connect.
Half-Year Report 2014

Strong organic sales growthProfitability further strengthened
Double-digit growth in Group profit again
Outlook for 2014 confirmed

2

Forbo Half-Year Report 2014

The Forbo Group – a leading manufacturer of floor coverings, building andconstruction adhesives, as well as power transmission and conveyor belt
solutions – reported net sales of CHF 603.0 million in the first half of 2014
(prior-year period: CHF 592.5 million). In local currencies, this represents
strong organic growth of 5.0%. Forbo again reported a double-digit increasein operating profit (EBIT), which rose by 12.2% to CHF 65.3 million (prior-­
year period, restated: CHF 58.2 million). The EBIT margin also improved
significantly to 10.8% (prior-year period, restated: 9.8%). Group profit fromcontinuing operations amounted to CHF 53.6 million (prior-year period,­restated: CHF 47.8 million), which is equivalent to a significant increaseof 12.1%.
Dear shareholders,
Forbo reports good results again in the first half of 2014, even though market conditions were mixed. Both divisions
generated strong organic sales growth in local currencies, on the back of our strong positions in the relevantmarkets, the successful and sustained expansion of our operations in growth markets, and our attractive and­innovative product portfolio. In particular, the focus on developing market segments not dependent on public
spending at Flooring Systems and the development of new product offerings at Movement Systems were­successful.
The higher sales, combined with further productivity gains along the entire value chain, produced a significant
increase in margins and a disproportionately large rise in earnings.
Due to the adjustment made at the end of 2013 to the valuation of land and buildings at amortized cost, therelevant items have been restated in the prior-year period.
Strong organic sales growth in local currencies
In the first six months of 2014, Forbo maintained the good pace of sales growth achieved in the second halfof 2013. In the first half of 2014, Forbo generated significantly higher net sales of CHF 603.0 million (prior-year
period: CHF 592.5 million), reflecting an increase of 5.0% in local currencies (+ 1.8% in the corporate currency).
Negative currency effects, particularly owing to the Japanese yen and the US dollar, caused a reduction of about
CHF 20 million in net sales reported in the corporate currency. Flooring Systems grew its sales in local currencies
by 4.2% (+ 1.6% in the corporate currency). Movement Systems reported a significant increase in sales of 7.0%
in local currencies (+ 2.1% in the corporate currency).
In both divisions, the investments in growth markets made in recent years have had a positive impact on the sales
trend.

Forbo Half-Year Report 2014

3

Profitability further strengthened
Despite the ongoing expansion of our activities in growth markets along with considerable expenditures for thedevelopment of high-value products and global market launches, we succeeded in significantly increasing profitability in both divisions. The contributing factors were higher sales and further productivity gains all along thevalue chain.
Operating profit before depreciation and amortization (EBITDA) came to CHF 83.2 million (prior-year period,­restated: CHF 76.6 million), corresponding to an increase of 8.6%. The EBITDA margin improved to 13.8% (prior-­
year period, restated: 12.9%). Operating profit (EBIT) came to CHF 65.3 million, compared with CHF 58.2 million in
the same period in 2013 (restated), corresponding to a significant increase of 12.2%. The EBIT margin improved
to 10.8% (prior-year period, restated: 9.8%).
Double-digit growth in Group profit again
Group profit from continuing operations amounted to CHF 53.6 million (prior-year period, restated: CHF 47.8
million), which is equivalent to a significant increase of 12.1%.
Share buybacks resulted in earnings accretion. Earnings per share from ­continuing operations (undiluted) therefore
rose disproportionately by 13.7% to CHF 26.36 (prior-year period, restated: CHF 23.19).
Further increase in equity ratio
Shareholders’ equity, already at a high level, was further strengthened despite the share repurchases. Equity rose
by CHF 11.4 million to CHF 798.2 million compared with the beginning of the year. The equity ratio rose to 70.4%.
High level of net cash
Net cash came to CHF 255.3 million as at June 30, 2014. In addition, Forbo held treasury shares worth CHF 215.5
million, based on the share price at the end of June 2014. The strong balance sheet coupled with the high levelof net cash enables Forbo not only to engage in the approved share buyback program but also to take advantageof external growth opportunities if they can generate value for the shareholders.
Performance of the divisions
The Forbo Flooring Systems division reported net sales of CHF 437.2 million in the first half of 2014 (prior-year
period: CHF 430.2 million), which is equivalent to a sales increase of 4.2% in local currencies (+ 1.6% in the corporate currency). The division maintained the positive sales trend of the second half of 2013 into the first six monthsof 2014. In particular, alongside expansion in the growth markets, the launch of new collections targeted to
specific customer segments not related to the public sector such as shop fitting, offices, hotels, and restaurants
have given sales a positive impetus. Compared with the prior-year period, demand in Europe and North America
has stabilized and even increased slightly. The ongoing weakness of the construction industry in the Netherlands
and the related muted demand for building and construction adhesives continue to be a challenge for the building and construction adhesives activity.
Based on the strong sales performance and various productivity improvements, operating profit (EBIT) rose significantly by 12.1% to CHF 52.7 million (prior-year period, restated: CHF 47.0 million). The EBIT margin rose to 12.1%(prior-year period, restated: 10.9%). The focus in the coming months will be on the continued expansion of ouractivities in the growth markets, intensified marketing efforts in new market segments not dependent on public
spending, and the successful marketing of the new collections we have just launched.

