financial report and registration document 2011 - Groupe SEB

Raw materials
The Group’s business is exposed to fl uctuations in the price of certain raw
materials, including metals such as aluminium, nickel (used in stainless steel)
and copper. In recent years, the markets have been extremely mixed and
variable. After a “high” cycle in 2007 and early 2008, during which prices
reached record highs, the crisis in late 2008 and 2009 caused these prices to
turn sharply downwards. When infl ation picked up again in late 2009, this led
to a marked, uninterrupted increase in metal prices. This increase was very
much linked to the economic recovery, and particularly to the rapid rise in
Chinese demand, which put heavy pressure on commodities with impacts on
prices. The weakening of the general economic climate and the recurrence of
a serious crisis situation in mid-2011, with, in particular, concerns regarding
the ability to maintain strong growth in the emerging markets (and especially
in China), greatly impacted prices beginning in the summer. Metal prices thus
experienced a signifi cant and steep drop beginning in the summer of 2011.
In 2011, the infl ation seen in the fi rst half of the year, followed by the decline
during the last four months of the year, ultimately resulted in a 10% increase
in the price of aluminium, with an average price of $2,395 per metric ton
(vs. $2,173 in 2010). In practice, the Group mostly buys aluminium discs for
which all price components – metal LME price, access bonus and added
value – increased considerably in 2011. Nickel also fi nished the year on a
high note, increasing 5% over 2010 with an average price of $22,800 per
metric ton ($21,800 in 2010). As for copper, it was driven by an infl ationary
spiral throughout the year that pushed it up 17% to an average price of
$8,800 per metric ton in 2011, versus $7,540 in 2010. The downturn seen in
First bond issue
In May 2011, the Group carried out its fi rst bond issue, totalling €300 million,
with a term of fi ve years (maturing on 3 June 2016) and an annual coupon
rate of 4.5%. The issue was largely over-subscribed (€600 million), attesting
both to investor confi dence and their taste for the inaugural bond offering.
Continued expansion in emerging markets
In 2011, Groupe SEB pursued its strategy of expansion into emerging
economies with three major transactions. These acquisitions aimed to
strengthen the Group’s international infrastructure, especially in markets
experiencing rapid growth and with high potential over the medium term.
� After signing an agreement on 17 December 2010 with the Company’s
founding family, on 28 February 2011 Groupe SEB acquired Colombiabased
Imusa. This company manufactures and markets cookware
made of aluminium, stainless steel and cast aluminium (frying pans,
saucepans, stockpots, regional cooking pots known as calderos, pressure
cookers, etc.) as well as plastic items for the home and kitchen including
Financial Report and Registration Document 2011
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Commentary on the fi nancial year
2011 highlights
the last months was not enough to disrupt the rising price of metals for the
year, which was detrimental to the Group. It should be recalled, nonetheless,
that in order to smooth out the effect of these variations, the Group has
implemented a hedging policy for some of its metal needs.
As regards plastics, after two years of sharply increasing prices, up
to September 2011, the trend slowed down in late 2011. On average,
however, the increase in plastics prices stood at 10-25% for the year,
depending on the category. As the Group sourced most of its plastic parts
pre-formed, the impact of the increase on purchasing was somewhat diluted.
Nevertheless, the average prices paid by the Group in 2011 for purchased
materials, components and sub-systems were much higher than in 2010,
in spite of the hedging contracts in place. Sourced fi nished products also
became more expensive due to the appreciation of the Chinese yuan and
higher salaries in China. The 2011 purchasing index matched the Group’s
expectations and was 3.5 points higher than the 2010 index.
The Brent price increase in 2011 had only a limited impact on sea transport
costs, which are also subject to the laws of supply and demand. Due to the
decline in consumer spending in certain mature markets (United States,
Europe) and the implementation of additional capacities planned well before
2011, maritime traffi c between Asia and these two regions decreased, leading
to a drop in prices. As for air and road freight, these forms of transportation
were subject to a fuel surcharge (diesel fuel), generally leading to a rise in
prices.
The issue enables Groupe SEB to lengthen the average maturity of its debt
and diversify its sources of fi nancing, in addition to its existing lines of credit,
while taking advantage of an attractive fi nancing opportunity. The bonds are
traded on the Euronext Paris market.
storage containers, kitchen utensils, thermos fl asks, etc. Imusa’s 2010
sales amounted to €90 million, with 57% of these sales coming from the
Colombian market and 28% from the United States, and the remainder
from various markets within Latin America. A leader in the Colombian
market with two brands, Imusa and Umco (focusing more on the entrylevel
segment), the company has two production units, two sales offi ces
(in Colombia and in the US) and employs around 1,000 people. At the
time of the acquisition, Imusa had 12 of its own retail outlets, plus two
new stores that opened in 2011. Through Imusa, the Group has affi rmed
its leadership in the small domestic equipment segment within the very
dynamic Colombian market. Groupe SEB’s Samurai brand was already
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