Groupe SEB : Business Rebound in Third-Quarter

  Groupe SEB : Business Rebound in Third-Quarter

       Operating profit from activity stable, in line with expectations
                            2013 targets confirmed

Business Wire

ECULLY, France -- October 22, 2013

Regulatory News:

Groupe SEB (Paris:SK):

Sales by region

Revenue (in   Q3    % change                  9       % change
€m)            2013                              months
                    Reported  Like-for-like  2013    Reported  Like-for-like
France        152   +0.9 %    +0.9 %         414     -5.4 %          -5.4 %
Other
Western EU    178   +13.2 %   +14.4 %        516     +7.8 %          +8.4%
countries
North         121   - 0.5 %   +5.5 %         319     +2.9%           +5.0%
America
South         113   -1.0 %    +17.1%         307     -2.3%           +9.3%
America
Asia-Pacific  270   +14.8 %   +17.0%         791     +10.8%          +10.5%
Central
Europe,
Russia and    164   -2.7 %    +2.7%          486     +0.7%           +2.8%
other
countries
TOTAL         998   +5.3 %    +10.0%         2,833   +3.5%           +5.5%
Maharaja
Whiteline      Rounded figures in € millions     % based on non-rounded figures
not
consolidated

Revenue performance

In a persistently difficult overall economic environment, consumer spending in
the third quarter showed encouraging signs in some regions and stalled in
others. The rapidly accelerating and significant decline of some currencies
(Brazilian real, ruble, Turkish lira...) against the euro in July and August
affected the markets more than had been initially expected.

In this environment, the small domestic equipment market showed improved
resilience, but remained highly competitive and promotion-driven. In almost
all countries, retailers kept a tight rein on inventory, restocking little and
often, which required increased flexibility from manufacturers.

Groupe SEB’s revenue for the first nine months of 2013 stood at €2,833
million, an increase of 3.5% vs. last year. On a like-for-like basis, revenue
was up by 5.5%. These figures reflect a significant acceleration in revenue
growth in the third quarter, to 5.3% as reported and 10% like-for-like, driven
by volumes. Following the sharp depreciation of some of the Group’s currencies
during the summer, the currency effect on sales for the first nine months was
a negative €54 million (half of which was linked to the Brazilian real),
representing considerably more than the first half’s negative €10 million.

Sales by region

FRANCE: A SLIGHT IMPROVEMENT IN A LACKLUSTRE ENVIRONMENT

In a persistently challenging and heavily promotion-driven consumer spending
environment, the market for small domestic equipment recovered a certain
resilience in the third quarter. The decline in cookware sales gradually eased
and demand for small electrical appliances picked up slightly with the
softening impact of a major rival loyalty program in 2012. Small electrical
appliance sales were led by the food preparation appliance and vacuum cleaner
segments, while demand for irons and breakfast appliances softened. In this
mixed environment, Groupe SEB’s revenue rose slightly, after a first half down
8.8% mainly due to the non-recurrence of a loyalty operation for cookware
conducted with a major retailer in 2012. Third quarter sales growth was led in
particular by continuing advances in kitchen machines, blenders, vacuum
cleaners, and full-automatic espresso machines, as well as by the success of
new steam generator models and the FreeMove iron. In addition, Dolce Gusto
maintained its momentum in the single-serve coffeemaker segment that has been
hit hard by the proliferation of different systems and by excessive and
unreasonable promotions on machines. In contrast, sales remained poor for
cookware, and pressure cookers struggled.

