Hornbach Hldg Ag

Hope everyone is doing well. My name is Antje Kelbert. I'm Head of Investor Relations at HORNBACH. On behalf of HORNBACH Group and the entire Investor Relations team, I'm delighted to welcome you today here in person in Frankfurt at the Z-Bank and those following our webcast virtually of this year's annual investor conference. I would like to express equally warm welcome to our board members here with us today. Albrecht Hornbach, CEO of Hornbach Management AG, Erich Harsch, CEO of Hornbach Baumarkt AG and member of Board of Management AG, and our CFO Karin Dohm, representing both Hornbach Management AG and Hornbach Baumarkt AG. Today we will start with Mr. Hornbach and Mr. Harsch, who will provide an overview of the past financial year 2023-24. And then we will see Ms. Doorn. She will take over and guide us through our financial performance, commenting on latest key figures. As always, once the presentations conclude, you have the opportunity to raise questions. This will not only be possible for those here in the room, but also for those participants following our webcast. And this time you can post your question very easily via the webcast tool. I will explain the process of the webcast at the start of the Q&A session. Before I now hand over to Mr. Hornbach, I would like to draw your attention to the fact that the conference will be recorded. The recording and the transcript will be published on the company's webpage after the conference. If you continue to participate, you declare your consent to this data processing. Please also note our disclaimer, which is valid for the presentations as well as for the Q&A session. And now I'm delighted to hand over to you, Mr. Hornbach. The stage is yours.

Ladies and gentlemen, I too would like to offer you a very warm welcome to our 2024 Investor and Analyst Conference. I'm delighted to see your interest in developments at the Hornbach Group. As well as the guests present here, we would also like to warmly welcome everyone who is following our Analyst and Investor Conference on their screen. In the next 30 minutes or so, Karin Dom, Erich Harsch and I will report to you on important developments at the Hornbach Group in the 2023-2024 financial year. And we would also like to provide you with some insights into our plans for the current financial year. Even if the 23-24 financial year presented numerous challenges, I would like to establish right at the start of my comments that we at Hornbach can view the development of our company with great optimism and confidence. We are on course and can report solid key figures. And I would note that we concluded the financial year in line with our sales and earnings guidance. In the period from March 1st, 23 to February 29th, 24, the Honbach Group generated net sales of Euro 6.2 billion, equivalent to a reduction of 1.6% compared with the previous year. If we consider the company's performance over a slightly longer period, and as a family-managed retail company, that is the way we plan, Then we can see a very pleasing picture, one in which our group developed very positively over the past five years. In the 2019-20 financial year, the Hornbach Group posted total net sales of Euro 4.7 billion. Back then, before the pandemic, that was already a real record year. Adjusted EBIT stood at Euro 227 million in 1920. Today, after what was certainly a challenging 23-24 financial year, it stands at Euro 254. This is despite the fact that there is an unfavorable correlation between the development of our earnings performance and the inflation which began with the war in Ukraine. It had an impact on our gross margin and consequently on our EBIT. The fact is that retail companies need to be in good shape in times of rising prices as procurement prices rise first before higher retail prices become established in the market. And we are in very good shape in this respect. So I am firmly convinced that the current share price of Hornbach Holding does not reflect our earning strength and the company's positive actual performance. And here I would refer in particular to our popularity among customers and the earnings we have generated on that basis in the past five years, as well as to our ongoing expansion and our distribution policy. As a retail company, these days you can only plan on the basis of long-term value creation. Long-term thinking and planning pay off. And that is what we do. We intend to continue growing successfully in the European market in the long term as well with new stores, new digital offerings and new services. For us, strength lies in rhythm. The right rhythm ensures organic growth, movement, vitality, and dynamism. The 2023-24 financial year was very much characterized by the latter. With dynamism, I mean the major process of transformation which our society is undergoing. This is affecting the whole of Europe and is not simply passing our company by. The ongoing wars and military conflicts in Eastern Europe and in the Middle East, and the shocking news these involve, have left their mark. They give rise to a feeling of powerlessness among many people, and that leads them to withdraw into their private spheres. The apartments, houses, and