Hornbach Holding AG: Expectedly difficult start to spring season

Expectedly difficult start to spring season

Hornbach publishes results for first quarter of 2013/2014
 

Consolidated sales fall 2.9% to Euro 892 million due to prolonged winter / Earnings significantly below previous year's figures / New store opening in Slovakia / Full-year sales and earnings forecast confirmed for 2013/2014
 

Neustadt a. d. Weinstrasse, June 27, 2013.
The Hornbach Group (Hornbach Holding AG Group) has - like the entire DIY and garden store segment - suffered a difficult start to its new financial year due to erratic weather conditions in the spring. Consistent with expectations, the exceptionally long winter adversely affected the Group's sales and earnings performance in the first three months of the current 2013/2014 financial year (March 1 to May 31, 2013). Consolidated sales fell 2.9% to Euro 892.0 million in the first quarter (2012/2013: Euro 918.8 million). Earnings showed an even more substantial decline. The Hornbach Group's operating earnings (EBIT) reduced by 32.2% to Euro 51.1 million (2012/2013: Euro 75.4 million). Despite this weak start, Hornbach is confident that its race to catch up in the coming months will still enable it to meet its full-year forecast for 2013/2014.

Hornbach-Baumarkt-AG, the largest operating subgroup, opened a new store in Slovakia in April and now operates 139 DIY megastores with garden centers in nine European countries. Its sales for the first quarter of 2013/2014 dropped by 3.0% to Euro 838.9 million (2012/2013: Euro 865.1 million). On a like-for-like basis, i.e. excluding stores newly opened or closed in the past twelve months, sales fell by 5.9% (including currency items: by 6.1%). 'Neither we nor the overall DIY sector have ever seen such a start to the year. Snow and frost literally froze demand at our DIY stores and garden centers in March and the first half of April 2013', commented Albrecht Hornbach, Chairman of the Board of Management of Hornbach Holding AG when presenting the quarterly results.

The Hornbach DIY megastores with garden centers in Germany also felt the effects of the poor weather conditions. Thanks to their unmistakable concept focused on project customers, however, they once again managed to outperform the sector average. In the first three months of the 2013/2014 financial year (March 1 to May 31, 2013), sales at Hornbach's stores in its home market fell 4.9% to Euro 478.9 million (2012/2013: Euro 503.8 million). On a like-for-like basis, domestic sales declined by 5.8%. Based on its own figures, Hornbach outperformed the German DIY sector by around one percentage point in the period under report.

In the eight countries in which it operates outside Germany, Hornbach virtually maintained the previous year's level of sales thanks to recent new store openings. Sales in other European countries slipped by 0.4% to Euro 360.0 million (2012/2013: Euro 361.4 million). The international share of sales at the Hornbach-Baumarkt-AG subgroup increased from 41.8% to 42.9%. On a like-for-like basis, sales outside Germany fell by 6.1% net of currency items and by 6.5% including currency items in the first quarter of 2013/2014. Apart from Romania, all international regions reported declines in comparable store sales.

At the Hornbach Baustoff Union GmbH (HBU) subgroup, which focuses on professional customers in the main construction and subconstruction trades, as well as on private customers, sales reduced by 1.1% to Euro 52.7 million (2012/2013: Euro 53.2 million). Frosty conditions, especially in March 2013, led to numerous construction projects being postponed. Operations were launched in the first quarter of 2013/2014 at one new location close to Pirmasens (Dahn). HBU currently operates 25 builders' merchant outlets in south-western Germany and two outlets close to the border in France (Lorraine).

The reduction in like-for-like sales was the main reason why the Hornbach Group's earnings for the first quarter of 2013/2014 fell significantly short of the previous year's figures. Operating earnings (EBIT) at the Hornbach Holding AG Group decreased by 32.2% to Euro 51.1 million (2012/2013: Euro 75.4 million). Earnings per preference share are reported at Euro 1.62 (2012/2013: Euro 2.34). 'Despite these setbacks in the first quarter, we are upholding our sales and earnings forecast for 2013/2014 as a whole. We are confident that we will be able to make up for lost ground in the coming months. After all, the need for construction and renovation work remains high', commented Albrecht Hornbach. The Hornbach Group therefore continues to expect that its sales for the 2013/2014 financial year will slightly exceed the previous year's figure (Euro 3.23 billion) and that its EBIT will more or less match or fall slightly short of the figure reported for the 2012/2013 financial year (Euro 145.9 million).
 

Note: The extensive interim reports of Hornbach Holding AG and Hornbach-Baumarkt-AG can be downloaded from the internet at: http://www.hornbach-group.com/reports.
 

Key figures of the Hornbach Group for the 1^st quarter at a glance

¹⁾ net of currency items
Rounding up or down may lead to discrepancies between percentages and totals. Calculation of percentage figures based on Euro 000s.