Q3 2012 Report of Praktiker AG

Quarter characterised by transformation

• German business influenced by uncertainty
• Max Bahr and International with positive EBITA
• Gross margin and financial result improved



Hamburg - 25 October 2012. For Praktiker AG, the third quarter 2012 was characterised by a special situation. The top priorities were the restructuring and realignment of the business model in Germany and the financing which has in the meantime been successfully secured. Against the backdrop of the unclear perspectives for the future of the Group which lasted until the end of the quarter, uncertainties appeared mainly in the German business that affected sales and earnings. In this context, the brand Max Bahr - the company's future main sales division in the German market - proved to be more stable than the Praktiker brand which is undergoing a transformation process. Abroad, third quarter sales continued to drop, but at a lower rate than during the first six months of the year. Moreover, Max Bahr and the segment International made a positive contribution to earnings. At the level of the Group, the gross margin and financial result improved during the period under review.


"The course of business in the third quarter was influenced by exceptionally challenging general conditions", stressed Armin Burger, CEO of Praktiker AG since 15 October. "During this period, the top management's attention mainly focused on the Group's restructuring and on securing the financing, on the one hand, while the perspectives for the future, which were still unclear during the period under review, temporarily affected the relationship with the suppliers thereby materially weighing on goods availability, on the other. The general conditions significantly improved after the turn of the quarter with the contractual safeguarding of all essential elements of the financing concept and will now have a positive effect on operational business. We now have a stable planning basis and a concrete development perspective that will give us new strength. With the realignment of the business model initiated by the present Management Board we are on the right track. I am confident that, based on the existing restructuring programme, Praktiker AG will successfully achieve the turnaround and return to a solid growth course".

In the third quarter 2012, the Praktiker Group generated sales of 758.2 million euro which is 10.2 percent down from the year-earlier period (844.4 million euro). As a consequence, also operational earnings (EBITA) deteriorated and were reported at minus 17.3 million euro. The gross margin, by contrast, developed better rising from 32.3 to 33.5 percent year-on-year. This was driven by the fact that significantly less old stocks had to be sold at high discounts as compared to 2011. With regard to the financial result, the deficit reported one year ago could be reduced as well. On account of less exchange rate fluctuations in improved from minus 22.1 to minus 15.1 million euro. At a minus of 32.4 million euro, earnings before taxes remained almost unchanged year-on-year.

During the first nine months of the current financial year, Group sales came in at 2,308.0 million euro. This is 6.5 percent less than one year earlier. Operating earnings improved significantly on the grounds of lower extraordinary effects to come in at minus 88.0 million euro (2011: minus 153.6 million euro).

Germany
In Germany, Q3 business was characterised by the start of store conversions from the Praktiker brand to the Max Bahr brand and by the then as yet unresolved financing which in turn had a negative impact on goods supply and customer frequency. At 522.9 million euro, domestic sales came in 11.7 percent below the year-earlier value. The Praktiker brand, in particular, suffered from the aforementioned strains and reported sales totalling 331.2 million euro which is a drop of 15.2 percent. During the third quarter, the sales division Max Bahr generated sales of 171.9 million euro or 4.8 percent less than one year earlier.

In view of the higher gross margin and lower extraordinary effects it was possible to report a better result in terms of EBITA. Overall, operating earnings from domestic operations improved during the third quarter from minus 23.1 to minus 20.8 million euro. Max Bahr delivered a positive contribution to earnings which - on account of the drop in sales - fell short of the prior-year value coming in at 2.9 million euro. Year to date, EBITA of Praktiker Germany improved to minus 73.5 million euro (2011: minus 125.4 million euro) and at Max Bahr to 19.6 million euro (2011: 15.3 million euro).

International
In the segment International, we experienced a certain pickup of the economic environment. Whereas in the first half of the year sales still lagged 12.2 percent behind the year-earlier value, this drop receded by 6.8 percent to 235.3 million euro during the period from July to September. This was mainly attributable to the continued tense situation in Greece. In Romania, a slight plus in sales in local currency was achieved for the first time in a long while. Sales revenues in the Ukraine again reported by far the highest growth climbing 20.0 percent.

In line with the restructuring programme, Praktiker continued its efforts aimed at controlling costs and strengthening profitability in the International segment. As a consequence, it was possible to again report a positive EBITA in the amount of 3.5 million euro in the third quarter. Although being 9.6 million euro lower than one year earlier, it is based on a comparably broad foundation. During the period from July to September, five of the eight international subsidiaries generated positive earnings: Bulgaria, Greece, Luxemburg, Romania and Hungary.

Store portfolio
The core element of the realignment of the German business initiated in late May is the nation-wide extension of the Max Bahr store portfolio by converting up to 120 Praktiker stores to the more upmarket and more profitable Group brand. This led to first shifts in the store portfolio during the third quarter. The number of Max Bahr stores climbed from 78 to 85 year-on-year while the number of Praktiker locations - including nine store closures - dropped from 236 to 220. Abroad, Praktiker was operating 111 stores as at 30 September, one up from the year-earlier period.






in € million

Q3/12

Q3/11

Change
in %

9M/12

9M/11

Change
in %

Sales

758.2

844.4

-10.2

2,308.0

2,467.5

-6.5

Germany

522.9

592.0

-11.7

1,690.2

1,779.2

-5.0

- thereof Praktiker

331.2

390.4

-15.2

1,092.1

1,171.9

-6.8

- thereof Max Bahr

171.9

180.5

-4.8

532.5

540.3

-1.4

- thereof Sonstiges

19.8

21.1

-6.2

65.5

67.0

-2.2

International

235.3

252.5

-6.8

617.8

688.2

-10.2

EBITA

-17.3

-10.1

-

-88.0

-153.6

-

Germany

-20.8

-23.1

-

-59.4

-114.3

-

- thereof Praktiker

-23.0

-28.3

-

-73.5

-125.4

-

- thereof Max Bahr

2.9

6.4

-

19.6

15.3

-

- thereof Sonstiges

-0.7

-1.3

-

-5.4

-4.2

-

International

3.5

13.0

-

-28.6

-39.4

-

Financial result

-15.1

-22.1

-

-38.6

-46.3

-

Earnings before taxes*

-32.4

-32.2

-

-126.6

-359.4

-

Capital expenditure

5.8

21.2

-

21.9

59.4

-

Number of stores as at 30 Sep

432

441

-0.2

Germany

321

331

-3.0

- thereof Praktiker

220

236

-6.8

-

- thereof Max Bahr

85

78

9.0

- thereof Sonstiges

16

17

-5.9

International

111

110

0.9

*undiluted



Quarterly Report Q3 2012 / Nine-Month Financial Report 2012

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