DIY & BIY is set to become the next SUPER BOOM Sector

Published: 07:00 21.12.2006 GMT+1 /HUGIN /Source: HORNBACH HOLDING AG /GER: HBH3 /ISIN: DE0006083439

DIY enthusiasts have rolled up their sleeves - HORNBACH profits disproportionately

Pleasing business performance in first nine months of 2006/2007

Third quarter sees best sales performance in Germany for ten years / Like-for-like sales growth of more than five percent in Germany and abroad / Growth outperforms overall sector / HORNBACH Group reports nine-month EBIT growth of 39 %


Bornheim, December 21, 2006.
The HORNBACH Group, one of Europe's largest operators of DIY megastores with garden centers, has witnessed a considerable upturn in demand for construction materials and other products relating to house and garden in the current 2006/2007 financial year. Growth rates clearly within a double-digit percentage range have been reported in some cases, particularly for shell construction and bathroom renovation products. Modern heating technologies and heat insulation projects have also been in great demand. "People have the confidence to try things out once again. They are investing in the future and are no longer shelving urgently necessary renovation work. HORNBACH has a clearer focus on the needs of these project customers than that of almost any other DIY store operator in Europe," commented the Chairman of the Board of Management of HORNBACH HOLDING AG, Albrecht Hornbach.

The Group's sales performance gained notably in momentum in the third quarter of the current 2006/2007 financial year (September 1 to November 30, 2006). Sales at the overall HORNBACH HOLDING AG Group rose by 7.3 percent to € 643.8 million (previous year: € 599.9m). Quarterly sales at the largest subgroup, HORNBACH-Baumarkt-AG, which operates 121 DIY megastores with garden centers in eight European countries, climbed by 6.7 percent to € 599.3 million (€ 561.6m).

The 5.2 percent growth in like-for-like sales in Germany is particularly pleasing. The German stores have thus achieved their best third-quarter results for ten years. With growth of 6.1 percent, like-for-like sales at the international stores remained at a consistently high level.

Reliable pricing policy honored by customers

"The figures we are able to present show that our competence in the compilation of product ranges and the customer service offered by our DIY megastores with garden centers have hit the nerve of DIY customers. I also see this as confirming our fair, transparent and reliable pricing policy. To all appearances, customers seem to have honored the fact that we were early to adopt an unmistakable position in the run-up to the sales tax increase," commented Albrecht Hornbach. "We will simply factor the unadulterated increased tax rate of 19 percent into our price calculations on January 1, 2007".

House owners increasingly investing in the future

In this respect, the Chairman of the Board of Management of the HORNBACH Group underlined the difficulty of forecasting how consumers would react to the increase in sales tax by three percentage points in a single step at the beginning of the new year. "What is nevertheless of fundamental significance is that consumers are finally looking to the future with confidence. This is proven by the very pleasing level of growth in Germany," stressed Hornbach. House owners were increasingly investing in the renewal of their roofs, heating systems, floors and sanitary installations, which generally required renovation after 20 years. Given that more than 80 percent of owner-occupied houses in Germany were more than 25 years old, there was a significant backlog in this area. Construction activity had also risen considerably once more. This trend had also benefited the HORNBACH Baustoff Union GmbH subgroup, where sales had risen by almost 16 % to € 44.7 million (€ 38.7m) in the third quarter of 2006/2007 and by 10.9 % to € 127.5 million (€ 115.0m) in the first nine months.

The company boss highlighted the fact that HORNBACH had also grown significantly faster than the overall DIY store sector in the current financial year. "The fact that our concept consistently focuses on the implementation of complete home improvement and garden projects means that we are benefiting disproportionately from the upturn in the overall economy and the construction sector."

Major improvement in earnings

The earnings of the HORNBACH Group improved substantially in the third quarter. Operating earnings (EBIT) at HORNBACH HOLDING AG rose by 146.0 percent to € 32.6 million (€ 13.3m). Operating earnings at the largest subgroup, HORNBACH-Baumarkt-AG shot up by 189.5 percent to € 26.6 million (€ 9.2m). The main reasons for the jump in earnings are the higher level of like-for-like sales, a slight year-on-year increase in the gross margin, improved cost ratios and lower pre-opening expenses.

Considerable sales and earnings growth has also been reported on a cumulative basis for the first nine months of the financial year. In the period from March to November 2006, the overall HORNBACH HOLDING AG Group achieved sales growth of 6.9 percent to € 2.023 billion (€ 1.892bn) and EBIT growth of 39.0 percent to € 132.4 million (€ 95.3m). The largest subgroup, HORNBACH-Baumarkt-AG, increased its sales by 6.6 percent to € 1.897 billion (€ 1.779bn) and its EBIT by 53.2 percent to € 114.5 million (€ 74.8m).

In view of possible fluctuations in weather conditions and the fact that the higher sales tax of 19 percent is due to take effect on January 1, 2007, the Boards of Management are upholding their previous forecast for the overall financial year. Accordingly, in spite of the lack of any new store openings the HORNBACH Group expects sales to rise in a medium single-digit percentage range, while earnings are set to rise as a proportion of sales.


The most important key figures can be found on the following tables. The extensive interim reports of HORNBACH HOLDING AG and HORNBACH-Baumarkt-AG have been published in the Investor Relations section of the internet pages of the HORNBACH Group at www.hornbach-group.com.