gardens are their source of strength. These are focal points for gathering with family and friends. Here, everyone can create things with their own hands. Do-it-yourself is the order of the day, and that is the opportunity for the do-it-yourself sector. Some time ago, an expert said this. A visit to a do-it-yourself store should be on prescription. I could not agree more. What could be better than realizing your own project yourself and then to be proud of it and use it every day? To make sure that we too remain successful in future, we also worked on numerous projects in the past financial year. I will refer to some examples in my own comments. Erich Haasch and Karin Dom will tell you about others later. And you can see the full picture in our management report and non-financial group report. A year has now passed since we extended the boards of management and Hornbach Baumarkt AG. The members who newly joined these boards are today working even more closely on Hornbach's strategic further development. I am delighted about that and it is a good sign for the future. Here, too, we are well on course. In December 23, the supervisory board of Hornbach Baumarkt AG extended the contract with Carsten Kuehn, a longstanding member of our board of management, through to September 29. As labor director, Carsten Kuehn promoted the work-made-to-measure concept, Arbeitszeit nach Maß, and in the marketing field, he has received great recognition for attention-grabbing communication campaigns. In December, Seniovo, a highly innovative start-up from Berlin, became part of the Honbach Group. Seniovo is the German market leader for serial, senior-friendly bathroom conversions. We see this topic as harboring great potential. And not only that, the acquisition supplements the numerous services we offer to our customers, also with our trade service. Before I turn to the key performance figures of the Honbach Group, I would like to thank all my colleagues very warmly for their commitment. My colleagues, those are the 24,783 people who were employed at the Honbach Group at the reporting date on February 29th, 2024. It is clear to us all that the past financial year was a challenge. and the financial year that has just started will also place its demands in us. Competition is as tough as ever in the European retail sector, and yet with their dedication and drive, each and every colleague helps to ensure that we maintain our success in the market. Speaking of dedication and drive, one thing I keep reading about is the four-day week, and I hear the desire for better ways of combining work with leisure time. That is all understandable. With our successful work-made-to-measure model, Arbeitszeit nach Maß, we have helped meet these needs for quite some time now. But that is just one side of the coin. The other, and that is one I see in day-to-day operations at the company, is the enormous commitment shown by so many people. And I would particularly like to highlight the young people who are doing their vocational training or dual work and study programs with us. When I see them, it makes me very hopeful for the future. What I see is this, a willingness to perform, passion and determination. Colleagues who plan fantastic projects together with customers at our stores and who really enjoy sharing their expertise. We have created very good conditions for our employees in all our countries, as is reflected in the high numbers of applications we receive. Most of our colleagues work at the 171 do-it-yourself stores and garden centers that we operate in nine European countries. We have 10 online shops and are a market leader for interconnected retail in Germany. With sales of Euro 2,823 per square meter, Hornbach Baumarkt AG is in pole position when it comes to surface productivity. And we can see a similarly pleasing picture in terms of like-for-like growth and market shares. In the 23-24 financial year, Hornbach's market share stood at 36.2% in the Czech Republic, 27.1% in the Netherlands, 17.3% in Austria, and 14.9% here in Germany. I would now like to take a short look at Honbach Baustoff Union. Baustoff Union is our specialist retailer, which focuses on the needs of commercial customers in the main and secondary construction trades. It operates 36 builders merchant outlets in southwestern Germany and just across the border in France. The downturn of business in the construction sector, higher interest rates, and further macroeconomic challenges led sales here to decrease by 9.6%. Net sales amounted to €381 million in the 2023-2024 financial year, accounting for 6% of consolidated sales. Yet if we take a longer-term view of developments at Baustoff Union, here too we can see a clearly positive picture. Back in the 1920 financial year, sales amounted to 299 million. If you compare that with Euro 381 million, then you would be right to conclude that things are moving in the right direction. We attach great priority on enhancing efficiency at Beustoff Union as well. The company is continuing to work on new opportunities presented by digitalization and is actively managing its costs. We still see good growth opportunities for our specialist retail business, given the