Groupe SEB: Solid Organic Growth in Sales

  Groupe SEB: Solid Organic Growth in Sales

             Adverse currency effect impacts performance in euros

Business Wire

ECULLY, France -- January 21, 2014

Regulatory News:

Sales by region

Revenue (in €m)       2012       2013      % change
                                           Reported        Like-for-like
France                 688         666       - 3.3%          - 3.3%
Other Western EU       759         821        + 8.2%           + 8.8%
North America          457         468        + 2.3%           + 5.6%
South America          451         426        - 5.5%           + 6.5%
Asia-Pacific           992         1,087      + 9.6%           + 11.4%
Central Europe,
Russia and other      713        693       - 2.7%          + 0.7%
                     4,060      4,161     + 2.5%          + 5.4%
Excluding Maharaja    Rounded figures in €  Percentages based on non-rounded
Whiteline              millions               figures
Revenue (in €m)        Q4 2012     Q4 2013   % change
                                           Reported        Like-for-like
France                 250         252        + 0.4%           + 0.4%
Other Western EU       280         305        + 8.9%           + 9.7%
North America          148         149        + 1.0%           + 6.9%
South America          137         119        - 12.7%          + 0.1%
Asia-Pacific           278         296        + 6.6%           + 13.7%
Central Europe,
Russia and other      230        207       - 9.8%          - 3.9%
TOTAL                 1,323      1,328     + 0.4%          + 5.1%
Excluding Maharaja    Rounded figures in €  Percentages based on non-rounded
Whiteline              millions               figures

Revenue performance

The strained and uncertain overall economic environment that prevailed
throughout 2013 affected consumer spending in many countries. Demand was
fragile or volatile, markets were highly competitive and promotion driven, and
retailers drew down or tightly managed their inventories. The small domestic
equipment segment, though inherently resilient, was impacted by volatile or
sluggish demand and performed unevenly across geographies as well as product
categories. In addition, the sharp fall in several of Groupe SEB’s (Paris:SK)
major currencies – most notably the Brazilian real, the Russian rouble and the
Turkish lira – disrupted business in the countries concerned.

Nevertheless, the Group’s sales performance was very satisfactory in this
difficult environment, representing revenue of €4,161 million for the year, up
2.5% on a reported basis and 5.4% at constant scope of consolidation and
exchange rates (like-for-like). Its revenue in euros was heavily impacted by a
negative currency effect of €116 million (of which €106 million in the second
half of the year), but organic growth (led by volumes) was firm, reflecting a
sharp second-half rebound that consolidated the return to growth observed in
the first half. Following a particularly vigorous third quarter, with revenue
up 10% like-for-like on low prior-year comparatives, sales remained buoyant in
the fourth quarter, with organic growth coming to 5.1%. However, performances
remained mixed across regions and product families.

Sales by region


In France, the end-of-year holidays failed to lift consumers out of the
ambient gloom, and the Christmas sales surge was considerably delayed because
shoppers not only deliberately put off their purchases until the last minute,
but also tended to wait for pre-Christmas bargains and promotions. The small
domestic equipment market echoed the overall trend, but confirmed a return to
moderate growth that began in the third quarter, both in cookware and
electrical appliances. The uptrend was led by particularly brisk sales of food
preparation appliances, vacuum cleaners and personal care products. All in
all, after falling short of the very high 2012 comparatives in the first half,
the Group turned the situation around. By returning to slight growth in the
second half of the year, with sales up 0.9% in the third quarter and 0.4% in
the fourth, Groupe SEB was able to limit the decline in annual revenue to just
3.3%. The contraction was largely attributable to a major non-recurring
loyalty campaign that had inflated cookware revenue in 2012. Business was
stronger in the small electrical appliances segment, where the Group saw very
successful sales of food preparation appliances (e.g. kitchen machines,
blenders, Soup & Co heating blenders and Infiny Force mixers), handstick
vacuum cleaners, Cookeo multicookers and Dolce Gusto pod coffeemakers. In
addition, market shares rose to record highs in the ironing segment, helped by
strong sales of the Free Move cordless iron, in a nevertheless weakening
market. Lastly, the launch of the Cuisine Companion cooking kitchen machine
was very well received, with demand greatly outstripping supply.


Despite a complex, generally dull macroeconomic environment, in a fluctuating,
uneven small domestic equipment market, the Group had an excellent year in
other Western EU countries. After a significant slump in 2012, due to the
effects of the economic crisis, business benefited from a combination of
several more favourable factors in 2013: low prior-year comparatives, an end
to the economic downturn in Southern Europe, the launch of major loyalty
programs with retailers and a solid product dynamic underpinned by
strengthened growth drivers. Revenue was higher in virtually all countries in
the region, particularly in Germany, where business continued to thrive in the
fourth quarter after an excellent third quarter, driven by a major loyalty
campaign set up with a retailer in the cookware segment. Groupe SEB also
delivered a very good performance in the United Kingdom throughout the year,
achieving significant advances in Ingenio cookware and food preparation
appliances, and generating record sales of Actifry fryers. Lastly, 2013 saw
very solid growth in Spain, mainly thanks to a Dolce Gusto loyalty operation
launched in the first half of the year, and particularly vigorous growth in
Portugal. However, sales for the full year were stable in Italy, where demand
slowed considerably in the fourth quarter.


