The low demand in the Residential segment linked to increased interest rates and a high cost inflation expects to continue into 2024, especially in Europe.
The demand for flooring solutions continues to go down, in both renovations of private homes and in new built, especially in Europe. Within new built the demand is expected to fall sharper towards the second half of 2023 and be weak until 2025. The renovation segment is expected to recover a bit from low levels in 2023 into 2024, when the destocking among major customers is in balance and the consumers’ willingness to invest in their homes comes back step by step.
As earlier informed Kährs is preparing and adapting its operations with a focus on cost control and capacity adjustments in steps to ensure continued low debt and a strong cash flow.
To adjust capacities and to introduce further efficiency programs to mitigate the effects of lower demand into 2024, Kährs continues with the plan to lower the capacities in all European factories in steps. The next step is affecting an additional 85 coworkers within our Swedish units on top of the measures taken already in the first two quarters 2023. Negotiations with union parties have been initiated effecting a notice of 80 blue collars and 5 white collars. Affected employees will receive information and the redundancies will start to take effect during the second half of 2023.
"Unfortunately, the continued challenging market situation makes it necessary for us to implement new adaptations of our production capacity to remain a sustainable and profitable business over time. It is sad to have to part from competent and loyal employees. We will as in the previous notice, work to find good solutions together with our union negotiating partners", says Carl-Henrik Stenermark COO at Kährs Group and site manager in Nybro.
Despite the downturn, President & CEO Johan Magnusson sees a great need for the company's products and services in the future.
"Despite the challenging market outlook in 2023 and into 2024, there is a great need for renovation and more new buildings in the long term. We will continue to build Kährs to be well equipped to support our customers in the best way in the future as well as to make Kährs an even more attractive employer," says Johan Magnusson President & CEO at Kährs Group.