Hornbach Hldg Ag

Good morning and welcome to the half-year update call for Honda Holding. My name is Antje Kelbert, Head of Investor Relations. Earlier today at 7 a.m. we published our financial results for the first half of fiscal year 2025-26, covering the period from 1st of March until the end of August 2025. I'm especially pleased to welcome our new Chief Financial Officer, Dr. Joanna Kowalska. With her deep industry expertise and many years of experience in financial management at KPMG and within the DIY retail sector at OBI Group, Joanna will be a great addition to the HORNBACH team. Since mid-August, she has taken over responsibility for the finance resource and will be presenting today's results, guiding us through the presentation. We are also joined by CEO Albrecht Hornbach, who has served as interim CFO during the transition period. Albrecht will be available for your questions during the Q&A session. Please note that this conference call, including the Q&A session, will be recorded and made available along with the transcript on our company website. Kindly also take note of the disclaimer which applies to the entire presentation and the Q&A session. To ask a question, please dial into the telephone conference using the numbers provided in your confirmation email. The operator will provide instructions at the beginning of the Q&A session. You can join the queue to ask a question by pressing the hash key and 5 on your phone. With that, I'm delighted to hand over to Joanna to walk us through the key developments and financial highlights of the first half year.

Please go ahead. Good morning, everyone. Thank you, Antje, for the kind introduction and warm welcome. I'm truly delighted to be part of the Holmbach team and to join you for today's half year update call. Since stepping into the role of CFO about six weeks ago, I have been deeply engaged in learning about the many facets of our business. It's an exciting time and I'm grateful for the support of my colleagues, especially Albrecht, who have been instrumental in helping me during the transition process. To Honbach, I bring over 17 years of experience within the European D&Y retail sector, alongside dedication to financial management and operational improvement. During my time at KPMG, I advised and audited many listed companies, and I'm truly delighted to contribute to Honba's continued success, as well as to long-term value creation for our shareholders. And I also look forward to getting to know all of you, meeting with you over the coming months and continuing the open and constructive dialogue that Hornbach is known for. And now let's dive into the key developments and financial highlights. At a glance, We delivered further profitable organic growth in the first six months of our current fiscal year. Next sales grew by 4.4%, driven by a very satisfying spring season and solid summer period. In addition, we saw continued higher customer footfall. This growth was further supported by the store openings in Nuremberg and Duisburg, both in Germany around the start of the fiscal year. On a like-for-like basis, Hornbach Baumbach sales rose by 3.6%. Growth margin increased by 4.6% in line with the sales growth. And the growth margin came in at 34.9%, matching the level from prior year's period. This development contributed to the adjusted EBIT growth of 2.5%. CAPEX reflects the active execution of our expansion strategy with a focus on acquiring attractive properties and building a state-of-the-art DNY store network. Nevertheless, we achieved a good free cash flow. We are pleased with our performance in the first half of the current financial year. And despite ongoing macroeconomic burdens and soft consumer sentiment, particularly in Germany, we have achieved solid results which are in line with our expectations. They also reinforce our confidence in strength and resilience of our business model and underline our relevance to our customers. Therefore, we confirming our full year guidance today. Before we dive deeper into financials for the first half of the fiscal year, let me start with a brief operational update. As you know, customer satisfaction is one of the most important KPIs to our business. A clear indicator of meeting our customer requirements. And we truly believe that a great shopping experience and assortment combined with a highly efficient operational setup is what drives our market relevance and long-term profitability. That's why we are especially proud of the results from the latest customer service. In Germany, the independent service Kundenmonitor ranked us number one for overall customer satisfaction in the D&Y sector. We also came out on the top in several other categories, including webshop, assortment relevance, selection, quality of the goods and private labels, as well as service offered. In the Austrian edition of the Kundenmonitor customer survey, we secured a leading position as well. We were ranked number one overall in customer satisfaction, achieving strong results across multiple categories. And also in Netherlands, the survey retailer of the year named us the best D&Y online shop. That's an important recognition of our team's hard work and a clear sign that we are on the right track. We are also continuing to invest in infrastructure to support our organic growth and improve the shopping experience for our customers. Just recently, we opened two new stores, one in Bucharest, Kolentina in Romania, and another one in Eisenstadt in Austria. Both are modern big box D&Y stores designed to give our customer everything they need for their home improvement project. This opening follows the launch of our new store in Duisburg, Germany, which opens in March. And there's more to come. Another store is set up to open in Timosara in Romania just tomorrow. All of these new locations demonstrate our commitment to expanding our store network and growing across all Hornbach regions. With that in mind, let's take a closer look at the sales figures for the reporting period. As mentioned earlier, group net sales in the first half of the year were up by 4.4%, driven by a strong spring season and solid summer. Compared to the same period last year, we saw increased demand for gardening products and construction materials. Customer frequency increased by 3.3%, reflecting a positive trend in store traffic. We also recorded a slight uptick in average ticket. After two years of stable performance, we are now back on a growth path. And now let's shortly have a look at Honbach Baustoff Union, our subgroup that mainly serves professional customers in the construction industry. Looking at their sales development, we saw a slight sales decline of 0.8%. That said, we believe the construction sector in Germany may have reached its lowest point and could now be starting to recover. The latest official statistical figures show a modest approach in both order intake and building permits. Looking at the geographic split on the right, Slightly more than half