OTHER WESTERN EU COUNTRIES: SOFT CONSUMER SPENDING BUT MARKED IMPROVEMENT FOR
THE GROUP

The uncertain macro-economic environment continued to weigh on consumer
spending, and the small domestic equipment market, which was relatively strong
overall in the first half, slowed over the summer in several countries.
Despite this, the Group’s performance — already robust in the first half —
improved significantly in the third quarter. This was due to low prior-period
comparatives, large-scale loyalty programs, and buoyant sales on the whole. In
Northern Europe, performances were highly satisfactory except in the
Netherlands where the Group was affected by lacklustre consumer spending.
Sales were particularly strong in Germany, where they were boosted by a
catch-up effect following a sharp decline in the third quarter of 2012. The
main growth drivers were cookware, linen care, vacuum cleaners, food
preparation appliances and full-automatic espresso machines. Sales were also
vibrant in the United Kingdom (helped by new retail slots for Ingenio
cookware, increased market shares for food processors and irons, etc.) and in
Austria, while business picked up in Belgium and Scandinavia. Southern Europe
saw a strong rebound in the third quarter. In Spain, the Group continued to
enjoy a healthy sales dynamic in a lacklustre market thanks to solid
commercial momentum. Sales were also buoyant in Portugal. In Italy, sustained
growth was led by sound fundamentals, with Rowenta continuing to strengthen
its position, and by a loyalty program in the small electrical appliance
segment.

NORTH AMERICA: SUSTAINED GROWTH IN THE THIRD QUARTER, BUT A MIXED PICTURE
DEPENDING ON THE COUNTRY

In the United States, after a surge in the second quarter, sales remained more
or less in line with the modest growth in the small domestic equipment market.
In cookware, Group sales are mainly focused on the T-fal and All-Clad brands,
for which we benefited from wider distribution as well as from more frequent
restocking after a period of retailer inventory drawdowns. In electrical
appliances, Krups gained new retail slots in the coffeemaker segment, Rowenta
consolidated its leadership in premium ironing solutions (irons and garnment
steamers), and T-fal’s mid-range irons made further inroads in mass retail. In
September, the Optigrill smart grill was launched on teleshopping channels
with highly encouraging results. In Canada, in a generally brisk market,
Groupe SEB reported very strong sales across its range (Fresh Express, steam
generators, breakfast appliances, etc.) and extended its leadership in the
deep fryer segment with the on-going development of Actifry. In Mexico,
revenue was hit by the non-renewal of a loyalty program with a retailer, but
underlying business remained fairly strong for both cookware and small
electrical appliances.

SOUTH AMERICA: STRONG SALES DYNAMIC BUT SIGNIFICANT NEGATIVE CURRENCY EFFECT

The on-going significant decline of the Brazilian real against the euro
explains the wide gap between reported and like-for-like revenue growth. In
Brazil, second quarter orders and sales that were disrupted by social unrest
in June have, as expected, been pushed back to July. The return to normal was
accompanied by a strong sales dynamic, with a revival of business with certain
retailers and on-going rapid development of on-line sales. Several of the
Group’s best-selling products such as Ultimate ceiling fans, the Planetaria
kitchen machine, Dolce Gusto, pressure cookers, steam irons, and new
10kg-capacity semi-automatic washing machines helped to drive growth, while
sales were more mixed for cookware (pots and pans) in a tougher market
environment. In Colombia, the summer saw a more complicated and unfavourable
environment than in the second quarter, with sluggish economic growth,
national social movements that affected business, the non-renewal of specific
commercial operations, etc. These factors together led to a slight downturn in
third quarter revenue, with growth in small electrical appliance sales only
partly offsetting the decline in sales of cookware, especially pressure
cookers. Among the other countries in the region, Argentina delivered strong
organic growth.

