Saarbrücken – May 27, 2009. Following an ungratifying first quarter 2009 the domestic business of the Praktiker Group distinctly stabilised during the last two months – also against the backdrop of a continued difficult economic environment. “In April - although there were two trading days less - Praktiker succeeded in selling so much more than one year earlier that it already managed to largely compensate for the first quarter drop in sales“, stressed Wolfgang Werner, CEO of Praktiker Bau- und Heimwerkermärkte Holding AG at this year’s Annual General Meeting in Saarbrücken. Also the month of May has so far shown its bright side so that Praktiker was able to reduce the scope of short-time work introduced for the first time in March at 81 German outlets to now only five stores. However, there is no reason to give the all-clear yet. Werner therefore called for “strict discipline“. Securing earnings and liquidity continued to top the list of priorities “with a big exclamation mark“.

The statement of CEO Wolfgang Werner regarding the General Annual Meeting 2009 is available here.

According to Werner the general economic situation was not to be sugar-coated. “But we are all jointly responsible for ensuring that we are not talking ourselves into something that we all want to avoid”, he said and called for seeing and seizing “the opportunities arising in the crisis and after the crisis”. According to Werner the Praktiker Group is well positioned and also its financial situation is sound. In total, the Group had around 233 million euro in cash at the close of 2008 plus a syndicated credit line of 200 million euro and a relatively low level of debt. Said Werner: “Further financial scope was recently achieved with the successful placement of a promissory note in the amount of 50 million euro“. This way the company can “operate efficiently” in the crisis and also “pull out into the fast lane when the economy picks up again” after the crisis.

Werner did not specify when this would be. There were signals “indicating that the crisis is bottoming out and that the economy could soon be picking up again”. Add to this the fact that, in Germany, the company saw a good start into the second quarter and that, at the international level, several Eastern and South-East European currencies have stabilised. The latter offered “a certain chance that the difficulties we have been facing over the past six months will not repeat themselves in the same way in the further course of the year“. However, it could also not be excluded “that the hardest test is still ahead of us, namely the second half of 2009, should the German labour market slump, should the elections in Germany not yield a positive impulse and should the crisis-stricken economies in Eastern Europe sink deeper into recession“. This would be poison for consumption in Germany and abroad “and also a new challenge for us”.

Against this backdrop Werner said that the decision of the Praktiker Group to take a break in its international expansion was right, but he added: “This does not mean that we have changed our international strategy. We believe that the markets in Eastern and South Eastern Europe continue to offer a large potential. Our medium term objective will remain to participate in this potential. We will not lose this from sight“.

Werner also vehemently defended the short-time work introduced in Germany in March under the impact of deepening recession as “an adequate alternative to the short-term policy of “hire and fire” frequently found in the retail sector”. It had been the right decision, even if now “also some light could be seen in the cloudy skies”. Werner continued: “We were the first retail group to have opened the door for a responsible, sustainable human resources policy that is suited to somewhat cushion the company’s cost pressure in times of economic crisis, on the one hand, while it allows to retain qualified labour in the company, prevent unemployment and thereby also maintain social peace, on the other”. He said that it also showed that this instrument proved to be extremely flexible in practice – both in terms of time management and in terms of organisational implementation. “We can thus draw back on a tried and tested procedure whenever the need arises and this – in addition to other measures – will in future also help us stay on course in troubled waters should the storm get even rougher“, stressed the CEO of Praktiker.

Just like at the Annual Press Conference and in the framework of the Q1 Quarterly Report Werner did not want to give any guidance for the further course of the financial year 2009. Instead, he stressed management’s expectation that “we will be able to achieve reasonable operating earnings even when sales are receding“. What was in the meantime beginning to show more clearly, however, was a “tectonic movement in the business basis of the Praktiker Group” which would actually not be detrimental: “I mean the fact that our domestic business is developing more stably in 2009 than our international business and should therefore contribute a somewhat higher share to group sales and earnings than in previous years”.