Hornbach Hldg Ag

Good morning and welcome to our Q1 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 three months of fiscal year 2026-27, covering the period from 1st of March until the end of May 2026. I extend my warmest welcome to our CFO, Dr. Joanna Kowalska, who will be our host today presenting our latest set of numbers. 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 as well as the Q&A session. After the presentation, we will take your questions. The technicalities will be explained by our operator at the beginning of the Q&A session. With that, I'm delighted to hand over to Joanna to walk us through the key developments of the first quarter of this year. Over to you, Joanna.

Good morning, everyone. Thank you, Antje. It's a pleasure to be back and to share our latest results with you. Before turning to the details, let me briefly outline the broader macroeconomic and retail environment we faced over the course of the first quarter. Customer sentiment remains subdued, particularly in Germany, but also across other markets. GDP growth and forward-looking expectations remain modest overall. Against this backdrop, we have made a successful start to the new financial year. On a personal note, I am incredibly proud to be serving as CFO at a time when we have recorded the highest quarterly net sales in our company's history, with May being the strongest month ever. This positive development has was driven by solid like-for-like sales growth in our existing stores, along with additional contributions from newly opened stores. The spring season went well, with customers appreciating our broad and project-focused assortment and services, as well as our everyday low-price promise. While this achievement belongs to the entire organization, it's rewarding to see our strategy, execution, and teamwork translate into record results. Overall, I can say we are happy with our figures, especially against the backdrop of the challenging macro environment I have just outlined. Let me now guide you through today's results. We will cover three topics. The first one, An overview of the Q1 key financial figures. The second one, details on the P&L, balance sheet and cash flow. And the third one, the guidance for the current fiscal year. Let me start with the key financial figures. Honda Group net sales reached 2 billion euros, an increase of 4.9% from last year. This was mainly driven by international sales at HLB AG. Like-for-like sales at HLB grew by 2.8% and once again outperforming the D&Y sector as a whole. The D&Y sector in Germany saw significantly weaker figures from March to May compared to our results. This is based on data by the industrial association BHB. And additional market research data proves that in our other European countries we at least matched or outspaced the overall sector performance. Gross profit increased by 4.0% or 27 million euro to 700 million euro. This resulted in a gross margin of 35.0%. Adjusted average reached Hldg Ag Hldg Ag Hldg Ag What do our Q1 figures look like in detail? Let's start by taking a closer look at our sales performance. As yet mentioned, group sales increased by 4.9% to a total of 2 billion euros. Looking at sales at HLB AG, we saw an increase of 4.7% to 1.9 billion euros. We are benefiting significantly from our device site European footprint. Sales in our other European market grew by 7.5% and now account for 53% of group sales. However, Germany also achieved sales growth of 1.8%. We saw the strength in our international presence and our business resilience is residing from a well-balanced geographical mix. We remain firmly committed to this strategic direction and continue to push ahead with our expansion plans in a controlled manner. Also, Bauschdorf Union, as you can see, contributed to our growth, increasing itself by 6.8%. And now let us take a look at market shares in the D&Y retail segment. Once again, we were able to further expand our market share in all HLG countries for which data is available. The left side shows our top three regions in terms of market share growth. In Czechia, we are number one and were able to further increase our market share to above 40%. This is a continuation of a strong momentum of recent years. In the Netherlands, customers value our product focus offering. This had led to an increase in our market share to 40.4%. We also continued to improve our position in Switzerland. The right side of the slide shows that we also achieved gains in highly competitive markets such as Germany and Austria. In Germany, our largest market share rose further, an increase of 0.5 percentage points year on year. We also recorded further gains in Austria. Overall, these results underline that Hormat is very well positioned in its market, and our ambition is to continue strengthening and expanding our presence across Europe. And this is not only about expansion, but also very much about driving profitable growth in our existing retail space. We were yet successful in this regard in the first quarter of 26-27. As you can see, sale on like-for-like basis excluding new open stores increased by 2.8%. This was preliminary driven by bigger basket size, but also customer frequency developed positively. You can see that our international regions are growing relatively faster on a like-for-like basis. However, Germany also recorded growth of 1.0%. This means that we once again outperformed the German DNY market, which developed negatively from March to May. The other European countries keeps growth of 4.4%. We achieved this growth rate again as a very strong prior year quarter underlying our resilience. Our top three performance in this respect are Slovakia, the Netherlands and Czechia. Slovakia recorded strong growth of over 9%. In the previous year, local purchasing power has been subdued due to political changes. The Netherlands continued its successful development, achieving growth of just under 9%, and Czechia grew by 5.6%, showing even stronger growth than in the prior year quarter. All other countries performed also very well. At the bottom of the table, you can see a decline in Romania, where consumer sentiment is temporarily impacted by tax increases impacting consumer spending in