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Investor Relations

Praktiker on Consolidation Course

07.04.1999

Praktiker on Consolidation Course

The Board of Management of Praktiker Bau- und Heimwerkermärkte AG presented the results of fiscal year 1998 at the annual balance sheet press conference. Net income in FY 1998 rose to DM 55.8 m (prior year: DM 34.8 m). DVFA/SG earnings per share at a nominal value of 5 DM amounted to DM 0.83 (prior year DM 0.50. Taking the goodwill depreciation into account, DVFA/SG earnings per share amounted to DM -0.20 (prior year DM -0.29). The Supervisory Board and the Board of Management of Praktiker AG will propose at the annual general meeting that the balance sheet profit of DM 61.0 m be completely returned to the reserves and that no dividend be distributed. "We see a solid equity basis", according to Herbert Krämer (46), new Speaker of the Board of Management of Praktiker AG, "as the fundamental prerequisite for the necessary investments in the competitive capability of the Praktiker concept. These investments serve to clarify our market positioning in Germany and are earmarked primarily for optimization of the location portfolio, strengthening of the assortment competence and ensuring an attractive value-for-money ratio." Sales and profits of the Praktiker Group did not fulfill the expectations for the fiscal year 1998. Praktiker AG increased group sales (net) by 20.2 % to DM 4.87 bn. However, this significant increase in sales is due primarily to the acquisition of the Wirichs stores as of 1 October 1997 and the consolidation of wholesale sales of the Extra franchise operations. Adjusted for acquisitions, sales rose by 3.9 %. Like-for-like sales declined by 4.8 %. In Germany sales rose by 19.1% to DM 4.43 bn (like-for-like sales -5,2 %), and abroad by 33.1 % to DM 445.3 m (like-for-like sales +2,0 %). Profit on ordinary business activities amounted to DM 75.4 m, 25.6 % above the result of the comparable period of the prior year (DM 60.0 m). However, the figure of DM 92.5 m attained in fiscal year 1996/97 was not reached. The main cause of the disappointing results is the loss in raw earnings resulting from the declining like-for-like sales. The Praktiker Group invested a total of DM 112.4 m in fiscal year 1998 (prior year DM 87.1 m). Within the framework of 21 new openings and 13 store conversions, investments in tangible assets amounted to DM 73.6 m (prior year 77.7 m). Depreciations increased to DM 64.6 million (prior year DM 47.1 m). Cash flow rose to DM 120.5 m (prior year DM 82.8 m). The weak sales trend in the fourth quarter 1998 continued in January and February of this year. In March, by contrast, like-for-like sales in Germany declined by a mere 0.3 %. Accordingly, preliminary group sales declined by 4.7 % to DM 1.119 bn in the first quarter of 1999. Like-for-like sales declined by 9.1 %. In Germany sales declined by 7.1 % to DM 1.002 bn (like-for-like -9.1 %). Abroad, sales increased by 21.4 % to DM 116 m (like-for-like -8.8 %). Despite a definite easing of the sales situation in March, it is still too early assume a general change in trends. In the German market, Praktiker expects neither a major improvement in the demand situation nor significant easing in the competition. Furthermore, the investments in the Praktiker concept will put pressure on earnings. The Praktiker AG Board of Management thus expects a result in fiscal year 1999 which will remain below that of the previous year.

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