financial report and registration document 2011 - Groupe SEB

4 2011
Commentary on the fi nancial year
highlights
4.1. 2011 HIGHLIGHTS
General environment
After the economic crisis of 2008-2009, the general context was much
more favourable throughout 2010, characterised by economic recovery
and by steady or growing consumer spending levels in most markets,
whether mature or emerging. As a result, the year 2011 opened to a rather
promising global situation, although certain problem areas in the fi rst half of
the year should even be overlooked at the major diffi culties experienced by
many European countries (Greece, Spain, Portugal, etc.), the socio-political
disruption caused by the Arab Spring (while this had little direct impact on
the Group’s business, it did have an indirect effect, especially in relation
to oil prices) and the natural and industrial disasters in Japan. From the
third quarter onwards, the macroeconomic climate became noticeably less
stable, affected by a series of new concerns and grim indicators, such as
the severe downturn of the situation in European countries dealing with
the economic crisis, the general sluggishness of the US economy and
the downgrading of its credit rating by Moody’s and Standard & Poor’s,
rumours of a slowdown in China, etc. This gloomy news and the austerity
measures imposed resulted in a high level of pessimism and a sharp drop
in household confi dence in the mature markets mentioned above, not to
mention a signifi cant decrease in consumer spending. The situation was
less troubled in other countries, but demand dipped somewhat in Western
Europe, while momentum remained strong in the emerging economies. On
the whole, this trend continued in the fourth quarter, yet it should be noted
that US consumer spending experienced a rebound beginning with Black
Friday and around the Christmas holiday.
Currencies
The volatility prevalent over recent years persisted. While 2008 and 2009
were characterised by a negative currency impact on sales (-€69 million
in 2008 and -€63 million in 2009) due to the marked depreciation of
numerous currencies in relation to the euro, 2010 was just the opposite
with a +€170 million currency impact on sales, due to the rallying of these
same currencies against the euro, especially during the second half of the
year. This trend continued during the fi rst quarter of 2011, before making
a sudden U-turn during the second quarter and continuing in this direction
until the end of the year. Ultimately, the currency effect on 2011 sales stands
at -€26 million. This amount is the result of a mix of fl uctuations depending
on currency and period of the year. Based on the average exchange rates
for 2011 compared to 2010, most currencies weakened in relation to the
euro: this is the case, namely, for the Turkish lira (-14.5%, with a steeper
decline during the second half of the year), the Ukrainian hryvnia (-6.7%),
the Mexican peso (-3.1%), the Polish zloty (-3%) and, to a lesser extent,
the rouble, the pound sterling and the Korean won (ranging between -1.5%
and -0.6%). The US dollar (-4.7% for the year in relation to the euro) and
Under these circumstances, the small domestic equipment market
experienced a brisk first half, thanks in large part to demand from the
emerging economies, followed by softer growth beginning in the summer,
amplifi ed by the downturn seen in Europe during the last four months.
Ultimately, the market fi nished the year 2011 on the rise, although this growth
has slowed as the months have progressed. In terms of quality, it is apparent
that the strained economic context (a repeat of 2008-2009) is refl ected in
consumer buying behaviour, which tends towards low-price products and
discounts. This situation results in heightened competition, with competition
between industry players being intensifi ed by the competition between retail
distributors.
As for the retail distribution industry, after the diffi culties encountered in
2008-2009, the reforms and “standardisation” in 2011 made it possible to
address 2011 from a calmer perspective. Nevertheless, certain retailers
remain in a precarious position, and most clients manage stock levels with
extreme care, throughout the world. Despite a few cases of bankruptcy and
store closures – either confi rmed or anticipated – 2011 was not affected by
any major incidents, thanks to a judiciously managed commercial policy and
high credit insurance levels.
the Chinese yuan (-0.2% for the year in relation to the euro) both followed
a rather mixed path depending on the quarter. They started the year on the
rise, then weakened for two quarters, before abruptly resuming an upward
trend during the last three months of the year. Regarding the Brazilian real,
after almost two years of continued appreciation, including the fi rst quarter
of 2011, it slowed its pace beginning in the spring and continued downwards
until the end of the year, ending at a rate almost unchanged for the 12-month
period. Despite a few hiccups, the yen grew 4.9% against the euro in terms
of average exchange rate in 2011 and 2010. Amongst all of these currencies,
the two that had the greatest negative effect on 2011 sales were the Turkish
lira and the US dollar; however, the weakening of the dollar did have a
positive impact on the Group’s purchases.
The persistent volatility affecting exchange rates over the past few years
is disruptive – sometimes having a positive effect and sometimes having
an adverse effect – on the Group’s highly international operations. Despite
this uncertainly, the Group makes every effort to turn a profi t everywhere it
does business.
60 GROUPE SEB Financial Report and Registration Document 2011