great need for renovation work, the age structure of very many buildings in Europe, and the EU's plans for climate neutrality. And to complete this picture of the Hornbach Group, I would like to mention Immobilien AG, which also forms part of our group, but does not have any operating business or its own employees. Consistent with its business purpose, and like in the past, it owns a major share of the real estate used by Baumarkt AG. Before I conclude my remarks, I would like to provide an outlook on the development of the Hornbach Group in 2024-25. The first months present us with a very pleasing picture as far as demand from our customers is concerned. but that should not create any inflated expectations concerning our sales growth and earnings. We continue to attach the utmost priority to organic development and high-quality locations in large catchment areas, and we build on long-term solutions. We will continue to align our product range and services to the needs of our customers in future as well. And our permanent low price strategy is also not up for debate. In our guidance for Hanbach Holding for the 2024-2025 financial year, overall we expect to see slight sales growth and adjusted EBIT at or slightly higher than the level reported for the 2023-2024 financial year. Ladies and gentlemen, I have served this company since 1991. During that time, we have experienced so much and mastered so many challenges. German reunification, the expansion into our neighboring countries, and the consistent development of our digital offerings. These were and are essential for the future operating capacity of our group. And today, corporate social responsibility is one of the most important topics for the future operating capacity of the society we live in and thus also for us. We are in the midst of a major transformation, the consequences of which, both positive and negative, are not yet foreseeable. It is a fact that we cannot avoid continually reducing CO2 emissions. By 2030, we aim for a reduction in scope one and two carbon dioxide equivalents on group level that is compatible with the 1.5 degree targets in the Paris Climate Agreement. One small but highly specific example of what we are doing to achieve that involves 34 new photovoltaic systems we newly installed on our roofs in the past financial year. With regard to our product range, we are working to achieve the greatest possible transparency concerning the origin, contents, and environmental impacts of our products. Our aim is to put our customers in the best possible position to take closer account of ecological, health, and social aspects when they make their purchases. Our non-financial group report shows you numerous further examples of our wide-ranging commitment to a future worth living in. We all have to work together to take care of our planet if we wish to have a future worth living in. And people are the crucial factor here. In this spirit, I would like to finish by quoting from Johann Wolfgang von Goethe. There are some great lines in his poem, The Divine. The nobleman be helpful and good, tirelessly he creates. As you know, we at Hornbach share that sentiment, but put it slightly differently. There's always a job to be done. Es gibt immer was zu tun. Many thanks for listening, and I I'd like to hand over now to Erich Haas.

Thank you, Mr. Randach, for your comments. Dear guests, I would also like to offer you a very warm welcome and thank you for your interest in developments at our group of companies. I will follow up on Mr. Hornbach's comments by looking at developments at Hornbach Baumarkt AG in slightly more detail. For me, three core messages are important. Firstly, despite numerous larger and smaller waves over the past five years, our retail company is very much on course. In the year under report, Hanbach Baumarkt AG generated sales at Euro 5.8 billion. That marks a slight reduction of 1.1% compared with the previous year, but represents substantial growth compared with the 2019-20 financial year, before the pandemic, in which we reported sales of around Euro 4.4 billion. Secondly, customers like coming to us, even when they have slightly less cash in their pockets. Customer footfall at our stores rose by 2.0% compared with the previous year. Our market share is significantly up on pre-pandemic levels and we are making good progress in developing our services further. You will be aware that the unusually cold and rainy months of March and April in the previous year, in 2023, led to a noticeable decline in demand across large parts of Europe, particularly for garden products. At the same time, inflation was still well above 7% in the months that followed. we were no longer able to make up for this difficult start for the financial year. And that also led to a slight decline in average purchases in the past financial year. Despite these difficulties, though, we managed to further reduce our inventory holds over the year as a whole. And my third core message is With their commitment, our employees make an absolutely key contribution to our great popularity among customers in challenging times. That is documented in independent surveys, which frequently place us in