of the HONBAS BaumaX revenue, 52.7%, comes from the eight European countries outside of Germany, representing an increase of approximately one percentage point compared to the previous year. Now, let's turn our attention to like-for-like sales growth. Generally speaking, underlying demand across most European countries in the first half of the current fiscal year benefited from warm and mostly dry weather. That said, July was quite rainy in Central Europe, which had some impact in Q2. For the group as a whole, like-for-like sales growth reached 3.6%, clearly above last year's period. Germany contributed 1.5%, which put us ahead of the German DNY sector that saw a slight overall decrease in sales of 0.7%. In other European countries delivered a strong 5.6% growth rate. Here, the Netherlands really stood out with growth of over 10%. We successfully strengthened our position as a big box player in Netherlands. Customer particularly value our outstanding product availability in large quantities, which set us apart from competition. Thanks to store openings in recent years, our locations in Netherlands are younger in average and showing their up-ramping growth contribution. In Q2, all countries showed positive like-for-like sales development, with the exception of Germany, where performance was impacted by 2.8 fewer business days. Let me now present the most recent market share improvements. We continue to focus on growing our market share and strengthening our position across Europe. In all Hornbach countries where market share data is available, we managed to expand our footprint between January and July 2025. In Germany, our largest and most competitive market, our share has now reached 15.5 percent, an increase of 0.6 percentage point compared to the prior year period. In the Netherlands, driven by a very positive footfall development, we gained 1.3 percentage point, bringing our total market share to 28.8%. In Czechia, we continued our positive momentum, increasing our market share to 38.5%. Austria and Switzerland also showed positive developments. This truly reflects the dedication and outstanding performance of our teams on the ground who consistently go above and beyond to serve our customers. Let's now continue with a closer look to our e-commerce business. Customer engagement across our interconnected platforms remains strong, which confirms that these are now well-established sales channels. E-commerce sales at Hornbach Bauma grew by a strong 10.1% in the first half of the year. That pushed our e-commerce share of total sales up to 13.1%. Both direct delivery and click and collect performed well. with growth rates of around 11 and 7% respectively. And with that, I would like to take a closer look at costs and expenses in the P&L. Our gross profit increased by 4.6%, which is mostly in line with the growth in the net sales. Gross margin came in at 34.9%, matching the level of the same period last year. This reflects a good product mix and an innovative assortment. Now let's take a look at expenses. We are now seeing the full impact of wage increases across all countries, which led to a rise in absolute personal costs. Personal expenses totaled €580 million, representing a 5.7% increase. This development is in line with expectations given the wage adjustment. While selling and store expenses increase in absolute terms, the expense ratio remains stable relative to total sales. And the same applies also to general administrative expenses ratio. Pre-opening costs rose by 4 million euros, driven by new store openings. All of this contributes to a positive development of our adjusted average, which I will present to you on the next slide. Overall, we improved our adjusted EBIT by 2.5% compared to the first half of last year, driven by successful spring season and solid summer performance. As a result, the adjusted EBIT margin remained broadly stable at 7.6%. Countries outside Germany contributed 62% to adjusted EBIT, making a 4 percentage point increase year over year. Once again, there were no significant non-operating items or adjustments in the first half of the year. And now, let's now move on to the cash flow statement. Our cash flow from operating activities increased significantly compared to previous year. The main drivers was a lower cash outflow from changes in working capital, This was predominantly due to reduced use of our reverse factoring program, as well as stronger reduction of inventories than in the prior year period. Funds from operations remain at the same level as last year. Capital expenditure in the first half of the fiscal year totalled 107 million euro up from 51 million in the same period last year. As planned, 56% of that was invested in land and real estate, mainly for the new stores developments. The remaining portion went toward stock conversions, equipment and software. Free cash flow after net capex and dividend improved to 129.6 million euros, reflecting the changes in working capital I just mentioned. Now, let's take a look at our balance sheet. As of the end of August, Hornbach once again delivered a robust balance sheet. The total balance sheet stood at 4.6 billion euros unchanged compared to February. Decreased inventories reflect the usual seasonal reduction after spring. Our equity ratio increased slightly to 46.9%, maintaining a strong and healthy position. Our net debt to EBITDA ratio improved to 2.4%. All in all, this underlines the strength of our financial foundation and the resilience of our business model. We are confirming the guidance for the fiscal year 2526. We continue to expect net sales to be at or slightly above the level of prior year and adjusted EBIT to remain at the same level. However, given the strong earnings performance in Q1 and the solid development in Q2, we currently expect adjusted EBIT growth within the upper half of our guidance range. Before we open the floor to questions, I want to take a moment to highlight our continued focus on strategic priorities, cost management and sustainable growth. Through target investment and operational efficiency, we are building a solid foundation for the future. With our strong private levels, everyday low price strategy and clear commitment to sustainability, We aim to support our customers, maintain market leadership and deliver long-term value to our shareholders. In summary, we were positioned to navigate the current macroeconomic and geopolitical challenges and to size medium and long-term growth opportunities in the home improvement sector. That gives us strong confidence in Honbach's continued successful development. As I mentioned at the beginning, we are satisfied with our results for the first six months, which are in line with our expectations. And with that, I will conclude my presentation and hand back to Antje for the Q&A session.

Thank you, Joanna, for your views and remarks on our results. I now hand over to Bastian, our operator, to explain the technicalities of our Q&A session Please go ahead.