HORNBACH Baumarkt : Quarterly Statement Q1 2023/2024

HORNBACH HOLDING AG & CO. KGAA GROUP

Statement on Q1 2023/24 (March 1 - May 31, 2023)

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
4. Including passive employment relationships

Outlook confirmed - subdued start to spring season in line with expectations

• At € 1,773.5 million, consolidated sales show slight year-on-year reduction of 2.2% in Q1 2023/24 due to subdued start to spring season on account of weather conditions
• • Net sales at HORNBACH Baumarkt Subgroup down 2.2%
  • Net sales at HORNBACH Baustoff Union Subgroup down 2.4%
• At € 109.4 million, adjusted operating earnings (adjusted EBIT) 26.2% lower than in previous year
• Full-yearforecast for 2023/24 confirmed: sales at about previous year's level and risk of adjusted EBIT reducing by around 5% to 15%

The net sales of the HORNBACH Group in the first quarter (Q1) of 2023/24 (March 1 to May 31, 2023) showed a slight year-on- year decrease of 2.2% to € 1,773.5 million (2022/23: € 1,813.4 million). Unusually poor weather conditions at the beginning of the main DIY season in March and April were one of the main reasons for this development. Sales at HORNBACH Baumarkt AG, the largest operating Subgroup (DIY retail), declined by 2.2% to € 1,667.6 million (2022/23: € 1,705.3 million). On a like-for- like basis and net of currency items, three-month sales at the HORNBACH Baumarkt AG Subgroup fell by 3.2%. Sales at the

HORNBACH Baustoff Union GmbH Subgroup decreased by 2.4% to € 105.4 million (2022/23: € 108.0 million). At € 109.4 mil- lion, operating earnings adjusted to exclude non-operating earning items (adjusted EBIT) fell 26.2% short of the previous year's figure (2022/23: € 148.3 million). Earnings per HORNBACH Holding share amounted to € 4.15 (2022/23: € 6.14). The full- year sales and earnings guidance for 2023/24 has been confirmed. Sales are expected at about the previous year's level. Adjusted EBIT is still subject to the risk of a 5% to 15% reduction compared with the previous year's figure.

Earnings, Financial, and Asset Position

Impact of macroeconomic conditions

The macroeconomic climate in Q1 2023/24 continued to be shaped by high inflation, albeit at lower levels than in the preceding months. The annual rate of inflation in the euro area (HICP) was estimated at 6.1% in May 2023, compared with 7.0% in April and 6.9% in March. In Germany, the inflation rate (CPI) eased from 7.4% in March to 7.2% in April and 6.1% in May. While grocery prices still rose at above-average rates, prices for mineral oil products in particular fell significantly. To date, wage growth has fallen short of inflation, thus further weakening the purchasing power of private households. Wages are nevertheless expected to rise significantly, particularly in Germany, during the further course of 2023. Collective wage negotiations for employees in the retail sector in Germany's federal states began in May 2023 and were still underway upon the preparation of this quarterly statement.

Seasonal and calendar-related factors

The start to the spring season in the countries in which HORNBACH operates was severely impeded by unusually cold and rainy weather in March and April. This had a significant adverse impact on demand for garden products in particular. Sunny weather in May then influenced sales positively, especially those in the garden division.

As a result of calendar-related factors, there was a Group-wide average of 1.5 business days fewer in Q1 2023/24 than in the equivalent period in the previous year.

Sales performance of the HORNBACH Group

A weather-induced dip in demand at the beginning of the spring season led the Group's consolidated sales of € 1,773.5 million to fall 2.2% short of the previous year's figure (2022/23: € 1,813.4 million).

HORNBACH Baumarkt AG Subgroup

The HORNBACH Baumarkt AG Subgroup did not open any new locations in Q1 2023/24. As of May 31, 2023, we therefore operated 171 retail outlets (February 28, 2023: 171) with total sales areas of 2.0 million square meters. Of these, 99 stores are in Germany and 72 in Other European Countries.

