Almost £70m was lost by the group behind kitchen maker Magnet after being hit by “unprecedented” inflation, “elevated” energy prices and “notably subdued markets” due to the cost-of-living crisis.
The delayed accounts for Nobia Holdings UK, a subsidiary of Swedish firm Nobia AB, have revealed the Darlington company made a pre-tax loss of £68.9m in 2022, compared to a loss of £9.9m in 2021.
The newly filed accounts with Companies House also show the firm’s turnover increased over the same period from £417.3m to £424.3m.
The business said a new management team was installed during the second half of 2022 to lead plans for “significant cost reductions, write-downs of non-performing assets and the exit from unprofitable ventures”.
Nobia Holdings UK’s results for 2023 are due to be filed with Companies House by the end of September this year.
Nobia AB, which is listed on Nasdaq Stockholm, took control of Magnet in 2001 in a deal worth £123m.
‘A challenging market environment’
Nobia UK faced “numerous challenges” in the fiscal year 2022, according to a statement from chief executive Kristoffer Ljungfelt.
In the statement, Ljungfelt said: “Emerging from a demanding period during the COVID pandemic, the company faced the impact of unprecedented price inflation on raw materials, elevated energy prices and notably subdued markets due to the cost-of-living crisis.
“In response to these challenges and dealing returns, a new management team was introduced in the second half of 2022, with a clear objective to restore profitability by refocusing on the core business and capitalising on being the leading supplier of mass premium kitchens in the UK.”
The chief executive also said they have directed their attention and efforts towards the fundamental aspects of their business as they navigate “a challenging market environment”.
In order for the company to return to profitable growth, Nobia AB had to undergo a “comprehensive restructure” during the latter part of the year, disclosed Ljungfelt.
This comprehensive restructuring consisted of “cost reductions, write-downs of non-performing assets and the exit from unprofitable ventures”.
The company added that “due to the continued difficult market conditions” it made a number of redundancies and announced the closure of two factories in the first half of 2023.
‘Poised for profitable growth’
However, Ljungfelt remains optimistic. He said: “Post-restructure, the business is poised for profitable growth primarily by improving the mass premium proposition and a drive towards higher average selling prices.”
“This strategy involves exiting lower-end segments, boosting sales in the mass premium category through the Magnet brand and reinforcing partnerships with core customers and suppliers through Gower,” the chief executive added.
Additionally, Nobia AB will continue to “take actions to strengthen the financial position of the group” and to focus its resources on its “core markets in the Nordics and the UK”.
According to Ljungfelt, the firm remains confident in how efficient its strategic initiatives are. These initiatives involve a focused return to Nobia AB’s “competencies and a targeted expansion into the mass premium market”.
He said: “Our expectation is that this approach will yield robust returns, bolster profitable growth and ensure a consistent cash flow trajectory from next year and beyond.”