Page 24 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Considering the current situation, it is difficult to quantify the impact the globally spreading
coronavirus crisis will have on the different sectors of the economy. One thing is certain, however:
the effect is already intense – the latest figures indicate that stationary fashion retailers experienced
a nearly 26% downturn in sales during the first quarter of 2020 – and this trend will continue
throughout the 2020 fiscal year. Public life and consumption have both been reduced to a minimum
due to the various government safety precautions. It is unclear how long these restrictions will
remain in place. But even if the situation normalises during the second half of the year, there is
no reason to expect an instant economic recovery or a surge in consumer demand.

5.3. Outlook – business performance

At the beginning of 2020 the world was shaped by trade conflicts between the largest nations
and regions. Society is in the process of taking serious measures to counteract climate change. The
automotive sector is facing a major transition unlike any the industry or its customers have ever seen.
Nevertheless, the global economy and its robust national economies remain on a course for growth,
albeit at a low level.
The Hoftex Group anticipated numerous challenges in 2020, precisely because of its international
character and the significant share of revenue coming from the automotive industry. We had an
optimistic outlook for 2020 and planned on generating EUR 160 million in sales. Compared to the
previous year’s revenues, adjusted for effects resulting from the sale of Hoftex CoreTech GmbH,
this corresponds to a slight increase of 2%.
Comprehensive investment projects were already launched in 2019 to develop a strategic focus on
new business sectors. These projects will continue to have an impact in 2020. We are planning on
investing a total of EUR 10 million in 2020. The largest share will go to the TENOWO locations Hof
and Mittweida. While in Hof the emphasis is on replacement and expansion investments for
the industrial, medical and new applications divisions, investments in Mittweida will go to furnishing
the Malimo technical centre with equipment.

At the same time the divisions are building organisational structures to address the new challenges,
investing in qualified personnel and projects in IT and digitalisation. The NEUTEX division relies
heavily on digital marketing and sales concepts and even presented these to customers and
industry experts at the Heimtextil trade fair in January 2020. Digital support enables us to make the
NEUTEX collections available to customers faster and in a more personalised way. In addition,
another new application makes it possible to digitally configure and order products tailored to
customer needs. The product launch of Ready 3.0 is planned for the second quarter of 2020.
The costs for these future projects will impact the results in the short term, but are essential
investments to assure the Group’s long-term success.
Based on these basic conditions for 2020, we expect an EBITDA between EUR 14 million and
EUR 16 million, which is close to 2019 levels (actual 2019: EUR 15.4 million). Overall, we had
reached planned levels both in terms of sales and EBITDA by mid-March.

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