KINGFISHER increases stake in HORNBACH of Germany

Published: 07:00 21.12.2005 GMT+1 /HUGIN /Source: HORNBACH HOLDING AG /GER: HBH3 /ISIN: DE0006083439

HORNBACH sees good prospects for further growth in Germany and abroad

Nine Month Report 2005/2006

Nine-month sales of HORNBACH HOLDING AG rise by 7.2 percent to Euro 1.892 billion / HORNBACH to open 15 new DIY megastores with garden centers in Germany by 2010 / Company to press ahead with expansion in other European countries



Frankfurt am Main, December 21, 2005. The HORNBACH Group, operator of one of Europe's largest DIY chains, is consistently maintaining its growth trajectory in Germany and Europe. "We will be opening 15 new DIY megastores with garden centers in Germany alone in the coming five years," announced Albrecht Hornbach, Chairman of the Board of Management of HORNBACH HOLDING AG, at the presentation of the third-quarter results for 2005/2006 in Frankfurt am Main on Wednesday. The HORNBACH Group will also be pressing ahead with its growth in other European countries. HORNBACH currently operates 123 DIY megastores with garden centers in eight European countries, of which 91 are in Germany.

Further increase in like-for-like sales

HORNBACH HOLDING AG increased its consolidated sales by 7.2 percent to Euro 1.892 billion in the first nine months of the 2005/2006 financial year (March 1 to November 30, 2005). Third-quarter net sales rose by 8.3 percent to Euro 600 million. Like-for-like sales at the DIY megastores with garden centers operated by the HORNBACH-Baumarkt-AG subgroup rose by 1.8 percent in the third quarter and by 1.1 percent for the first nine months.

Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to Euro 152.0 million in the first nine months, compared with Euro 166.4 million in the equivalent period in the previous year. Operating earnings (EBIT) amounted to Euro 95.3 million, compared with Euro 112.5 million in the first nine months of the previous financial year. Consolidated earnings before taxes and minority interests reached Euro 66.0 million, compared with Euro 86.5 million in the same period in 2004/2005.

Rejection of destructive discount battles

According to Albrecht Hornbach, this decline in earnings is mainly due to two factors. "On the one hand, we reported superb earnings in the past financial year, which are very difficult to top. On the other hand, our sector is still subject to merciless competition, which is increasingly taking the form of discount battles. By adjusting our price management to the market, we have extended our price leadership." The Board Chairman is convinced that HORNBACH's strong position will enable the company to emerge as a victor from the "era of destructive discount battles". "HORNBACH is playing no part in the ups and downs in pricing policy - we offer our goods at permanently low prices."

Praktiker IPO welcomed

Albrecht Hornbach welcomed the stock market return of the Metro subsidiary, Praktiker, as representing a "step towards the further opening up of the DIY sector to the capital markets." The Board Chairman added that "we see it as a very positive development that following our own IPO in 1987 a competitor has now also taken this step." This would contribute to enhancing transparency within the sector and stimulate competition on the capital markets.

Munich, Düsseldorf and Hamburg in focus

One focus of the company's further expansion in Germany is on Greater Munich, where three new stores are scheduled to be opened by 2007. The outlet in Munich-Fröttmaning, which is located in the North of the state capital on the A9 motorway directly adjacent to the Allianz Arena, is opening on December 27. The purchase agreement for an attractive piece of land in Freiham in the West of Munich was also signed a few weeks ago. A further location in the South of the Bavarian metropolis is also in the planning stage.

HORNBACH is also planning new openings in Düsseldorf and Hamburg for the coming years. "In spite of the existing overcapacity in the market, we still see Germany as offering space for our unique business model," stressed Hornbach. The HORNBACH success model could be summarized as follows: "We focus on project and professional customers. That is why our stores are characterized by large-scale surfaces and broad product ranges, high quality of advice and permanently low prices."

Renowned studies award top marks to HORNBACH

"We will also not be cutting back on our customer advice, as some competitors are planning to do, but will rather expand the service division even further," affirmed Albrecht Hornbach. After all, it was precisely the high quality of customer advice and excellent level of service which made HORNBACH so attractive for DIY enthusiasts and professional tradesmen.

Numerous independent studies have confirmed HORNBACH's leading position in terms of service orientation and quality of customer advice. This year's "Customer Monitor Germany" survey undertaken by the Munich consumer affairs company Servicebarometer AG awarded HORNBACH a satisfaction index of 2.35, thus placing the company ahead of all other large DIY chains. The Customer Monitor survey questioned more than 19,000 consumers on their experiences with 19 different sectors. In the DIY store section of the survey, HORNBACH was also awarded top position in the price structure and product range categories.

In the Summer, HORNBACH won a comprehensive DIY store test undertaken by the television programs "market" (WDR) and "Plusminus" (ARD). TV teams had closely examined the five largest providers of DIY products over several weeks and declared HORNBACH the winner, with an overall grade of 2.3.

