HORNBACH Baumarkt AG

Good morning and welcome to Hanbach Holdings quarterly update call presentation on the first quarter of fiscal 2526. My name is Antje Kelbert, Head of Investor Relations. Today at 7 a.m. we have already published our figures for the first quarter comprising the period of March 1st until May 31st 2025. Welcome and good morning also to our CEO and Interim CFO Albrecht Hornbach who will be our host and presenter today and will later take your questions. Please note the entire conference call including the Q&A session will be recorded and made available with a transcript on the Corporate's website afterwards. Please also take note of the disclaimer which is valid for the entire presentation and for the Q&A session. To ask a question, please dial in for the telephone conference. Dial-in numbers have been provided in your confirmation email. The operator will give further advice at the beginning of the Q&A session at the end of the call. By pressing hash key 5 on your phone, you can join the queue to ask a question. Now I'm delighted to hand over to you, Albrecht, to give us an overview of the last set of numbers. Please go ahead.

Thank you very much. Good morning and a warm welcome from my side. Thank you for joining. We delivered a good performance in the first quarter of our current financial year. This is in line with what we already mentioned during our update on current trading at the investor and analyst conference on May 21st, 25th. Our net sales grew by 5.7%, driven by favorable weather conditions during spring, resulting in increased customer footfall. Additionally, sales benefited from two new recent store openings in Nuremberg and Duisburg, both in Germany. On a like-for-like basis, sales grew by 4.7%. These results are in line with our expectations as we already commented in our analyst and investor conference in May and underline our continued confidence in our robust and resilient business model and our relevance to our customers. Our gross profit increased alongside the already mentioned sales growth by 5.3%. This resulted in a gross margin of 35.2%, slightly below the prior year period. Adjusted EBIT significantly improved compared to the same period last year. This was mainly driven by improved sales and gross profit improving our cost to sales ratios. Whilst we are very pleased with our results for Q1, we remain cautious with our guidance for the rest of the year. No changes here as macroeconomic uncertainties and a dampened consumer sentiment could still impact our business. Therefore, we confirm our full year guidance as announced in May. We continue to expect sales at or slightly above the previous year's level and adjusted EBIT at the previous year's level. Let us now have a closer look at some of the Q1 results. As mentioned, group net sales in Q1 were up by 5.7%, mainly driven by Honbach Baumark's strong performance. Compared to last year's quarter, we saw increased demand for gardening products and construction materials following the good weather in March, April and May. Customer frequency in Q1 developed positively with an increase of 4.2%, while average tickets also showed a slight upward trend of 1.1%. It is still too early to conclude that this is a lasting trend towards larger projects, but it is a step into the right direction. The geographic split did not change significantly, with slightly more than half of Hornbach Baumarkt sales now coming from the eight European countries outside Germany. Hornbach Baustoff Union subgroup, which mainly caters to professional customers in the construction industry, also reported a sales growth of 3.1%. We anticipate that the construction industry in Germany has now bottomed out and that things should slowly start to improve again. The most recent figures show a slight upward trend in order intake and building permits. Now let's turn to like-for-like sales growth. Generally, demand in most European countries benefited from warm and mostly dry spring weather. For the group, like-for-like growth was, as mentioned, 4.7% in total. Germany contributed a growth of 3.4%, other Europe 5.9%. Especially in Luxembourg and the Netherlands, we saw strong like-for-like growth of nearly 11% each. Sales performance was partly driven on average 1.2 additional business days in the Hohenbach countries compared to the prior year period. I would also like to point out that sales growth in Q1 has not been influenced by inflationary effects. Consequently, we have seen pure volume growth as selling prices slightly decreased compared to the prior year period. Let's now have a look at our market share development. We continue to focus on expanding our market share in expanding our strong market position throughout Europe. In all Hamburg countries for which GfK market share data is available, we managed to increase our footprint in the period from January to April 2025. In Germany, our largest market, and despite a highly competitive environment, our share has reached 15.6%, a plus of 0.6 percentage points. In Czechia, we make 38.6% of the market, 1.5% more than in the prior year period. And in the Netherlands, we gained 1.4 percentage points, now making 29.7% of the total market. In Austria and Switzerland, we also saw a positive development. This illustrates that our offering remains highly relevant to our do-it-yourself customers and that we were able to benefit from the favorable weather conditions during this spring session. Let me also remind you that compared to the pre-COVID period, this is a tremendous development and strong achievement of our colleagues catering for our customers. Not only did we manage to grow in the time of the pandemic, we also defended market shares and improved them even further. Let's now jump to e-commerce development. Customer engagement across our interconnected platforms remains high, confirming that those are well-established sales channels, both in our do-it-yourself and do-it-for-me offerings. E-commerce sales of Honbach Baumarkt showed a strong growth of 11.1%, resulting in an increased e-commerce share of 13.1% in Q1. both directly delivery and click and collect developed positively with approximately 12 and 8% growth respectively. And with that, I would like to take a closer look at the cost and expense development in our P&L. Our gross profit increased by 5.3 percentage points, mostly in line with the growth in net sales. Gross margin came in at 35.2% after 35.4% in the prior year period. This reflects, as already mentioned, the normalization of selling prices in the do-it-yourself sector. Let us now look at our selling and store expenses. While we are now seeing the full effect of increased wages in all countries we operate in, costs have risen slower than sales. This leads us to the disproportionately positive development of adjusted EBIT. Overall, we improved our adjusted EBIT by 10.4% compared to Q1 last year, based on a successful spring season combined with improved cost-to-sales ratios. With this, overall adjusted EBIT margin came in at a comfortable 8.5%, an increase of 0.4 percentage points compared to the prior year period. There were no significant non-operating items or adjustments in KU1. Let's now turn to the cash flow statement. Our cash inflow from operating activities increased significantly compared to the previous year, primarily driven by a cash inflow from change in working capital. This is due to, among other things, lower utilization of the reverse factoring program, which was fully repaid in the first quarter as usual, and to a reduction of inventories. Funds from operations increased slightly, mainly driven by the higher net income for the period. CapEx summed up to 48 million euros in Q1 compared to 23 million in the same period last year. As planned, 58% was spent on land and real estate, mainly for new stores, while the rest was attributed to store conversions and equipment as well as software. Free cash flow improved to 147 million euros, reflecting the already mentioned change in working capital. Let us now have a look at our balance sheet. As of May 31st, 2025, Von Brach once again delivered a robust balance sheet. Compared to February 28, 2025, the consolidated balance sheet slightly increased to 4.7 billion euros. The equity ratio was slightly up, coming in at 45.5%, remaining on a strong level. All in all, our balance sheet underpins our robust financial position as well as the resilience of our business model. Before we open the floor to questions, I want to highlight our continued focus on strategic priorities, cost management and sustainable growth through targeted investments and operational efficiency. With our strong private labels, everyday low price strategy and commitment to sustainability, we aim to support customers, maintain market leadership and deliver value to shareholders. In summary, we are well positioned to navigate the complex macroeconomic and geopolitical environment and capture medium and long-term growth opportunities in the home improvement sector. That makes us very confident about Hohenbach's successful development in the future. Our current guidance for the 25-26 financial year reflects ongoing macroeconomic uncertainties and subdued consumer sentiment. Therefore, we are currently confirming our original forecast published in May. We continue to expect net sales at or slightly above the level of 24-25 and adjusted a bit at the level of 24-25. However, Given the good earnings performance in the first quarter of 2526, adjusted a bit in the upper half of the guidance range is currently likely. And with that, I conclude my presentation and hand back to Angie Kelpert for Q&A session.

