Hornbach Hldg Ag

Welcome to our hybrid analyst and investor conference of Hornbach Holding. My name is Antje Kelbert, Head of Communications and Investor Relations at Hornbach. On behalf of Hornbach Holding and the entire Communications and Investor Relations team, I'm delighted to welcome you personally again here in Frankfurt today. At this point, a warm thank you also to our host, DSET Bank, where we are today. Thank you very much that we are here today. We would also like to extend a warm welcome to our participants who have joined us digitally today for our hybrid event. This hybrid format is a first for us and we look forward to the joint conference with physical and digital participants who can follow the event via the webcast stream. I would like to extend an equally warm welcome to our board members. From Hornbach Management AG, CEO Albrecht Hornbach and our CFO Karin Dom are with us today. Hornbach Baumarkt is represented by CEO Erich Harsch. According to today's schedule, Mr. Hornbach and Mr. Harsch will first provide an overview of the past financial year 2021-22 and will present the group's key developments. Ms. Dom will then conclude with a tour of the financial results and explain the most important key figures. Afterwards, you will have the opportunity to raise questions to the speakers. This will not only be possible for participants here in the room, but also for our digital participants. But questions cannot be asked via the webcast tool. You have to dial in by telephone. To do so, please use the dial-in details that were sent to you by email upon registration. If you need the help of an operator during the conference call, please press star and zero on your phone. I would like to draw your attention to the fact that this conference will also be broadcast via video and telephone, and that video and audio recording as well as a transcript of the entire event will also be made, which will subsequently be published on the company's website. If you continue to participate the conference, you declare your consent to this data processing. Please note also our disclaimer, which is valid for the presentation as well as for the entire Q&A session. And now I will hand over to our CEO Albrecht Hornbach and look forward to the following presentations.

Thank you. Ladies and gentlemen, A warm welcome to our annual results analyst conference for 2021-22. I am delighted that having missed two years due to the pandemic, we can welcome some of you in person for the first time again. And there are some familiar faces here as well. It's good to see you. This is the first time we are holding our annual results press and analyst conference as a hybrid event. Some of you are joining us online, while others have come here to Frankfurt. That shows how right it was to draw on digital possibilities and combine these with a familiar format. We need no further introduction because we are already right on topic. We want to discuss the past financial year with you today and give you an outlook for the 2022-23 financial year. At this event in the past, we always spoke to you about the performance of two shares, that of Hornbach Holding AG and Co. KGaA and that of Hornbach Baumarkt AG. We decided to withdraw the Hornbach Baumarkt AG from the stock exchange at the beginning of the year. And we successfully completed this delisting as of February 28. Why did we do that? Our ongoing status as a family-led company has been secure since we converted the holding company into a limited partnership by shares. And that means there was no longer any need for a duplicate listing. Now we have streamlined our capital market presence. In future we will be able to present ourselves and our success story to the capital market in a more focused manner as one company. And to say it right away, 21-22 was a further record year for HANNBURG, one with exceptionally strong results. If you have followed our company and our sector for some time now, you will already know what effects both positive and negative coronavirus had on our business. The second year of the pandemic with lockdowns and the Bundesnotbremse in Germany was also a huge challenge for all of us. But, and that is also an insight gained this year, we once again managed to seize the opportunities presented by the crisis and emerge from the situation in even better shape. Together with Erich Haas and Karin Dom, I will be telling you how we managed that. Ladies and gentlemen, in its second year as well, the pandemic promoted a trend which almost nobody escaped. I imagine you will all have noticed that in your neighbourhood, your surroundings or even yourselves, at some point during the pandemic, while working from home, seeing to homeschooling for the children and generally spending far more time at home, many people took the opportunity to tackle projects in their apartments, houses and gardens. And that certainly gave them a great deal of positive energy. Now that most restrictions have been lifted, we can move round more freely again and day-to-day life is beginning to feel more normal. Now we can see that this trend towards homing and cocooning is still intact. people have developed a taste for it. Anyone who has actually started improving their own surroundings does not suddenly stop just because restaurants and museums are open and they can go on holiday again. Put simply, people are far more attached to their own four walls now than they were before the pandemic. And this trend will continue. A much cited study by the management consultancy Accenture even refers to a decade of home. Having said that, the pandemic also affected us directly and is still doing so. Many of our suppliers were and are directly or indirectly affected by production downtime, supply shortages for commodities, containers not being available, ports being closed, and other problems. It goes without saying that we have noticed that as well. Prices are rising, goods arrive late, but not at all. That all sounds like difficult times. And yet the figures, which my colleagues will present in detail once I have finished, tell a very different story. As I already mentioned, 21-22 was another record year for us. I would like to highlight one or two aspects right away. The Honbach Group concluded the financial year with sales growth of 7.7%. Its sales rose