• Consolidated net sales grow by 22.3 percent to total 877.5 million euros
• Operating earnings (EBITA) burdened by impact of one-off factors
• 24 Praktiker stores being converted to Easy-to-Shop
• Max Bahr consolidated as from February 1
• International business with strong growth
• Sales and earnings forecast for 2007 confirmed

Kirkel – 26 April 2007. Praktiker Bau- und Heimwerkermärkte Holding AG has completed a successful first quarter of 2007. “We are fully in line with our budget at Praktiker while the new group subsidiary Max Bahr is developing better than expected and is currently giving us much to be pleased about”, was how Wolfgang Werner, CEO at Praktiker Bau- und Heimwerkermärkte Holding AG, commented on the group’s I / 2007 quarterly report. This was further supported by the group’s international operations which enjoyed dynamic growth with sharp increases in both sales and earnings.

The Quarterly Report 1/2007 is available here.

Statement of CEO Wolfgang Werner regarding the first quarter report 2007 is available here.

Praktiker Group continued on its growth course in the first three months of the 2007 financial year with consolidated net sales up by 22.3 percent to 877.5 million euros (previous year: 717.7 million euros). Around three quarters of this growth is attributable to the integration of the operating activities of Max Bahr, which has been a fully consolidated group member since February 1, 2007. Max Bahr alone contributed 119.7 million euros to group sales in the months of February and March. The total sales generated by Praktiker – excluding Max Bahr – increased by 5.6 percent to total 757.8 million euros. Adjusted for changes in selling area, the like-for-like rate of increase stood at 4.6 percent.

Germany – good sales development despite capacity cuts and tax increases

In the German market Praktiker Group was able to generate net sales in the first quarter of 2007 totalling 671.0 million euros (previous year: 560.1 million euros). This equates to an increase of 19.8 percent. Excluding the sales generated by Max Bahr, Praktiker turned over 551.3 million euros in the first quarter, 1.6 percent less than in the comparable quarter of the previous year. However, the decline was attributable to the closure of seven German outlets. Adjusted for changes in selling area, like-for-like sales generated by Praktiker rose by 0.2 percent. Were one to base the comparison with the previous year on pre-tax sales, in line with the standard practice of the sector’s relevant association (BHB), Praktiker’s like-for-like gross sales in the first quarter of 2007 would have increased by 2.6 percent over the first quarter of 2006.

In connection with this, Praktiker CEO Werner continued, it should be noted that the increase in value-added tax in January caused a significant fall in demand. “That made January an extremely weak month for us. But in February we were already able to register a clear upswing in our German business.”

International – strong growth momentum

In Eastern Europe Praktiker’s business boomed in a way the company hasn’t experienced in a long time. Net sales generated via its international activities rose by 31.0 percent to total 206.5 million euros (previous year: 157.6 million euros). Like-for-like, the increase stood at 19.3 %. This sales growth reflects the Praktiker brand’s outstanding positioning in Eastern Europe but at the same time is also attributable in part to the fact that the past winter was significantly milder than that of the previous year. The main engines of growth were the new focus countries Rumania and Bulgaria. Werner: “These figures are an impressive endorsement of the strategy and alignment of our internationalisation policy.”

On account of the sharp increase in sales, the share of the International segment in group sales continued to increase – in spite of the acquisition of Max Bahr. It stood at 23.5 percent in the first quarter of 2007 (previous year: 22.0 percent).

EBITA affected by impact of one-off factors

Operating earnings (EBITA) stood at minus 19.9 million euros in the first quarter, 4.0 million euros less than in the previous year (-15.9 million euros). In Germany, earnings of minus 20.0 million euros (previous year: -11.5 million euros) were reported while the group’s international operations made a positive contribution to first quarter earnings for the first time ever. It amounted to 0.1 million euros, equating to an improvement in earnings of 4.5 million euros over those generated in the first three months of the previous year.

The negative EBITA level is attributable to a range of one-off factors that had a negative impact limited solely to the German business. In the first place, Praktiker decided to pass on the increase in value-added tax to its customers in Germany only gradually, resulting in a loss of earnings of an almost double-digit million euros magnitude. Moreover the consolidation of Max Bahr – in spite of the addition to sales – made a negative contribution to operating earnings amounting to 7.0 million euros due to the fact that such integration costs as were already identifiable in the first quarter had to be given due consideration in that quarter. The costs concerned are primarily attributable to payments anticipated in the course of the year arising from the social plan that was drawn up to cushion the impact of structure-related personnel cuts at Max Bahr’s head office in Hamburg. Additionally, the conversion of 24 Praktiker stores to the Easy-to-Shop concept incurred expenses around the mid single-digit million euros mark. Were one to adjust the EBITA level to take due account of these one-off factors, the development of Praktiker’s operating activities in Germany would have shown further improvement in the first quarter too.

Outlet network expanded, personnel numbers increased

Due to the integration of Max Bahr and ongoing expansion in Eastern Europe, Praktiker Bau- und Heimwerkermärkte Holding AG’s distribution network expanded sharply. As such, Praktiker Group operated a total of 418 do-it-yourself stores as of March 31, 2007, of which 344 were located in Germany (previous year: 275) and 74 abroad (previous year: 65). In the company’s domestic market, the number of outlets rose due to the addition of 76 Max Bahr stores and despite the closure of seven Praktiker stores. Personnel numbers at Praktiker Group increased to 26,803 persons as compared with a workforce numbering 21,107 in the previous year due to acquisition and expansion. As far as its international operations were concerned, personnel numbers rose to 8.223 (previous year: 6,784) while in Germany the workforce increased to 18,580 (previous year: 14,323).

Capital expenditure at higher level

In the first quarter of 2007 Praktiker Group invested a total of 21.5 million euros (previous year: 5.1 million euros), of which 15.4 million euros were earmarked for the segment Germany. As far as the Praktiker brand was concerned, funds were set aside almost exclusively for investment in concept conversions, modernisation and replacements. Moreover at Max Bahr, the company also invested in the opening of four new stores in the two consolidated months of February and March. In terms of its international operations, the group invested a total of 6.1 million euros in the period under review with one new store being opened in Poland.

Outlook – quarterly figures confirm sales and earnings forecast for 2007

The current development of the business in Germany shows that consumers have largely gotten over the increase in value-added tax after a temporary decline in demand in January. Consumer confidence is rising and growth expectations with regard to gross domestic product have undergone repeated upward adjustment. Moreover, the management of Praktiker Group is confident of already being able to reap significant synergies from the acquisition of Max Bahr in the very first year. “Dynamic earnings growth in both our domestic and foreign markets ought to be sufficient to offset the expenses we will incur in the conversion of 67 German Praktiker stores to the Easy-to-Shop concept and the one-off Max Bahr integration costs as well as compensate for the losses already suffered due to the increase in value-added tax” Praktiker management board chairman and CEO Werner stressed. He continued: “Against this backdrop we are still sticking to the forecast we announced in connection with the publication of our results for the 2006 financial year on April 3 this year. In the 2007 financial year we anticipate generating sales in excess of four billion euros, largely attributable to the acquisition of Max Bahr. But sales of the Praktiker brand are also expected to increase by more than five percent. Operating earnings (EBITA) are anticipated to total at least 115 million euros and as such exceed the earnings generated in the previous year.“

Key data of Praktiker Group