Hornbach Holding AG: Hornbach posts sustainable growth and invests in its substance

Hornbach posts sustainable growth
and invests in its substance

Forecast met once again: EBIT rises in line with sales by more than 6 % to Euro 169 million / Hornbach Group improves sales to Euro 3.2 billion / Market share significantly expanded in Germany / Pace of investment stepped up

Frankfurt/Main, May 24, 2012. The Hornbach Group successfully upheld its sustainable growth course in the past 2011/2012 financial year (March 1, 2011 to February 29, 2012). Consolidated sales at HORNBACH HOLDING AG grew by 6.2 % to Euro 3.2 billion. Operating earnings (EBIT) rose by 6.3 % over the same period to reach Euro 169.1 million. The company, which is listed in the S-Dax, thus met its sales and earnings forecasts once again, while at the same time boosting its competitive position. This is especially true for the DIY megastores with garden centers in Germany, which significantly outperformed the overall sector and extended their market share from 8.8 % to 9.2 %.

Sales at the Hornbach Group's DIY megastores with garden centers grew by 2.8 % on a like-for-like basis, i.e. excluding sales at stores newly opened or closed, in the 2011/2012 financial year, following growth 2.6 % already in the previous year. Hornbach reported the strongest growth momentum once again in Germany, where like-for-like sales at the DIY megastores with garden centers grew by 5.8 % - and thus faster than at any time since the IPO of the Hornbach-Baumarkt-AG subgroup in November 1993. By comparison, the German DIY sector reported like-for-like sales growth of 1.0 % in the period from January to December 2011. This compares with like-for-like sales growth of more than seven percent at Hornbach's stores in the same period.

'For us, the past 2011/2012 financial year was simply first-class!', commented Albrecht Hornbach, Chairman of the Board of Management of Hornbach Holding AG, upon the presentation of the company's results in Frankfurt. He characterized the Group's earnings strength as 'remarkable'. Operating earnings (EBIT) at the largest operating subgroup, Hornbach-Baumarkt-AG, whose 134 retail outlets in nine countries exceeded the three billion euros sales mark for the first time, improved Euro 128.4 million, up 7.8 % on the previous year. This growth was chiefly driven by higher like-for-like sales in conjunction with a stable gross margin and slightly improved store expense ratios. The Hornbach Baustoff Union GmbH subgroup, which currently operates 24 outlets in its regional builders' merchant business in south-western Germany, increased its EBIT by 16.5 % to Euro 3.8 million in the year under report. At Euro 39.0 million, EBIT at the Hornbach Immobilien AG subgroup slightly exceeded the previous year's figure. Overall, operating earnings at the Hornbach Holding AG Group grew by 6.3 %, and thus in line with sales, to reach Euro 169.1 million. Consolidated net income at Hornbach Holding AG amounted to Euro 94.6 million. In the previous year, consolidated net income (Euro 99.1 million) had benefited from a retrospective corporate income tax credit of Euro 8.2 million.

'Our earnings growth in the past financial year is all the more pleasing if we consider that we once again invested a double-digit million amount in forward-looking strategic projects, one of the most important of which was the rapid expansion of our online retail', added the Chairman of the Board of Management. At www.hornbach.de, home builders, DIY enthusiasts and garden lovers can now inform themselves about more than 40,000 articles and have more than 13,000 delivered directly to their homes. According to Albrecht Hornbach, further millions were invested in elaborate conversion measures, such as those undertaken to modernize the image stores, paint departments, and bathroom and kitchen centers at the stores. Not only that, the Hornbach Group also channeled millions into enhancing energy efficiency at its stores once again in the past financial year. 'We have absorbed these expenses in the interests of sustainable growth, and that without weakening our earnings strength. We invested in our substance, rather than living off it', stressed Albrecht Hornbach.

The fact that Hornbach received a higher ranking in Germany's most important customer satisfaction survey, the Kundenmonitor Deutschland, in 2011 than that ever achieved by a DIY player in the past was, according to the company boss, a particular success. Consumers ranked Hornbach first in 17 out of 33 categories. Among others, these included value for money, specialist advice, and the most important category of all - 'Overall satisfaction'. Similarly, Hornbach was also ranked first in customer surveys in Austria, the Netherlands, Switzerland, and Sweden. 'Hornbach has a well-established image among consumers as a partner for building and renovation projects', commented Albrecht Hornbach. 'People have honored our combination of specialist advice, breadth of product range, services, and permanent low prices. This way, we have successfully set ourselves apart from competitors.'

Up to 15 new stores and replacement locations planned for next two years

The Hornbach Group stepped up its investments by almost Euro 50 million to Euro 162.9 million in the 2011/2012 financial year, while also further improving its capital structure. The equity ratio at the overall Group rose from 43.1 % to 45.9 %. 'Our high volume of liquidity, amounting to more than Euro 400 million, and our broad range of financing instruments mean that we can invest flexibly in our growth', added Albrecht Hornbach. Having opened three new stores in the 2011/2012 financial year, Hornbach is now increasing its rate of new store openings. Up to 15 new stores, some of which to replace existing locations, are planned to be built in the next two years. Expansion will continue to focus on other European countries. The Hornbach Group, which had a total of 14,320 employees at the balance sheet date on February 29, 2012 (plus 4.0 %), has budgeted investments of between Euro 200 million and Euro 250 million in each of the 2012/2013 and 2013/2014 financial years.

According to the forecast published in the Annual Report, sales are set to show growth in a medium single-digit percentage range in the current financial year, and in a medium to high single-digit percentage range in the following year. Operating earnings at the Hornbach Group are expected to slightly exceed the figure for the previous financial year. The Group's operating earnings should then show disproportionate growth compared with sales in 2013/2014.

Key earnings figures of the Hornbach Group (Hornbach Holding AG Group)

* The consolidated net income for 2010/2011 includes a one-off corporate income tax credit of Euro 8.2 million.

Key earnings figures of the Hornbach-Baumarkt-AG subgroup

(Differences due to rounding up or down to nearest Euro million; percentage changes calculated on basis of Euro 000s)

Note
The Annual Reports of the HORNBACH HOLDING AG Group and the HORNBACH-Baumarkt-AG subgroup for the 2011/2012 financial year are available online at: www.hornbach-group.com