EQS-News: HORNBACH Holding AG & Co. KGaA: HORNBACH Group delivers record sales performance amid uncertain backdrop and adopts cautious outlook for the financial year 2023/24

HORNBACH Group delivers record sales performance amid uncertain backdrop and adopts cautious outlook for the financial year 2023/24

• FY 2022/23 net sales increased by 6.6% to EUR 6.3 billion based on stable and strong demand for construction and DIY products amid persistent inflationary environment
• Against a challenging backdrop HORNBACH significantly increased market share in Germany and across all international markets compared with pre-pandemic levels
• Adjusted consolidated operating earnings (EBIT) decreased in line with guided results and preliminary figures by 20.0% to EUR 290.1 million (+28% vs. 2019/20)
• Stable dividend proposed at EUR 2.40 to be confirmed at the Annual General Meeting on July 7, 2023
• Outlook: Net sales around the level of 2022/23, adjusted EBIT for fiscal 2023/24 in light of the challenging environment with downside risk (-5% to -15%)

Table 1: Key figures HORNBACH Holding AG & Co. KGaA Group

_{¹⁾ Excluding currency items; including Bodenhaus and online sales
²⁾ Adjusted to exclude non-operating income and expenses
Rounding up or down may lead to discrepancies between percentages and totals. Percentage figures calculated on basis of EUR 000s.}

Bornheim (Palatinate), Germany, May 16, 2023.

The HORNBACH Group (HORNBACH Holding AG & Co. KGaA Group; ISIN: DE0006083405) increased consolidated net sales in the financial year 2022/23 (March 1, 2022 to February 28, 2023) by 6.6% to EUR 6,263 million on the back of robust underlying customer demand. In line with guided results and preliminary figures, adjusted EBIT declined y-o-y by 20.0% to EUR 290.1 million. Compared to pre-Covid levels (2019/20) this represents an increase by 28%. Earnings per share at EUR 9.83 decreased from previous years record level (EUR 12.48) by 21.2%. In line with its dividend policy, HORNBACH Holding will propose a stable dividend of EUR 2.40 at the Annual General Meeting on July 7, 2023. Against the ongoing macroeconomic challenges with regard to persistent Inflation and product pricing, as well as the subdued start into the spring season due to bad weather conditions in key markets, management remains cautious on the outlook for FY 2023/24.

As in previous years, the past fiscal year was characterized by a high degree of uncertainty. Time and again, we had to act quickly and react to external influences. Being successful today as a retail company means more than ever: speed, adaptability and anticipating people's needs at an early stage. A look at the Kundenmonitor 2022, a German customer survey, demonstrates just how well we succeeded in doing this last year, with HORNBACH ranking number one among DIY stores in terms of customer satisfaction in Germany. In Sweden and the Netherlands, we took the top position in the "Retailer of the Year 2022" survey, commented Albrecht Hornbach, CEO of HORNBACH Management AG.

Against the challenging backdrop in recent years HORNBACH continued to significantly increase its market share in Germany as well as across all international markets compared to pre-pandemic levels. In the  calendar year 2022, the market share of HORNBACH Baumarkt (GfK³⁾) stood at 14.9% compared to 13.1% in the pre-Covid year 2019 in Germany, at 17.8% in Austria (2019: 17.0%), at 34.4% in the Czech Republic (2019: 33.3%), at 26.1% in the Netherlands (2019: 21.1%) and at 13.5% in Switzerland (2019: 12.0%). Four new DIY megastores with garden centers have been opened in 2022/23 in Nitra (Slovakia), Enschede (Netherlands), Constanta (Romania) and Leipzig (Germany).

Earnings in 2022/23 above pre-Covid levels, but impacted by inflationary and cost pressures

With EUR 290.1 million the adjusted EBIT of HORNBACH Group in FY 2022/23 came in 28% above pre-Covid levels (2019/20: EUR 227.0 million). Compared to the record number of FY 2021/22 (EUR 362.6 million), adjusted EBIT declined as guided by 20.0%, mainly due to inflationary pressures along the full value chain and cost pressures weighing on the Groups margins. Earnings were also impacted by increased store operating and personnel costs. The adjusted EBIT margin stood at 4.6% (2021/22: 6.2%).

While adjusted EBIT in the HORNBACH Baumarkt subgroup decreased by 23.4% to EUR 241.0 million (2021/22: EUR 314.7 million), HORNBACH Baustoff Union improved adjusted EBIT by 6.2% to EUR 13.8 million (2021/22: EUR 13.0 million) and HORNBACH Immobilien subgroup by 3.9% to EUR 55.8 million (2021/22: EUR 53.7 million).