ASIA-PACIFIC: LEADING CONTRIBUTOR TO THE GROUP’S ORGANIC GROWTH IN THE THIRD
QUARTER

This performance was mainly due to growth momentum in China, which accelerated
over the period. In a sluggish Chinese small domestic equipment market, Supor
enjoyed robust sales growth and strengthened its position in the market. In
the cookware segment, vibrant demand for Thermospot products (woks, pots and
pans) and the depth of the pressure cooker range put Supor ahead of the
competition. In small electrical appliances, best-selling products continued
to perform well and new products were very well received (new induction rice
cooker models, extra-long portable induction hobs, on-going development of
soya milk makers, etc.). Development in Tier 3 and Tier 4 cities, an increased
in-store presence and the take-off of online sales also contributed to
performance. In Japan, the yen’s decline against the euro is a matter of
concern for all market players, but has no impact on the Group’s 2013 revenues
because of currency hedging. Third-quarter revenues were up slightly
like-for-like, particularly due to vigorous kettle sales and the success of
recently launched products such as Air Force vacuum cleaners, FreeMove
cordless irons, and blenders. In South Korea, the improving economy resulted
in higher revenue over the period. However, business remained difficult in
Australia. In Thailand, the Group continued to enjoy very high rates of
growth, thanks to the expanding product line-up and investing significantly in
growth drivers.

CENTRAL EUROPE, RUSSIA, OTHER COUNTRIES (TURKEY, MIDDLE EAST, AFRICA, ETC.):
SLOWER GROWTH AND MORE ERRATIC BUSINESS.

Two major factors had an impact on sales. First, the significant weakening of
several of the region’s currencies against the euro, which led the Group to
introduce or announce price increases in certain countries to preserve
profitability of local subsidiaries. Second, a marked slowdown in several
major markets led to a decline in sales. This was especially true in Russia,
where demand stalled during the summer after 13 quarters of uninterrupted
growth. In this environment, the Group was nonetheless the only international
player to strengthen its market position in the small electrical appliance
segment. In Poland, the continued economic improvement enabled the Group to
maintain the strong growth dynamic of the second quarter, especially in food
preparation appliances, full-automatic espresso machines, kettles and steam
generators. In Ukraine, sales remained sluggish in the third quarter. Market
growth slowed significantly in Turkey, where the situation has been
complicated for the Group for several months due to protectionist measures,
political unrest, and a particularly competitive and promotion-driven
environment. Lastly, the Group enjoyed sustained growth in the Middle East
(Saudi Arabia and the United Arab Emirates).

Sales by product family

At constant exchange rates, all the major product families saw growth in the
first nine months of 2013, with the pace stepping up in the third quarter in
almost all cases:

  *Like in the first half, the home comfort product segment performed best
    despite growth slowing in the third quarter. Fans remained the main growth
    driver in Latin America, led by the Ultimate ceiling fan that was launched
    this year and is proving very popular.
  *In electrical cooking, the Group continued to benefit from vibrant sales
    of rice cookers and electrical pressure cookers in China and the Cookeo
    range’s solid momentum, as well as a good sales run for multicookers in
    Central Europe and Russia. Actifry remains one of the best selling
    products for the Group and, with about 900,000 units sold annually, a
    major contributor to the electrical cooking activity.
  *In the vacuum cleaner segment, further new products were deployed and the
    business continued to expand internationally in an increasingly
    competitive environment. Market share gains could be achieved in several
    countries, led by the outstanding success of the Air Force models and the
    Group’s competitive advantage in the “silent” vacuum cleaner segment.
  *In the food preparation appliance segment, the now comprehensive range
    (mixers, immersion blenders, beaters, choppers, meat mincers, blenders
    including heating blenders, kitchen machines, etc.) and increasingly
    international presence have helped to speed up the pace of growth in
    recent quarters.
  *In the beverage preparation appliance segment, the Group regained strong
    momentum in the third quarter, building on Dolce Gusto’s continuous
    development which offset the drop in sales of Nespresso machines in an
    increasingly competitive single-serve coffeemaker market.
  *In the ironing segment, recovery came as expected from the ramp-up of new
    steam generator models and the continuing international deployment of the
    FreeMove cordless iron, which gave a strong boost to sales in the third
    quarter.
  *In personal care, after a lacklustre first half in line with the market,
    sales picked up thanks to the success of the Steampod straighteners
    designed in partnership with L’Oréal. Bathroom scales and the Silence
    hairdryer also made a positive contribution to growth.
  *Cookware sales improved in the third quarter, led by China (especially the
    success of Thermospot), Canada, Japan, and Germany, and by inroads of the
    ceramic-coated cookware ranges.

