Technogym reported net earnings tumbled 75.5 percent in the first half as sales slumped 24.7 percent.
Earnings reached €6.23 million, down from €25.4 million a year ago. Revenues fell to €222.4 million from €295.3 million.
Net profit on an adjusted basis amounted to €11.4 million, down by 54.8 percent compared to €25.2 million in 2019. In the half-year ended 30 June 2020, non-recurring expenses of €5.3 million were recorded, mainly attributable to the impairment of the investment for €2.5 million and for €1 million to donations to the intensive care units of the Romagna Hospitals to cope with the health emergency.
The sales decline was due to the contraction in general sales volumes mainly due to pandemic-related postponement of several projects on the business-to-business side. The growth of the Home & Consumer segment was significant with a gain of 50 percent.
By region, turnover was down in all geographic areas except its home country of Italy. North America is the area most impacted by COVID-19 with a decrease of 32.2 percent in turnover mainly due to the decision of some key accounts within the Club segment and operators in the Hospitality segment to postpone some investments.
Europe reported a 24 percent contraction mainly due to the postponement of orders in countries such as the UK and France. The other relevant area, Asia Pacific, showed a 26.2 percent slowdown in the light of the weak performances of China and Japan.
Italy reported a good performance confirming the turnover of the first half of the previous year, due to the postponement of some orders from 2019 to the first quarter of 2020. Negative performance was recorded in MEIA, down 27.1 percent, and LATAM, down 48.6 percent, mainly due to Brazil being impacted both by COVID-19 and by the company’s interest to reposition itself on the local market.
EBITDA, on an adjusted basis, was equal to €37.3 million, down by 26 percent, compared to €50.4 million in the first half of 2019. This decrease was mainly due to the significant revenue decrease in the period but mitigated by a reduction in operating costs, which did not impact the company’s development projects.
The net operating income, on an adjusted basis, amounted to €17.9 million, down by 47.8 percent compared to €34.2 million in the same period of 2019. This decrease is influenced by the decrease in sales volumes partly offset by cost containment activities and by higher depreciation of €2.5 million.
Nerio Alessandri, chairman and CEO, commented: “2020 will go down in history as a year of strong transformation that has changed not only the economic scenario but above all habits and lifestyles. With no doubts, psycho-physical well-being and health have risen further within people’s priority list: being healthy and in good physical shape not only helps us in prevention but makes us more performing in sport and allow us to live a better life.
“In line with this trend, in the first half of 2020, Technogym achieved significant growth (+ 50 percent) in the Home segment, due to an increase in demand for home products and solutions, the quality, and the level of innovation of its offering. Its “Wellness on the Go” strategy, training anytime anywhere, represents an opportunity also for a fitness club to offer online training programs to its members at home and at the club.
“Today we are, more than ever, focused on the “Technogym Direct to Consumer” priority, envisaging the offer of engaging and personalized training experiences, live and on-demand, thanks to our Technogym Live platform, on equipment, mobile and TV, at home and at the gym. Consumers can thus choose their favorite trainer and training content, developed by both Technogym and fitness clubs. Technogym accelerates the consumer development with significant additional investment – on the basis of a plan that will be presented at the next Board of Director’s meeting – with the goal of strengthening our leadership, our premium positioning, and increase our market shares.
“Even though half-year revenues have been impacted by COVID, we are very confident of Technogym’s growth prospects in the medium-long term: wellness services have a great potential for development and we are the only company featuring an ecosystem able to offer training experiences, for different passions and needs, in rehabilitation and fitness centers, corporate gyms, hotels and especially at home. Since ever we spread digital fitness solutions and today, thanks to artificial intelligence, we are able to offer personalized training services and products to the Technogym community in 100 countries in the world”.
Photo courtesy Technogym