4

Forbo Half-Year Report 2014

The Forbo Movement Systems division reported net sales of CHF 165.8 million in the first half of 2014 (prior-­
year period: CHF 162.3 million), which is equivalent to a significant sales increase of 7.0% in local currencies(+ 2.1% in the corporate currency). All regions contributed to this gratifying growth. Demand received positive
stimuli from the double-digit growth rates in the growth markets, especially Asia/Pacific. Europe and North
America also made gratifying progress.
Operating profit (EBIT) rose by CHF 4.9% to CHF 17.0 million (prior-year period, restated: CHF 16.2 million). The EBIT
margin increased to 10.3% (prior-year period, restated: 10.0%). In the second half of the year, the division willcontinue to focus on expanding its activities in growth markets, targeted extensions of its product offering, andthe development of new, innovative applications. At the same time, its task will be to shape global processes inthe value chain even more efficient.
Outlook for 2014 confirmed
Our estimates for the current year have not changed since March. Owing to the strong growth rates in the second
half of 2013, achieving our target for the full year 2014 will still be challenging despite the good start in the firsthalf of 2014.
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 sales and once again somewhat higher Group profit fromcontinuing operations for the full 2014 business year compared with the previous year.

This E. Schneider			
Executive Chairman			

Forbo Holding Ltd
Baar, August 19, 2014

Stephan Bauer
CEOForbo Half-Year Report 20145

Consolidated balance sheet
and income statement
Condensed consolidated income statement
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, deferred income, and prepaid charges
Other current financial instruments
Cash and cash equivalents
Total assets

30.6.201431.12.2013

401.6
372.6
29.0
731.4
237.3
236.5
67.5
190.1
1,133.0

408.2
378.7
29.5
718.8
213.4
196.3
68.1
241.0
1,127.0

798.2
107.4
1.2
106.2
227.4
61.6
1.0
164.8
334.8
1,133.0

786.8
99.1
1.2
97.9
241.1
87.2
0.7
153.2
340.2
1,127.0

First half 2014

First half 2013

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, current 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

603.0– 372.8
230.2– 164.9
65.3
2.1
67.4
– 13.8
53.6
0.2
53.8

592.5
– 367.7
224.8– 166.6
58.2
0.9
59.1
– 11.347.8–
47.8

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

26.47
26.44

23.19
23.19

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

26.36
26.33

23.19
23.19

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

0.11
0.11

–
–

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

6

Forbo Half-Year Report 2014

Comprehensive income statement
and consolidated shareholders’ equity
Comprehensive income statement
First half 2014

First half 2013
(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
Fair value adjustment of cash flow hedges
Other comprehensive income, net of tax
Total comprehensive income

53.8

47.8

– 4.6

1.9

3.4
–
– 1.2
52.6

2.6
0.0
4.5
52.3

Consolidated shareholders’ equity
First half 2014

Unaudited, CHF m
January 1, 2014
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
June 30, 2014

SharecapitalTreasuryshares

0.2

– 0.1

– 0.0
0.2

– 0.1

Share
capitalTreasuryshares0.3– 0.1

Reserves

1,031.5
53.8
– 4.6
49.2
1.2
– 13.8– 28.6
1,039.5

Reserves
fromcash flow
hedgesTranslationdifferences

0.0– 244.8
3.4
3.4

0.0

– 241.4

Reserves
fromcash flow
hedgesTranslationdifferences

0.0– 236.6

Total

786.8
53.8
– 1.2
52.6
1.2
– 13.8– 28.6798.2

Consolidated shareholders’ equity
First half 2013 (restated)

