 2.6% in local currencies). Net sales of Flooring Systems continued to be­impacted by public-sector cost-cutting measures and lower construction activity in many of Forbo’s important
markets. As anticipated, net sales declined by 2.5% (– 4.1% in local currencies). Movement Systems increased sales
by 0.4% (+ 1.3% in local currencies) amid a very mixed market environment.
EBIT margin kept at a healthy level
Despite the slight decline in sales and the costs incurred for serving new markets and market segments, Forbo
kept its margins largely at a healthy level.

Forbo Half-Year Report 20133

Operating profit before depreciations and amortizations (EBITDA) came to CHF 76.6 million (prior year period:
CHF 82.0 million), corresponding to a decline of 6.6%. The EBITDA margin stood at 12.9% (prior year period: 13.6%).
Operating profit (EBIT) came to CHF 56.9 million, compared with CHF 58.3 million in the same period in 2012,
corresponding to a decline of 2.4%. The EBIT margin stood at 9.6% (prior year period: 9.7%).
The two divisions showed differing trends. Movement Systems increased earnings, whereas Flooring Systems
reported a lower operating profit owing to the decrease in sales.
Significant increase in Group profit and earnings per share
Group profit came to CHF 46.9 million (comparable reported net income from operations in the prior year period:
CHF 42.7 million). This corresponds to a significant increase of 9.8%, which was due on the one hand to higher
financial income and on the other to lower interest payments as a result of the reduction of interest-bearing debt.
Earnings per share rose by 21.7% from CHF 18.70 in the prior year period to CHF 22.75.
Further improved equity ratio
Shareholders’ equity increased by CHF 37.5 million to CHF 854.9 million compared to the start of the year, while
the equity ratio rose to 62.9%.
High level of liquidity
Net cash came to CHF 226.2 million as at June 30, 2013. In addition, Forbo holds shares worth CHF 104.9 million,
based on the share price at the end of June 2013. The strong balance sheet coupled with the high level of liquidity enables Forbo not only to engage in the approved share buyback program but also to take advantage of­external growth opportunities if they can generate value for shareholders.
Performance of the divisions
The Forbo Flooring Systems division reported net sales of CHF 430.2 million in the first half of 2013 (prior year
period: CHF 441.4 million), which is equivalent to a decrease of 2.5% (– 4.1% in local currencies). Since Flooring
Systems’ primary customer segments are schools, hospitals, retirement homes, and public buildings, the division
is highly dependent on public-sector spending. The significant cuts in government spending continue to impact
on investments in new construction and renovations. In particular, the healthcare and education customer segments that are among Forbo’s most important markets are suffering from this trend. The downturn is affecting
most countries with the exception of the growth markets. Forbo has adjusted to these changed conditions bystrengthening its distribution structures and entering new customer segments such as shop fitting, offices, hotels
and restaurants. These measures have partly offset the strong decline in sales in the public sector.
Operating profit (EBIT) decreased by CHF 8.7% to CHF 46.0 million (prior year period: CHF 50.4 million). The EBIT
margin declined slightly from 11.4% in the prior year period to 10.7%. In the coming months, the focus will be
on further efforts to expand in growth markets as well as on targeted measures in marketing and sales aimed
at developing new customer segments and new markets and thereby reducing the division’s dependence on
public-sector spending.

4

Forbo Half-Year Report 2013

The Forbo Movement Systems division reported net sales of CHF 162.3 million in the first half of 2013 (prioryear period: CHF 161.7 million), equivalent to an increase of 0.4% (+ 1.3% in local currencies). Demand in North
America showed a stable uptrend. The European markets were very mixed, but on the whole sales in Europe wereclose to the previous year’s level. Asia/Pacific reported a slight increase in demand overall.
Operating profit (EBIT) rose by 8.2% to CHF 15.9 million, compared with CHF 14.7 million in the first half of 2012.
The EBIT margin went up from 9.1% in the prior year period to 9.8%. In the second half of the year the division
will continue to focus on expanding its activities in growth markets and extending its product portfolio.
Earnings guidance for 2013 confirmed
Our assessment of the current year has not changed. On the whole, we anticipate largely unchanged economic
conditions for the remaining months of 2013. We will continue to face challenging circumstances, and trends will
be very different in the various regions, markets, and customer segments. We are well positioned with our two
divisions. We will continue to implement our strategy consistently and concentrate on our operational per­formance and on providing convincing products and services to our customers.
Barring any significant change in the current economic conditions, especially with regard to exchange rates andraw material prices, we expect a slight increase in net income from operations in the 2013 business year comparedwith the previous year.

