HORNBACH Baumarkt : Half-Year Financial Report 2022/23 of Holding AG & Co. KGaA Group

HALF-YEAR FINANCIAL REPORT

HORNBACH Holding AG & Co. KGaA

Group

H1

2022/23

(MARCH 1 - AUGUST 31, 2022)

HORNBACH HOLDING AG & CO. KGaA GROUP

Half-Year Financial Report 2022/23 (March 1 - August 31, 2022)

Rounding up or down may lead to discrepancies between percentages and totals. Calculation of percentage figures based on € 000s.

1. Like-forlike sales net of currency items; includes sales at all stores that have been open for at least one year and online sales
2. Adjusted to exclude non-operating income and expenses
3. Including minority interests pursuant to IFRS

Further sales growth in 2nd quarter and 1st half of 2022/23 - guidance confirmed

• Customer demand for construction and DIY products remains stable in second quarter (Q2) of 2022/23
• HORNBACH Group increases consolidated sales by 5.2 % to € 3,463 million in first half (H1) of 2022/23
• • DIY and garden centers (HORNBACH Baumarkt) boost net sales by 4.9 % (2021/22: 4.6 %) and by 1.9 % on a like-for-like
    basis net of currency items (2021/22: 3.4%)
  • Builders' merchant business (HORNBACH Baustoff Union) increases net sales by 9.7 % (2021/22: 13.2 %)
• Adjusted operating earnings (adjusted EBIT) of € 277.4 million down 17.7 % on previous year but significantly (39.8 %) higher than in pre-pandemic 2019/20 financial year
• Earnings per share of € 11.37 almost at previous year's level due to increased shareholding in HORNBACH Baumarkt AG
• Earnings guidance for 2022/23 dated June 13, 2022 is confirmed: Slight growth expected in net sales, adjusted EBIT ex- pected to show a low double-digit percentage reduction

Demand from customers for construction and home improvement products remained high in the summer months despite rising inflation and travel activity returning to normal levels. Having already risen by 8.1 % in the first three months of the 2022/23 financial year, in the second quarter (Q2) of 2022/23 (June 1 to August 31, 2022) consolidated sales exceeded the record level reported for the previous year's quarter by 2.2 %. For the first half (H1) of 2022/23 (March 1 to August 31, 2022), this resulted in sales growth of 5.2 % to € 3,463.3 million (2021/22: € 3,292.4 million). Sales at the largest operating Subgroup, HORNBACH Baumarkt AG (DIY retail), grew by 4.9 % to € 3,236.8 million in the first half of 2022/23 (2021/22: € 3,085.2 million). On a like-for-like basis and net of currency items, first-half DIY sales at the Subgroup increased by 1.9 % (2021/22: 3.4 %). The HORNBACH Baustoff Union Subgroup generated substantial growth, with sales rising by 9.7 % to € 226.6 million.

The HORNBACH Group's operating earnings adjusted to exclude non-operating earnings items (adjusted EBIT) decreased by

23.2 % to € 129.1 million in the second quarter of 2022/23 (2021/22: € 168.1 million). At € 277.4 million, adjusted EBIT for the first half of 2022/23 therefore fell 17.7% short of the previous year's record figure (€ 337.2 million). The adjusted EBIT margin of 8.0 % in the first half of 2022/23 (2021/22: 10.2 %) was still slightly ahead of the first half of the pre-pandemic 2019/20 financial year (7.6 %). Due to the increased shareholding in HORNBACH Baumarkt, the earnings per share of € 11.37 fell only slightly short of the previous year's level (2021/22: € 11.69).

The full-year earnings guidance for 2022/23 as adjusted on June 13, 2022 is confirmed. Adjusted EBIT is still expected to show a low double-digit percentage reduction compared with the record figure reported for the 2021/22 financial year (€ 362.6 million). The sales guidance (slight increase) remains unchanged on the guidance published on May 17, 2022.

Macroeconomic and Sector-Specific Framework

The first half of the 2022/23 financial year (March 1 to August 31, 2022) was marked by the impact of the Russia/Ukraine war and by significant price rises, particularly in the energy sector. Existing pressure on international supply chains continued, not least given the temporary closures of Chinese trade ports, as did the shortages in commodities and upstream products. Energy and food prices rose sharply, while inflation rates reached record levels in Europe. Based on figures released by Eurostat, the annual inflation rate in the European Union (EU 27) rose from 7.8 % in March to 9.8 % in July. In Germany, the annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) increased from 7.6 % in March to 8.8 % in August.

According to Eurostat, despite record inflation and the Ukraine war gross domestic product in the European Union (EU 27) initially grew year-on-year by 5.5 % in Q1 of the 2022 calendar year following the contractions seen in the pandemic years of 2020 and 2021. The EU 27 countries reported growth of 4.2 % in Q2 2022. Germany showed the weakest momentum, with year-on-year growth of 3.5 % in Q1 2022 and 1.7 % in Q2 2022. Following the lifting of nearly all pandemic-related restrictions, private consumer spending nevertheless rose significantly from the end of March, growing year-on-year by 9.1% in Q1 2022 and by 6.5 % in Q2 2022.