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

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

– 0.1

0.0

0.2

– 0.1

Reserves

965.6
47.8
1.9
49.7
1.4
8.7
– 24.91,000.5

2.6
2.6

0.0

– 234.0

Total

729.2
47.8
4.5
52.3
1.4
8.6
– 24.9766.6

Forbo Half-Year Report 20147

Consolidated cash flow statement
Condensed consolidated cash flow statement
Unaudited, CHF m
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Decrease (–) in cash and cash equivalents
Translation differences on cash and cash equivalents
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 2014
1.7
– 4.7
– 48.5– 51.5
0.6
241.0
190.1

First half 2013
– 2.2
– 2.3
– 24.0– 28.5
0.2
251.3
223.0

8

Forbo Half-Year Report 2014

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, 2014, to June 30, 2014
(hereinafter ‘reporting period’), and was drawn up inaccordance 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, 2013.
The consolidated half-year financial statements havenot been audited by the auditors. They were approvedfor publication by the Board of Directors on August 18,
2014.
02 Group accounting principles
The accounting principles applied in the consolidated
Half-Year Report are in line with the accounting policies
set out in the 2013 Annual Report with the following
exceptions:
The following new and revised standards and interpretations were first applied by the Group as at January 1,
2014:– IAS 32 (revised) 	‘Offsetting Financial Assets
and Financial Liabilities’– IAS 36 (revised) 	‘Recoverable Amount
Disclosures for
Non-Financial Assets’– IAS 39 (revised) 	‘Novation of Derivatives
and Continuation of
Hedge Accounting’The first-time adoption of the above-mentioned IAS
standards had no impact on the Half-Year Report presented here.

As of the 2013 reporting year, land and buildings arerecognized at amortized cost and no longer at fair value at the date of revaluation, less cumulative depreciation and impairments. The retrospective application
required an adjustment to the opening balance as atJanuary 1, 2012, as if the valuation method had always
been applied. The resulting restatement according to
IAS 8 reduced the cost of goods sold by CHF 1.0 million
and administrative costs by CHF 0.3 million in the firsthalf of the previous year. Operating profit and Group
profit from continuing operations were therefore CHF
1.3 million and CHF 0.9 million higher, respectively.
Standards, interpretations or amendments that havebeen published but are not yet mandatory have notbeen early adopted.
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 atthe date of the financial statements. If the estimates andassumptions used by management to the best of its
knowledge 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, 2013.
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 of­average actual tax rates during the current businessyear.

Forbo Half-Year Report 201403 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 that they manufacture, distribute,and sell differ fundamentally in terms of production,
distribution, and marketing.
Flooring Systems develops, produces, and sells lino­
leum, vinyl floorings, entrance matting systems, carpet
tiles, needle felt floor coverings, Flotex – the washable
textile flooring – as well as the various accessory products required for installing, processing, cleaning, andcare of flooring. Movement Systems develops, produces, and sells high-quality conveyor and processing belts,
plastic modular belts, as well as timing and flat belts
made of synthetic materials. Corporate includes thecosts of the Group headquarters and certain items of

9income and expenses which are not directly attribut­
able to a specific business.
The Flooring Systems and Movement Systems divisions
are reportable segments. The identification of report­
able segments is based on internal management reporting to the Group’s Executive Chairman and its Chief
Executive Officer and hence on the financial information used to review the performance of the operational units in order to reach a decision on the allocation of
resources.
The Executive Chairman and the Chief Executive Officer
assess the performance of the segments based on theiroperating result (EBIT). The net financial result is notallocated to the divisions since it is Corporate Treasurythat in the main exercises central control over the financial result.

First half 2014

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
437.2
–
437.2
52.7
603.5
3,127

Movement
Systems
165.8
–
165.8
17.0
220.4
2,000

Corporate/
Elimination
–
–
–
– 4.4
22.5
41

Total
603.0
–
603.0
65.3
846.4
5,168

Flooring
Systems
430.2
–
430.2
47.0
598.9
3,088

Movement
Systems
162.3
–
162.3
16.2
222.3
1,950

Corporate/
Elimination
–
–
–
– 5.0
30.8
41

Total
592.5
–
592.5
58.2
852.0
5,079

First half 2013 (restated)

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

10

Forbo Half-Year Report 2014

Reconciliation of segment results to the income statement and balance sheet:First half 2014
65.3
2.1
67.4

58.2
0.9
59.1

30.6.201431.12.2013(restated)

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

04 Balance sheet
Total assets as at June 30, 2014, increased slightly by
CHF 6.0 million versus the end of the previous year to
CHF 1,133.0 million.
Property, plant, and equipment declined by CHF 7.5
million to CHF 224.8 million because investments in
fixed assets amounting to CHF 9.6 million in the first halfof 2014 were lower than depreciation. The investments
were primarily related to maintenance and efficiency
improvement projects.
The increase in inventories and trade and other receivables, deferred income, and prepaid charges totaling
CHF 64.1 million was mainly timing-related.
Liquidity holdings came to CHF 190.1 million as at June30, 2014.