Net sales at the HORNBACH Baumarkt AG Subgroup decreased overall by 2.2% to € 1,667.6 million in Q1 2023/24 (2022/23:

• 1,705.3 million). Within the quarter, sales showed reductions in March and April and returned to year-on-year growth in May. Online sales (including click & collect) fell to € 221.0 million, down 18.1% on the previous year's quarter. Online sales therefore ac- counted for a 13.3% share of total sales in Q1 2023/24 (2022/23: 15.3%). On a like-for-likebasis and net of currency items [ Brief Glossary on Page 7], the Subgroup's sales declined by 3.2% in the first quarter (2022/23: plus 5.3%). Including currency items for non-euro countries, namely the Czech Republic, Romania, Sweden, and Switzerland, like-for-like sales across the Sub- group decreased by 2.8% (2022/23: plus 6.0%).

Sales in the individual regions developed as follows in Q1 2023/24 (March 1 to May 31, 2023):

• Germany
  Net sales in the Germany region decreased by 5.2% to € 808.5 million in Q1 2023/24 (2022/23: € 853.2 million). Like-for-like
  sales in Germany in Q1 2023/24 fell 5.7% short of the previous year's figure (2022/23: plus 4.4%).
• Other European Countries
  In the Other European Countries segment, net sales showed slight growth of 0.8% to € 859.2 million (2022/23: € 852.1 mil- lion). The international share of consolidated sales therefore rose year-on-year from 50.0% to 51.5%. Like-for-like sales net of currency items declined by 0.8% (2022/23: plus 6.2%). Including currency items, sales were at the same level as in the previ- ous year's quarter (2022/23: plus 7.7%). Developments varied very widely between individual regions of the Other European Countries segment. Driven by rising customer totals, the Netherlands posted substantial like-for-like sales growth of 7.7%, while Austria and Sweden in particular fell notably short of the previous year's figures.

HORNBACH Baustoff Union GmbH Subgroup

Sales at the HORNBACH Baustoff Union GmbH (HBU) Subgroup, which chiefly focuses on the needs of professional customers in the main construction and subconstruction trades, as well as on private construction clients, decreased by 2.4% to € 105.4 million in Q1 2023/24 (2022/23: € 108.0 million). As of May 31, 2023, this Subgroup operated 39 builders' merchant outlets, of which 37 locations in south-western Germany and two locations close to the border in France (Lorraine).

Earnings performance of the HORNBACH Group in the first quarter of 2023/24

• Gross profit decreased by 3.9% to € 596.0 million in Q1 2023/24 (2022/23: € 620.1 million). At 33.6%, the gross margin fell short of the previous year's figure (34.2%). This reduction in the gross margin [ Brief Glossary on Page 7] was mainly attributable to higher procurement prices and transport costs, factors which could not be fully offset by adjusting retail prices.
• Selling and store expenses increased by 2.2% to € 412.7 million in the period under report (2022/23: € 404.0 million). Due to the Group's expansion, as well as to pay rises and inflation bonuses, store personnel expenses grew by 4.8%, while operating expenses dropped by 3.5%. Advertising expenses were at around the same level as in the previous year. The store expense ratio [ Brief Glossary on Page 7] thus rose from 22.3% to 23.3%. Driven in particular by higher technology expenses, gen- eral and administration expenses increased by 8.2% to € 75.4 million (2022/23: € 69.7 million). The administration expense ratio [ Brief Glossary on Page 7] therefore stood at 4.3% (2022/23: 3.8%). Pre-opening expenses rose from € 1.6 million to
• • 2.1 million.
• EBITDA [ Brief Glossary on Page 8] declined by 18.4% to € 165.0 million (2022/23: € 202.0 million).
• Consolidated operating earnings (EBIT) amounted to € 109.9 million (2022/23: € 148.6 million). Non-operating earnings items
  of € 0.4 million resulted from disposal gains on the level of the HORNBACH Baumarkt AG Subgroup (2022/23: disposal gains of € 0.2 million at the HORNBACH Immobilien AG Subgroup). Adjusted EBIT [ Brief Glossary on Page 7] showed a year-on- year reduction of 26.2% to € 109.4 million (2022/23: € 148.3 million). The adjusted EBIT margin stood at 6.2% in Q1 2023/24 (2022/23: 8.2%).
• Net financial expenses declined from minus € 7.3 million to minus € 15.8 million, with this reduction largely due to negative currency items of € 3.7 million (2022/23: positive currency items of € 3.6 million). At minus € 12.1 million, the interest result was also slightly lower than the previous year's figure (minus € 10.9 million).
• Consolidated earnings before taxes (EBT) [ Brief Glossary on Page 8] fell by 33.4% to € 94.1 million (2022/23:
• • 141.2 million).
• Consolidated net income stood at € 71.0 million in Q1 2023/24 (2022/23: € 106.9 million). Minority interests amounted to
• • 4.7 million (2022/23: € 8.6 million). Earnings per HORNBACH Holding share are reported at € 4.15 in Q1 2023/24 (2022/23:
  • 6.14).

