Financial Report and Registration Document 2010 - Groupe Seb

1
GROUPE SEB IN 2010
MANAGEMENT REPORT ON 2010
with the pre-crisis level. The Group’s situation eased in all the countries of
the zone except in Venezuela, which is in full recession. In Brazil, beyond
the favourable economic climate, the enormous growth of the middle class,
known as “C”, reinforced by access to the consumption of about 40 million
people primarily located in the Nordeste, generated a very positive dynamic
on demand. Taking advantage of aggressive product plans and a reorganized
sales force, Groupe SEB reported a very good year in Brazil: solid business
recovery and the recapture of cookware market shares; reinforcement of
leadership in small electrical appliances thanks in particular to the success
of fans, the renewal of the entire range of blenders, the upgrading of
Dolce-Gusto or the Respect hair straightener, marketed among others
through the booming “beauty shops” outlets; the massive expansion of
the Group’s own retail outlets, which, at the end of 2010, amounted to
22 in the country, versus 4 at the end of 2009. In Colombia, the Group’s
second largest market in South America, business was very positive for the
majority of the product families and was further boosted by the opening of
10 new shops in 2010. In the other countries, and especially in Argentina and
Chile, the Group reported excellent performance on the basis of an extended
product offer and the development of its own retail outlets (3 openings in
Argentina and 6 in Chile).
In Asia and Pacific, the strong business growth throughout the year was
sharply driven by the vibrant Chinese market, which represents the Group’s
second largest market in size. Supor actively contributed to this dynamic
performance with a 30% increase in domestic sales in 2010 despite a
more modest increase in the fourth quarter due to the difficulties in 2009.
In the field of cookware, which made up a third of its sales in China, Supor
strengthened its leadership, despite fierce competition, thanks to the
success of its latest models of woks, frying pans, saucepans and steam
cookers, Thermospot and the Ingenio concept (removable handles), but also
thanks to significant progress in several key accounts. In small electrical
appliances (two thirds of its sales), Supor reported strong growth in all its
product families and created development drivers through its entry into new
segments (kettles, blenders, etc.). At the same time, Supor continued to
develop its “Supor Lifestores” on the Chinese territory and, at the end of the
year, had 804 of its own retail outlets (+272 outlets compared to end 2009).
In Japan, in a dismal economic context, shrinking purchasing power led
to a contraction in consumption; the Small Household Equipment market
stayed on an uptrend, but with a more significant price orientation. Sales
in 2010 remained steady but the slowdown in growth observed in the third
quarter was confirmed and emphasized in the last months. In Korea, we rely
on a sturdy business in cookware and the opening of new electrical product
categories (food preparation, personal care, etc.) to continue moving forward.
Lastly, in Australia, consumption remained slack and the Group suffered.
The end of the year was slightly more positive and allowed a partial offsetting
of the delay accumulated in the first half.
In Central Europe, Russia and other countries (Turkey, and Middle-East
countries, Africa, etc.), the return to growth in 2010 – confirmed from quarter
to quarter – occurred in a context of more competitive and promotional
markets than before. The zone is heterogeneous and situations remain
mixed depending on the country. In Russia, demand recovered and the
Group was able to redeploy its sales, although it has not returned to its
“pre-crisis” levels. Retailers, more focused than previously, maintained a
cautious stocks policy and gave preference to quick turnover products.
The Group renewed its successes in ironing, kettles, meat mincers and
personal care, supported by advertising and marketing investments which
turned out to be very lucrative. In Ukraine, in a more favourable environment,
the Group confirmed its leadership and left the No. 2 lagging far behind as
it dominated the market with its small electrical appliances such as kettles,
breadmakers, hair straighteners and the launch of Dolce Gusto. In Turkey,
the Group accumulated some delay in the fi rst half compared to the fast
take-off of the market, but it began to correct the situation in the second
half of the year, regaining positions in small electrical appliances thanks to
an enhanced mix, and in spite of strong and active local competition. Lastly,
in Central Europe, the recovery is taking much longer and consumption
is still weak. Against this background, our sales nevertheless improved at
the end of the year, especially in Poland, offsetting the bad first half, with
more vibrant trading activity in electric products (drawn by Actifry, vacuum
cleaners, Dolce Gusto, steam generators, hair straighteners, etc.) but a clear
contraction in cookware.
1
COMMENTS ON 2010 RESULTS
INCOME STATEMENT
At €438,000, Groupe SEB’s 2010 operating margin increased by 23.2%
compared to 2009, accounting for 12% of sales (11.2% in 2009 and 10.6%
in 2008). This positive change is linked to a set of factors, whose positive
effects were ultimately mixed:
the improvement in the economic situation as well as the proper
performance or recovery of markets led to a sharp rise in sales volumes
with a very positive impact on the trading activity of the Group’s plants
and on the absorption of production costs. The phenomenon is all the
more significant given that the production capacities of the sites had been
under-utilized in 2009 and this led to sub-absorption of manufacturing
costs. Taken together, the increase in sales and its impact on the utilisation
of industrial capacities led to a volume effect on the operating margin of
over €150 million;
the slightly-shrinking price-mix effect due to price reductions and targeted
promotional operations in certain countries where there had been
substantial increases in 2009. These price reductions were intended to
preserve the dynamism of the Group’s market. The product mix is still
good thanks to the quality of the Group’s sales, despite a strong history
and tighter markets;
foreign currencies made a positive contribution of up to €32 million
to the operating margin, while their impact was hugely negative in
2009 (-€87 million). This effect is due to the nearly widespread appreciation
of the Group’s operating currencies (real, rouble, yuan, yen, pound sterling,
Turkish lira, won, zloty, etc.) against the euro, for which the positive impact
on the translation of the operating margin into euros significantly exceeded
the negative impact of the dollar’s reinforcement on procurement and
purchasing conditions;
the unfavourable differences on purchases, linked in particular to the
inflation of raw material costs, were generally limited since the additional
cost amounted to €19 million, a significant portion of which was linked to
the effect of aluminium price hikes on purchases of Supor, which has no
hedging instruments. In 2010, the Group thus succeeded in containing
increases on commodities as well as on components or finished products,
but is anticipating a greater impact in 2011;
GROUPE SEB
FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010
15