Hornbach-Baumarkt-AG Group

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84 GROUP MANAGEMENT REPORT Outlook for the Group • The statements concerning the revision of expectations for the domestic business in 2013/2014 are basically also transferrable to the sales forecast for other European countries. Due to the more fragile state of the macroeconomic framework in most EU countries outside Germany, however, the downside risk in the other European countries segment is to be classified higher overall. We therefore expect to see a lower rate of like-for-like sales growth than in Germany in the 2013/2014 financial year. As the long winter led to substantial losses of sales in the first quarter of 2013/2014 in other European countries as well, we believe that the most likely scenario is that like-for-like sales will not match the level seen in the 2012/2013 financial year. In the 2014/2015 financial year, we intend to improve our sales in other European countries once again compared with 2013/2014. Our aim is to achieve like-for-like sales growth, in some cases significant, in the countries outside Germany. We see this aim as realistic not only because of the positive economic outlook for 2014 in the countries in which we operate, but also due to the ongoing substantial backlog of work in the European construction and modernization market. Thanks to our focus on project and professional customers, we have above-average growth potential in this regard compared with our competitors. Should there be any significant deterioration in the macroeconomic framework, then this would also involve an additional risk to like-for-like sales at our locations in other European countries. Sales forecast We expect our consolidated sales, i.e. our net sales accounting for new openings, closures and extensions of stores, for the 2013/2014 financial year to slightly exceed the level seen in the 2012/2013 financial year. In the following 2014/2015 financial year, our sales should achieve a higher growth rate than in 2013/2014. Earnings performance Our future earnings performance is mainly based on the earnings contributions expected from the “DIY stores” and “Real estate” segments. • The operating earnings performance of the DIY store segment is primarily dependent on the rate of change in like-for-like sales. A further key factor is the gross margin, which we believe will match the level seen in the previous year in the 2013/2014 financial year and then tend slightly downwards in the following years. We see this as being due above all to the increased pressure on margins on account of the sharp growth in e-commerce in DIY store sector. The growing range of internet stores can be expected to lead to tougher price competition. We intend to counter the negative impact on prices largely with positive volume effects and by raising our share of private labels. Due to the expected development in like-for-like sales, the store expense ratio (store expenses as a percentage of net sales) will remain at around the same level as in the previous year in the 2013/2014 financial year and is expected to decrease significantly in the 2014/2015 financial year. This development will be driven above all by savings in general operating expenses and great cost discipline at the stores. Pre-opening expenses will increase year-on-year in 2013/2014, as they already include costs incurred for stores scheduled to be opened in the first months of the following year. In the 2014/2015 financial year, preopening expenses should then fall to levels significantly below the 2012/2013 financial year (€ 9.6 million). We will continue to channel targeted resources into key forward-looking projects in the forecast period, such as in particular into consistently expanding our online store in Germany and other European countries. In view of this, the administration expense ratio will increase further in 2013/2014. From the 2014/2015 financial year onwards, the administration expense ratio is expected to gradually decline.
GROUP MANAGEMENT REPORT Outlook for the Group 85 • The earnings performance of the real estate segment in the two-year forecast period through to the end of February 2015 will mainly be characterized by the stable development in rental income in line with the Group’s expansion. Earnings forecast The earnings forecast is based on the assumption that there is no unexpected macroeconomic downturn, such as due to any escalation in the European sovereign debt crisis, in the two-year forecast period. The earnings performance of the Group in the 2013/2014 and 2014/2015 financial years will be determined by the development in earnings in the DIY store segment. We expect operating earnings (EBIT) at the HORNBACH-Baumarkt-AG Group for the 2013/2014 financial year not to match the level seen in the 2012/2013 financial year (€ 99.3 million). The Group’s earnings strength should improve significantly once again in the 2014/2015 financial year. EBIT should then show clearly disproportionate growth compared with sales. DISCLAIMER This annual report is to be read in the context of the audited financial data of the HORNBACH-Baumarkt-AG Group and the disclosures made in the notes to the consolidated financial statements contained in the annual report. It contains statements relating to the future based on assumptions and estimates made by HORNBACH’s Board of Management. Forward-looking statements are only valid at the time at which they are made. Although we assume that the expectations reflected in these forecast statements are realistic, the company can provide no guarantee that these expectations will turn out to be accurate. The assumptions may involve risks and uncertainties which could result in actual events differing significantly from the forecast statements. The factors which could produce such variances include changes in the economic and business environment, particularly in respect of consumer behavior and the competitive environment in those retail markets of relevance for HORNBACH. Furthermore, they include a lack of acceptance of new sales formats or new product ranges, as well as changes to the corporate strategy. HORNBACH has no plans to update the forecast statements, neither does it accept any obligation to do so.
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Hornbach-Baumarkt-AG Group Annual R
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Key Group, Financial and Operating
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Time and Space Those are the dimens
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COMPANY PROFILE 7 Germany. The net
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10 TO OUR SHAREHOLDERS TO OUR SHARE
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12 REPORT OF THE SUPERVISORY BOARD
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14 REPORT OF THE SUPERVISORY BOARD
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16 DIRECTORS & OFFICERS DIRECTORS &
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AUDITOR’S REPORT 159 AUDITOR’S
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Germany Baden-Württemberg Binzen E
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