Groupe SEB : First-Quarter 2014 Revenue

  Groupe SEB : First-Quarter 2014 Revenue


Business Wire

ECULLY, France -- April 24, 2014

Regulatory News:

Groupe SEB (Paris:SK):

  *Revenue up 6.2% like-for-like
  *Operating Result from Activity amounting to €74million at constant
    exchange rates and to €50 million as reported
  *A strong €101million in cash generated from operations in the quarter

Revenue (in €m)       Q1 2013     Q1 2014  % change
                                           Reported        Like-for-like
France                 126          129       +2.5%           +2.5%
Other Western EU       161          183       +13.7%           +13.4%
North America          96           94        -2.3%            +0.1%
South America          97           82        -15.7%           +2.9%
Asia-Pacific           282          303       +7.2%            +12.7%
Central Europe,
Russia and other      169         151      -10.5%          -3.7%
TOTAL                 931         942      +1.1%           +6.2%
                     Rounded figures in €  Percentages based on non-rounded
                       millions               figures

2014 began in a continued tense overall environment caused by an uncertain
economy, heightened geo-political unrest in some regions and an on-going
decline in many currencies against the euro, including the yen, rouble,
Ukrainian hryvnia, Turkish lira, Brazilian real and Colombian peso. Against
this backdrop, as in 2013, consumer spending remained volatile and unstable.
No exception to the rule, the small domestic equipment market saw significant
disparities from one region to another.

Nonetheless, the Group’s like-for-like revenue growth was 6.2%, mostly led by
volumes. On a reported basis, first-quarter 2014 revenue was up a slight 1.1%
including a €53 million negative currency effect (with a major impact of the
real, yen and rouble) and a €6 million positive effect related to changes in
the scope of consolidation as Maharaja Whiteline and CORANCO have both been
consolidated as from 1 January 2014.

Operating Result from Activity for the quarter amounted to €50million,
adversely affected by a €24million negative currency effect. At constant
exchange rates, it stood at €74million, stable compared with €73million in
first-quarter 2013.

Net debt at 31 March 2014 amounted to €412million, virtually unchanged from
31 December 2013. The very healthy cash flow from operations was used mainly
for the acquisition of the new headquarters building.



In a slightly positive small domestic equipment market, the Group’s
first-quarter revenue was up 2.5%, a more sustained pace of growth than in
second-half 2013. This modest acceleration was due to a solid dynamic in
electrical appliances that offset a decline in cookware, in line with the
market. Early-year successes included our new product offering in steam
generators, buoyant sales of vacuum cleaners, a solid performance by the
Cookeo multicooker, a recovery in Nespresso coffeemakers and solid advances in
food preparation appliances. In this segment, growth was driven by kitchen
machines and the Cuisine Companion cooking food processor, which confirmed its
rapid development.


In other Western European Countries, the trends in the small domestic
equipment market noted in 2013 continued in the first quarter of 2014, with
growth in Northern Europe and a stabilized situation in Southern Europe. After
an exceptional year in 2013 – albeit sluggish in the first three months – the
Group’s sales in early 2014 remained brisk and translated into a double-digit
organic growth. As a matter of fact, revenue was higher in nearly all
countries. In Germany, at a time when a number of customers tightened their
inventory management, sales were energized by the tail-end of a cookware
loyalty programme launched in fourth-quarter 2013. The same was true in
Belgium, where sales were boosted by two loyalty programmes. In the United
Kingdom, the Group maintained a robust pace of growth, led by cookware,
Optigrill and Nespresso and Dolce Gusto single-serve coffeemakers. Sales
improved in the Netherlands and continued to trend upwards in Southern Europe.
The gains were moderate in Italy but business was vigorous in Greece and
Spain, where the upswing was led by cookware, steam generators and vacuum


At 31 March 2014, the Group’s revenue at constant exchange rates and scope of
consolidation was unchanged in North America, due in large part to winter
storms that significantly impacted store traffic and consumer spending. In
addition, the prior-year comparisons for the first quarter were rather
demanding. Beyond these considerations, the Group’s small electrical appliance
performance in the US was contrasted. Demand rose in the ironing segment
(Rowenta and T-fal) and accelerated with Optigrill but remained complicated in
coffeemakers for Krups. In cookware, T-fal sales slowed while Imusa sustained
its growth and All-Clad continued to expand with certain customers and to gain
new retail store slots. In Canada and Mexico, sales expressed in euros were
impacted by the decline in the Canadian dollar and the peso against the euro.
Nonetheless, sales in Canada continued to trend favourably, led by Actifry,
Optigrill and vacuum cleaners, which were all supported by significant
investments. In Mexico, local sales declined mainly due to a smaller loyalty
programme with a retailer this year.


In a region impacted by economic uncertainty and enormous currency challenges,
the Group achieved an organic revenue growth of 2.9% for the quarter, although
reported revenue declined by 15.7%. This difference of nearly 19 points is due
to the on-going decline in nearly all of the region's currencies against the
euro for many months. Moving beyond these exchange rate issues, performance
varied considerably from country to country. In Brazil, in an environment
marked by a slowdown in consumer spending, the Group had to raise prices
significantly to respond to the sharp drop of the real. This obviously
complicated negotiations with retailers and had consequences on the business,
both in cookware and in small electrical appliances, especially in the
ironing, personal care and coffeemaker segments. On the other hand, sales held
up well in food preparation appliances, thanks to several recently launched
new products. They were higher for vacuum cleaners and robust for fans, driven
by a very hot summer and by strong advertising support for the Turbo Silencio
Repellente fan. In Colombia, the Group’s sales grew at a faster pace in nearly
all product categories, including cookware and utensils, irons, blenders and
coffeemakers. In addition, Actifry got off to an encouraging start. This
vigorous performance was boosted by advertising campaigns and in-store


