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V-ZUG increases profitability despite a difficult market situation

V-ZUG recently shared its annual results of 2023 and outlook for the year 2024. In 2023, the V-ZUG Group generated net sales of CHF 585.4 million, 8.0 % lower than the previous year. During the pandemic-induced boom in 2021–2022, sales volumes were extraordinarily high. In addition to this base effect, inflation, rising interest rates and a corresponding decline in demand had a negative impact on sales volumes in the reporting year. This development was exacerbated by the reduction of inventory levels at V‑ZUG partners. To address the market-related decline in volume, additional measures to increase sales and cost-saving initiatives were implemented that had a positive effect on the operating result and cash flow.

Photo: V-ZUG.

Declining sales volumes, increased gross profit and targeted cost management
The situation in the market for household appliances in 2023 was challenging. The sluggish development of new construction projects and the reluctance to invest in renovations had an impact on V-ZUG's sales volumes. Sales volumes came under greater pressure in the second half of the year in particular. Operating income (EBIT), on the other hand, was substantially higher than in the first half year. This was due to no more purchases on spot-buy markets in the second half of 2023 and consistent sales pricing, which lead to a higher gross margin. In addition, the adjustment to the number of employees in production, process optimisations and further cost-saving initiatives bolstered the operating income.

Focus on market development and operational improvements
The net sales of V-ZUG as market leader in the Swiss domestic market fell by 7.3 %. In International Markets, net sales decreased by 10.9 %. Operating and organisational improvements went hand in hand with further intensified market development. Structures and processes were optimised in the Swiss market organisation and in Marketing, Engineering and Operations in order to respond more quickly to market changes. Temporary employees were reduced and recruitment for vacancies took place selectively. In addition, an initiative called "Simplify V-ZUG" was launched. The initiative involves streamlining processes and routines and further improving product, delivery and service quality. Throughout the entire company, projects have been reviewed and prioritised and possible cost reductions implemented.

The supply difficulties that were triggered by disrupted supply chains in the previous year are now history. Since the beginning of February 2023, the delivery quality has been back at the usual high level.

Site transformation – a commitment to Switzerland
Having commissioned Europe's most cutting-edge refrigerator factory in Sulgen in 2022 and by constructing a new vertical factory in Zug, V-ZUG is underscoring its commitment to Switzerland. The new "Zephyr Ost" production building was constructed in 2023. The basic fit-out was completed at the beginning of the first quarter of 2024 and the building handed over to V-ZUG for the installation and commissioning of operating equipment. This strengthens the Swiss identity and provides an important contribution to the local economy. Moreover, V-ZUG is investing in an extensive training programme to equip the skilled workers of today and tomorrow with essential industry expertise.

Sustainability as a main pillar: ongoing commitment
V-ZUG has always been committed to quality, precision and longevity. Sustainability forms part of the business strategy and is managed via an interdisciplinary Sustainability Workforce. A number of projects were driven forward in the reporting year.

Marcel Feurer becomes new Chief Swiss Market Officer
The V-ZUG Group has appointed Mr Marcel Feurer as Chief Swiss Market Officer (CSMO) and Member of the Executive Committee. He will start in his new role at latest by 1 June 2024. He has many years of experience in sales, service and business development in the B2B and B2C business in Switzerland and abroad. Marcel Feurer is currently National Sales Director and Member of the Executive Committee of Hilti Schweiz AG. He previously held a range of positions at Hilti, including Director of Business Development and Member of the Executive Committee of Hilti Belgium.

2024 outlook
In the light of persistent global uncertainty, delayed planning approval procedures and the current level of interest rates, V-ZUG does not expect an improvement in consumer behaviour and in the real estate industry in particular. The "Simplify V-ZUG" initiative will continue, reducing complexity as well as simplifying and automating collaboration and processes. This is also expected to have a positive impact on customer focus and product quality. A number of new products, particularly in the mid segment, will be launched in 2024. For the year 2024, V-ZUG expects the market environment to remain challenging. It continues to be committed to its medium-term targets through investments in market positioning and development, production as well as in ongoing projects to increase innovation and efficiency.

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