Groupe SEB: First-Half Performance in Line with the 2014 Road Map

  Groupe SEB: First-Half Performance in Line with the 2014 Road Map

          Results adversely affected by currency effect, as expected

  *First-half organic revenue growth of 4.7%
  *Operating result from activity of €138million at constant exchange rates
    and €91million on a reported basis
  *Solid cash generation from operations of €91million

Business Wire

ECULLY, France -- July 24, 2014

Regulatory News:

Consolidated Financial Results      H1 2013    H1 2014   % change
(in €m)                                                
Revenue                              1,835       1,827      -0.5%
Like-for-Like                                    1 921      +4.7%
Operating result from activity       137         91         -33.4%
Like-for-Like                                    138        +0.7%
Operating profit                     117         73         -37.0%
Profit attributable to equity        52          25         -52.0%
holders of the parent
Net debt (at 30 June)                516         532        + 116 M€
                                     Rounded figures in €   Percentages based
                                     millions               on

Commenting on the first-half 2014 results, Thierry de La Tour d’Artaise,
Chairman and Chief Executive Officer of Groupe SEB, said:

“Groupe SEB's first-half performance was in line with forecast, with sustained
organic growth in revenue, led by innovation and international expansion, and
operating result from activity stable on a like-for-like basis but sharply
down after taking into account the currency effect. Indeed, as expected, the
sharp declines in many currencies against the euro significantly impacted

The Group’s first-half activity was split between markets that were rather
better than expected, particularly in Europe and China, and an environment
that was much tougher than expected in Russia and Japan.

The steep fall in net profit is not relevant given the limited contribution of
the first-half to annual results and should not be extrapolated over the

“These results are in line with our road map and the outlook given at the end
of the first quarter. In a complicated environment, we have stepped up
initiatives to improve our operations while ensuring strict control over
costs. We are also maintaining our investments in the product families and the
countries that represent our growth drivers for the future.

”For the coming months, we anticipate that the environment will be slightly
more favourable in Russia and Japan and that the pace of growth will pick up
in France and the United States. Once again, we can rely on the powerful,
on-going innovation dynamic that shaped the first half. In addition, we can
expect to benefit from slightly less unfavourable exchange rates. The
resulting flexibility will enable us to provide greater support to our
businesses in the most difficult markets. All in all, I am confident in the
Group’s ability in 2014 to deliver sustained organic growth in revenue and a
significant improvement – higher than in 2013 – in operating result from
activity at constant exchange rates.”

                                                  Thierry de La Tour d’Artaise
                                          Chairman and Chief Executive Officer

Revenue Performance

€1,827million in first-half revenue, declining 0.5% as reported but
increasing 4.7% like-for-like

The first half was shaped by a still strained and uncertain environment that
saw widely divergent market situations, a highly competitive, promotion-driven
context and on-going inventory drawdowns on the part of retailers.

Against this backdrop, the Group’s business held up well in the first half,
with revenue increasing 4.7% like-for-like. Following a solid start to the
year, it continued to trend positively in the second quarter although organic
growth was more moderate, at 3.2%. The currency impact on revenue for the
first six months of 2014 amounted to a negative €107million (versus a
negative €10million in first-half 2013) reflecting the decline of many
currencies against the euro over the period. Among the currencies with the
strongest negative impact were the Japanese yen, the Brazilian real, the
Russian rouble, the Chinese yuan and the Turkish lira. Reported sales also
included the €13-million positive impact related to the consolidation of both
Maharaja Whiteline and Canada’s Coranco (acquired in December 2013), as from 1
January 2014.

While organic growth in revenue was generally strong, performance nonetheless
varied from one region and one product category to another, the main growth
drivers being fans, vacuum cleaners, electrical cooking, linen care and

Revenue by region

Revenue (in €m)             H1 2013    H1 2014   % change
                                                 Reported   Like-for-like
France                       262         266        +1.4%      +1.4%
Other Western EU countries   338         363        +7.4%       +7.0%
North America                197         193        -2.5%       +1.3%
South America                194         173        -10.7%      +4.6%
Asia-Pacific                 522         540        +3.5%       +11.1%
Central Europe, Russia and  322        292       -9.3%      -3.4%
other countries
TOTAL                       1,835      1,827     -0.5%      +4.7%
                           Rounded figures in €  Percentages based on non-
                             millions               rounded figures
Revenue (in €m)              Q2 2013     Q2 2014    % change
                                                 Reported   Like-for-like
France                       136         137        +0.4%       +0.4%
Other Western EU countries   177         180        +1.6%       +1.3%
North America                102         99         -2.7%       +2.5%
South America                97          92         -5.6%       +6.2%
Asia-Pacific                 239         236        -0.8%       +9.3%
Central Europe, Russia and  153        141       -7.9%      -3.0%
other countries
TOTAL                       904        885       -2.1%      +3.2%
                           Rounded figures in €  Percentages based on non-
                             millions               rounded figures