top positions, also in the increased customer footfall, and in the fact that overall we are outperforming the sector. Having the best product range and the best services is of course crucial. Without the many colleagues who are there to help customers day in, day out, it would not be possible to run a successful business. That is why I would like to take this opportunity as well to express my heartfelt thanks to all my colleagues and especially to the 1,000 or so people in training who are necessary for our company's future operating capacity. Ladies and gentlemen, at the balance sheet date of February 29th, 2024, we operated 169 DIY megastores with garden centers as well as online shops in nine European countries. Under the Bodenhaus brand, we continue to operate two specialist stores for hard flooring materials and an online shop as well. Our stores have an average size of about 12,000 square meters, weighted in line with sector standards. We generate slightly more than half our net sales in eight European countries. The remaining 48% is contributed by our stores in Germany. Here, we currently operate 96 DIY stores and garden centers. In Duisburg and in Nuremberg, we just recently began work on building new stores. These are expected to be completed by the middle of 2025. In the eight other countries across Europe, we operate 73 DIY stores and garden centers. That is one more than in the previous year. We opened a new state-of-the-art DIY store and garden center in Nijmegen in the Netherlands in July of 2023. And our company's performance in the Netherlands in particular is very pleasing. Thanks to increased customer footfall and the expansion in our project business, we can report like-for-like growth of 4.2% at this country company. And just like in the Czech Republic, we managed to further expand our market share in the Netherlands. At Euro, 2,823 per square meter. Surface productivity at Hornbach's DIY stores is still well ahead of the competition. Just to compare, before the pandemic in the year 1920, financial year, our surface productivity stood at Euro 2,386 per square meter, so about 440 Euros less. Back then, that was the highest figure since the IPO of Hornbach Baumarkt AG in 1993. As you know, we combine our stationary business in all countries in which we operate with online shops to form multi-channel DIY retail. By seamlessly dovetailing the app and web shop with the stores, customers are free to decide how, where and when they would like to shop. Our interconnected retail strategy has helped to raise productivity at our stores. In the past financial year, the online business accounted for 12.7% of our sales. By comparison, the sector average was around 5%. So, here too, we are performing significantly better than our competitors and are also well ahead of pre-pandemic levels. Since the fall of 2023, we have extended our online shop in Germany to include a marketplace. This supplements the already very extensive offering with further DIY products. We like to refer to this as a curated selection, one that is absolutely in keeping with our focus as a project DIY store. At the beginning of May this year, the German Retail Federation reported that online marketplaces are gaining in significance within online retail. That may well be true for pure players. For Hornbach, I can say that we view the marketplace as a sensible addition to our multi-channel retail, one that should benefit our alignment as the topic DIY store for projects. And that brings me to one project that I'm particularly pleased about. At the end of 2023, we boosted our service offering by successfully acquiring Seniovo. Founded by Jonathan Kohl, this Berlin startup focuses on serial barrier-free bathroom conversions. And barrier-free construction is a very exciting topic, particularly given demographic changes in our society. This cooperation with Seniovo supplements our existing Hornbach trade service in Germany. At Seniovo, the service concept plays a very major role along with digitalization. This way, teams take care of all applications and approvals and Seniovo guarantees high quality project implementation. Thanks to highly standardized and digitalized processes, that all happens very quickly. I already mentioned that people are very important to us at our company. That is why we create conditions that promote loyalty not only among customers but also among our employees. Across the whole of Europe, there are many colleagues who have built nearly the whole of their working lives at HORNBACH. That is a good indication of our attractiveness as an employer and of our modern and lively management culture. Loyalty is one thing. Renewal is another. Both are crucial. One aspect of our renewal is the fact that we placed the management in Sweden into new hands at the end of 2023. In Joachim Loeb, we managed to gain an expert who knows the Swedish market and has acquired great management experience in his career to date. During the selection process, it was his strategies and visions for Hornbach in Sweden that convinced us. Joachim Loeb has succeeded Oliver Garrecht, who has already worked for Hornbach for more than 30 years. The beginning of 2023-24 financial