Overview of Key Figures

HORNBACH HOLDING AG Group: 3rd Quarter

HORNBACH HOLDING AG Group 3rd Quarter 3rd Quarter Change
(in € million, unless otherwise stated) 2006/2007 2005/2006 in %
Net sales 643.8 599.9 7.3
of which in other European countries 214.7 200.2 7.2
Gross margin (as % of net sales) 34.7% 33.8%
EBITDA 50.8 33.9 50.0
Earnings before interest and taxes (EBIT) 32.6 13.3 146.0
Consolidated earnings before taxes 23.7 5.0 369.7
Consolidated net income* 16.0 0.5 -
Undiluted earnings per preference share (€) 1.64 0.10 -

* pursuant to IFRS including minority interests.


HORNBACH HOLDING AG Group: First Nine Months

HORNBACH HOLDING AG Group Nine Months Nine Months Change
(in € million, unless otherwise stated) 2006/2007 2005/2006 in %
Net sales 2,023.4 1,892.0 6.9
of which in other European countries 682.3 627.9 8.7
Gross margin (as % of net sales) 35.0% 34.4%
EBITDA 189.6 152.0 24.7
Earnings before interest and taxes (EBIT) 132.4 95.3 39.0
Consolidated earnings before taxes 104.8 66.0 58.8
Consolidated net income* 69.8 40.9 70.6
Undiluted earnings per preference share (€) 7.04 4.27 64.9
No. of employees at the HORNBACH Group 12,168 12,090 0.6
Investments 84.4 170.9 -50.6
Total assets 1,827.9 1,835.6 -0.4
Shareholders' equity 621.9 566.4 9.8
Shareholders' equity as % of total assets 34.0% 30.9%

* pursuant to IFRS including minority interests.


HORNBACH-Baumarkt-AG Subgroup: 3rd Quarter

HORNBACH-Baumarkt-AG Subgroup 3rd Quarter 3rd Quarter Change
(in € million, unless otherwise stated) 2006/2007 2005/2006 in %
Net sales 599.3 561.6 6.7
of which in other European countries 214.7 200.2 7.2
Like-for-like sales growth 5.5% 1.8%
Gross margin (as % of net sales) 35.5% 34.3%
EBITDA 41.8 26.5 57.8
Earnings before interest and taxes (EBIT) 26.6 9.2 189.5
Consolidated earnings before taxes 20.7 4.0 419.6
Consolidated net income 14.8 0.9 -
Undiluted earnings per share (€) 0.96 0.06 -



HORNBACH-Baumarkt-AG Subgroup: First Nine Months

HORNBACH-Baumarkt-AG Subgroup Nine Months Nine Months Change
(in € million, unless otherwise stated) 2006/2007 2005/2006 in %
Net sales 1,897.1 1,779.1 6.6
of which in other European countries 682.3 627.9 8.7
Like-for-like sales growth 2.9% 1.1%
Gross margin (as % of net sales) 35.7% 34.9%
EBITDA 161.3 122.1 32.1
Earnings before interest and taxes (EBIT) 114.5 74.8 53.2
Consolidated earnings before taxes 96.5 54.9 75.9
Consolidated net income 65.2 34.3 90.2
Undiluted earnings per share (€) 4.26 2.26 88.5
No. of employees 11,579 11,473 0.9
Investments 61.5 123.7 -50.3
Total assets 1,320.6 1,331.2 -0.8
Shareholders' equity 474.1 423.2 12.0
Shareholders' equity as % of total assets 35.9% 31.8%
No. of stores 121 123 -1.6
Sales area as per BHB (in 000 mē) 1,315 1,305 0.8
Average store size (in mē) 10,868 10,608 2.5


Rounding differences may arise in totals and percentages.



About HORNBACH
The HORNBACH Group is one of Europe's largest operators of DIY megastores with garden centers. In addition to the largest operating subgroup, HORNBACH-Baumarkt-AG (DIY megastores with garden centers), the overall HORNBACH HOLDING AG Group also comprises the subgroups of HORNBACH Baustoff Union GmbH (regional builders' merchant and construction materials business) and HORNBACH Immobilien AG (real estate and location development). The HORNBACH DIY megastores with garden centers have an average size of almost 11,000 square meters, a figure unmatched by any competitor in Germany and Europe. Founded in 1877, the family-run company, which has its roots in the Palatinate region, was first publicly listed in 1987. HORNBACH currently operates 121 DIY megastores with garden centers in eight countries, of which 89 are in Germany. Its sales concept and product range are entirely tailored to the needs of project and professional customers. HORNBACH guarantees its customers permanently low prices and is thus the price leader in the sector. The high quality of advice and excellent service provided by the company have been attested in numerous independent tests and studies. Pioneering achievements, such as the first DIY store combined with a garden center (1968), the first megastore (1980) and the first DIY store with a drive-in facility (2003) provide proof of HORNBACH's ongoing innovative power. Since 2001, a strategic partnership has been in place with the British retail group Kingfisher. HORNBACH has acted as a "job machine" for decades, with more than 12,000 employees now participating in the success of the company.



Press Release of HORNBACH-Group on the Q3/9M Interim Report 2006/07

Q3/9M Interim Report 2006/07 HORNBACH HOLDING AG Group

Q3/9M Interim Report 2006/07 HORNBACH-Baumarkt-AG Group