to 5.875 billion. This growth was driven by all company divisions, Germany and abroad, do-it-yourself retail and the builders merchant business, online and stationary. Our largest operating subgroup is Tonbach Baumarkt AG, which operated 167 locations and 9 online shops at the balance sheet date. This subgroup grew its sales by 7.4% to 5.496 billion. In Germany, our DIY stores and garden centers increased their sales by 4.8% to 2.78 billion and our international locations in eight countries outside of Germany generated roughly the same volume of sales. Here, sales grew by 10.3% to 2.716 billion. Our online sales, this is including click and collect, rose by 10.5% to 944 million. The Honbach Baustoffunion GmbH subgroup rounded off the superb sales performance of the Honbach Group with sales growth of 11.8%. And not only that, taking over two locations in Saarland, it will press ahead with its successful growth strategy in the new financial year as well. We also have pleasing news when it comes to our earnings. Thanks to strong sales growth, the Honbach Group increased its earnings significantly compared with the previous year. The Honbach Group's adjusted EBIT, i.e. EBIT adjusted to exclude non-operating one-off items, grew by 11% to 363 million. At the Honbach Baumarkt AG subgroup, adjusted EBIT rose by 13% to 315 million. This means that for this important key figure, we even beat the record earnings reported for the previous year. The adjusted EBIT margin for the overall group climbed from 6.0% to 6.2%. That too is a record level higher than at any time since we converted to IFRS accounting 20 years ago. Earnings per share jumped from EUR 10.33 to 12.48. We are very pleased with our performance in the past financial year, which was driven by three absolutely critical success factors. I will begin with our successful digitalization strategy. More than 12 years ago, we were one of the first companies in the do-it-yourself sector to start digitalizing our business, while most of the sector was really quite late to follow smooth. We made massive investments in this field because we were and we are convinced that viewed in the long term, digitalization will be crucial to our success story. Today we are reaping the benefits for this forward-looking approach. We have profited from our head start and extended it further. Now we have the top performing online shop in the sector with around 250,000 articles available at the German site. So what is the secret? Other retailers view their distribution channels separately and refer to multi-channel or omni-channel sales. Since launching our digitalization campaign, we have relied on our own strategy, Interconnected Retail or ICR for short. That means we consistently dovetail our stationary product range with the opportunities presented by online shopping. We bring the Internet with all of its possibilities into the stores and vice versa, create a genuine shopping experience for consumers at home. We see ourselves as pioneers in this area and will consistently uphold our ICR strategy. Another key aspect is that IZR also has a cultural component. We never attempted to separate the channels in organizational or physical terms. All of our staff factor IZR into their solutions. The stores do not view the online business as a competition, but rather as a key component of our business model, one that generates additional sales and from which ultimately we all benefit together. The second success factor is our supply chain and logistics concept. During the lockdowns, 140 of 161 stores at the time were closed. That did not lead to a suspension of business, quite the opposite. We spontaneously converted our stores into distribution centers from which we sent goods directly to customers. Having said that, even the best logistics are of little use if the flow of goods, the supply chain is disrupted. Here too, we were able to draw great benefits during the pandemic from structures that were in place and highly functional. We have been focused on improving the ways we use freight space since 2012 already. In times of rising freight costs, we are now benefiting from that. Not only that, since the onset of the pandemic, we have created additional storage capacities, taking a highly forward-looking approach to procurement and made flexible use of various transport options to secure the availability of goods for our customers. We have long-standing relationships with our suppliers and a multi-supplier strategy that allows us to draw on alternative supply sources when necessary. That all said, our employees, our colleagues are still the most important success factor. I've spoken a great deal about flexibility, about the need to be open to new opportunities and the challenges presented to us by the pandemic. Our success despite all of the challenges is thanks above all to our committed workforce. Just two examples. Right at the beginning of the pandemic, the team at our stores developed fantastic and highly effective measures to protect our customers, spontaneously and at their own initiative. During the lockdowns in the past two years of the pandemic, employees who previously advised customers, worked at checkouts or stocked goods into shelves, switched to handling online orders, fetching goods from the shelves, packaging them and sending them to customers. We heard of some staff members that they walked up to 30 kilometers at the store in just one working day to assemble online orders for customers. We owe each and every Hornbach employee, who now number nearly 25,000 in total, our special appreciation in these times. We know the extra efforts they made to serve our customers placed great demands on them. A decade of home, functioning structures and a motivated team. These give good reason to be optimistic about the future. At the same time, we are of course also watching developments in Ukraine with great concern. Regardless of any implications for our company, which Erich Haasch will refer to in greater detail, our wish and hope is that it will finally be possible to end the war. The suffering on the part of those affected moves us greatly and we are committed in a variety of ways to doing our part to help the civilian population. All that now remains is for me to thank you warmly for your interest and to hand over to Erich Haasch.

