Ekornes QM Holding, the owner of the Stressless brand, says it plans to "adapt production capacity and protect profitability to stay competitive" by downsizing its operations in Norway and Asia, and implementing further measures to manage cost and margin development.
Ekornes is Norways' largest furniture producer, manufacturing from five factories there, plus in the US, one in Thailand and one in Lithuania.
With demand returning to pre-pandemic levels, combined with a general slowdown in the global economy and cost inflation putting pressure on margins (particularly in raw materials and transport), group earnings were negatively affected in Q4 2022.
“The market environment is changing and Ekornes must adapt production capacity and protect profitability to stay competitive," says interim CEO Fredrik Ødegård Nilsen (pictured). "Our leading products and brands are sold across the world, and we need to be cost efficient and flexible to take good care of our customers, partners and employees.”
Ekornes thus plans to bring the scale of the organisation back to pre-pandemic levels. Operations in Norway will be downsized by up to 150 full time equivalents (FTEs), building on the reduction in operational capacity of 80 FTEs implemented in September. Moreover, support functions and headquarters will be downsized by up to 40 FTEs.
In the Asia Pacific region, Ekornes will concentrate operations in Thailand, discontinue activities in Vietnam, and reduce the workforce by approximately 700 FTEs. Ekornes has made substantial investments in the production facility in Thailand to enable the concentration of all Asian operations at one location. This process will be completed during Q1 2023.
"While Ekornes has a sharp focus on customer and partner needs, the group is implementing further price increases to mitigate the effects of increased costs," says Ekornes. "The group will also reduce capital expenditures and indirect costs, in addition to optimising the product portfolio, to protect profitability and financial robustness. The group views resilience and flexibility as key to ensure sustainable operations and long-term competitiveness.
"The effects of rightsizing operations in Norway, reorganising activities in Asia and the other initiatives are expected to materialise from the second half of 2023."
Ekornes says its ability to deliver relevant products with short delivery times has been crucial for the group's performance, supported by a comprehensive distribution network and a favourable diversification of raw material sourcing and market presence.
“Efficient production, strong brands and innovative product development are at the core of the group’s competitiveness and necessary to maintain our strong market positions and attractiveness towards our customers and end-users,” concludes Fredrik.
