• Second Quarter sales increased by 26.9 %, EBITA up 10.7 %
• Germany: Integration of Max Bahr bearing fruit
• International: Like-for-like growth again in double-digit range
• Positive course of business anticipated for second half of 2007

Kirkel – July 25, 2007. Praktiker Bau- und Heimwerkermärkte Holding AG successfully closed the second quarter 2007 and thus also the first half of the current fiscal year. Owing to the successful integration of Max Bahr and the continued dynamic growth of international operations it was possible to distinctly increase sales and earnings. Based on these fundamentals, the management is raising its guidance for operating earnings (EBITA) in the current fiscal year. Wolfgang Werner, Chairman of the Management Board of Praktiker Bau- und Heimwerkermärkte Holding AG: “We are fully on schedule. In view of the sales trend, our earnings structure and the fact that we have been able to absorb the major part of the one-off expenses expected for 2007 already during the first half, we now expect to generate earnings of around 125 million euros“. The prior earnings guidance had been for 115 million euros. In terms of sales, Werner continues to expect that the Praktiker Group will exceed the four billion euro mark.

 

Group: sales and earnings at record levels

Praktiker Bau- und Heimwerkermärkte Holding AG increased its consolidated second quarter sales by 26.9 percent to 1.13 billion euros. During the first six months of the current financial year, for the first time more than two billion euros in sales have been generated. This corresponds to a 24.8 percent rise over the first half of 2006. The strong growth was mainly attributable to two reasons: the successful integration of the DIY chain Max Bahr, which took effect on 1 February 2007, and the continued dynamic growth generated on the international markets.

   

Owing to some one-off effects that impacted the German business only, the increase in sales did not fully reflect in the development of operating earnings (EBITA). This notwithstanding, the good prior-year result was exceeded by 5.7 percent in the first half 2007 and increased to 49.1 million euros. The negative result of nearly 20 million euros reported in the first quarter was thus more than compensated for during the second quarter 2007 with EBITA coming in at 69.0 million euros – which corresponds to a 10.7 percent increase over the same period one year earlier.

 

Germany: growth due to Max Bahr

In Germany, second quarter sales soared by 28.0 percent to 838.6 million euros. In the first half of 2007, Praktiker generated sales of 1.51 billion euros (First half 2006: 1.22 billion euros), which is equivalent to a 24.2 percent increase. However, this growth is exclusively attributable to the Max Bahr brand. Like-for-like domestic sales of the Praktiker brand receded by three percent during the first six months. If one were to use gross sales – i.e. sales including VAT – as a basis for comparison, the drop would be much more moderate coming in at 0.7 percent.

 

The reasons for the decrease in sales were manifold. The conversion to the Easy-to-Shop concept involved a loss in sales as had been anticipated. Moreover, the assortment structure of the Praktiker stores was focused more strongly on traditional DIY core products this year. This involved a withdrawal from volume-generating bargains in the non-DIY range that had been increasingly offered in the run-up to the soccer world championship in 2006.

  

Operating earnings during the second quarter reached 43.5 million euros, which was 2.3 million euros less than during the same period one year earlier. Since the first quarter had seen season-related losses in the amount of 20.0 million euros, EBITA for the first half is reported at 23.4 million euros. This result already includes one-off effects in the double-digit million euros range resulting from the expenses for the conversion to the Easy-to-Shop concept, the integration of Max Bahr and from the fact that the VAT increase could not yet be fully passed on to the customers.

 

 

International: continued high growth rate

The international activities once again contributed materially to the positive development of business at the Praktiker Group. The dynamic growth, which had already characterized the first quarter, continued also during the second quarter with sales rising 24.0 percent to 288.9 million euro. In the first half, the international activities generated sales of 495.4 million euros, which was 26.8 percent more than during the same period one year earlier. Particularly high growth rates were reported by the Eastern European operations in Romania, Bulgaria and Poland. 

EBITA of the international activities doubled during the first half. It reached a record level of 25.7 million euros (First half 2006: 12.2 million euros), which for seasonal reasons was almost completely generated in the second quarter (25.6 million euros). All countries where Praktiker operates stores were able to make a positive contribution to earnings during the April-to-June period.

 

Store portfolio extended, headcount raised, capital expenditure strongly increased

As of June 30, 2007, the Praktiker Group operated 343 stores in Germany (June 30, 2006: 270 stores). No other competitor can claim a wider market presence. Of these stores, 267 are operated under the Praktiker brand, including a total of 39 stores which have already been converted to the Easy-to-Shop concept. 76 locations are operated under the brand Max Bahr. In addition, Praktiker operates 75 outlets abroad – ten more than one year earlier. The selling space thus increased to a total of 2.65 million square meters (June 30, 2006: 1.99 million square meters), of which 2.12 million are in Germany (June 30, 2006: 1.53 million) and 528,000 abroad (June 30, 2006: 466,000). The headcount too rose on account of the acquisition and the international expansion from 17,259 during the first half 2006 to now 22,060. The Praktiker Group now has a workforce of 13,749 employees in Germany (Previous year: 10,569) and 8,311 abroad (Previous year: 6,690). These are average figures expressed as full-time equivalents. 

During the first half, Praktiker Group invested a total of 64.5 million euros (First half 2006: 11.0 million euros). Of this amount, 39.2 million euros were invested abroad (First half 2006: 6.1 million euros). In Germany, investments in the first half 2007 totaled 25.3 million euros (First half 2006: 4.9 million euros). This amount was used to finance conversions to new concepts, modernizations and replacement investments at Praktiker and also the opening of five new stores at Max Bahr.

 

Earnings forecast for the full year raised

The course of the first half year of the current financial year leads us to expect that the second half will develop positively, too. Therefore, the management reiterates its earlier forecast that sales will stand at around four billion euros at the end of the current financial year. Since the most of the one-off expenses have already been absorbed during the first half, the management raises its former earnings forecast (EBITA) from at least 115 million euros to around 125 million euros. Wolfgang Werner: “We are consistently pursuing our strategy of profitable growth. In Germany, we want to rise to the number one position in the near future. Abroad, the goal is to expand our strong position in those countries, where we are already active, and tap interesting new markets“.