"Best DIY store in the Netherlands"

It is not only in Germany that consumers prize the product range, service levels and price structures offered by HORNBACH. Readers of the respected Dutch daily newspaper "De Telegraaf" recently voted the HORNBACH DIY megastore with a garden center in Zaandam as the "best DIY store in the Netherlands".


An overview of the most important key figures:
(Percentage changes calculated on EUR 000s basis)

Key Figures HORNBACH HOLDING AG
(ISIN DE0006083439)

Third Quarter 2005/2006 (March 1 - November 30, 2005)

(in EUR million, unless otherwise stated) 3rd Quarter
2005/2006 3rd Quarter
2004/2005
± %
Net sales 599.9 554.1 8.3
of which in other European countries 200.2 172.2 16.3
Gross margin (as % of net sales) 33.8% 34.2%
EBITDA 33.8 36.3 -7.0
Earnings before interest and taxes (EBIT) 13.2 17.5 -24.3
Consolidated earnings before taxes and minority interests 5.0 8.5 -40.5
Consolidated net income* 0.5 3.7 -85.5
Earnings per preference share (EUR) 0.10 0.49 -79.6

* after minority interests


First Nine Months 2005/2006

(in EUR million, unless otherwise stated) 9 Months
2005/2006 9 Months
2004/2005
± %
Net sales 1,892.0 1,765.7 7.2
of which in other European countries 627.9 542.5 15.7
Gross margin (as % of net sales) 34.4% 35.6%
EBITDA 152.0 166.4 -8.7
Earnings before interest and taxes (EBIT) 95.3 112.5 -15.3
Consolidated earnings before taxes and minority interests 66.0 86.5 -23.7
Consolidated net income* 33.9 41.3 -18.0
Earnings per preference share (EUR) 4.27 5.20 -17.9
No. of employees at HORNBACH Group 12,090 11,411 6.0
Investments 170.9 118.7 44.0
Total assets 1,835.6 1,868.8 -0.2
Shareholders' equity 566.4 547.4 3.5
Shareholders' equity as % of total assets 30.9% 29.4%

* after minority interests


Key Figures HORNBACH-Baumarkt-AG Subgroup
(ISIN DE0006084403)

Third Quarter 2005/2006 (March 1 - November 30, 2005)


(in EUR million, unless otherwise stated) 3rd Quarter
2005/2006 3rd Quarter
2004/2005
± %
Net sales 561.6 518.3 8.3
of which in other European countries 200.2 172.2 16.3
Like-for-like sales growth 1.8% -0.9%
Gross margin (as % of net sales) 34.3% 34.8%
EBITDA 26.4 29.1 -9.2
Earnings before interest and taxes (EBIT) 9.2 13.4 -31.5
Consolidated earnings before taxes 4.0 8.3 -52.2
Consolidated net income 0.9 5.4 -84.3
Undiluted earnings per share (EUR) 0.06 0.36 -83.3



First Nine Months 2005/2006


(in EUR million, unless otherwise stated) 9 Months
2005/2006 9 Months
2004/2005
± %
Net sales 1,779.1 1,658.8 7.2
of which in other European countries 627.9 542.5 15.7
Like-for-like sales growth 1.1% 2.5%
Gross margin (as % of net sales) 34.9% 36.1%
EBITDA 122.1 141.1 -13.4
Earnings before interest and taxes (EBIT) 74.8 96.4 -22.4
Consolidated earnings before taxes 54.9 81.4 -32.6
Consolidated net income 34.3 50.0 -31.4
Undiluted earnings per share (EUR) 2.26 3.33 -32.1
No. of employees 11,473 10,752 6.7
Investments 123.7 75.0 64.9
Total assets 1,331.2 1,332.8 -0.1
Shareholders' equity 423.2 401.8 5.3
Shareholders' equity as % of total assets 31.8% 30.2%
No. of stores 123 117 5.1
Sales area as per BHB (in 000 m²) 1,305 1,196 9.1
Average store size (in m²) 10,608 10,224 3.8



==> PDF versions of the Interim Reports 2005/2006 can be downloaded here:

Interim Report First Nine Months 2005/2006 HORNBACH HOLDING AG Group:


Interim Report First Nine Months 2005/2006 HORNBACH-Baumarkt-AG Subgroup:



The interim reports of HORNBACH HOLDING AG and HORNBACH-Baumarkt-AG have also been published in the "Investor Relations" section of the website of the HORNBACH Group at www.hornbach-holding.de.



Investor Relations

Axel Müller
76878 Bornheim bei Landau
Tel: (+49) 0 63 48/ 60 - 24 44
Fax: (+49) 0 63 48/ 60 - 42 99
E-Mail: invest@hornbach.com

Internet: www.hornbach-holding.com


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