Non-operating charges against earnings, which are mainly attributable to valuation effects in accordance with IAS 36 (impairments), increased from EUR 7.6 million to EUR 31.6 million in the 2022/23 financial year. This was due to the increase in the weighted average cost of capital (WACC), in particular as a result of changes in the risk-free interest rate. EBIT including non-operating earnings effects decreased by 27.2% to EUR 258.5 million (2021/22: EUR 355.0 million).

Earnings per HORNBACH Holding share at EUR 9.83 (2021/22: EUR 12.48) include positive effects from the increased shareholding in HORNBACH Baumarkt AG which stood at 92.15% as of February 28, 2023. The Management Board and the Supervisory Board will propose a stable dividend of EUR 2.40 per share in line with our dividend policy, subject to approval by the Annual General Meeting of HORNBACH Holding AG & Co. KGaA to be held on July 7, 2023.

Cash flow from operating activities on Group level increased to EUR 425.4 million (FY 2021/22: EUR 344.9 million). This is mainly due to significant improvements in working capital. With EUR 203.5 million, the HORNBACH Groups investments were around 14% higher in FY 2022/23 compared to the previous year (EUR 178.6 million) reflecting the 4 new store openings as well as investments for stores in the coming years and a number of store conversions. Free cash flow after investing activities and dividends was reported at EUR 186.5 million (FY 2021/22: EUR 134.5 million).

HORNBACH remains cautious on the outlook for 2023/24

Given the ongoing inflation and product pricing dynamics, as well as the extraordinarily bad weather conditions at the start of the main DIY season in Q1 2023/24, management remains cautious on the outlook and expects net sales at the HORNBACH Holding AG & Co. KGaA Group around the level of the 2022/23 financial year (EUR 6,263 million). Regarding earnings development, the slower start to the year along-side the broader macroeconomic challenges reduces visibility even further. In light of the challenging environment, a scenario where adjusted EBIT declines by approx. 5% to 15% below the level of the 2022/23 financial year (EUR 290.1 million) cannot be ruled out.

When we look at the persistently high inflation and the rainy and cold weather in March and April, as well as uncertainty around consumer sentiment, it is clear that success cannot be taken for granted. In response to these challenges, we are increasing our focus on our cost base, in combination with continuing to deliver our long-term growth strategy and our commitment to price leadership. Due to the slow start into the spring season we currently expect first-quarter earnings to be significantly lower than in the prior-year quarter, said Erich Harsch, CEO of HORNBACH Baumarkt AG.

Based on industry and consumer trends, especially with regard to energy efficient renovations, management remains confident for the DIY sector and HORNBACHs medium-term business prospects. Erich Harsch: HORNBACH has a long history and we have shown that we are very resilient, with a proven track record of successfully navigating through cycles and gaining market share.

_{³⁾ GfK definition: DIY stores bigger than 1,000 sqm; Data available for Germany, Netherlands, Austria, Switzerland and Czech Republic}

Table 2: Miscellaneous key figures HORNBACH Holding AG & Co. KGaA Group

_{⁴⁾ Of which 169 HORNBACH DIY stores with garden centers and two BODENHAUS outlets
⁵⁾ Sales area BHB: Closed building (warm or cold): 100%; covered open space (cold): 50%; building material drive-in (cold): 50%; non-covered open space (cold): 25%.
⁶⁾ Number of employees as of February 28, including passive employees}

Note
The Annual Report of the HORNBACH Holding AG & Co. KGaA Group for the 2022/23 financial year is available online at: www.hornbach-holding.de. The press briefing on the annual results is scheduled for 11 AM today. A live broadcast is accessible via the following link: https://media.choruscall.eu/mediaframe/webcast.html?webcastid=k3AJXtRH

About HORNBACH Group

HORNBACH Group is an independent, family-run retail group under the umbrella of HORNBACH Holding AG & Co. KGaA, which is listed on the Frankfurt Stock Exchange and represented in the SDAX. The largest subsidiary, HORNBACH Baumarkt AG, operates 171 DIY megastores with garden centers (incl. specialist stores) and online shops in nine European countries. The Group also includes HORNBACH Baustoff Union, a regional builders' merchant company with 39 locations in southwestern Germany and France, as well as HORNBACH Immobilien AG, which develops retail real estate for the Group. In the financial year 2022/23 (reporting date: February 28, 2023), the HORNBACH Group generated net sales of EUR 6.3 billion, making it one of the five largest DIY and garden retail companies in Europe. The Group has a workforce of more than 25,000 employees.

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