· Group sales up 24.8 percent to 3.945 billion euros
· EBITA before conditions set by Federal Cartel Office raised to 125.8 million euros
· Capital expenditure at record level of around 168 million euros
· Proposed dividend of 0.45 euros per share
· Forecast for 2008: EBITA target of 135 to 140 million euros
Frankfurt, 2 April 2008 – In fiscal year 2007, the Praktiker Group generated the highest sales and the best operating result so far in its 30-year history.
Net sales of the Group were up 24.8 percent to 3.945 billion euros. Earnings before interest, taxes and amortization (EBITA)
– before the conditions set by the Federal Cartel Office for the approval of the Max Bahr acquisition – came in at 125.8 million
euros. The targets of the company’s forecast presented one year ago have thus been achieved. Growth was driven by the takeover
of Max Bahr effective on 1 February 2007 and a strongly expanding international business. Capital expenditure rose to a record
level of around 168 million euros. In view of the positive development of its operating business, the Management Board and
the Advisory Board will propose a dividend of 0.45 euros per share to the Annual General Meeting on May 30, 2008.
Wolfgang Werner, CEO of Praktiker Bau- und Heimwerkermärkte Holding AG: “The balance for the year 2007 is more than respectable
when considering under which general economic conditions on the domestic market this result was achieved. We have strengthened
our home base with the integration of Max Bahr which was initiated and largely completed during the year under review. We
have massively expanded the second important pillar of our success: our international business. And we did not put today’s
profits over tomorrow’s success but invested extensively into the future. Against this backdrop we expect sales of the Praktiker
Group to rise by a medium single-digit rate in 2008 and EBITA to increase to 135 to 140 million euros.“
At the close of the fiscal year under review the Praktiker Group operated a total of 425 stores in nine countries across Europe
with a workforce of 29,093 employees. The increase in the number of locations (84) and personnel (5.587) resulted from the
takeover of the operating business of Max Bahr and an accelerated international expansion. Following this strongly extended
market presence, Praktiker generated net sales totaling 3.945 billion euros – 24.8 percent up from the year earlier (3.162
billion euros). The sales forecast for the year 2007 was of “around four billion euros“. Before the conditions set by the
Federal Cartel Office for the approval of the Max Bahr acquisition, Praktiker generated an operating result (EBITA) of 125.8
million euros. The forecast EBITA was of “around 125 million euros”. Accounting for the extraordinary one-time expenses resulting
from the divestment of three stores in northern Germany required by the Federal Cartel Office, EBITA stood at 116.0 million
euros.
Special factors affect financial statements
The gross profit on sales (gross profit) climbed by 29.3 percent to 1.274 billion euros. This corresponds to a gross margin
on sales of 32.3 percent (plus 1.1 percentage points). The net financial income is reported at minus 22.5 million euros (2006:
plus 1.4 million euros). For the first time, the interest payable on the convertible bond issued in August 2006 had to be
paid for the whole year. At the same time the company had to absorb currency losses resulting from year-end revaluations of
finance lease liabilities. However, nine million euros of these two positions were not cash-effective. The company reported
a one-time rise in the tax expense because loss carry-forwards had to be revalued as a consequence of the corporate tax reform
in Germany. This resulted in a non-recurring tax expense of over 40 million euros, which was equally not cash-effective. The
net income thus declined from 84.1 million euros one year earlier to 23.7 million euros. Accordingly, the earnings per share
dropped to 0.39 euros (2006: 1.43 euros).
The acquisition of Max Bahr in particular left its mark on the balance sheet of the Praktiker Group in terms of length and
structure. This notwithstanding, the equity ratio of 43.7 percent remained at a high level. Despite remittance of the purchase
price for Max Bahr and record investments, liquid funds totaled 270.8 million euros (2006: 466.3 million euros) at the close
of 2007. Praktiker CEO Wolfgang Werner: “This way, we continue to have a high degree of financial flexibility, in particular
when considering that we still have an additional credit line of 200 million euros. Hence, we are free to act in case another
opportunity for an acquisition should arise in the foreseeable future“.