Dr. Albert Gnägi
Chairman of the Board of Directors

Forbo Holding Ltd
Baar, August 20, 2013This E. Schneider
Delegate of the Board of Directors and CEO

Forbo Half-Year Report 20135

Consolidated balance sheet
and income statement
Condensed consolidated balance sheet
30.6.2013
Unaudited, CHF m
AssetsNon-current assets
Property, plant, and equipment and intangible assets
Deferred tax assets, investments in associates and other non-current assets
Current assets
Inventories
Trade and other receivables, prepaid charges, and deferred income
Other current financial instruments
Cash and cash equivalents
Total assets

31.12.2012
Restated

524.7
498.1
26.6
835.5
232.2
242.9
137.4
223.0
1,360.2

530.9
504.2
26.7
803.0
218.6
191.0
142.1
251.3
1,333.9

854.9
132.9
1.5
131.4
372.4
72.0
132.7
167.7
505.3
1,360.2

817.4
137.4
2.6
134.8
379.1
84.7
132.5
161.9
516.5
1,333.9First half 2013

First half 2012

Shareholders’ equity and liabilities
Shareholders’ equity
Non-current liabilities
Non-current financial debt
Employee benefit obligations, non-current provisions, and deferred tax liabilities
Current liabilities
Trade payables
Current financial debt
Current provisions, accrued expenses, tax and other liabilities
Total liabilities
Total shareholders’ equity and liabilities

Condensed consolidated income statement

Restated

Unaudited, CHF mContinuing operations
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating profit
Financial result
Group profit before taxes
Income taxes
Group profit from continuing operations
Group profit from discontinued operations after taxes
Group profit

592.5– 368.7
223.8– 166.9
56.9
0.9
57.8
– 10.9
46.9
–
46.9

603.1
– 378.5
224.6– 166.3
58.3
– 6.0
52.3
– 9.6
42.7
73.1
115.8

Earnings per share total
Basic earnings per share in CHF
Diluted earnings per share in CHF

22.75
22.74

50.73
50.70

Earnings per share from continuing operations
Basic earnings per share in CHF
Diluted earnings per share in CHF

22.75
22.74

18.70
18.69

–
–

32.03
32.01

Earnings per share from discontinued operations
Basic earnings per share in CHF
Diluted earnings per share in CHF

The accompanying notes are an integral part of the Half-Year Report.

6

Forbo Half-Year Report 2013

Comprehensive income statement
and consolidated shareholders’ equity
Comprehensive income statement
First half 2013

First half 2012
Restated

Unaudited, CHF m
Group profit
Items that will not be reclassified to the income statement
Remeasurements of defined benefit plans, net of taxes
Items that may be subsequently reclassified to the income statement
Translation differences
Translation differences reclassified to the income statement
Fair value adjustments of cash flow hedges
Other comprehensive income, net of tax
Total comprehensive income

46.9
1.9
1.9
3.6
3.6
–
0.0
5.5
52.4

115.8
– 15.0– 15.0
41.5
– 0.7
41.2
1.0
26.5
142.3

Consolidated shareholders’ equity
First half 2013

Unaudited, CHF m
January 1, 2013
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Change in scope of consolidation
Share-based payments
Treasury shares
Dividend payment
June 30, 2013

SharecapitalTreasuryshares

0.3

– 0.1

– 0.1

0.0

0.2

– 0.1

Reserves

958.6
46.9
1.9
48.8
–
8.3
1.8
– 24.9992.6

Revaluation
reserve

Reserves
fromcash flow
hedgesTranslationdifferences

111.0

0.0

– 252.4
3.6
3.6
–

–

111.0

0.0

– 248.8

Revaluation
reserve

Reserves
fromcash flow
hedgesTranslationdifferences

128.0

– 1.7

– 289.4

1.0
1.0

40.5
40.5
2.7

Total

817.4
46.9
5.5
52.4
8.3
1.7
– 24.9854.9

Consolidated shareholders’ equity
First half 2012
Restated

Unaudited, CHF m
January 1, 2012
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Change in scope of consolidation
Share-based payments
Treasury shares
Dividend payment
June 30, 2012

Share
capitalTreasuryshares

0.3

– 0.1

0.3

The accompanying notes are an integral part of the Half-Year Report.