Operating result from activity

Operating result from activity for the first nine months of 2013 stood at €233
million, basically unchanged from the €232 million reported for the same
period of 2012. The total included €96 million for the third quarter alone,
representing an 8% increase over third quarter 2012. The stable nine-month
performance matches Group expectations and is in line with annual
expectations. This stability is explained by compensating factors:

- on one hand, the positive impact from organic growth in sales and an active
management of prices and costs;

- on the other hand, the negative impact of currencies as well as slightly
higher investment in growth drivers and future development.

Analysis of debt at 30 September 2013

Net debt at 30 September 2013 totalled €575million, compared with
€556million at 31 December 2012. The slight increase was mainly due to the
higher level of inventories in response to both internal factors (anticipation
of upcoming loyalty programs notably) and outside factors (to offset
retailers’ low inventories and ensure timely deliveries to these customers).
Note that net debt at 30 September 2012 stood at €646 million.

Groupe SEB’s balance sheet remains very healthy.

Significant events of the period

Groupe SEB announced on 3 July 2013 that the French investment fund Fonds
Stratégique de Participations (FSP) acquired a 5.25% stake in SEB SA in June.
The transaction was one of FSP's first investments. It was carried out on a
friendly basis, in full agreement with the Company’s Board of Directors and
management, and is intended to be a long-term holding. In this way, FSP has
demonstrated both its confidence in the Group's business model and its
willingness to effectively support the Group’s growth, alongside the founding
family, whose commitment remains steadfast.

As part of this long-term investment strategy, FSP will be represented on SEB
SA’s Board of Directors by an independent director, whose appointment will be
proposed for ratification at the Annual General Meeting in 2014.

Outlook

Faster growth in the third quarter helped to mitigate increased negative
currency effects on operating result from activity following the significant
decline of some currencies against the euro. The Group’s performance in the
first nine months of 2013 and the teams’ responsiveness to currency
fluctuations strengthen the Group SEB’s confidence in its ability to deliver
stronger revenue growth than initially expected and to maintain operating
result from activity at the same level as in 2012. In addition, the necessary
measures will be taken to enable the Group to continue reducing its debt.

Based on current exchange rates, the real, the ruble, and the Turkish lira in
particular, will weigh on 2014 performances on a full-year basis. When
existing currency hedges expire, at the end of 2013, the yen will also have a
negative impact. It is therefore cautious to anticipate a potentially
significant impact on 2014 business and results. In addition to making
targeted price increases, the Group will implement additional actions to
offset the effect of unfavourable exchange rates, as in 2013. However,
building on its solid fundamentals and a return to a healthy sales momentum,
the Group will maintain a high level of investment in future growth drivers,
in line with its long-term strategic objectives.

Listen to the audiocast online (English only) at http://www.groupeseb.com  or
click here.www.groupeseb.com

The world leader in small domestic equipment, Groupe SEB operates in nearly
150 countries with a unique portfolio of top brands including Tefal, Rowenta,
Moulinex, Krups, Lagostina, All-Clad, and Supor, marketed through multi format
retailing. Selling some 200 million products a year, it deploys a long-term
strategy focused on innovation, international development, competitiveness and
service to clients. Groupe SEB has nearly 25,000 employees worldwide.

                                                                    GROUPE SEB
                                                            INVESTOR RELATIONS
 Chemin du Petit Bois I BP 172 - 69134 Ecully Cedex France I T. +33 (0)4 72 18
                                              16 40 • Fax +33 (0)4 72 18 15 99
    A French Société par Actions Simplifiée. Capital: €806,400 I Registered in
                           Lyon under no. 016 950 842 I VAT no. FR 94016950842

Contact:

Investors / Analysts
Groupe SEB
Investor Relations
Isabelle Posth, Tel: 33 (0) 4 72 18 16 40
BP 172
69134 Ecully cedex, France
comfin@groupeseb.com
or
Media
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Caroline Simon
Phone: +33 (0) 1 53 70 74 93
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75116 PARIS