• Group sales at 795.6 million euros (-8.0 percent)
• Seasonal operating loss (EBITA) rises to 49.2 million euros
• International business suffers from devaluation of national currencies
• Distinct pick-up in Germany in April
• Positive earnings forecast for 2009 reiterated

Kirkel – 22 April 2009. Unfavorable economic and climatic conditions in Germany and abroad have appreciably affected the First Quarter results of Praktiker Bau- und Heimwerkermärkte Holding AG. Group sales declined – also due to the substantial exchange rate losses in the Eastern European markets – by 8.0 percent over the year-earlier period to 795.6 million euros. At the same time, the usual seasonal operating loss increased from 20.8 to 49.2 million euros. This notwithstanding and against the backdrop of a distinct pick up of domestic business in April, the management continues to expect “adequate, positive EBITA” for the full fiscal year 2009.

The Interim Report 1/2009 is available here.

The statement of CEO Wolfgang Werner regarding the interim report 1/2009 is available here.

Wolfgang Werner, CEO of Praktiker Bau- und Heimwerkermärkte Holding AG, rated the key financials of the first quarter report as being unsatisfactory. However, the decline in sales and earnings was “not surprising when comparing today’s economic environment with that of spring 2008 when no one could as yet foresee at which breathtaking speed the then financial crisis would spread to all sectors of the real economy”. By contrast, Werner was satisfied about the good start into the Second Quarter. Domestic business in April so far came in above that of the prior year and has already largely compensated the sales losses incurred during the first three months. Accordingly, the scope of short-time work that had been introduced in March for one third of the German Praktiker stores could be distinctly reduced. Werner: “At present, only 32 stores are on short-time work, around 50 less than last month. This attests not only to the flexibility of this labor market instrument. It also indicates a certain easing of the situation“. Now it remained to be seen how sustainably this weather-promoted trend would prove to be.

Prior-year sales mark was clearly missed, but well asserted in Germany

During the first three months of 2009 the economic crisis in Germany and abroad for the first time also had an appreciable effect on the retail sector. This was also felt by the Praktiker Group. First Quarter sales dropped eight percent to 795.6 million euros (2007: 865.1 million euros). This was materially attributable to its international business. At 206.1 million euros, sales of the segment came in 13.6 percent below those of the First Quarter 2008 (238.6 million euros). One of the main reasons for this – besides the customers’ buying restraint – was the massive currency depreciation that has in the meantime hit many Eastern European countries. Net of this currency effect which showed for the first time in the last quarter 2008, international sales would only have declined by 3.6 percent.

Also in Germany sales during the First Quarter of the current financial year 2009 contracted due to cyclical and climatic reasons. Another factor weighing on First Quarter sales was the fact that this year’s Easter Business fell into the month of April. However, price measures and additional marketing activities helped limit this drop in sales. In this context domestic group sales receded by 5.9 percent – from 626.5 to 589.5 million euros. During the period from January to March, the Praktiker brand only lost 5.6 percent and Max Bahr 6.9 percent. Werner: “At Max Bahr, we focused more on margins. At Praktiker, we largely accommodated to the needs of our price-sensitive customers. I believe that, by doing so, we have gained in trust and image. This could well pay off in the further course of the year“. According to Werner it showed that the company succeeded “in positioning the Praktiker brand in such a way that, in particular in times of crisis, it has a particular appeal to customer groups who want to, or need to, save”.

EBITA distinctly below last year’s level

Also the earnings situation of the Praktiker Group suffered from the current economic crisis. During the current fiscal year the seasonal operating losses normally incurred during the first quarter of a year came in at 49.2 million euros. Last year, EBITA for the same period had stood at minus 20.8 million euros. This spring’s operating earnings have hence deteriorated distinctly. The international business segment, which during the past two years for the first time had reported slightly positive earnings in a winter quarter, showed EBITA of minus 10.0 million euros (2007: plus 1.3 million euros). At unchanged exchange rates losses would have been 1.4 million euros lower.

In Germany, the operating loss rose to 39.2 million euros (2007: 22.1 million euros). Here, EBITA stood at minus 36.0 million euros. At Max Bahr, a slight improvement of EBITA to minus 1.5 million euros was achieved despite the relatively poor start into the gardening season in March.

Outlook

Around four weeks after the Annual Press Conference the management of Praktiker Bau- und Heimwerkermärkte Holding AG reiterates its qualitative statement regarding the sales and earnings trend for the full fiscal year. Werner. “We know that the domestic business in April has been running well. However, we also know that the economic settings continue to be difficult“. Moreover, the situation abroad is highly ambivalent. ”No one can say today when the structurally hard hit economies in our Eastern European markets will recover“. It therefore proved to be right to focus on safeguarding the earnings and liquidity position early on and thereby sustainably raise the ability of the Praktiker Group to weather the crisis. ”We will continue to strictly pursue this course. Controlling costs and keeping expenses flexible are not only the order of the day but of the whole year “, stressed Werner.

In view of the fact that the economic development in Germany and abroad is not foreseeable, Werner reiterated the statement that the Praktiker Group will generate “adequate, positive” EBITA even against the backdrop of receding sales.

QUARTERLY FINANCIAL REPORT – Q1 / 2009

* Excluding the store in Zabrze (Poland) which burnt down on 26 December 2008