– 0.1

Reserves

978.2
115.8
– 15.0
100.8
14.3
2.1
– 43.7– 27.5
1,024.2– 17.0

111.0

– 0.7

– 246.2

Total

815.3
115.8
26.5
142.3
2.1
– 43.7– 27.5888.5

Forbo Half-Year Report 20137

Consolidated cash flow statement
Condensed consolidated cash flow statement
First half 2013
Unaudited, CHF m
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Decrease (–)/Increase in cash and cash equivalents
Translation differences on cash and cash equivalents
Total cash and cash equivalents at beginning of year
Total cash and cash equivalents as at June 30

The accompanying notes are an integral part of the Half-Year Report.

First half 2012
Restated

– 2.2
– 2.3
– 24.0– 28.5
0.2
251.3
223.0

4.2
240.5
– 83.4
161.3
0.3
205.3
366.9

8

Forbo Half-Year Report 2013

Notes to the condensed consolidated
half-year financial statements (unaudited)
01 General information
This condensed consolidated interim report covers the
six-month period from January 1, 2013 to June 30, 2013
(hereinafter ‘reporting period‘) and was drawn up in accordance with the International Accounting Standard
34 (IAS 34) ‘Interim Financial Reporting’. The consol­i­
dated half-year financial statements do not include
all information reported in the consolidated full-year
financial statements and should therefore be read in
conjunction with the consolidated financial statements
as at December 31, 2012.
The consolidated half-year financial statements havenot been audited by the auditors. They were approvedfor publication by the Board of Directors on August 19,
2013.
02 Group accounting principles
The accounting policies applied in the consolidated
half-year report are in line with the accounting policies
set out in the 2012 Annual Report with the following
exceptions:
The following new and revised standards and interpretations were first applied by the Group as at January 1,
2013:– IFRS 10 (new)	‘Consolidated financial
statements’– IFRS 11 (new)‘Joint arrangements’– IFRS 12 (new) 	‘Disclosure of interests
in other entities’– IFRS 13 (new)‘Fair-value measurement’– IFRS 7 (revised)	‘Offsetting financial assets
and financial liabilities’– IAS 1 (revised) 	‘Presentation of financial
statements’– IAS 19 (revised)‘Employee benefits’
The first-time adoption of the standards IFRS 7 (revised),10, 11, and 12 had no impact on the Half-Year Reportpresented here.
IFRS 13 primarily governs how the fair value of certain
assets and liabilities is measured and introduces a number of new disclosures that are presented in ‘05 Balance
sheet’.

The first-time adoption of IAS 19 (revised) led to changes in the accounting of employee benefit obligations.
The expected return on plan assets and interest expense previously recognized in the service cost were
replaced by recognition of net interest expense/income
calculated on the net defined benefit obligation. Consequently, operating profit in the reporting period is
CHF 0.5 million higher than it would have been under
the previous accounting method. Group profit is
CHF 0.4 million higher and other comprehensive income CHF 0.4 million lower. For the prior year period,
the restatement resulted in operating profit that was
CHF 3.1 million higher, Group profit that was CHF 2.4
million higher and other comprehensive income thatwas CHF 2.4 million lower. Since Forbo to date has recognized actuarial gains and losses in other comprehensive income in the year of occurrence, the first-time
adoption of IAS 19 (revised) had no effect on the­defined benefit obligation reported in the previous
year.
The amendments to IAS 1 (revised) require companies
to group together items of other comprehensive income according to whether they may be subsequently
reclassified to the income statement if certain prerequi­sites are met or whether they will not be reclassified,
together with the relevant income tax effects. Thechanges are to be applied retroactively, i. e. the presentation of other comprehensive income in the prior year
period was restated accordingly.
The Forbo Group has not early adopted any publishedbut not yet mandatory standards, interpretations oramendments.
The preparation of the consolidated half-year financial
statements requires management to use estimates andassumptions that may affect reported revenues, expenses, assets, liabilities, and contingent liabilities at thedate of the financial statements. If the estimates andassumptions used by management to the best of theirknowledge at the date of the financial statements happen to differ from subsequent actual facts, the original
estimates and assumptions will be adjusted in the reporting period in which the facts have changed. The
consolidated half-year financial statements do not contain any significant new estimates and assumptions
used by management compared with the consolidated
financial statements as at December 31, 2012.
Earnings and expenses which are not incurred on astraight-line basis during the business year are only deferred if such deferral was justified at year-end. Income
tax expenditure is estimated on the basis of average
actual tax rates during the current business year.

