Hornbach-Baumarkt-AG Group

10 TO OUR SHAREHOLDERS
TO OUR SHAREHOLDERS
Dear Shareholders,
We can look back on a demanding 2012/2013 financial year.
Faced by numerous challenges that we as a company were
unable to influence, we nevertheless generated earnings with
which we can be satisfied. The crucial point here is that we
continued to channel substantial resources and our innovative
strength, and that without making any cutbacks, into our
sustainable, long-term growth. Viewed from this perspective,
2012/2013 was an important stepping stone on the way to the
Group’s future development. Given the difficult underlying
conditions, it is no surprise that our key sales and earnings
figures ultimately failed to match the high standard set in the
2011/2012 financial year.
In 2010/2011 and 2011/2012, we boosted our consolidated
sales by just under six percent each year. We originally targeted
a similar rate of growth for the past 2012/2013 financial year
as well. In the end, however, we only managed to post slight
sales growth of 0.6% to € 3,020 million. More than anything,
this noticeably lower level of sales momentum in the year
under report was due to the acceleration in the economic
downturn in the European Union.
Europeans may have become more or less accustomed to the
euro debt crisis as an ongoing state of affairs. However, the
threat of state bankruptcy in Greece and widespread doubts
as to politicians’ ability to implement reforms engendered
even greater uncertainty among consumers, businesses, and
investors across large parts of Europe from summer 2012
onwards. Consequently, the European Union fell even more
deeply into recession towards the end of 2012. In many countries,
this noticeably reduced people’s willingness to consume
and invest. It also did not fail to leave its mark on the retail
sector, and on the DIY sector in particular.
We too felt the strong economic headwind in the eight countries
outside Germany in which we operate, and that with very
few exceptions. Consumers were far more nervous in the
second half of the financial year than was the case in Germany.
To be on the safe side, private households in numerous
European countries put back their construction or renovation
projects. This situation was made worse by further negative
factors, such as the real estate crisis in the Netherlands, or by
Swiss residents going on cross-border shopping sprees. All in
all, these factors placed an ever greater damper on demand at
our DIY megastores with garden centers outside Germany the
further the financial year progressed. It became apparent in the
third quarter of 2012/2013 that it would no longer be possible
to make up for the shortfall in like-for-like sales to the extent
necessary to meet the previous sales forecast for the HORN-
BACH-Baumarkt-AG Group. We therefore revised our forecast
downwards in November 2012. We then achieved our target of
matching the previous year’s level of consolidated sales.
Pleasingly robust sales performance in Germany
The 2012/2013 financial year showed once more why it is so
important that we have a strong presence in the German DIY
market. In the past, or to be more precise, prior to the financial
and economic crisis in 2009, we repeatedly faced critical
questions as to why we did not focus our expansion exclusively
on countries outside Germany, not even to mention the
hype about growth opportunities in Eastern Europe. Had we
acted on all these supposedly great ideas, then we would have
steered a far less successful course through the stormy waters
of the sovereign debt crisis in the past two years. Among
economists, Germany is viewed as a something of a safe
haven. Numerous other European Union countries face economic
problems, while rising unemployment is adversely
affecting consumer demand. In Europe’s largest economy, by
contrast, growth rates, the labor markets and consumer
confidence were most recently in comparatively robust state.
Against this backdrop, DIY customers in our home market
seemed more interested in implementing their DIY and renovation
projects than allowing themselves to be excessively
distracted by concerns about the euro. This enabled us to
maintain our like-for-like sales in Germany at the previous
year’s level. That in itself is already a respectable achievement.
After all, the 5.8% growth achieved in the 2011/2012
financial year meant that the standard to beat in terms of our
like-for-like sales performance in Germany was higher than at