© Nilfisk Electronics Production | October 12, 2018
Divestments & closures in Nilfisk's simplification strategy
Cleaning equipment manufacturer, Nilfisk, has executed significant initiatives aimed at supporting its ongoing multi-year simplification strategy to improve long-term profitability.
Nilfisk has decided to exit the Outdoor business, which includes utility machines, lawn mowers and mroe). The Danish-based part of the business is sold effective January 1, 2019, while the Italian-based part of the business will be exited immediately with an expected completion in Q1 2019. In addition, Nilfisk has sold its US carpet restoration business effective October 29, 2018, and the high pressure washer business Rottest in Turkey effective September 2018. The exits of the Outdoor and the US restoration businesses will have negative impact on Q4 growth as both businesses had organic growth rates above group average and the exit meant a cancellation of an expected new product launch in the Outdoor business, the company states in a press release. The exits are expected to be slightly cash positive, but lead to loss under special items of EUR 30-35 million of which EUR 25-30 million is expected in 2018. The exits are expected to have a positive impact on Nilfisk’s EBITDA margin before special items of 0.2-0.3 percentage points in 2019. Nilfisk has closed its production facilities in Suzhou, China, and outsourced production of consumer products and private label products, while consolidating the production of professional products into one site in Dongguan, China. The closure of the site in Suzhou was planned for Q4 2018 but after labor discussions and strikes at the factory, the closure was executed already in August, 2018. The earlier than expected closure had a negative impact on consumer revenue in Q3, and will also impact Q4 consumer and private label revenue. The implemented actions will lead to an intended reduction of five facilities, hence simplifying Nilfisk’s production set-up.