Forbo Half-Year Report 201303 Acquisition of business operations
The Group acquired the assets of CV-Wisma Belt-Indodomiciled in Bandung, Indonesia, effective March 22,
2013. CV-Wisma Belt-Indo was a distributor selling conveyor belts and flat belts in the Indonesian market. The
acquired assets of CV-Wisma Belt-Indo were brought
into the newly established PT Forbo Siegling Indonesia
in Bandung which is reported within the Movement
Systems division.
The acquisition price of CHF 0.3 million was paid in cash.
The identifiable assets and liabilities valued at fair value
at the date of acquisition are divided equally between
tangible fixed assets and inventories. No goodwill
was generated. The purchase price and the values of
the acquired assets are definitive. The transaction costs
were recognized in the income statement. The takeover
had only a negligible effect on Group profit.
04 Segment information
Forbo is a global producer of Flooring Systems andMovement Systems. The divisions correspond to theinternal management structure and are run separately
because the products they manufacture, distribute, andsell differ fundamentally in terms of production, distribution, and marketing.
Flooring Systems develops, produces, and sells linoleum, vinyl floorings, entrance matting systems, carpet

9tiles, and needle felt floor coverings as well as the various accessory products required for installing, processing, cleaning, and care of flooring. As a result of the saleof the industrial adhesives activity, including synthetic
polymers, and the integration of the building and construction adhesives activity into the Flooring Systems
division, the former Bonding Systems division no longer
existed in the second half of 2012. The prior year figuresof the present Half-Year Report were therefore restatedin accordance with the current internal management
structure. Forbo’s Movement Systems division develops,
produces, and sells high-quality conveyor and processing belts, power transmission belts, synthetic modular
belts as well as timing and flat belts made of synthetic
materials. Corporate includes the costs of the Group
headquarters and certain items of income and ex­penses which are not directly attributable to a specificbusiness.
The Flooring Systems and Movement Systems divisions
are reportable segments. The identification of the reportable segments is based on internal management
reporting to the Group’s Chief Executive Officer andhence on the financial information used to review theperformance of the operational units in order to reacha decision on the allocation of resources. The Chief Exe­cutive Officer assesses the performance of the reportable segments based on their operating result (EBIT).
The net financial result is not allocated to the divisions
since it is Corporate Treasury that in the main exercises
central control over the financial result.

First half 2013

Unaudited, CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (June 30)

Flooring
Systems
430.2
–
430.2
46.0
704.2
3,088

Movement
Systems
162.3
–
162.3
15.9
238.2
1,950

Corporate/
Elimination
–
–
–
– 5.0
30.8
41

Total
592.5
–
592.5
56.9
973.2
5,079

Flooring
Systems
441.8
– 0.4
441.4
50.4
48.6

Movement
Systems
161.7
–
161.7
14.7
14.7

Corporate/
Elimination
– 0.4
0.4
–
– 6.8
– 8.1

Total
603.1
–
603.1
58.3
55.2

703.5
3,056

248.6
1,891

20.2
43

972.3
4,990

First half 2012
Restated

Unaudited, CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating profit
Before application of IAS 19 (revised)
Operating assets
Number of employees (June 30)

10

Forbo Half-Year Report 2013

Reconciliation of segment results to the income statement and balance sheet:First half 2013

Unaudited, CHF m
Operating assets
Non-operating assets
Total assets

05 Balance sheet
Total assets as at June 30, 2013 increased slightly by
CHF 26.3 million versus the end of the previous year to
CHF 1,360.2 million.
Property, plant, and equipment declined by CHF 3.3 million to CHF 351.7 million. In the period under review,
capital expenditures amounted to CHF 12.1 million andwere primarily related to maintenance and efficiency
improvement projects.
The increase in inventories and in trade receivables­totaling CHF 53.9 million was mainly timing related.
Liquidity holdings came to CHF 223.0 million as at June30, 2013.