Thank you, Albrecht, for guiding us through our numbers and your remarks. I now hand over to our operator Bastian to explain the technicalities of our Q&A session. Please go ahead.

Thank you, Antje. If you wish to ask a question, please dial hash key followed by the five on your keypad to enter the queue. If you wish to withdraw your question, please dial hash key followed by the six on your keypad. I will pause for a moment. Just as a reminder, if you would like to ask a question, please dial hash key followed by the five on your keypad. So we have the first question coming from Volker Bosse from Baader Bank. Please go ahead.

Yeah, thanks for taking my question. Good morning. Congratulations on the good start into the new fiscal year. I would have three questions, please. And the first question would be on online sales. You reported strong double digit growth here. Do you see any specific reasons or drivers for that? Do you see structural trends towards online or is there any one of included or so? I would be interested to get your thoughts on that, please. The second question would be on your guidance. You also mentioned potential cost increases which might come. Do you have something special here in mind or what kind of cost increases you speak about last year with the salary increases repeating again, or what do you want to give as a message by saying so? And last but not least, third question would be on current trading, how June developed, meaning we have nice, hot, warm weather outside. This should be supportive, I guess, but to get your thoughts on that would be also very helpful. Thank you.

okay thank you for the questions shall i answer um first question uh concerned um concerned uh online sales i would guess uh You know, we had a very strong peak of online sales during the COVID pandemic. And after that, we got on the path of normalization, which means decreased online sales. And I simply guess we have now reached the bottom and on a normal increasing rate of our online sale. in addition it's worth to mention i think that since some time we also reported about that we are operating our marketplace which might influence our online sales in a positive way because of our product range gets gets broader for the customers and makes our workshop even more interesting Guidance cost increases. OK. Cost increases is mostly employee wages. But we have not made a very big increase. But now we have the higher wages which began in the end of the last year and it takes some months until the basis is reached. And trading, okay, we are now reporting a Q1. We said Q1 was, we have had a positive trading. This trend is still ongoing and our trading is very sufficient in the moment.

