2016/2017Annual Reports published:

Hornbach Group firms up earnings strength

Sales at Hornbach Group increase 4.9% to Euro3.94billion

EBITgrows 14% to Euro156.8million

Hornbach energetically promoting e-commerce

Albrecht Hornbach: “After the profit warning in December 2015, we notably
regained trust on the capital market in 2016/2017.”

Frankfurt/Main, May29,2017.The Hornbach Group has successfully upheld its sustainable growth course and met its sales and earnings targets. In the 2016/2017 financial year (March1,2016 to February28,2017), the Hornbach Holding AG & Co. KGaA Group increased its sales by 4.9% to Euro3,941million (previous year:Euro3,755million). Consolidated operating earnings (EBIT) grew year-on-year by 14% to Euro156.8million (previous year: Euro137.5million) and the EBIT margin rose from 3.7% to 4.0%. Like-for-like sales growth and improved cost ratios more than offset the impact of the lower gross margin. The Group’s earnings performance also benefited from a year-on-year reduction of Euro10.7million in non-operating, one-off charges on earnings.Excluding non-operating earnings items, the Hornbach Group’s EBIT rose 5.7% to Euro159.8million (previous year: Euro151.2million).

“In the past 2016/2017 financial year we boosted our market position as one of Europe’s leading DIY groups and firmed up the Hornbach Group’s earnings strength. Following the downturn in earnings, mainly due to one-off items, in the previous year, the stability and strength of our core operating business has returned to the fore once again.By consistently pressing ahead with our innovation activities – and especially the increasing digitization of our retail business – we have broadened the foundation for sustainable earnings growth in the years ahead”, comments Albrecht Hornbach, Chairman of the Board of Management of Hornbach Management AG, general partner of Hornbach Holding AG & Co. KGaA, at the presentation of the company’s results in Frankfurt.

Operating earnings rise at all three subgroups

Hornbach Baumarkt AG, the largest operating subgroup, further expanded its international network with new store openings in Prague, Rum near Innsbruck, and Amsterdamin the 2016/2017 financial year. Following the latest new store opening in The Hague in April 2017, this subgroup now operates 156 DIY stores with garden centers across nine European countries. Based on sales growth of 5.0% to Euro3,710million, the Hornbach Baumarkt AG subgroup increased its EBIT by 8.1% to Euro97.5million in 2016/2017. Adjusted EBIT improved by 3.5% to Euro102.8million. This increase in operating earnings was due among other factors to strong like-for-like sales growth outside Germany (plus 5.1%). Hornbach nevertheless generated like-for-like growth in Germany as well (plus 1.4%) and expanded its share of the German DIY market even without any new stationary store openings.

Hornbach Baustoff Union GmbH, the subgroup operating in the builders’ merchant business, also pursued a growth course in the 2016/2017 financial year.Sales here grew by 4.8% to Euro229million, while EBIT rose from Euro2.3million to Euro4.2million.

With EBIT up 6.5% to Euro58.0million, the Hornbach Immobilien AG subgroup also contributed positively to the Hornbach Group’s earnings performance.

Contrasting with the growth in pre-tax earnings figures, the Hornbach Group’s consolidated net income for 2016/2017 fell by 8.0% to Euro89.9million. This was due to a substantially higher tax charge than in the previous year.

Winning the trust of customers and the capital market

“The 2016/2017 financial year was also very important for us in terms of the stock market. It was a period in which we notably regained trust on the capital market following the profit warning issued in December 2015”, comments Albrecht Hornbach. Over the financial year, the Hornbach Holding share rose by almost 16% (excluding dividend payment) to Euro65.85. The secondary placement of one million Holding shares by the family trust Hornbach Familien Treuhandgesellschaft mbH on March28,2017 lent further momentum to the share price. With this transaction, the Hornbach family has sold the second half of the share package bought back from the former strategic partner Kingfisher plc in March 2014.Analysts have welcomed the increase in the free float to 62.5% and the marked rise in trading liquidity.

In the 2016/2017 financial year, Hornbach pressed further ahead with the all-round digital transformation of its business model and invested an additional medium double-digit million euro amount to this end. Alongside Germany, five other European countries now have Hornbach online stores and these have made above-average contributions to the Group’s sales growth. Highlights Albrecht Hornbach: “The dividing line between online and offline is becoming increasingly blurred. The winners of this process will be those companies that are able to meet customers professionally on all stations of their individual ‘journeys’.We are superbly positioned, also in competitive terms, with our strategy.”

Customers have honored the consistent enhancement in Hornbach’s retail concept. That is documented by the top rankings awarded to the company in numerous consumer surveys for years now, such as the first place achieved in the prestigious Kundenmonitor Deutschland survey in 2016. Here, Hornbach scored particularly highly in the product range, pricing, and specialist advice categories.

In its dividend policy, Hornbach is adhering to its principle of continuity. The general partner and the Supervisory Board of Hornbach Holding AG & Co. KGaA will be proposing a dividend of Euro1.50 for each no-par ordinary bearer share in the KGaA with dividend entitlement, and thus unchanged on the previous year, for approval by the Annual General Meeting on July7,2017.At Hornbach Baumarkt AG, the proposed dividend of Euro0.68 per share is also unchanged on the previous year.

Key figures of the Hornbach Group (Hornbach Holding AG & Co. KGaA Group)

Key figures
Hornbach Holding AG & Co. KGaA Group / 2016/2017
financial year / 2015/2016
financial year / ±
(in Euro million, unless otherwise stated) / in %
Net sales / 3,940.9 / 3,755.2 / 4.9
ofwhich Hornbach Baumarkt AG subgroup / 3,710.1 / 3,534.8 / 5.0
- Germany / 2,040.2 / 2,010.7 / 1.5
- Other countries / 1,669.9 / 1,524.3 / 9.6
Like-for-like sales growth (DIY) / 3.0% / 2.6%
of which Hornbach Baustoff Union GmbH subgroup / 228.9 / 218.5 / 4.8
Gross margin (as % of net sales) / 36.6% / 37.0%
EBIT / 156.8 / 137.5 / 14.0
of which Hornbach Baumarkt AG subgroup / 97.5 / 90.2 / 8.1
of which Hornbach Immobilien AG subgroup / 58.0 / 54.5 / 6.5
of which Hornbach Baustoff Union GmbH subgroup / 4.2 / 2.3 / 82.6
Adjusted EBIT1) / 159.8 / 151.2 / 5.7
Consolidated earnings before taxes / 130.1 / 113.0 / 15.1
Consolidated net income / 89.9 / 97.7 / (8.0)
Earnings per share (basic/diluted in Euro) / 4.84 / 5.04 / (4.0)
Misc. key figures
Hornbach Holding AG & Co. KGaA Group / February 28,
2017 / February 29, 2016 / ±
in %
Shareholders’ equity as % of total assets / 52.8% / 49.8%
Number of DIY stores with garden centers / 155 / 153 / 1.3
Sales areas in 000 m² (BHB) / 1,806 / 1,771 / 1.9
Number of employees / 17,738 / 17,373 / 2.1

Differences due to rounding up or down to nearest Euro million; percentage changes calculated on basis of Euro 000s.

1) Adjusted to exclude non-operating income and expenses

Note
The Annual Reports of the HornbachHoldingAG & Co. KGaA Group and the Hornbach Baumarkt AG subgroup for the 2016/2017 financial year are available online at:

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