Operating loss significantly reduced due to lower extraordinary effects

• Store conversions from Praktiker to Max Bahr started successful
• International business continues to be impaired by declining sales



Hamburg, 21 March 2013 - The Praktiker Group succeeded in significantly reducing operating losses in 2012 with sales declining 5.6 percent to 3.003 billion euro. EBITA were reported at minus 128.8 million euro. However, this significant improvement by around 65 percent compared to 2011 is exclusively attributable to lower extraordinary effects.

Armin Burger, Chairman of the Management Board of Praktiker AG: "The financial year 2012 was a year of far-reaching distortions that materially affected sales and earnings. Our activities focused on securing our company's existence and its realignment. In this regard we succeeded in making a major step forward. In 2013, we will consistently continue on this path and thereby set the strategic foundations for the repositioning of the Group. Our efforts aim at expanding the profitable brand Max Bahr to one of the leading DIY chains in Germany".

Group: sales down, operating earnings significantly improved
In 2012, the Praktiker Group generated sales of around 3.003 billion euro. This was 5.6 percent down from the year earlier (3.183 billion euro). In its international segment, the persisting poor economic situation in large parts of the international markets again impaired business development. In Germany, in an overall stagnating market, 2012 mainly lagged behind the year earlier due to the important spring business which was impaired by poor weather conditions. In additions, sales volume was lost due to the realignment of the business model. To be able to manage the conversion of Praktiker stores to the Max Bahr brand, these stores had to be closed for about one month each.

Operating earnings (EBITA) of Praktiker AG were stated at minus 128.8 million euro. Compared to the prior year (minus 375.1 million euro) this represents a significant improvement which however is exclusively attributable to the reduction of extraordinary effects which had impaired earnings much more strongly in 2011. In 2012, extraordinary effects in the amount of 29.6 million euro on balance had to be reported in the financial statements (prior year 473,0 million euro). They mainly relate to expenses for the conversion of Praktiker stores to Max Bahr, provisions for planned store closures and higher consultancy expenses. After deduction of these extraordinary effects, EBITA came in at minus 99.1 million euro (prior year: minus 61.6 million euro).

Germany: Realignment of Group portfolio proving effective
In Germany, the Praktiker Group generated sales totalling around 2.191 billion euro in 2012, 4.3 percent less than one year earlier (2.289 billion euro). This drop, which still exceeded five percent in the second and third quarter, could be significantly mitigated towards the end of the year. In the last quarter, it amounted to only 1.4 percent. Like-for-like, sales for the full year remained stable against a negative sector trend.

As a result of the realignment of the German business resolved by the Management Board in May 2012 and implemented starting from August, the store portfolio of Praktiker - including eleven store closures - was reduced by 38 locations. The portfolio of Max Bahr grew by 27 locations. The sales divisions' share in sales shifted accordingly over the year: Praktiker Germany generated sales of 1.409 billion euro which is 6.5 percent down while Max Bahr outperformed the prior-year value by 0.7 percent with sales totalling around 700 million euro. In this context it has to be borne in mind that the sales losses in the conversion stores during the four-week closure had to be shouldered solely by Max Bahr.

Operating earnings of domestic operations equally remained in the negative but improved significantly due to the reduction of extraordinary effects. Praktiker Germany reported EBITA of minus 90.8 million euro (2011: -262.5 million euro) while, at Max Bahr, EBITA came in at minus 14.5 million euro (2011: -20.9 million euro). Before special items, EBITA at Praktiker remained almost stable at minus 82.6 million euro (2011: -79.6 million euro) while at Max Bahr EBITA again reached positive territory with 6.8 million euro. When looking only at the 78 historic stores of Max Bahr before extraordinary effects, EBITA improved slightly at 16.6 million euro (2011: 16.2 million euro).

International: sales and operating earnings receding
Also in 2012, the international business remained challenging. Sales dropped to 811.8 million euro missing the prior year value by 9.2 percent (2011: 894.2 million euro). The reason for this were mainly the macroeconomic problems in many international markets that prevented demand for DIY products from picking up. Particularly affected were Greece, Poland and Hungary whereby the drop in sales gradually slowed from quarter to quarter in important countries like Greece and Romania. A high growth rate was only delivered by the Ukraine.

Part of the sales losses reported is also attributable to currency fluctuations. Net of these fluctuations, i.e. in local currency, international sales dropped by 7.6 percent.

Operating earnings (EBITA) reached minus 17.5 million euro which is significantly better than in 2011 (minus 84.1 million euro). This improvement in turn is again solely attributable to the absence of extraordinary effects. In the year earlier, these extraordinary effects had burdened the result with 91.8 million euro. In the year under review by contrast, the company reported a positive balance with regard to extraordinary effects: value additions to fixed assets and the release of provisions for onerous contracts in the scope of 4.5 million euro contrasted with restructuring expenses of just 2.4 million euro. Before extraordinary effects, EBITA stood at minus 19.6 million euro (2011: 7.7 million euro). The drop in sales thus weighed on operating earnings.

Net loss for the year distinctly reduced
After consideration of the financial result and taxes, Praktiker AG closed the financial year 2012 with a net loss for the year of 188.9 million euro. One year earlier, this net loss had still amounted to 554.7 million euro.

Capital expenditure reduced
Capital expenditure accounted for 87.7 million euro in 2012. Although this is 17.1 million euro up from the year earlier (70.6 million euro), this increase is solely attributable to non-cash items resulting from amended lease contracts. Of the total capital expenditure, only 35.2 million euro were cash-effective, which is distinctly less than in 2011 (62.6 million euro).

Net debt increased
The net debt at the close of 2012 amounted to 491.9 million euro and thus exceeded the year-on-year value (351.1 million euro) because the liquid assets had decreased while the financial liabilities had increased as a consequence of the loan taken out in October.

Store portfolio: reduction and fundamental change at home, slight increase abroad
At the end of financial year 2012 the Praktiker Group operated a total of 427 stores, 12 less than one year earlier. Of this number, 316 stores were operated in Germany (2011: 330). The domestic store portfolio of Praktiker contracted from 235 to 197 stores as a result of store closures and conversions to the sales division Max Bahr; Max Bahr extended its store network from 78 to 105 locations. The store portfolio of extra BAU+HOBBY, which operates under the reporting segment Miscellaneous, shrank from 17 to 14 stores. At the international level, the Praktiker Group extended its presence by two stores to a total of 111 locations. Here, three store openings in Poland, Greece and Hungary contrasted with one store closure in Turkey.

Further expansion plans in Germany and abroad were shelved in view of the persistently difficult business situation.

Outlook: sales 2013 below prior year, EBITA again improved
For the full year 2013, the management anticipates group sales to come in below the prior-year value in view of the foreseeable changes in the overall portfolio. Regarding operating earnings during the current financial year, the management expects to achieve improved but not yet positive EBITA.


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