FRANCE: fourth consecutive quarter of revenue growth

In the first half, in a market that trended favourably but was highly
competitive, Groupe SEB confirmed the return to growth that began in
second-half 2013. The slight increase in revenue stemmed from a challenging
cookware market – because of a competing loyalty programme and weaker demand
for pressure cookers – offset by brisk demand for small electrical appliances.
In this segment, the Group strengthened its positions by significantly
outperforming the market. Among the best-selling products in the first half
were the cooking kitchen machine Cuisine Companion, which led growth in the
food processor category; steam generators, sales of which were driven by new
models; the Cookeo multicooker; the BeerTender home draught beer system, which
benefited from the impact of the FIFA World Cup; and the Dolce Gusto and
Nespresso single-serve coffeemakers, for which sales were sharply higher.

OTHER WESTERN EU COUNTRIES: a very good first half

In Western Europe, the market was generally buoyant in the first half, despite
a certain loss of momentum late in the period. As in 2013, performance varied
from one product family and country to another. In this environment, Groupe
SEB achieved a clear increase in revenue over the first six months of 2014,
with continued growth – albeit slight – in the second quarter, on the back of
high prior period comparatives.

Sales were especially robust in Germany, which benefited from a solid demand
for core products (ironing appliances, vacuum cleaners and Nespresso and
full-automatic espresso machines) and from the extension of a cookware loyalty
programme introduced in fourth-quarter 2013. The Group turned in a very brisk
sales performance in Belgium and maintained a firm dynamic in the UK thanks to
flagship products that have driven growth for nearly three years and to the
success of Optigrill. In Italy, in a lacklustre market, the Group continued to
make inroads and increased its market share in small electrical appliances.
Lastly, sales remained sustained in Spain despite very high prior-period
comparatives in the second quarter (due to a Dolce Gusto loyalty programme),
enabling the Group to strengthen its positions in several key product

NORTH AMERICA: a slight improvement in sales in the second quarter

In the NAFTA countries, the Group’s first-half revenue was down as reported,
adversely impacted by currency declines against the euro, but slightly higher
at constant exchange rates. In the US, following a first quarter shaped by bad
weather that impacted consumer spending and led to high inventory levels among
retailers, the market and the Group’s performance varied depending on the
product category. In cookware, sales were lower in the entry-level and
mid-range segments, based on high prior-period comparatives. However, they
were sharply higher in the “Hispanic” segment, which is targeted by Imusa, as
well as in the premium segment, with the success of new All-Clad ranges
co-branded with chef Thomas Keller. In small electrical appliances, business
was more difficult in the ironing segment due to a more competitive
environment, while sales of Optigrill rose very rapidly.

Sales in Canada maintained their strong momentum, despite price increases
introduced to offset the weakening of the Canadian dollar. In Mexico, revenue
was down slightly in the first half but solidly higher at constant exchange
rates in the second quarter.

SOUTH AMERICA: firm organic growth

The major drop in first-half revenue in South America was due to the decline
in the Group’s main operating currencies in the region – in particular the
Brazilian real and the Colombian peso – against the euro. However, revenue at
constant exchange rates rose significantly, reflecting a positive trend in
business. In Brazil, the currency environment led the Group to raise its
prices, in particular to offset the rising cost of production purchases. After
difficult negotiations with customers that adversely affected business in the
first quarter, sales picked up in the second quarter. Growth was driven by
food preparation and linen care, by Dolce Gusto and by a solid upswing in
cookware. In Colombia, the Group owes its organic growth to fans, while sales
in the food processor and cookware categories were held back by the
non-renewal of promotional programmes carried out in 2013.

ASIA-PACIFIC: solid momentum, with the exception of Japan

Although exchange rates had a negative impact on the region’s contribution to
reported revenue, organic sales growth was strong, reflecting a generally
positive business trend in the region, excluding Japan. In this country, where
the Group was confronted with a considerable currency challenge, sales
declined sharply. This was due to the combined effect of a tenuous consumer
spending environment, major inventory drawdowns among retailers, price
increases introduced to partially offset the impact of a weak yen on the local
subsidiary’s margins, and the increase in the VAT rate as from 1 April.
Together, these unfavourable factors led to a worse-than-expected decline in
first-half sales, despite the launch of strong local recovery measures.