Thank you, Mr. Randach. Ladies and gentlemen, I too would like to offer you a very warm welcome to our annual results press conference. As Albrecht Hornbach already said, we can look back on a record year. I would like to follow up now by looking at the statistics for the sector a little bit more closely. How is our company's positive performance to be viewed when compared with the rest of the sector? How has our market position developed? Before I begin, I would like to pick up on Albrecht Hornbach's comments on the situation in Ukraine. Hornbach does not have any stores in Russia or Ukraine, and we also do not have any direct business relationships in either country. Having said that, the war is close to us, very close in fact. We have stores in Slovakia and Romania, two countries directly bordering Ukraine. Particularly at our two stores in the east of Slovakia, not far from the Ukrainian border, many of our staff have relatives and friends who have been directly affected by the war. That puts the news from this region in a completely different perspective for the colleagues and location, but also for us. This is why we are helping wherever we can. With everyday necessities, so material donations in particular, and with financial assistance not only in Germany, but also in our country companies. Our Czech Republic and Slovakia region spontaneously supported an initiative to supply people affected by the war with around 200,000 euros. And it goes without saying that we automatically give leave to those colleagues who have to take care of affected relatives. Let us hope that the situation changes quickly and that people there can finally live in peace and freedom again. Turning back to our company and our business performance in the past financial year. We already heard that the past year was exceptionally good for the HORNBACH Group. How good the year actually was is particularly clear if we compare the figures Albrecht Thornbach just presented with those of our competitors. As you will recall, 2020 was a record year for the whole sector. A year in which nearly all companies generated growth. So the question is, which companies managed to latch onto this success in 2021 as well? Let's have a look at the DIY market. The new sector statistics compiled by the DENE publishing house are due for release in just a few days. They have already communicated one fact in advance. Of the six largest DIY companies in terms of sales in Germany, according to the statistics collected by DENE, Only one of them managed to post further sales growth after the pandemic driven boom in 2020. And that was Hornbach. All other major competitors, Obi, Bauhaus, Hagebau, Thom and Globus, were not quite able to build on the previous year's success and reported declines in their sales performance. Of course, because of the lockdown situations, the Bundesnotbremse in Germany. The two-year statistics compiled for 2019 to 2021 show that we achieved the highest sales growth in the sector. This way, we have overtaken Hagebau and Thom and advanced to number three among the DIY companies with the highest sales in Germany. I have no doubt that you will already have seen it in our numerous presentations. In terms of total sales in our international business, we have held third position among German DIY store operators for many years now. But if you look at our sales in Germany alone, we were long only the fifth largest player in the sector. And now we have taken a major leap forward to position three, and that by building on our own resources. We have grown significantly faster than the market and that is of course also reflected very pleasingly in our market share. Based on GfK figures, Hornbach Baumarkt's share of the German DIY market grew from 13% up to 15.1% in the 2021 calendar year. and we are still highly successful in our international business. In the Czech Republic, for example, we have a market share of 33% and are already the top player in the sector. And if we look at the Netherlands, we can see that in parallel with the 25th anniversary of our market entry, we are close to achieving 25% market share. With eight new stores opening in the past seven years, the Netherlands is one of our fastest-growing country markets. So the question now is, what have we done differently to our competitors? Albrecht Hornbach already referred to the importance of our ICR strategy. That is fundamental to our success. After all, our pleasing sales growth was driven not by acquisitions or many new store openings, but chiefly by our own internal resources, our ICR strategy, our smart procurement and stocking policies, and the great personal dedication shown by our colleagues. To do justice to the importance of digitalization and all the opportunities it presents, we have set ourselves the standard of being the technology leader within our sector, within the Baumarkt sector. We have our own development team with 80 employees alone working on the webshop, the app and the relevant interfaces. Technology is key to our success and that is precisely why we are permanently investing in this field. For us, online and stationary are not two distribution channels. On the contrary, we interlink the two worlds closely to generate additional benefits for our customers. Or, to put it loosely according to