In a relatively dynamic overall market environment, the Group enjoyed
sustained growth in 2013, with the pace of expansion gathering speed in the
fourth quarter. In the United States, where the market trended more favourably
while nevertheless remaining intensely competitive, the Group leveraged
renewed vigour in the cookware segment, gaining new retail slots for the T-fal
brand and enjoying a strong recovery in All-Clad sales in the second half of
the year. In electrical appliances, growth was robust in ironing systems,
thanks to new advances by Rowenta in the premium steam iron and garnment
steamer segment and the ongoing deployment of T-fal mid-range product offering
in mass-retail. At the same time, the new All-Clad waffle makers and
slow-cookers were a hit with consumers and the Optigrill smart grill launched
in September generated encouraging initial results. Business was healthy in
Mexico, particularly in cookware and linen care, but annual sales were down on
2012 at constant exchange rates due to a non-recurring loyalty program. In
Canada, in a slightly decelerating market in the fourth quarter, the Group’s
sales trajectory remained highly positive. A very good overall performance was
achieved for the year, along with new market shares gains, thanks to Actifry
and other flagship products in the ironing and cookware categories.

Note that Groupe SEB acquired Canada’s Coranco on 16 December 2013 with the
purpose of obtaining direct control of Lagostina product marketing operations
in Canada. Through this acquisition, Groupe SEB significantly strengthens its
positions and becomes the unrivalled leader in the cookware market.


In South America, 2013 was shaped by the ongoing, significant depreciation of
the Brazilian real, which led to very large gaps between the year-on-year
change in revenue as reported and at constant exchange rates. In Brazil, added
to these currency effects, economic uncertainty and social unrest led to
erratic demand and mixed performances from one quarter to the next. After a
robust third quarter, end-of-year conditions were tighter due to a combination
of slower consumer spending and the adverse impact on fan sales of cool
weather, in contrast to the very buoyant 2012 season. Nevertheless, organic
growth was strong for the year, led by sales of electrical appliances such as
the Planetaria kitchen machine, the Dolce Gusto pod coffeemaker, steam irons
and new 10kg-capacity semi-automatic washing machines, which more than offset
a decline in cookware. In Colombia, the economy remained firm and consumer
spending was quite strong. After a mixed third quarter, Groupe SEB regained a
certain degree of momentum in the fourth, despite the absence of specific
commercial operations. Momentum was particularly strong in the linen care
segment, while fan sales were also higher and demand improved for pressure
cookers as well as for cooking utensils and accessories, leading to market
share gains. The Group had a good year in Argentina, shaped by significant
organic growth.


2013 sales were robust in the heterogeneous mix of markets comprising the
Asia-Pacific region, with all countries experiencing increased demand in the
fourth quarter. China was the regional heavyweight and the largest contributor
to growth. The Chinese small domestic equipment market picked up after an
anaemic 2012, with Supor achieving a very substantial improvement in locally
generated revenue to outperform the competition and gain new market share.
This energetic performance was attributable to a strong product dynamic,
constantly fuelled by innovation and range extension. In cookware, the
Thermospot range was expanded with the introduction of new woks and other
items, and the launch of stainless steel and Clipso pressure cookers was
exceptionally well received by retailers and consumers alike. In small
electrical appliances, local best-sellers went from strength to strength and
the launch of new products such as round-pot rice cookers and juice extractors
helped to enhance the Supor brand’s presence on store shelves. At the same
time, Supor pursued its geographic expansion into Tier 3 and Tier 4 cities,
added many new sales outlets to its network and stepped up development of
on-line sales. In Japan, where the steep fall in the yen became a major
concern for all market players, the Group achieved another year of organic
growth despite an already high basis of comparison in 2012. Anticipating a
much more complicated 2014, as no currency hedges are in place, Groupe SEB is
taking the necessary measures to limit the effects of the weakening local
currency on business and the translation of results into euros. In South
Korea, business gradually picked up after a dull first half, helped by the
improved economic environment and the upswing in demand. Lastly, Thailand and
Malaysia continued to act as very powerful growth drivers throughout the year.


After trending upwards in the first half of 2013, demand in this region
suddenly stalled in the summer, mainly due to the abrupt slowdown of the
Russian economy on top of the already difficult, tense situation in Turkey. In
addition, the significant, persistent decline in several of the region's
currencies against the euro led to a serious disruption of the markets
concerned. As a result, sales were sharply impacted in the second half of the
year, particularly in Russia where, despite forefront positions supported by
its rich product offering and established brand equity, the Group had to face
a dramatic drop in demand in the last six months of the year, along with
inventory drawdowns by retailers. In addition to this more challenging
environment, Groupe SEB was affected by the non-renewal in the fourth quarter
of 2012 loyalty programs. In Central Europe, despite a contraction in Poland
in the fourth quarter, annual revenue grew significantly at constant exchange
rates, thanks primarily to strong demand for food and beverage preparation
appliances, such as automatic espresso machines and kettles, as well as for
linen care appliances. In Ukraine, demand was flat until September, when it
was lifted by a marketing operation with a retailer and several successful new
product launches. In a politically complex, protectionist environment defined
by significant promotional activity, the Group’s sales were weak in Turkey
throughout the year, leading to an erosion of its market shares. In contrast,
demand was very robust in the Middle East (Saudi Arabia and the United Arab
Emirates) and in Egypt (where business is conducted through a joint venture),
resulting in a very good fourth quarter.


Apart from their very negative impact on revenue, unfavourable changes in
exchange rates also hurt the Group’s profitability in 2013. However, Operating
Result from Activity for the full year should be very close to the reported
2012 figure.
The Group is expecting a very high level of Cash Generated from Operations,
which will further strengthen its financial position.

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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.


Investors / Analysts
Groupe SEB
Investor Relations
Isabelle Posth
BP 172
69134 Ecully Cedex, France
Tel: 33 (0) 4 72 18 16 40
Image Sept
Estelle Guillot-Tantay
Caroline Simon
7, rue Copernic
75116 Paris, France
Tel.: 33 (0) 1 53 70 74 93
Fax: 33 (0) 1 53 70 74 80
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