The vitality of sales in Asia-Pacific was led mainly by a very powerful
dynamic in China, which in first-half 2014 was the Group’s leading market in
value. Supor turned in an excellent performance in its domestic market in
cookware as well as in small electrical appliances like rice cookers,
electrical pressure cookers, mobile induction hobs..., leading to significant
new market share gains. These gains were driven by innovation, Supor’s
on-going expansion into Tier 3 and Tier 4 cities, and rapid growth in online
sales. In South Korea, Malaysia and Thailand, the Group’s sales rose sharply
at constant exchange rates with Thailand becoming one of its top 20 countries
in terms of revenue despite recent political events.

CENTRAL EUROPE, RUSSIA AND OTHER COUNTRIES: performance held back by Russia

As in the first quarter, this region was the only one to experience a decrease
in revenue at constant exchange rates. The decline in particular of the
Russian rouble, the Turkish lira and the Ukrainian hryvnia against the euro
represented a major competitiveness challenge and negatively impacted
business. In addition, the Ukrainian crisis had obvious consequences on the
overall situation and on consumer spending in the countries concerned. As a
result, the Group operated in a strained environment. In Russia, considerably
lower demand and sharply increased promotional activity led to heightened
competitive pressure, in particular because of the emergence of local players
with very aggressive sales and marketing policies. In these circumstances, the
Group experienced a greater-than-expected decline in first-half sales. In
Poland, business improved in the second quarter but first-half revenue
nonetheless dipped slightly at constant exchange rates because of the
non-renewal of a loyalty programme. In Turkey, after two difficult years and a
succession of price increases, the Group enjoyed a return to organic growth,
thanks in particular to a strong dynamic in linen care, vacuum cleaners and
food processors, supported by growth drivers. Development continued in the
Middle East and revenue rose sharply in Egypt. Lastly, in India, the powerful
re-launch of Maharaja Whiteline led to a solid increase in the company’s


First-half 2014 operating result from activity amounted to €91million, in
line with forecast. It included a €45-million negative currency effect due
mainly to the decline of the yen, rouble, real and yuan against the euro as
well as to the €2-million negative impact of changes in the scope of
consolidation. Like-for-like, first-half 2014 operating result from activity
totalled €138million, virtually unchanged from the €137million recorded in
the first six months of 2013.

It should be emphasized that first-half operating result from activity is not
representative of the full year and should not be extrapolated.

The change in first-half operating result from activity can be explained as

  *The volume effect was a positive €28 million, reflecting the favourable
    impact of organic sales growth.
  *Price mix effect was a slightly positive €1 million and was based on a
    variety of sometimes offsetting factors, such as price increases in
    certain countries, promotional initiatives in others and the shift in
    product and country mix.
  *Manufacturing costs (purchases, unit costs) improved by €3 million,
    reflecting productivity initiatives and lower purchasing costs, the
    benefits of which were partially offset by under-absorption of fixed
  *Investment in growth drivers was strengthened by €19 million.
  *SG&A rose by €12 million half of which were linked to the build-up of our
    commercial operations.


First-half operating profit amounted to €73million. The sharp drop compared
with the €117million reported in first-half 2013 was directly linked to the
decline in operating ^ result from activity.

Financial result represented an expense of €21million. The improvement from
an expense of €25million in first-half 2013 resulted from both finance costs
and exchange losses that were less penalising than in the prior-year period.

Attributable profit was €27million lower at €25 million, a fall that was
entirely due to the decline in operating result from activity. Income tax
expense declined sharply because of the contraction in pre-tax profit.
Minority interests were stable, reflecting the impact of the weaker yuan on
minority interests in Supor’s results.


At 30 June 2014, the Group’s equity stood at €1,464 million.

Net debt at 30 June 2014 stood at €532million, an increase of €116million
compared with 31 December 2013. Cash from operations represented a solid
€91million in first-half 2014. Net debt at 30 June takes into account
outflows for the payment of the dividend (€78million), the Group’s investment
in its new headquarters in Ecully, France (€70 million), the buyout of the
minority shareholders in Maharaja Whiteline and share buybacks.

At 30 June 2014, debt-to-equity stood at 36% and the debt-to-EBITDA ratio was
1.22. The Group’s financial position thus remains healthy and solid with a
diversified debt profile.


In an economic environment that will remain uncertain and volatile, the
Group’s expectations for the end of the year are nonetheless slightly more

From a geographic perspective, the Group is reasonably optimistic about the
second-half environment in Europe and North America, and is confident in an
on-going solid dynamic in Asia, excluding Japan, still driven by China.
However, it is cautious about economic trends and consumer spending in Brazil.
In Russia and Japan, following an extremely difficult first half, the
environment should be slightly more favourable.

Innovation, which already drove organic revenue growth in the first half, will
continue to be a catalyst, especially from the autumn. At the same time, the
Group continues to implement and deploy its plan to improve operations, which
produced a number of tangible results in the first half.