Adjusted for calendar-related factors, output in the construction industry in the EU 27 rose year-on-year by 5.6 % in the first quarter and by 2.0 % in the second quarter of the 2022 calendar year. The corresponding figures for Germany are year-on-year growth of 4.2 % in Q1 2022 and a year-on-year reduction of 2.8 % in Q2 2022. Based on figures released by the Federal Statistical Office, building permits for new detached houses plummeted by 17.0 % in the first half of 2022, while permits for apartment blocks still rose by 7.8 %.

Growth rates in GDP and inflation in countries in which HORNBACH operates

According to Eurostat, retail sales (excluding motor vehicle retail) adjusted for calendar-related factors in the EU27 grew by

5.7 % in Q1 2022. In Q2 2022, the retail sector posted growth of 1.2 %. The internet and mail order segment reported negative growth in both quarters, contracting by 6.3 % and 9.0 % respectively. Sales in the German retail sector grew by 5.0 % in Q1 2022 and decreased by 3.2% in Q2 2022.

Based on figures released by the GfK, German DIY stores and garden centers reported nominal year-on-year growth in aggregate gross sales of 14.9 % to € 11.52 billion in the first half of the 2022 calendar year. The sector therefore continued to fall short of the record figures achieved due to pandemic in the first half of 2020. On a like-for-like basis, i.e. excluding stores newly opened, closed, or subject to major conversion measures, sales in the sector rose by 14.3 % in the period from January to June 2022.

In the Netherlands, gross sales at DIY stores and garden centers surged by 20.5 % in the first half of the 2022 calendar year according to the GfK, contrasting with the downturn of 24.7 % reported for the previous year due to strict pandemic-related re- strictions. In Austria, sales at DIY stores and garden centers showed a slight decline of 0.4 %, while their Swiss counterparts reported a significant reduction of 8.9 %. Sales at DIY stores and garden centers in the Czech Republic grew by 20.5 % in the first half of 2022. No data is available for Luxembourg, Romania, Sweden, or Slovakia.

Sales at DIY stores and garden centers in Germany (calendar year)

Earnings, Financial, and Asset Position

Impact of Macroeconomic Conditions

Increased prices for commodities, procurement, transport, and energy meant that we were obliged to adjust our retail prices to market circumstances in numerous areas of our product range and merchandise. Given our permanent low price guarantee, how- ever, we do not always pass on the higher costs to our customers in full, or only after a certain delay.

In terms of our merchandise procurement, we witnessed delays to supplies and shortages in some cases once again in

H1 2022/23, with these resulting in particular from high demand for fuels and for insulating materials. Furthermore, the restricted availability of chips continued to delay supplies of some types of machine. This situation has nevertheless eased compared with the previous year. Thanks to our multi-supplier strategy, the additional storage capacity we have built up, and our highly circumspect procurement and stocking policies, however, we were mostly able to uphold the availability of merchandise for our customers. As a result, there were no material shortages in stocks.

The HORNBACH Group did not and does not have any locations in Russia, Belarus, or Ukraine. Furthermore, we also do not have any direct suppliers in any of these three countries. In some cases, we witnessed temporary shortages among suppliers who procured upstream products, components, or commodities from these regions and were obliged to switch procurement source.

Seasonal and Calendar-Related Factors

Impact of weather conditions

In Europe, the spring and summer months offered only partly favorable weather conditions for implementing projects at home and in the garden. Following a delayed start to the gardening season due to frosty spring weather in several regions of Europe, the summer months were then characterized by record heat and drought.

Number of business days

There was an average of 0.5 business days more in the first half of the 2022/23 financial year (March 1 to August 31, 2022) than in the equivalent period in the previous year. The arithmetic calendar-related impact at the Group came to plus 1.5 business days in Q1 and minus 1.0 business days in Q2.

Sales Performance of the HORNBACH Group

The HORNBACH Holding AG & Co. KGaA Group (HORNBACH Group) comprises the HORNBACH Baumarkt AG, HORNBACH Baustoff Union GmbH, and HORNBACH Immobilien AG Subgroups.

Sales at the HORNBACH Group rose by 2.2% to € 1,649.9 million (2021/22: € 1,614.3 million) in the second quarter of the 2022/23 financial year (June 1 to August 31, 2022) and by 5.2 % to € 3,463.3 million in the first six months (2021/22:

€ 3,292.4 million).

HORNBACH Baumarkt AG Subgroup

Development in HORNBACH's store network

Two new DIY stores with garden centers were opened in the first half of 2022/23, in this case in Nitra (Slovakia) and Enschede (Netherlands). As of August 31, 2022, the HORNBACH Baumarkt AG Subgroup operated 169 retail outlets (February 28, 2022: 167) with total sales areas of 2.0 million m², of which 98 in Germany and 71 in other European countries.