Okay, Volker, does this answer your questions?

Can I unmute?

Probably. I was muted again, so now I'm muted. Yeah, thank you very much for the explanation. Thank you, Wolfgang.

Okay. So the next question comes from Thilo Kleibauer from Warburg Research. Please go ahead with your question.

Yes, hello. Good morning. Thanks for taking my questions. I found one follow-up question on the cost increases. So for Q1, you mentioned an increase in operating expenses of 3.7%. Is this, in the end, the run rate we also should expect for the coming quarter? So cost increases 3 to 4% due to expansion, IT projects, wage inflation? And my second question would be regarding Hornbach Baustoff Union. You also mentioned building materials were quite positive in Q1. So do you also expect maybe a kind of stronger recovery for the Hornbach Baustoff Union business in the coming quarters? These are my questions.

Thank you for these questions. I think the 3.7%, which you mentioned, it's a wage increase, which we have in the month of... We had it since September. And we have to wait until September, until we reach that basis. And that's the main driver for increases, not other things. Okay, okay. Okay. And concerning the Baustoff Union, I mentioned we had a turnover increase of 3.1% in this quarter. And we have the feeling that also in Baslerfunion we have reached the depths of the valley and that this industry is slowly recovering, but the main effects we are awaiting for next year only. Okay, thank you. That's helpful. Okay, thank you.

So the next question comes from Thomas Maul from DZBank. Please go ahead and ask your question.

Yes, good morning. Thanks for taking my questions. I got two. Firstly, with regard to Germany, you reached a market share of above 15% in Germany now. That's quite impressive. Do you actually have any internal targets for market share or which level would you like to achieve in Germany? And second question, maybe you can comment a bit on the competitive situation in Austria. My impression is that it's a bit difficult to gain share in Austria. So maybe you can elaborate a bit on what's going on in Austria. Thank you.

Okay, we are at a level in the Q1 of 15.6% market share in Germany now. And of course, we have no special targets in market share. We tend to deliver our customers with the best what we can do. And market share is an outcome of our normal operating But of course, we are proud that market share is increasing. And this is a sign of our very good position in the industry and our leading position in operations efficiency. Austria.

So we have as a second speaker, we have also Erich Haas, he's CFO of Honbach Baumarkt AG, and he's also supporting the questions regarding the specificities of Honbach Baumarkt. Please go ahead.

Hello and good morning. I think Austria is pretty similar to Germany in the development of the market share. It's difficult because of the many competitors and the structure of the country, but we are on a very good way and we think we can develop also in Austria in a good way. As you know, maybe we have a new head of our business in Austria, Peter Eberdorff, who's responsible for since some months for the business and he's an Austrian and I'm trusting that the development in Austria will also

be on a good way okay thank you helpful okay so then the next question comes from ralph marinoni from korean please go ahead and ask your question

Yes, good morning, everybody. Two questions from my side. First, can you quantify the pre-opening costs of the new disc bookstore? And second question, which amount of capex can be assumed for the full year, considering another three store openings?

I didn't understand right. Pre-opening costs of which special?

of the Duisburg store that must have been included in your Q1 results.

Okay. Yeah, I must say that we do not disclose single store numbers. So we cannot tell you, especially pre-opening cost of a certain market, a certain store, which in this case should be Duisburg. And I don't have this number here. Sorry about that. And CAPEX, full year.

Yes, so we have for the capex, we have given the indication that we will see ourselves above the level of 2024-25, which has been around 148 million.

Okay, so that's maybe fair to assume that we can multiply your capex of the first quarter with a factor of four.

Yeah, it's not evenly spread through the quarters. However, as Albrecht said, we don't disclose them. And already, as you can imagine, the pre-opening costs have already been there last year. So as the name says, pre-opening, and we used the last fiscal year. So it's a little bit spread throughout different quarters and even throughout different fiscal years.

OK, thank you.

welcome so at this moment there are no further questions in the queue as a short reminder if you would like to ask a question please style the hash key followed by the five to get into the queue So as I can see, there are no more questions at this time. So I would hand back to Angela for any closing comments.

Yeah, thank you very much for handing back and all your questions. Thank you, Albrecht, for guiding us through and for answering the questions. If you have some further questions after the call or would like to discuss any further topic, please do not hesitate to get in touch with the investor relations team. So we are available. we also would like to invite you to meet us at the upcoming capital market events throughout the coming weeks especially in september after the summer break you will find an overview of our conferences and ir activity at the end of the presentation and also um most recent on our website so thank you very much for your interest this morning and have a pleasant summer time enjoy your own outdoor and gardening projects and we hope to meet you soon in person thank you very much and goodbye point in