In the Asia-Pacific region, organic sales rose by 12.7%, reflecting strong
sales in China, solid advances in most markets, a decline in Australia and a
sharp drop in Japan where the Group is hard hit by the massive decline in the
yen against the euro, following the expiration of currency hedges at the end
of 2013. The announcement in fourth-quarter 2013 of major, although only
partially offsetting, price increases – effective 1 January 2014 – led
retailers to build up their inventory before that date, resulting in a sharp
fall in the Group’s first-quarter sales. Despite a successful promotion for
pressure cookers, new gains in vacuum cleaners and the encouraging start-up of
the Fresh Express shredder, local revenue was substantially down. On the other
hand, Supor turned in an excellent first-quarter performance in China. Growth
was led by newly-launched products such as the spherical-pot rice cookers,
soymilk makers, frying pans, woks or Clipso pressure cookers as well as by
business expansion in new consumer regions and the on-going development of
e-commerce. Besides China, sales were brisk in South Korea, Thailand and


This was the only region in decline in the first quarter, adversely impacted
by the slowdown of consumer spending in Russia since last summer as well as
the consequences of recent events in Ukraine. In addition, the collapse of the
rouble, the Turkish lira and the Ukrainian hryvnia, in particular, seriously
disrupted the local markets and modified the competitiveness challenges. In
Russia, demand has been sluggish and in an increasingly competitive
environment, the entire industry has been suffering. Nonetheless, the Group
introduced targeted price increases in 2013 and early 2014 with the goal of at
least partially offsetting the decline in the rouble. But in this difficult
environment, business was severely strained and the Group’s revenue was down
sharply. In Ukraine, after a positive start to the year – in line with late
2013 – sales came suddenly to a halt in March due to the destabilization of
the country and regional tensions. In Central Europe, business improved
despite the price increases, but the discontinuation of a loyalty programme
with a retailer in Poland weighed on the Group’s performance. Lastly, the
Group’s situation in Turkey is gradually stabilizing thanks to certain
flagship products like Actifry, irons and vacuum cleaners, which are supported
by advertising and marketing investments. Nonetheless, the environment remains
complicated and tense. However, both the United Arab Emirates and Egypt saw a
sustained increase in sales.


The Group’s performance varied not only from region to region but also from
one product category to another.

  *The home comfort segment remained the most dynamic product family, buoyed
    by weather that was very favourable to fan sales in Latin America.
  *The vacuum cleaner product family continued to make a solid contribution
    to growth, led by the success of upright vacuum cleaners and new inroads
    by bagless models in Europe.
  *In electrical cooking, vigorous sales of rice cookers in China (notably
    the best-seller spherical-pot model), solid momentum for Cookeo, a strong
    start for Optigrill, and continued growth for Actifry offset lower demand
    for multicookers in Russia.
  *In ironing, growth was led by new steam generator models and fast-heating
    steam stations. Sales of steam irons continued to trend favourably despite
    a significant drop-off in Russia.
  *Cookware benefited from Supor’s solid dynamics in China, growing sales of
    ceramic-coated ranges and a number of specific sales and marketing
  *In food preparation appliances, business was highly contrasted, with on
    the one hand the clear success of kitchen machines, blenders and the
    Cuisine Companion cooking food processor and on the other the sharp drop
    in meat mincers, which were penalised by Russia.
  *The same holds true in the beverage preparation category, which saw solid
    growth in full-automatic espresso machines and in Nespresso and Dolce
    Gusto coffee makers, as well as a severe drop in kettles in Russia and
  *Despite the confirmed success of the Steampod professional hair
    straightener, designed in partnership with L’Oréal, sales in the personal
    care segment declined.


Operating Result from Activity in first-quarter 2014 amounted to €50million,
adversely affected by a €24million negative currency effect. At constant
exchange rates, first-quarter Operating Result from Activity came to
€74million, in line with the first-quarter performance in 2013. This
stability at constant exchange rates, at a time when sales grew by an organic
6.2%, was largely due to an unfavourable country mix while the impact of price
increases and other offsetting actions have not yet been felt.

It should be emphasized that first-quarter Operating Result from Activity is
traditionally low, not representative of the full year and thus should not be


Net debt stood at €412 million at 31 March 2014, nearly unchanged from 31
December 2013 (€ 416million).

In the first quarter, the Group generated a strong €101million in cash from
operations, most of which stemmed from a significant improvement in working
capital requirement. However, the Group had a number of one-off outlays,
including a payment for the new headquarters amounting to €63million and
share buybacks for approximately €15million.


As anticipated, 2014, and in particular the first half of the year, will be
significantly impacted by the decline in many currencies that occurred mainly
during second-half 2013. In addition to this headwind, market conditions are
more difficult than expected in a number of countries, especially Russia and
Ukraine, and development in consumer spending is uncertain. In this
complicated environment, the Group is implementing the necessary actions to
ensure, on a full-year basis, sustained growth in sales and Operating Result
from Activity at constant exchange rates.Nevertheless and given current
market conditions, the first half-year – like the first quarter – will only
partially reflect the impact of these measures.

Upcoming events

Annual General Meeting: 15 May 2014 – Paris, Palais Brongniart, 2:30 pm
First-half 2014 revenue and earnings: 24 July – 6:30 am

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.

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Investors / Analysts
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