general. Overall, Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag of 9%. Direct delivery accounted for the largest share of our online business, growing by 5%. And click and collect recorded an increase of 18%. This development shows us that our click and collect offering is meeting customers' demand. As you can see, the e-commerce share of Holmbach Baumarkt sales rose to 13.6% in the last quarter. And compared to the pre-pandemic period, we have nearly doubled our e-commerce sales. By seriously integrating our e-commerce offering with our stores, we are able to provide customers with a truly interconnected shopping experience. We were among the pioneers in Germany in the e-commerce space, investing in this business more than 15 years ago, and this is now paying off. Let us now have a look on the profits for the period. Our gross profit increased by 27 million euros. The gross margin was slightly below the prior year at 35%. The development of gross profit was preliminary driven by sales growth. At the same time, challenges in logistics and increasing purchase prices driven by the current geopolitical environment put pressure on the margin. We are monitoring, of course, this development very closely and aim to mitigate the impact through prudent planning. On the right side, you can see the total cost, which increased overall by 27 million euro or 5.2%. We were able to fully offset the increase in cost through higher gross profit. Where the increase in cost comes from? Mainly from selling and store costs. Those rose due to new stores and increases in operating costs, mainly maintenance, cleaning, and payment transaction costs. However, the cost ratio remains stable at 22.6% of sales. As you can see, also general and admin costs also increased. Here, too, higher personal expenses were the main driver, as expected, and in addition, costs for our IT infrastructure have increased. These investments are essential for us to future-proof our business model, optimize processes, increase efficiency, and consistently drive forward our digital transformation. The central cost ratio remained at a comparable level to the previous year. Reopening costs were slightly before the previous year's level. And as personal costs are the key component of both store and central costs, let me briefly provide you here some further details on that. Total personal costs across all mentioned cost categories amounted to around 370 million, an increase of 5.5%. This increase was mainly driven by a higher number of employees as a result of the new open source compared to Q1 of the prior year, as well as salary. Let us now turn to adjusted average. Adjusted average amounted to 161 million euros Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag This share increased and is 2% above the previous year's level. Let us now take a look at the cash flow statement. Operating cash flow plays an important role in our strategy of organic expansion, which is largely financed by our cash flow. The slight increase in operating cash flow to 199 million euros was mainly driven by increased funds from operations. CapEx amounted to 56 million euros and increased by 11 million euros compared to the previous year. This is in line with our strategy of organic growth. Around 46% of investments related to land and real estate in connection with the development of new store locations. 34% of investments was allocated to store equipment for new and existing stores. The remainder was invested mainly in software to further advance digitalization. And in this context, migration to SAP for HANA should also be mentioned, which is being driven forward with high priority. Free cash flow after capex and dividend payments amounted to 143 million euro. The elevated cash flow from financial activities includes new promissory note loan. This will be used for refinance the bond of Hlndag Baumark which will be redeemed early at the end of July. Due to the new loans, the balance sheet total increased to 5.3 billion euros. The equity ratio decreased to 42.3% in line with the higher balance sheet total. However, it remains at a very solid level. Net financial debt decreased by 9.2%. This was mainly due to the higher liquid funds. And the leverage ratio defined as the net debt to EBITDA of 2.5 was below the year-end level. Looking ahead, we will continue to manage our leverage prudently. At the same time, we will ensure efficient financial flexibility to support further organic growth. This brings me to our guidance for the current fiscal year. We made a successful start to the 26-27 financial year. We also saw a good customer response in the first weeks of Q2 and expect to benefit from the selling days that were missing in Q1. At the same time, there exist many uncertainties. Challenges in logistics arising from the current job or political situation as well as rising raw material prices are expected to persist for the time being and continue to put pressure on margins. Also, discussions on wage arrangements with trade unions are currently still ongoing in Germany. Based on the outcome, this may have an effect on personal expenses. Against this backdrop, we remain prudent in our forecast and confirm the guidance issued in May. For the HVH holding group, we currently expect net sales to be slightly above the level of the prior year financial year. Adjusted EBIT is expected to be roughly at the previous year's level. We will continue to maintain a controlled pace of further organic expansion. Therefore, we expect increased investment in the coming financial year. CAPAC is likely to be significantly above the prior year level. And for sure, this will put some pressure on our free cash flow compared to last year. Nevertheless, our operating cash flow remains solid. As long as this holds, investing in future growth opportunities justified a somewhat lower free cash flow in the currencies per year. We continue to see significant medium and long-term growth potential in the home improvement sector. All in all, we are pleased with the results in the first quarter. And you too have started and we are well prepared. We are doing our best to maintain our positive momentum and continue delivering a strong performance. Just in line with our motto, there is always a job to be done.