Earnings performance by segment

• Adjusted EBIT at the HORNBACH Baumarkt AG Subgroup fell by 27.8% to € 96.5 million in Q1 2023/24 (2022/23: € 133.7 mil-
  lion). The Subgroup posted non-operating earnings items of € 0.4 million in the quarter under report (2022/23: none).
• At the HORNBACH Baustoff Union GmbH Subgroup, adjusted EBIT came to € 2.8 million (2022/23: € 5.1 million). As in the previous year, no non-operating earnings items arose in the quarter under report.
• Adjusted EBIT at the HORNBACH Immobilien AG Subgroup grew by 10.8% to € 16.3 million in the period under report (2022/23: € 14.7 million). There were no non-operating earnings items (2022/23: disposal gains of € 0.2 million).

Financial and asset position

The inflow of funds from operating activities fell from € 176.5 million in the previous year's quarter to € 30.6 million in Q1 2023/24. The change in working capital resulted in an outflow of € 98.5 million (2022/23: plus € 11.2 million), which mainly resulted from liabilities to suppliers being reduced. Funds from operations decreased from € 164.4 million to € 129.1 million. The outflow of funds for investing activities amounted to € 48.3 million (2022/23: € 49.2 million). This figure includes gross capital expenditure of

• 51.1 million (2022/23: € 52.3 million). At € 29.4 million, around 58% of capital expenditure involved land and buildings (2022/23: € 37.4 million), while the remainder was channeled into plant and office equipment at new and existing stores (€ 20.1 million) and into intangible assets, mainly software (€ 1.6 million).

The outflow of funds for financing activities, amounting to € 51.2 million (2022/23: € 13.1 million), includes outflows of € 27.0 mil-

lion for the repayment of financial loans (2022/23: € 3.6 million), as well as outflows of € 24.2 million to redeem lease liabilities

(2022/23: € 26.7 million). The free cash flow [ Brief Glossary on Page 8] amounted to minus € 17.7 million (2022/23: € 126.4 million).

Total assets at the HORNBACH Group decreased to € 4,590.8 million as of May 31, 2023, down 2.9% compared with the balance sheet date on February 28, 2023. Key reasons for this were the reduction in inventories (minus € 71.4 million) and the repayment of liabilities. Shareholders' equity as posted in the balance sheet rose to € 1,965.0 million, up 3.6% compared with the previous balance sheet date. At 42.8%, the equity ratio [ Brief Glossary on Page 8] remained at a high level (February 28, 2023: 40.1%). Including current and non-current lease liabilities pursuant to IFRS 16, net financial debt [ Brief Glossary on Page 8] increased from € 1,343.3 million at the previous balance sheet date to € 1,375.4 million. Excluding current and non-current lease liabili- ties, the Group reported net financial debt of € 464.9 million as of May 31, 2023 (February 28, 2023: € 415.9 million).

Other Disclosures

Employees

The HORNBACH Group had a total of 25,535 employees in fixed employment across Europe as of the reporting date on May 31, 2023 (February 28, 2023: 25,118).

Statement of figures

Figures have been rounded up or down to the nearest million euro amount. Such rounding up or down may result in minor discrepancies between the various presentations. Percentages have been calculated on the basis of thousand euro figures.