First half 2012
Restated

Unaudited, CHF m
Segment result (EBIT)
Financial result
Group profit before taxes

56.9
0.9
57.8

58.3
– 6.0
52.3

30.6.2013
973.2
387.0
1,360.2

31.12.2012
913.7
420.2
1,333.9

Compared with December 31, 2012, shareholders’equity increased by CHF 37.5 million to CHF 854.9 million, despite the payment of withholding tax-free distributions to Forbo Holding Ltd shareholders totaling
CHF 24.9 million. The equity ratio increased further inthe first half of 2013 and stood at 62.9% as at June 30,
2013.
With the commercial registry entry of January 17, 2013,
250,000 registered shares each with a nominal value of
CHF 0.1 were retired. The share capital as at June 30,
2013 was CHF 225,000.
On the balance-sheet date, the Group held the financial
instruments listed on page 11. There were no significant
financial instruments in the fair-value hierarchy level 3
nor was there any regrouping between the levels of thefair-value hierarchy. There were also no non-recurringfair-value measurements of financial instruments.

Forbo Half-Year Report 201311

Fair-value measurement of financial instruments
using the method of the fair-value hierarchy
30.6.2013

Level 1

Level 2­

Listed market prices

Other significant
observable inputs

210.1
223.0

–
–

–
–

137.3
0.1
570.5

137.3
137.3

0.1
0.1

133.8
97.4

–
–

–
–

0.0
231.2

–
0.0

0.0
0.0

Unaudited, CHF m
AssetsFinancial instruments valued at amortized cost
Trade receivables and other receivables
Cash and cash equivalents
Financial instruments valued at recurring fair value
Other current financial instruments
Derivative financial instruments
Total

Shareholders’ equity and liabilities
Financial instruments valued at amortized cost
Interest-bearing debt
Trade payables and other payables
Financial instruments valued at recurring fair value
Derivative financial instruments
Total

06 Income statement

07 Cash flow statement

Operating profit (EBIT) in the reporting period came to
CHF 56.9 million, which was CHF 1.4 million lower thanin the restated prior year period.

Free cash flow in the reporting period was minus
CHF 4.5 million. Cash flow from operating activities was
slightly negative owing to the increase in net working
capital during the reporting period.

The financial result stood at CHF 0.9 million in the reporting period; this was CHF 6.9 million better than in
the first half of 2012. The significant improvement inincome was primarily attributable to capital gains on
securities and to a lesser extent to a reduction in interest
expense.
Income tax amounted to CHF 10.9 million, corresponding to a tax rate of 18.8%. The restated tax expense in
the comparable period was 18.4%.
The resulting Group profit came to CHF 46.9 million,
which was CHF 4.2 million, or almost 10% above therestated Group profit from continuing operations in thefirst half of 2012.
Basic earnings per share in the period under review
amounted to CHF 22.75. Diluted earnings per share(adjusted for the dilution effect of outstanding options)came to CHF 22.74.

Cash flow from investing activities was not impacted bydivestments in contrast to the first half of 2012. This item
contains mainly capital expenditures of CHF 12.1 million
and inflows from the sale of securities amounting to
CHF 9.8 million.
Cash flow from financing activities primarily reflects the
distribution from capital contribution reserves amounting to CHF 24.9 million. In the reporting period, no cash
or cash equivalents were used to buy back the Group’s
own financing instruments.

12

Forbo Half-Year Report 201308 Main exchange rates applied
The following exchange rates against the CHF havebeen applied for the most important currencies concerned:
Income statement
Average exchange rate, 6 months
Currency
EUR 1
USD 1
GBP 1
JPY 100

2013
1.23
0.94
1.45
0.98

2012
1.20
0.93
1.46
1.17

Balance sheet
Exchange rate on balance-sheet date
30.6.2013
1.23
0.94
1.44
0.96

09 Events after the balance sheet date
As announced in the media release on July 3, 2013,
the Forbo Flooring Systems’ operation in France is concerned by investigations of the French competition
authority. The investigation concerns the market for
floor coverings in France and has been initiated on suspicions that leading manufacturers may have engaged
in anticompetitive practices. At this stage of the pending investigation, Forbo is neither able to disclose any
further information thereon, nor to assess the impli­
cations which may derive therefrom.

CalendarMedia and financial analysts’ conference for the 2013 business year:
Ordinary General Meeting:

Tuesday, March 18, 2014
Friday, April 25, 2014

Our Half-Year Report is published in German and in English translation.

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo International SA
Lindenstrasse 8
CH-6340 Baar

Phone + 41 58 787 25 25
Fax + 41 58 787 20 25

info@forbo.com
www.forbo.com

31.12.2012
1.21
0.91
1.47
1.06