Hornbach Holding AG & Co. KGaA: Hornbach confirms annual forecast

Hornbach confirms annual forecast

2^nd quarter of 2018/19: Sales and earnings performance improves on spring despite "summer recess" / Hornbach Group increases Q2 sales by 4.4% to Euro 1,163 million / Adjusted EBIT of Euro 82 million at previous year's level

1^st half of 2018/19: Consolidated sales up 3.5% to Euro 2,391 million / Adjusted EBIT falls 7.7% to Euro 161 million / Board of Management: Shortfall in earnings should mostly be made up by end of financial year

Bornheim bei Landau/Neustadt a. d. Weinstrasse, September 27, 2018. The Hornbach Group (Hornbach Holding AG & Co. KGaA Group) asserted itself well in the first half of its 2018/19 financial year (March 1 to August 31, 2018), and that despite extreme weather conditions at times, and has confirmed its annual forecast. The company's performance improved significantly in the second quarter of 2018/19 (Q2) compared with the frosty spring season. In the period from June to August 2018 (Q2), Germany's third-largest DIY store operator increased its consolidated sales by 4.4% to Euro 1,163 million following on from growth of 2.8% in the first quarter of 2018/19. Consolidated sales for the six-month period grew by 3.5% to Euro 2,391 million. At Euro 82 million, operating earnings (EBIT) adjusted to exclude non-operating earnings items were at the previous year's level. At around Euro 161 million, the Hornbach Group's cumulative adjusted EBIT for the first six months fell 7.7% short of the previous year's record figure, with this being due to the weak first quarter. The Board of Management nevertheless expects the company to successfully make up lost ground in the second half of the financial year and has therefore not amended the full-year sales and earnings forecasts for 2018/19.


"All in all, we can report a robust first-half performance - and that although the extreme summer of 2018 meant that consumers were often more interested in keeping cool than in tackling strenuous construction or renovation projects. Against this backdrop, the like-for-like, currency-adjusted sales growth of 3.4% generated by our DIY stores and garden centers in the second quarter is certainly respectable", commented CFO Roland Pelka at the half-year press conference in Bornheim.

Net sales at the HORNBACH Baumarkt AG, the largest operating subgroup (DIY retail), increased by 4.3% to Euro 1,088 million in the second quarter of 2018/19. First-half sales grew by 3.5% to Euro 2,250 million (2017/18: Euro 2,173 million). The strongest growth came once again from retail activities in the Other European countries region, where the company pools its DIY business in eight countries outside Germany. Sales here rose by 6.8% to Euro 1,076 million (2017/18: Euro 1,007 million). The international share of the subgroup's first-half sales rose from 46.3% to 47.8%. This increase was also promoted by the company's ongoing expansion abroad, with two new DIY stores with garden centers added in the Netherlands and Switzerland in the first half of the year. DIY stores in the company's home market increased their six-month sales by 0.7% to Euro 1,174 million (2017/18: Euro 1,166 million).

On a like-for-like basis and net of currency items, the subgroup's sales rose by 3.4% in the second quarter and by 2.8% in the first half. Like-for-like sales at the German stores grew year-on-year by 1.2% (Q2) and 0.5% (H1), while the equivalent growth rates of 5.8% and 5.5% in other European countries were significantly higher.

The Hornbach Baustoff Union GmbH subgroup, which now operates 28 builders' merchant outlets in south-western Germany and two locations close to the border in France (Lorraine), increased its first-half sales by 2.8% to Euro 139.9 million (2017/18: Euro 136.1 million) and its second-quarter sales by 5.3% to Euro 75.2 million (2017/18: Euro 71.4 million).

Earnings expected to catch up in 2^nd half of 2018/19
after stable performance in summer quarter

The Hornbach Group matched the previous year's level of earnings in the second quarter. Adjusted operating earnings (EBIT) rose by 0.3% to Euro 81.9 million. Earnings per Holding share were unchanged at Euro 2.85. The Hornbach Baumarkt AG subgroup improved its adjusted EBIT by 2.3% to Euro 65.5 million and its earnings per share by 6.6% to Euro 1.45 (2017/18: Euro 1.36).

Given the weak first quarter, earnings for the first half of 2018/19 still fell short of the previous year's figure. Due above all to a subdued sales performance as a result of weather conditions and a lower gross margin, adjusted operating earnings (EBIT) at the Hornbach Holding AG & Co. KGaA Group for the first six months fell by 7.7% to Euro 160.9 million (2017/18: Euro 174.3 million). Earnings per Holding share are reported at Euro 5.54 (2017/18: Euro 6.03) Six-month adjusted EBIT at the Hornbach Baumarkt AG subgroup decreased by 7.9% to Euro 130.4 million (2017/18: Euro 141.5 million). Earnings per Baumarkt share eased from Euro 3.08 to Euro 2.86.

The Board of Management has confirmed the full-year sales and earnings forecasts for 2018/19. It expects the company to virtually make up for the shortfall in earnings from the first quarter in the second half of the year. Comments Roland Pelka: "The target of catching up after the 'summer recess' is ambitious, but manageable." The Hornbach Group's consolidated operating earnings (EBIT) adjusted for non-operating items for the 2018/19 financial year as a whole are therefore still expected to more or less match the level reported for the 2017/18 financial year (Euro 165.6 million).

Key Figures of the Hornbach Group for the 2^nd Quarter and the 1^st Half at a Glance

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

¹⁾ Excluding currency items

²⁾ Including minority interests pursuant to IFRS

The Half-Year Financial Reports of Hornbach Holding AG & Co. KGaA and Hornbach Baumarkt AG
can be downloaded from the "Publications" section of our website. Link: www.hornbach-group.com.