Hornbach Hldg Ag

Good morning and welcome to our update call for the third quarter and the first nine months of the 2024-25 fiscal year for Honbach Holding. My name is Antje Kelbert, Head of Investor Relations. This morning at 7 a.m., we released our reports and presentation on our IR website. Karin Dohm, CFO of Honbach Group, will take you through financial highlights and development of our first nine months. Before I hand over to Karin, I would like to remind you that the entire conference call, including the Q&A session, will be recorded and made available with the transcript on the company's website. Following Karim's remarks, we will open the floor to questions. If you are unable to get your question during the call, please reach out to the investor relations team afterwards. Please also take note of this disclaimer, which is valid for the entire presentation and for the Q&A session. And now, Karim. hand over to you. Please go ahead.

Thank you, Antje. Good morning and a warm welcome from my side. Thank you for joining us so shortly before the holidays. We achieved solid growth over the first nine months of our financial year, despite a continued challenging macroeconomic environment, especially in Germany. Sales were up 0.5% to 4.95 billion euros. Our market share rose in most countries and our customer frequency picked up. Gross margin continued to improve and was up by 1.3 percentage points in the first nine months. Adjusted EBIT came in at 300 million euros, significantly stronger than last year's results. Let me do a little bit of a deep dive now into our P&L. As highlighted, our net sales in the first nine months of 2024-25 were slightly above prior year's levels. Hornbach Baumarkt contributed with a sales growth of 1.1%, benefiting especially from organic growth across Europe. This is an outstanding development for two reasons. Firstly, we achieved this growth against the backdrop of low inflation and softening prices in the DIY sector. And secondly, we're still navigating a market characterized by soft consumer sentiment and reluctant spending behavior, especially regarding larger projects. Thus, our strong sales growth means that our offering remains highly relevant to our customers. As mentioned, customer frequency picked up over the last nine months, with an increase in footfall of 1.6%. While average tickets were still slightly down year over year, Q3 showed signs of good recovery. Once again, our focus on multiple attractive markets across Europe is paying off, as demonstrated by solid growth in the other Europe segments. This is also reflected in our like for like figures. All regions, apart from Switzerland, achieved positive sales growth on a like for like basis in Q3, summing up to a noteworthy 3.7% outside of Germany. Especially Sweden and Romania, having seen negative like for like momentum in the previous year, have performed well over the course of the current fiscal year. In sum, Like-for-like sales growth for the first nine months was up 1.1%, based on an equal number of business days as the prior year. Turning now to e-commerce. The share of e-commerce sales of Hornbach Baumarkt came in at a stable 12.4% in the first nine months of 2024-25. Looking at quarterly developments, we achieved slight e-commerce growth in Q3, driven by click and collect as well as direct delivery. In particular, click and collect, as well as all online sales with in-store contact, performed well and are growing again. This confirms our view that the interconnectedness of online and offline channels is highly relevant for our business. Therefore, we continuously invest into all components of the customer journey, providing attractive and state-of-the-art touchpoints both online and offline. We are absolutely convinced that the great customer experience across all channels is coupled with unmatched convenience, are incremental for our future growth and profitability. As previously mentioned, our solid performance also shows in our market share development. I'm extremely proud of my colleagues who once again managed to expand market shares in key regions, especially in times of, as cited, softer consumer sentiment. We remain confident that our customer value proposition will continue to pay off and that we are able to gain share against the background of active competition in all our regions. Let us continue to go through our P&L. Our gross margin increased by 1.3 percentage points compared to last year's nine months, continuing on the higher levels we achieved in the first half of the year. While gross profit increased by 4.3% in the nine-month period, total cost increase was limited to plus 1.5%, despite necessary salary raises that affected our Q3 cost base. As pointed out in earlier calls, we will continue to work on our cost and process efficiency. Let's now take a look at earnings. Overall, we improved our adjusted EBIT by 11.4% compared to the same period last year. In addition, We are pleased with a more balanced EBIT contribution across regions, with Germany now representing 37% compared to 32% in the prior year's period. Our solid earnings performance has consequently also resulted in higher cash flows in the nine-month period. Our cash flow from operating activities increased by 20.1%, primarily driven by better net results along with ongoing enhanced working capital management. Cash flow from investing activities was lower in the first nine months compared to previous year. Nevertheless, allow me to remind you that we still expect full year 2024-25 total capex to come in at a range of 160 to 100 million euros with larger investments into new stores coming up in Q4. Regarding the gross capex split, roughly half was spent on land and real estate thus far, mainly for new stores, while the rest was spent on store updates and equipment as well as software. Moving on to our balance sheet. Our consolidated balance sheet remains strong, almost unchanged at 4.5 billion euros. The equity ratio was up slightly, coming in at 46.8%, once again providing reassurance and consistency for all our stakeholders. Reduced net financial debt and strong rolling 12-month EBITDA resulted in an improved debt ratio of 2.3 compared to 2.5 at the beginning of our fiscal year. November, S&P confirmed our rating at BB+, with a stable outlook. All in all, our balance sheet underpins our robust financial position and the resilience of our business model, providing the foundation needed to capture future growth opportunities. Against the background of recent capital market developments, let's have a quick look at the development of our share. As media coverage has focused heavily on share index developments in Germany lately, I would like to quickly point out that Hornbach Holding's share has outperformed German indices this year. Even against the DAX, our share has an impressive headroom of 8%. Independent of or especially because of the current macro environment, our strategic focus remains unchanged. Seize long-term opportunities. This includes investing continuously into our sustainable growth, maintaining our strong market position, furthering our operational excellence, sustaining a strong balance sheet and paying an attractive dividend. Perseverance and looking beyond short-term quarterly results continue to pay off for us. We are innovative by tradition and create stable conditions for positive change. Therefore, we are confident in our business model and our ability to grow. Before we open the floor for questions, let's have a quick look at our full year guidance. Anticipating typical seasonal performance in Q4, the earning forecast for 24-25 remains unchanged. We continue to expect an adjusted group EBIT at slightly above the level of 23-24 financial year, with gross margin stabilization at the current higher level. Taking the development of the first nine months into account and in the light of ongoing challenging consumer environment, we expect net sales at previous year's level. It's indicated we will reopen our store in Nuremberg shortly before the end of this fiscal year. Next fiscal year, we will open four stores, one in Germany, one in Austria, and two in Romania, adding 63,000 square meters of new retail space with a corresponding sales potential next year. Overall, we feel that our organization is well prepared to capitalize on the recovery and the home improvement market going forward. With that, I conclude my presentation and hand back to Antje for the Q&A session.

Thank you, Karin. We will now start the Q&A session. Our operator will share some instructions and then we will take your questions. Caroline, please go ahead.