• Net sales up 4.2 percent to € 3.16 billion
• EBITA raised 5.0 percent to € 111.1 million  
• EBITA before non-recurrent items € 118.6 million
• Germany: Market position extended, distinctly above the industry average
• International: Double-digit growth of sales and earnings
• Proposed dividend of € 0.45 per share

Frankfurt, April 3, 2007 – Praktiker Group concluded a successful fiscal year 2006: Sales and earnings were up again from the very good-prior year values*. Net sales rose 4.2 percent to € 3.16 billion (2005: € 3.03 billion). Like-for-like, international sales grew 6.2 percent (2005: 3.9 percent) and domestic sales 2.5 percent (2005: 0.7 percent). At the same time, EBITA rose five percent from € 105.8 to € 111.1 million. In view of these results the Management Board and the Supervisory Board decided to propose a dividend of € 0.45 per share to the Annual General Meeting on May 30, 2007.

  

Wolfgang Werner, CEO of Praktiker Bau- und Heimwerkermärkte Holding AG: “We have been able to maintain the dynamic growth of the last few years and to sustainably improve our market position in Germany and abroad. This shall continue also during the current fiscal year. 2007 will be a year of change and investments for Praktiker. We will accelerate expansion abroad and shake up the domestic market together with Max Bahr. Our target is to become number one in Germany“.

EBITA in the amount of € 111.1 million is in comparison with the very good preceding year a rise of 5.0 percent. This success, which also led to a slight improvement of the EBITA margin to 3.51 percent, is all the more respectable when seen against the backdrop of non-recurrent expenses for the acquisition of Max Bahr and for the launch of the Easy-to-Shop pilot phase in the amount of € 7.5 million that had to be digested in fiscal year 2006. Net of these extraordinary expenses Praktiker Group would have achieved record earnings of € 118.6 million. Werner: “Earnings from operations therefore have to be rated even more positively than they appear to be at a first glance“.

 

 

Adjusted for the financial result and taxes, the net profit for the year climbed 8.4 percent from € 77.6 million to € 84.1 million.

 

Changes in the balance sheet of Praktiker Bau- und Heimwerkermärkte Holding AG are mainly attributable to a convertible bond in the amount of € 150 million issued to finance part of the acquisition of Max Bahr. Total assets as at December 31, 2006 rose to around
€ 1.89 billion compared against € 1.72 billion in 2005. What is more important: the equity ratio remained basically unchanged at slightly over 50 percent while liquid assets of
€ 466.3 million continued to clearly exceed the financial debt (€ 293.8 million).

 

 

Market position in Germany strengthened – Like-for-like distinctly above industry trend

The two segments, domestic and international, contributed in different shares to the 4.2 percent rise in consolidated sales to around € 3.16 billion. In Germany, the roughly € 2.3 billion sales of fiscal 2006 represent a nominal plus of 0.8 percent. Like-for-like, however, – as seven unprofitable stores were closed during the year under review – domestic business grew 2.5 percent. With this result, Praktiker developed distinctly better than the German DIY industry in general, which lost 1.6 percent of its sales volume against 2005 according to information by the BHB (Federal association of German home improvement, DIY and gardening centres).

 

Higher selling space productivity and improved return on sales
This success reflects in a significant rise in sales per square meter. In 2006, Praktiker Germany for the first time exceeded the € 1,500 mark. What is even more important: The higher selling space productivity also resulted in a higher operating margin. Before non-recurrent expenses, the domestic EBITA margin reached 2.9 percent, while the whole Group came in at 3.8 percent. Wolfgang Werner: “From these figures we conclude that we have strengthened our market position and that our price-aggressive, discount-oriented strategy is paying off“. This is attributable to an aggressive marketing, the successful positioning of Praktiker as the price leader and the consistent implementation of measures to boost efficiency.

 

Easy-to-Shop pilot stores particularly successful
Six of the 268 German Praktiker outlets played a particular role in 2006: They were the pilot stores for the new Easy-to-Shop concept to render shopping at Praktiker not only good value for money but also distinctly more easy, convenient and fast thanks to a 20 percent streamlining of the assortment, plausible navigation systems and a self-explanatory merchandize presentation. These pilot stores demonstrated the growth potential inherent in the new concept in the second half of 2006. Sales of these stores came in clearly above the respective year earlier value. The earnings situation in addition also improved thanks to higher efficiencies resulting from the assortment optimization.

 

Based on the experience made with the pilot stores the Praktiker board anticipates that the stores that are converted to the Easy-to-Shop concept will achieve a ten percent plus in sales within a period of two years of their conversion. Already during the current fiscal year a total of 67 stores are to be converted, with 65 to 70 to follow in each of the next two years.

 

Acquisition of Max Bahr basis for two-brand strategy

The acquisition of the operating business of our former competitor, Max Bahr, on August 14, 2006 represents a milestone in the history of the Praktiker Group. This transaction forms the basis for the realisation of a two-brand strategy that is unique in the German DIY industry. At the close of the year, Max Bahr had around 4,000 employees and operated 77 outlets with a selling space totalling 566,200 square meters. The takeover was realised on February 1, 2007 after approval of the transaction by the Federal Cartel Office.

 

High sales growth and increased profitability of the international operations

Abroad – mainly in Eastern Europe – the group is in the midst of a sustained phase of profitable growth. Our international operations achieved around 28 percent of our sales revenue but nearly half of the earnings from operations of the Praktiker Group in fiscal year 2006. International sales were boosted by 14.4 percent to € 880.2 million (2005: € 769.5 million). EBITA climbed 24.1 percent to € 52.6 million (2005: € 42.4 million).

 

This positive trend was chiefly the result of the extension of our international store network, which focused on the Eastern European EU accession countries Romania and Bulgaria during the year under review, and of a gratifying rise in sales in the existing stores. A total of eight new stores were opened abroad, of which five in Romania, two in Bulgaria and one in Greece. But also net of these new locations, i.e. like-for-like, Praktiker achieved a plus in sales of 6.2 percent. Another pleasant development: All countries not only achieve a strong growth in sales but also made positive contributions to group earnings.

 

Investments: Three quarters for international operations

Investments of the Praktiker Group in fiscal year 2006 dropped by a good 20 percent coming in at € 68.0 million. This was mainly attributable to the fact that some new openings in Eastern Europe, including our market entry in the Ukraine, could not be realized in time before year’s end due to political and regulatory. This not withstanding, roundabout € 54 million account for our international business - that is around three quarters of our total investments. Nearly two thirds or € 46.7 million were spent on extending the store portfolios and are thus growth investments.

 

Outlook

The Praktiker Group sees good opportunities for domestic and international growth also for 2007. “Also this year we will do everything in our power to confirm the sustainability of our success“, stressed Werner. In Germany, the prerequisites for a continued profitable growth have strategically and sustainably improved with the acquisition of Max Bahr, on the one hand, and with the start of the nation-wide rollout of the Easy-to-Shop concept, on the other. These are “excellent preconditions to challenge the position of the present market leader“. Abroad, the dynamic expansion will be stepped up further with the opening up of a new market and also with investments on a broad basis in seven of the eight countries where Praktiker is operating. Plans include the opening of 15 to 20 new stores and numerous extensions of existing locations.

  

Praktiker Bau- und Heimwerkermärkte Holding AG expects to raise group sales – including Max Bahr – to over € 4 billion in fiscal year 2007 and achieve group EBITA of at least
€ 115 million. This forecast does not include the divestment of four locations in Germany imposed by the Federal Cartel Office. The resulting effects on earnings cannot be forecast at present.