Aristotle, the whole is greater than the sum of its parts. Let me give you some specific examples of how we interconnected our stationary and online businesses. For example, click and collect, the option to order goods at home or on the road with computer, tablet or smartphone and then simply collect them at the store. Numerous retailers only discovered Click & Collect in the last years. This meant they could still generate a certain level of sales during the lockdowns and maintain their customer relationships. We at HORNBACH introduced this option across Germany in mid of 2011 already and then swiftly rolled it out to all other regions. That gave our customers multiple advantages during the periods of lockdown. Not only that, many customers learned to appreciate this service and are still using it much more frequently than before, even though the stores are open as usual again. We have free Wi-Fi at our stores, which enables us to provide additional information and services to our customers. And by the way, that also creates absolute price transparency. For us, that gives us the opportunity to convince customers of our price leadership directly on location at the shelf. Over the past two years, customers have also made far greater use of the option of scanning purchases themselves with the HORNBACH app and thus speeding up the payment process. And that trend is continuing. The display of product availability for a given product and its location within the store is another example. Or the use of virtual reality glasses for bathroom planning. or online configuration for customized products and much more. No other stationary competitor generates more sales via digital channels than we do in our sector. At around 1 billion euros, online accounts for around 17% of total sales at HBMAG. In reality, it's a lot more because many of our customers are informing themselves via our internet channel before visiting the store and then buying there. So, online is very important for our business. In Germany, not even Amazon, Zalando or Otto generated growth as high as ours in their online businesses in 2020. ICR is an essential part of our very own success. And this success would of course be unthinkable without the amazing commitment shown by our colleagues. On the one hand in the specialist central departments and logistic services and above all at our stores. There, digitalization is not perceived as competition for the bricks-and-mortar business, but rather the benefits it brings to Hanbach's consumers are valued overall. Therefore, our colleagues use the options provided by the online shop and other digital aids in their daily work, when advising customers in sales activities and when offering numerous services. That is crucial in making our customers feel comfortable and willing to draw on our services and recommend them to others. Very important. We are well aware of the important role of our colleagues played in our successful growth in the past financial year. They have my absolute respect for what they have achieved under the difficult conditions such as the mask load during physically demanding work. And I am delighted we were able to underline our appreciation with a decent profit sharing scheme to our employees. Before I hand over to my colleague Karin Dohm, I would like to give a short outlook of the operative milestones in the current financial year. Inflation, unstable supply chains, bottlenecks in logistics, rising commodity and transport costs, many of the challenges that already accompanied us in the past two years will remain with us. Given the geopolitical situation, they may even intensify further. However, we will not let up in our efforts to constantly renew our business and act with great flexibility. We intend to build on our momentum this year as well. We have already opened two new DIY stores and garden centers in 2022, one in Slovakia in Nitra and one in the Netherlands in Enschede. And the third is set to follow in Romania, in Constanza, on the Black Sea in Romania in the fall. In Germany, we will open the next store in spring 2023, in this case in Leipzig. And of course, in parallel, we are also modernizing and further expanding existing stores when it's possible and beneficial for our customers. And when it comes to interconnected retail, our foot remains firmly on the accelerator. In the current year, we will continue to invest in our online shops, staff and customer apps and technology for use at our stores. We will be moving all our online shops to our new e-commerce platform, which will offer us better scalability and greater flexibility. Demand remains high and we expect the trend of consumers improving their own four walls to continue in the medium term as well. Not least as ever, more people will work from home even now that the coronavirus restrictions have been lifted. In that respect, we can look to the future with confidence. Our people at HORNBACH have amply demonstrated their ability to master even major challenges to the benefit of our customers. Ladies and gentlemen, I would like to leave you with this positive outlook. Thank you for listening. I will now hand over I will now hand you over to Karin Dom, my colleague on the board of management, who will take a closer look at our business results with you. Thank you very much.