Thank you for your valuable insights, Joanna. We are now happy to take your questions. In the interest of time, please limit yourself to one or two questions. Please state one question at a time. And now I head over to our operator to explain the technicalities of our Q&A session. Please go ahead.

Dear participants, we are now moving to the Q&A session. And if you want to ask a question, please use the Raise Your Hand button. If you have dialed in by phone, please use the key combination star 9 and follow the instructions. There is Mr. Moll raising his hand. And so you should be able to unmute yourself Mr. Moll and ask your question. Mr. Maul, you can unmute yourself now and then place your question. So we might move to another participant, Mr. Bosse. Mr. Bosse, you should be able to unmute yourself and place your question.

Can you hear me? Can you hear me? Yes. Perfect. Okay. Sorry. Yes. Thanks for the presentation. I would have two questions. You speak about cost increases in general, but you also mentioned negotiations with the trade unions, so also potential cost increases. Could you give us here an update on what kind of negotiations are currently running and what kind of outcomes do you expect from these trade unions negotiations and from the overall cost inflation trend which we see to get your view here and the second question would be on the two openings congratulations to the first opening in Q1 where and when will be mentioned two other openings in the year to come thank you

Thank you very much for your question. Let me start with the first one on personal costs and development. Hldg Ag Hldg Ag Hldg Ag But to be honest, the cost increases are in line with Honva's strategy and the growth agenda. The increase in expenses reflects two factors, you know. The wages increases, as always, to keep pace with inflation and also the increase in health funds, which is a natural consequence of our ongoing expansion program with the opening of new stores. And to be honest, I see we investing in our employees. And this is really an asset of Hornbach. Investing in employees is essentially to expand our customer reach and to continue providing first class service at every location. And if you consider that we performed such as we performed even in this strong situation, Hldg Ag competition, even in these challenging times, having the best quarter results ever in the history. Our strategy to really invest in the people is, I think, very, very good. But, of course, we always are committed to finding the right balance between investment in our people and maintaining the cost of the things. Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag

Hldg Ag And includes new employees as well, right?

Of course. This is a total. And yeah, this is a roughly prediction, you know.

Would you say that overall cost inflation is also in the range by 4% or excluding or including personal overall costs, so to say, OPEX in general?

it's difficult to say you know to be honest of course as I mentioned we have also pressure in the gross margin logistic cost and to make any prediction on the increase of that of this cost or energy or it's very difficult yeah but you know yeah you know but 60% of our total cost a personal cost therefore yeah yeah absolutely Thank you. And Volker, you mentioned also the question, too, about other openings, yeah? So we plan two new openings. The first one is in Floren in the Netherlands, and the second one is Graz in Austria.

When to come, roughly? Summer, autumn, or next year, you know?

Yeah. Both are planned for autumn this year.

Okay. Thank you very much, and all the best.

Thank you Volker for your question.

So we move to another participant dialed in by phone. Mr. Haider, you should be able to speak now and place your question. Mr. Haider, we should hear you.

