"In view of the ongoing difficult economic climate, we are very satisfied with the results for the first quarter", commented Albrecht Hornbach, Chairman of the Board of Management of Hornbach Holding AG. "We attribute this positive performance not least to our clear profile as the DIY store for projects in Europe and as an innovation leader in the sector." The first-class quality of the company's product ranges, its professional advice and consistent permanent low price policy with no discount campaigns were appreciated by DIY enthusiasts and professional tradesmen alike. In most regions where Hornbach operates, demand for building, home improvement and garden products and services had so far not been impeded by macroeconomic uncertainties, or only to a marginal extent.

In line with expectations, due to a base effect involving non-operating real estate gains in the previous year the earnings of the Hornbach Group fell short of the figures for the equivalent quarter in the previous year. Operating earnings (EBIT) reduced by 11.3 percent to ? 59.6 million (? 67.2m). Consolidated earnings before taxes dropped by 13.9 percent to ? 50.4 million. Basic earnings per preference share were reported at ? 3.72 (previous year: ? 4.87). Following adjustment for net non-operating earnings items of ? 10.8 million, however, the Group's earnings performance in the first three months of the current financial year was nevertheless pleasing. Adjusted operating earnings thus improved by 5.8 percent.

 

The company's consistent sales and earnings growth is particularly apparent in the quarterly figures of Hornbach-Baumarkt-AG, the most important operating subsidiary, as no non-operating real estate gains were generated here in the previous year either. Net sales at the Hornbach-Baumarkt-AG subgroup rose by 4.8 percent to ? 774.8 million (previous year: ? 739.2m), while operating earnings (EBIT) grew by 2.0 percent to ? 49.6 million (previous year: ? 48.6m). Net income for the period increased by 4.0 percent to ? 33.1 million (previous year: ? 31.8m). Basic earnings per Baumarkt share amounted to ? 2.10 (previous year: ? 2.03).

 

Hornbach continues to act as a guarantor of safe jobs, even in difficult times. In contrast to the overall trend, the number of employees across the Group rose by 0.7 percent to 13,262.

 

The Hornbach Group invested a total of ? 38.8 million in the first three months of the current financial year (previous year: ? 35.2m). Of these funds, around 72 percent were invested in land and buildings, while the remainder was mainly channeled into plant and office equipment. Investments were financed in full from the operating cash flow of ? 105.1 million (previous year: ? 116.7m). Shareholders' equity at the Hornbach Holding AG Group improved by 5.1 percent to ? 820.5 million (February 28, 2009: ? 780.5m), while the equity ratio continued to amount to a pleasing 39 percent.

 

Hornbach currently operates 130 DIY megastores with garden centers across nine European countries. The average store size is in excess of 11,000 m². There are 92 stores in Germany, while the international stores are located in Austria (11), the Netherlands (8), the Czech
Republic (6), Switzerland (4), Sweden (3), Slovakia (2), Romania (3), and Luxembourg (1).

 

Hornbach will maintain its course of expansion even in the current crisis. Two new store openings are planned for the current financial year. The third Hornbach store in Romania was already opened in Brasov in March. The fifth store in Switzerland is expected to be opened in Galgenen in the Zurich area in the fourth quarter (December 1, 2009 to February 28, 2010). All in all, Hornbach expects to generate sales growth in a low to medium single-digit percentage range both on the level of the overall Group and of the Hornbach-Baumarkt-AG subgroup in the current financial year.

 

"We expect our DIY stores with garden centers in Germany to continue to outperform the sector average in terms of like-for-like sales," added Albrecht Hornbach. Sales at the Hornbach Baustoff Union GmbH subgroup should also outperform the builders' merchant segment in Germany. In other European countries, Hornbach expects the widespread distribution of risks across its European DIY store network to enable reductions in sales in specific regions to be compensated for at least in part by sales growth in other regions.

 

Due mainly to significantly lower earnings in the real estate segment, operating earnings (EBIT) at the overall Hornbach Holding AG Group for the 2009/2010 financial year as a whole will fall significantly short of the previous year's figure, but are nevertheless expected to
exceed the EBIT posted for the 2007/2008 financial year (? 105.5m).

 

Hornbach consistently focuses on its "project customer" target group. This is also true of the company's advertising, which presents key themes succinctly and unmistakably. The campaign "If you can imagine it, you can also build it" was awarded a Silver Lion at the advertising festival held in Cannes at the end of June. This is the first time that a German company has won one of the coveted awards in the supreme discipline in the competition, the Integrated Lions. The campaign had already received numerous awards previously, including one from the Art Directors Club. "That this motto should be singled out is at the same time also a great compliment to our project customers, who form the focal point of our concept," commented Jürgen Schröcker, Chief Marketing Officer.

 

 

 

 

 

 

*   includes non-operating earnings components from the real estate segment. Net non-operating accounting gains of ? 10.7 million were reported in the first quarter of the previous year, while in line with the budget no disposal gains were generated on real estate transactions in the first quarter of 2009/2010. Following adjustment for non-operating earnings items, operating EBIT improved by 5.8 percent.

 

**  including minority interests pursuant to IFRS.

 

 

 

 

 

Rounding up or down may lead to discrepancies between percentages and totals. Calculation of percentage figures based on ? 000s.