Capital expenditure massively increased abroad
Beyond the acquisition of Max Bahr, Praktiker invested massively into the future in 2007. In total, the volume of capital
expenditure reached a record value of 167.9 million euros – nearly 100 million euros up from the year earlier. 113.8 million
euros were invested abroad against 54.0 million euros in 2006. In Germany, 54.1 million euros (2006: 14.0 million euros) were spent on optimizing the
market presence of Praktiker and Max Bahr. One focus of investments in Germany was the conversion of 60 Praktiker stores to
the Easy-to-Shop concept. The complete volume of capital expenditure was funded from the group’s operating cash flow.
Germany: market presence of the Praktiker Group massively extended
Sales in Germany climbed 25.4 percent to around 2.862 billion euros (2006: 2.282 billion euros). With this sales volume, the
Praktiker Group has massively extended its position on the German home market. This was possible thanks to the new subsidiary
Max Bahr, which was included in the scope of consolidation of the Praktiker Group with effect on February 1, 2007 and generated
sales of 688 million euros. Like-for-like – that is excluding Max Bahr and considering the closure and/or divestment of seven
Praktiker stores – domestic sales declined by 3.6 percent. However, Praktiker did better than the industry average which,
according to the BHB trade association, lost around six percent over the prior-year net sales on a like-for-like basis. This
industry-wide weakness was attributableto the VAT increase at the beginning of the year and a slump in demand marked by a
massive buying restraint in the second half of 2007.
EBITA in Germany – before the conditions set by the Federal Cartel Office - dropped by 13.0 percent over the year-earlier
value and came in at 50.9 million euros. The roughly 25 million euros spent on the conversion of the new Easy-to-Shop stores
as well as the non-recurring integration expenses for Max Bahr in the amount of around six million euros are already included
in this figure.
The integration of Max Bahr, by contrast, had a very positive effect on earnings. In addition to the contribution to the operating
result also synergies worth more than 20 million euros were leveraged. According to Werner this demonstrates “that size also
quickly yields earnings“.
International: expansion accelerated at double-digit rate, sales productivity increased
International business was again a strong growth driver for sales and earnings in 2007. International sales for the first
time exceeded the one billion euros mark and increased by 23.0 percent to 1.083 billion euros (2006: 880 million euros). Following
the strong growth in sales, EBITA of the International segment increased by 42.4 percent to 74.9 million euros. In other words:
in 2007 a good 27 percent of the group’s sales and 59.5 percent of its operating income – before conditions set by the Federal
Cartel Office – were generated abroad.
The positive development of international sales was attributable, on the one hand, to the fact that the expansion rate was
nearly doubled: the number of store openings rose from eight in 2006 to 15 in 2007. On the other hand, the productivity of
the existing store network improved once again. Like-for-like, sales growth of the international segment stood at 11.4 percent.
This supported the positive development of the operating result which was driven by the growth countries Romania and Bulgaria
but also by Greece, traditionally the strongest Praktiker operation abroad. Poland, a country where competition is at a similarly
high level as in Germany, has confirmed the upward trend of the past few years and managed its turnaround in 2007. Turkey
is also on a good course under a new management. With the opening of the store in the Ukrainian city of Donezk in November
2007, Praktiker was also the first international DIY group to establish its franchise and a good starting base for further
expansion in this second-largest country in Eastern Europe.
Outlook
In the assessment of the Praktiker management, the group’s international business will continue to grow dynamically in 2008.
The demand potential on the international markets, in particular in Eastern Europe, continues to remain high. Praktiker will
therefore further drive its expansion abroad, open 15 to 20 new outlets and proceed with its market entry into another new
country in 2008: Albania.
Business in Germany is expected to develop moderately. In view of the mixed general economic situation the Praktiker management
is focusing on a re-calibration of its price strategy, an improvement of the gross margin on sales and a strengthening of
its price leadership.
Against this backdrop, the Management Board of Praktiker Group expects sales to rise in the medium single-digit range and
the consolidated EBITA to increase to around 135 to 140 million euros in 2008.