Good morning, this is Michael Heider from the Bermack Bank. I hope you can hear me. Very good. I also have two or three questions. Maybe first to CapEx.

Excuse me, Mr. Heider. Sorry, are we in English?

Sorry for that. I have two or three questions, if I may. First one on CapEx. We had 55 million or you had 55 million in the first quarter. Last year was 220. You say this year you expect significantly higher capex. I suppose that's in relation to two more openings coming. But I mean, can you be a little bit more specific here after the first quarter? It's my assumption right here that this is going to accelerate in the rest of the year. That would be my first question. Then second question on the Baustoff Union, which saw a nice acceleration in growth. Can you give us the reasons behind this? And then the last one, you touched upon it, but maybe you can elaborate a little bit more on the current pricing environment. Do you think we have reached the peak here now with the political situation currently or what is your expectation here? Many thanks.

Thank you, Michel, for your question. So I start with the first one about the capex. Yeah, the capex grow by 11 million, and it reflects the higher investment in expansion. To your question, to be more specific on that, unfortunately, I appreciate your interest in this topic. However, this is not information we disclose, and I can only tell you our strategic growth strategy. Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Here we are really happy and very, very satisfied with the development in this quarter. You know, this is really something which we for a long time waited for. Yeah. And both driven by existing location plus the M&A transaction. Maybe you remember, we bought a small store or locations Hldg Ag Hldg Ag Yeah, we hope that the next month will develop in the same line with the last month. We hope. We will see.

Is this related to increasing construction activity in the area or are you gaining market share or something?

We see a little bit of recovery in the building sector. Last year, we see that the permits are rising, and it was last year. Therefore, I think this is a result of that. Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag What we value long term supplier relationships and it is important to us that our supply chain remains stable to provide our customers with everything they need and to make some details on the price increases. Hldg Ag Hldg Ag Hldg Ag Hldg Ag Hldg Ag Yeah, the pressure on the growth margin is expected to continue in coming quarters at a similar level, I would say. Of course, yeah, we all know the current situation is very volatile and each day we have new news. But to be honest, I expect that we will face the pressure on the growth margin and higher logistic costs and purchase prices.

All right. Thank you very much. Very clear.

Thank you.

So we move on to the next participant. Mr. Saripalli, you should be able to unmute yourself. Mr. Savicalli, as you are dialed in by phone, you should be able to unmute yourself following the instructions. So this seems not to be able for him, unfortunately. And we therefore get to Mr. Miro Susak. You should be able to unmute yourself and place your question. Please go ahead.

Hello, can you hear me?

Yes, we can hear you. Hi, good morning, Miro. Hi, Miro.

Good morning. I have a question regarding the reverse factoring program. So I see from, I would like to understand how it works. I see from basically the balance sheet that you repaid 149 million during the quarter. And I would like to understand against or how this is booked. Basically how, whether this moves through the P&L or how it moves through the P&L and the cash flow statement.

Yes, so how to understand the reason of that, I think this is a normal procedure we see for the last couple of years. We are conducting this instrument. So in Q4, we normally start with that. We then fully repay in Q1. So this is the pattern in the end to prolong our paying terms to industry standards. So it's a procedure I think we've taken over a couple of years. Hldg Ag Hldg Ag Hldg Ag

Hldg Ag Hldg Ag Hldg Ag Hldg Ag

Hldg Ag Hldg Ag Hldg Ag So, due to the fact that we don't have any risen hands, I hand back over to Antje Kellert.

Okay, so thank you. Those who had some technical issues can always come back to us. So for those who were unable to mute and post their questions, so we are here at the investigations team, just come back to us. But the other questions, it looks like all those have been addressed now. And with that, also thank you for Joanna for her contribution today. After the summer break, we will have already scheduled participation in several capital market events and conferences, and we look forward to engaging in personal conversations with many of you there. So you can also find an overview of the upcoming investor relations activities on our website. So as already said, if anything comes afterwards or you were not able to post your questions during the call, just don't hesitate to come back to the investor relations team. And all the others, thank you very much for your interest and time this morning. We hope to see you soon, and we wish you a great summertime. Thank you very much.