First half 2013
(restated)

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

846.4
286.6
1,133.0

Current financial instruments, compared with the balance-sheet date as at December 31, 2013, remain the
only essential financial instruments valued at recurringfair value. These are listed securities that are allocatedto the first fair-value hierarchy level.
Compared with December 31, 2013, shareholders’­equity increased by CHF 11.4 million to CHF 798.2 million. The increase in shareholders’ equity by the amountof Group profit of CHF 53.8 million was offset in part by
the tax-free dividend of CHF 28.6 million and changes
in the item ‘Treasury shares’, amounting to CHF 13.8
million. The equity ratio rose to 70.4% as at June 30,
2014.

788.4
338.6
1,127.0

Forbo Half-Year Report 201411

05 Income statement

06 Cash flow statement

Operating profit (EBIT) in the reporting period came to
CHF 65.3 million, which was CHF 7.1 million higher thanin the prior-year period.

Free cash flow in the reporting period was barely minus
at CHF – 3.0 million. Cash flow from operating activities
was only slightly positive owing to the increase in net
operating working capital.

In the reporting period, the financial result amounted
to CHF 2.1 million, which was CHF 1.2 million better
than the previous year. The improvement in financial
income in the year under review was due to capitalgains and income from securities.
Income tax amounted to CHF 13.8 million, corresponding to a tax rate of 20.5%. The tax rate in the prior-year
period was 19.1%.
The resulting Group profit from continuing operations
came to CHF 53.6 million, which is CHF 5.8 million or
12.1% higher than the restated prior-year result.
Group profit from discontinued operations amounted
to CHF 0.2 million and was related to the sale of theindustrial adhesives activity to H.B. Fuller Company
completed in the 2012 business year.
Undiluted earnings per share on the basis of the av­
erage number of outstanding shares amounted to
CHF 26.47 in the reporting period. Diluted earnings per
share (adjusted for the dilution effect of outstanding
options) came to CHF 26.44.

Cash flow from investing activities contains the cash
outflow of CHF 9.6 million for investments in property,
plant, and equipment and inflows of CHF 4.9 million
from divestments of property, plant, and equipment
and financial instruments.
Cash flow from financing activities reflects primarily therepayment of capital contribution reserves of CHF 28.6
million and a net cash outflow totaling CHF 20.1 million
from treasury shares.

12

Forbo Half-Year Report 201407 Main exchange rates applied
The following exchange rates against the Swiss franc
have been applied for the most important currencies
concerned:
Income statement(average exchange rates for 6 months)
Exchange rates
Euro zone
USA
Great Britain
Japan

EUR
USD
GBP
JPY

1
1
1
100

2014
1.22140.89091.48650.8692

Balance sheet(exchange rates on balance-sheet date)2013
1.2296
0.93651.44590.982030.6.2014
1.21630.8936
1.52150.878508 Contingent liabilities

09 Events after the balance sheet date

The Group’s contingent liabilities have not changed
significantly compared with December 31, 2013.
As announced in a media release on July 3, 2013, theactivity of Forbo Flooring Systems in France is being
investigated by the French competition authorities. The
investigation affects the flooring market in France andwas instituted on suspicion of anti-competitive prac­
tices by leading manufacturers. As the investigation is
ongoing, the Group is unable to provide any further
information at present or estimate the possible repercussions.

At the Ordinary General Meeting on April 25, 2014, theshareholders of Forbo Holding Ltd voted to reduce theshare capital of CHF 225,000 to CHF 215,000 by cancellation of the 100,000 registered shares repurchased
through the share buyback program approved at theExtraordinary General Meeting on November 5, 2012.
The capital reduction was completed with the entry in
the Commercial Register of the Canton of Zug on July4, 2014, and was published in the SHAB on July 9, 2014.
The stock exchange adjustment took place on the sameday.

CalendarMedia and financial analysts’ conference for the 2014 business year:
Ordinary General Meeting:

Tuesday, March 17, 2015
Friday, April 24, 2015

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

31.12.2013
1.2256
0.89151.46980.8478