Leifheit Aktiengesellschaft: Leifheit sees positive development in second quarter

Leifheit sees positive development in second quarter

• Group turnover in the first half-year on par with the previous year thanks to growth in Germany
• Investments in strengthening the brands and Brand Business
• EBIT down year on year due to non-recurring expenses
• Capital increase successfully completed
• Forecast for full year 2017 confirmed

Nassau, 10 August 2017 - In the first half of 2017, the Leifheit Group made up the shortfall in turnover that resulted in the first quarter of this year, generating turnover of EUR 120.9 million. As a result, turnover was virtually on par with the figure from the previous year of EUR 121.1 million. Turnover in the strategically important Brand Business saw development that was comparable to the first half of 2016. Leifheit generated further growth in particular in its domestic market, Germany, with the Leifheit-branded cleaning and laundry care products, as well as in the e-commerce sales channel. Growth continued in Eastern Europe as well with an increase in turnover of 4.3% to EUR 12.8 million.

"We succeeded in largely making up the slight decline in sales from the first quarter by mid-year. The favourable development in Germany, achieved through growth in Brand Business as well as through successful special offers in Volume Business, made a significant contribution to this recovery," said Thomas Radke, Chairman of the Board of Management of Leifheit AG. "At the same time, we made investments in the second quarter to further strengthen our strategically important Brand Business for the future," he added.

Group EBIT impacted by non-recurring expenses

The Group generated earnings before interest and taxes (EBIT) of EUR 6.8 million in the first half of 2017, compared to EUR 10.1 million in the same period of the previous year. The EUR 3.3 million decline resulted primarily from non-recurring expenses for the restructuring of sales activities in Brand Business in the amount of EUR 2.3 million and higher advertising costs of EUR 1.3 million for strengthening the Group's brands. The foreign currency result decreased by EUR 0.1 million to EUR -1.1 million in the first half of 2017 (previous year: EUR -1.0 million). Gross profit stood at EUR 57.0 million in the first half of 2017, compared to EUR 57.6 million in the previous year. The decline was mainly the result of higher purchasing prices for raw materials and goods purchased in foreign currencies. The gross margin therefore fell by 0.5 percentage points to 47.1% (previous year: 47.6%).

Less taxes, this equalled a net result for the period of EUR 4.4 million, compared to EUR 6.6 million in the first half of 2016.

Brand Business on par with previous year

Turnover in Brand Business, which includes the Leifheit and Soehnle brands, showed stable development compared to the first half of 2016 and amounted to EUR 103.2 million. As a result, the contribution of Brand Business to Group turnover was somewhat higher year on year at 85.3%.

The Group generated healthy growth in the cleaning and laundry care product categories in the reporting period. The products for floor and surface cleaning, such as the new Leifheit Care & Protect System, and for ironing and laundry drying, made a particularly substantial contribution to this development. By contrast, the kitchen product category and Soehnle-branded products recorded a drop in turnover. Turnover in the e-commerce sales channel rose once again year on year by 5.8%.

Turnover in Brand Business in Germany increased, and the Group generated further turnover growth in the Eastern European target markets as well. With the exception of Belgium, turnover in the Central European target region was down by contrast in the first half of the year, while turnover in Spain remained largely stable. Aside from South America and Australia, Brand Business in target markets outside of Europe also recorded a decline in turnover.

Volume Business down slightly year on year

At EUR 17.7 million, turnover in the first half of 2017 in the substantially smaller Volume Business, which is more volatile due to a higher share of Project Business, was down only slightly on the figure of EUR 18.0 million from the same period of the previous year. Volume Business achieved a share of 14.7% in Group turnover (previous year: 14.9%).

Turnover of Herby laundry care products and in Project Business rose slightly over the past six months. This growth made it possible to largely compensate for an expected drop in turnover in kitchen goods. Turnover in Germany increased significantly. By contrast, falling turnover in France and the US put a damper on turnover development in the first half of the year.

Capital increase from company funds successfully completed

Resolved by the shareholders of Leifheit AG at the Annual General Meeting, the capital increase from company funds at a ratio of 1 to 1 in combination with the issuance of bonus shares was successfully completed with its entry into the commercial register. 20 June 2017 was the first trading day on the stock exchange on the basis of the higher number of Leifheit shares, which was raised from 5 million to 10 million. Doubling the number of shares caused the share price to fall by half day over day on that particular date.

Forecast for full year 2017 confirmed

With a view to the business development to date, and considering all market estimates, opportunities and risks, Leifheit AG continues to expect Group turnover growth of 3.5 to 4.5% in the current financial year. The Group anticipates 4 to 5% growth in turnover in its strategic core business, Brand Business. Leifheit expects turnover growth in Volume Business of 2 to 3%.

The earnings forecast also remains the same. The investments in the restructuring of sales activities in Brand Business in the second quarter led to non-recurring expenses of EUR 2.3 million. Taking into consideration this non-recurring effect, Leifheit continues to expect that earnings before interest and taxes (EBIT) will be on par with the previous year.

Additional information can be found in the financial report for the period ending 30 June 2017, available at http://financial-reports.leifheit-group.com.

About Leifheit

Leifheit AG, founded in 1959, is one of the leading European brand suppliers of household items. The company stands for high quality, innovative products with great utility and functional design in the sectors of cleaning, laundry care, kitchen goods and wellbeing. Leifheit and Soehnle are among the best-known brands in Germany. In addition to the Brand Business, Leifheit AG operates in the service-oriented Volume Business via its French subsidiaries Birambeau and Herby. The Leifheit Group and its international branches combined have around 1,100 employees. More information on Leifheit is available online at www.leifheit-group.com, www.leifheit.de, www.soehnle.de.