In recent weeks, there has been a slight improvement in the currency
situation, which should attenuate the severe adverse effect of exchange rates
on Group performance in the second-half. The resulting flexibility will enable
the Group to provide greater support to its businesses in the most difficult

Given this situation, the Group's objective for 2014 is to deliver sustained
organic growth in revenue and a significant improvement – higher than that
achieved in 2013 – in operating result from activity at constant exchange

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.

Upcoming events

Shareholders Meeting - Dijon: 22.09.14 - Palais des congrès, 18:00 (FT)
Shareholders Meeting - Annecy: 25.09.14 - L’impérial Palace, 18:00 (FT)
2014 nine-month sales and financial data : 23.10.14, 05:40 PM (FT)

Live audiocast : or click here

The English version of the First-Half Financial report will be available on on 28 July 2014.


(in € millions)                    First-half 2014  First-half  Full-year
                                                      2013         2013
Revenue                            1,826.7          1,835.2     4,161.3
Operating expenses                 (1,735.4)        (1,698.1)   (3,750.9)
OPERATING RESULT FROM ACTIVITY     91.3             137.1       410.4
Discretionary and                  (10.3)           (15.5)      (37.2)
non-discretionary profit-sharing
RECURRING OPERATING PROFIT         81.0             121.6       373.2
Other operating income and         (7.4)            (4.1)       (9.5)
OPERATING PROFIT                   73.6             117.5       363.8
Finance costs                      (14.3)           (15.5)      (31.0)
Other financial income and         (7.4)            (9.9)       (23.9)
Share of profits of associates     -                -           -
PROFIT BEFORE TAX                  51.9             92.1        308.9
Income tax expense                 (14.6)           (27.1)      (87.2)
AFTER TAX                          37.3             65.0        221.7
Non-controlling interests          (12.3)           (12.9)      (22.0)
PROFIT ATTRIBUTABLE TO OWNERS OF   25.0             52.1        199.8
Basic earnings per share           0.49             1.08        4.13
Diluted earnings per share         0.48             1.07        4.08


Years ended 31 December

ASSETS (in € millions)              30/06/2013             
                                                30/06/2013  31/12/2013
Goodwill                            466.4       467.3       448.2
Other intangible assets             443.5       432.3       411.8
Property. plant and equipment       560.7       496.7       485.9
Investments in associates           -           -           -
Other investments                   14.6        38.6        57.4
Other non-current financial assets  13.4        10.9        9.5
Deferred taxes                      55.2        72.2        52.0
Other non-current assets            5.2         5.4         6.0
Long-term derivative instruments    -           -           -
NON-CURRENT ASSETS                  1,559.0     1,523.4     1,470.8
Inventories                         794.9       780.4       731.1
Trade receivables                   540.9       533.4       740.2
Other current receivables           134.6       114.6       116.7
Current tax assets                  25.3        21.7        33.3
Short-term derivative instruments   5.1         17.9        2.8
Cash and cash equivalents           342.9       416.0       426.3
CURRENT ASSETS                      1,843.7     1,884.0     2,050.4
TOTAL CONVERSION LOSSES – ASSETS     3,402.7      3,407.4      3,521.2

EQUITY AND LIABILITIES                  30/06/2013             
(in € millions)                                     30/06/2013  31/12/2013
Share capital                           50.2        50.2        50.2
Other reserves and retained earnings    1 353.8     1,348.1     1,414.2
Own shares                              (85.9)      (83.6)      (74.7)
EQUITY ATTRIBUTABLE TO OWNERS OF THE    1,318.1     1,314.7     1,389.7
NON-CONTROLLING INTERESTS               145.5       139.8       142.6
EQUITY                                  1,463.6     1,454.5     1,532.3
Deferred taxes                          61.5        77.9        71.3
Long-term provisions                    191.5       184.5       180.9
Long-term borrowings                    628.4       649.5       627.0
Other non-current liabilities           36.9        33.4        33.3
Long-term derivative instruments        -           -           -
NON-CURRENT LIABILITIES                 918.3       945.3       912.5
Short-term provisions                   45.9        42.4        45.6
Trade payables                          490.1       445.1       524.8
Other current liabilities               206.9       201.1       251.3
Current tax liabilities                 24.2        25.4        26.6
Short-term derivative instruments       7.3         8.8         13.5
Short-term borrowings                   246.4       284.8       214.6
CURRENT LIABILITIES                     1,020.8     1,007.6     1,076.4
TOTAL CONVERSION GAINS – LIABILITIES    3,402.7     3,407.4     3,521.2


Investors / Analysts
Groupe SEB
Investor Relations
Isabelle Posth
Emmanuel Fourret
Tel: 33 (0) 4 72 18 16 40
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Estelle Guillot-Tantay
Tel: 33 (0) 1 53 70 74 93
Fax: 33 (0) 1 53 70 74 80
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