Hornbach-Baumarkt-AG Group

THE HORNBACH-BAUMARKT SHARE 31
less prone to join in any euphoria in the overall market. This
pattern was clearly recognizable once again in the course of
the past financial year.
Stable sideways movement
The Baumarkt share was listed at a Xetra price of € 25.20 on
March 1, 2012. While fears of a break-up in the euro area sent
stock markets plummeting through until June 2012, our share
remained unaffected and tended sideways. This reflects the
trust investors place in our share. Given the sales and earnings
performance of the HORNBACH-Baumarkt-AG Group, however,
there was little potential for upward development in the share
price in the further course of the 2012/2013 financial year.
As described in detail in the group management report (please
see Page 36 onwards), HORNBACH had to contend with the
recession across large parts of Europe in the third and fourth
quarters in particular. On November 27, 2012, the company
reduced its sales and earnings forecast for 2012/2013 as a
whole to account for the increasingly subdued economic
backdrop. The general public was informed by ad-hoc announcement
that consolidated sales would most probably
match the previous year’s figure of € 3.0 billion and that
operating earnings would fall short of the record figure of
€ 128 million posted for the 2011/2012 financial year. In the
wake of this profit warning, the Baumarkt share price dipped
slightly, reaching its annual low at € 24.20 on December 10,
2012. This situation was exacerbated by investors’ more
pessimistic overall assessment of growth prospects in the
European DIY sector. Unfavorable weather conditions in the
2012/2013 winter, which significantly impaired customer
demand at DIY stores and garden centers, also played a part
in attracting investors’ interest towards other sectors. The
Baumarkt share thus lacked momentum to break out of its
sideways motion. It reached its annual high at € 26.40 on
February 5, 2013. On the balance sheet date on February
28, 2013, the share closed at € 26.00, thus posting growth
of 3.2% over the twelve-month period.
The performance of the HORNBACH-Baumarkt-AG stock over a
long-term investment horizon was notably more attractive.
Anyone who bought the security at the beginning of March
2003, for example, and then kept it in the portfolio for ten
years would have been pleased to see annual average share
price growth of 9.9%. By reinvesting the dividend, they could
have achieved 15.2% growth a year with the Baumarkt share.
Given these figures, it is clear that our share is mostly to be
found in the portfolios of so-called value investors, a group
which has accompanied our company over decades in some
cases. They particularly trust the company’s management, the
quality and sustainability of its unmistakable business model,
and our market position in Germany and eight other European
countries. Not only that, HORNBACH can point to a stable
financial structure, a further increase in its equity ratio, and
high cash holdings, factors that meet the investment needs of
investors keen on safety and stability.
Successful bond placement in February 2013
HORNBACH exploited the low interest rates available at the
beginning of 2013 to refinance its non-current financial debt.
The company successfully placed a seven-year bond (ISIN
DE000A1R02E0) with a volume of € 250 million on February
15, 2013. The issue was several times oversubscribed, with
great demand from private and institutional investors alike. The
bond received an interest coupon of 3.875%, upon issue the
lowest coupon for an issuer in this rating class (Standard
& Poor’s: BB+; Moody’s: Ba2). Based on the issue price of
99.25%, this corresponds to a yield of 4.00% p.a. The proceeds
were used to prematurely redeem the ten-year high-yield bond
(ISIN XS0205954778), placed in November 2004 with a coupon
of 6.125%, on February 25, 2013. This significantly improved
the maturity profile of the Group’s financial liabilities. Given the
great interest shown in the new Eurobond by private investors in
particular, within a few weeks the price reached more than
104%, corresponding to a yield of around 3.2%. The bond issue
offers long-term security for the HORNBACH Group’s further
growth.