year also saw a new management change in Romania. Radu Oniga succeeded Mugurel Horia Ruzu, who had held the position of country director since 2005 already in Romania. We currently operate the nine combined DIY stores and garden centers with drive-in facilities and an online shop. I wish both colleagues every success in their roles and hope they will remain loyal to us for as long as their successors. And I would like to thank their predecessors, Oliver Garecht and Murgoel Horiyaruzu, very warmly for their work. They will both remain available for us for some time as advisors. One way to promote loyalty is decent pay and at Hornbach we are one of the best addresses in this respect. Retail is an attractive employer with hourly wages of up to Euro 21 plus, additional allowances are not uncommon here in Germany. In October 2023, we decided to voluntarily increase remuneration in Germany by up to 5.3% for employees covered by collective agreements and our trainees. In March this year, we announced that our pay scale employees and trainees in Germany would receive another 4.7% more gross pay at the dates where their respective rates are due to rise in 2024. This provision applies until such time as agreement is reached in the collective pay talks for the retail sector. In one tariff region, that is already the case. A similarly positive picture is emerging at the other country companies. Employees working in countries where there are no collectively agreed pay rates for the retail sector are paid on the basis of arrangements customary to the respective markets. and we offer a whole number of voluntary additional benefits in all nine countries in which we operate. Dear guests, Mr. Hornbach already mentioned that we are in the midst of a process of transformation. Great opportunities await us. That holds true not only for us as a company but also for society as a whole. It is about freedom and the ability to recognize ourselves what actually matters. Neither of these things should be taken for granted. We have to work for them every day, for example by going out to vote or deliberately opting for a forward-looking company like Hornbach. The scientist and physician Rudolf Virchow is thought to have coined the following saying, is not so much about the ability to act arbitrarily, but rather about the ability to act prudently. Acting prudently is the standard we set ourselves. At Hornbach, every individual bears responsibility for building a future worth living in. It is the stance and initiatives taken by every individual, the teams with specialist responsibility and management that promote sustainability-related topics at our company. We have put the conditions in place to enable ideas to be turned into action and to ensure that our efforts are tangible and relevant for the people. I would invite you warmly to look at our revised CSR policy and our non-financial group report and to find out more about what we have already achieved and about what we are implementing or planning. Our product range is one major lever when it comes to promoting sustainability. That is why we are very deliberately developing our offering further to account for various aspects of sustainability. And our private label products are one key focus of our efforts to further develop our product range along sustainability lines. We draw on information about sustainable articles and suitable projects in our communications with customers and of course also in the training materials for our colleagues. Our goal is this. Our customers should themselves have the possibility to account for ecological, health and social aspects when making their purchases. That too is a matter of freedom and self-empowerment. In our procurement processes, we look into the entire value chain for our products and carefully weigh up any decisions we take between regional procurement and global value creation. Where possible, doubtful or environmentally harmful substances are replaced by effective ecological alternatives. We forego stocking controversial or environmentally critical articles such as herbicides containing glyphosate or plants whose cultivation involved the use of neonicotinoids. As a company, HORNBACH is organically certified. This is the only way we are allowed to sell our private label FloraSelf Bio or organically certified plants and seeds. We prefer to procure timber and timber products from within the European Union, where it comes from forests that are managed in a sustainable and socially responsible way. All the timber we sell, which comes from non-EU countries or from Romania, bears the FSC seal to document environmentally friendly and socially responsible forestry. No better certification is currently available. I could extend this list much further. Please do get in touch with us if you have closer interest in this. Sustainable commitment means keeping at it, recording key figures and actively steering these in the right direction. That is laborious and requires great input, but it is absolutely crucial if we wish to live in freedom and implement fantastic DIY projects in future as well. Many thanks for your interest. I will now pass you on to my colleague Karin Dohm. Thank you.