GROUPE SEB : Provisional 2020 Sales

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Press release

Better Living

January 21, 2020 - 5:40 p.m.

Provisional 2020 Sales

- unaudited figures -

1

Organic sales growth in the fourth quarter and resilient business activity for the year

• Annual sales: €6,940m, -5.6% as reported and -3.8% LFL*
• Q4 sales: €2,228m, -0.5% as reported and +2.9% LFL*

Statement of Thierry de La Tour d'Artaise, Chairman and Chief Executive Officer of Groupe SEB:

"For all of us, 2020 will be remembered as the year of an unprecedented health crisis with major economic impacts.

This health crisis revealed two key trends: certain practices, such as home cooking, became more widespread, enabling us to demonstrate the relevance of our products ,and services and customers made ever-greater use of e-commerce, a trend we believe is here to stay.

Thanks to the agility and commitment of our teams, we delivered a good fourth-quarter performance, reflecting the Group's resilience over the past year, despite difficulties encountered in the Professional business owing to the persistence of the pandemic.

The Group stayed the course and continued to pursue its active M&A strategy with the acquisitions of StoreBound and Angell, as well as stepped up existing efforts on key strategic projects.

Today, the market environment is uncertain, but we remain confident in our fundamentals, which will be key strengths as we navigate this trying period."

* LFL: on a like-for-like basis (= organic)

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GENERAL COMMENTS ON GROUP SALES

The economic environment was highly disrupted in 2020, marked by an unprecedented health crisis that was reflected in a worldwide economic recession.

In this difficult and uncertain context, Groupe SEB delivered satisfactory performances in 2020.

Following a good fourth quarter, annual turnover came out at €6,940m, down 5.6% year on year. The decline comprises a limited organic decrease of 3.8%, a currency effect of -€219m(-3.0%) and a scope effect (mainly Storebound, acquired in July 2020) of +€81m (+1,2%).

The Consumer business ends the year on a positive tone, with annual sales practically stable LFL (-0.5%).This stability is the result of several factors:

• the resilience of household consumption, notably in products for the home;

2 - a rapid ramp-up in online sales starting with the initial lockdowns, which offset in part the steep decline in in-store sales (mandatory closures and/or decrease in footfall);

• major sales volatility from one month to the next, with periods of substantial restocking by retailers;
• a less promotional environment overall.

In contrast, Professional sales fell 30.7% LFL in 2020, impacted by extremely limited business activity

in the hospitality and catering sectors. This situation led our customers to suspend, postpone or reduce their investments in equipment (coffee machines) and significantly limited maintenance interventions.

After a difficult first half (sales down -12.7% and -12.6% LFL), in which the Consumer business was

strongly impacted by very strict health measures in many countries, starting with China, the Group returned to growth in the second half of the year (+0.2%, of which +3.6% organic growth). This recovery resulted from a rebound in small domestic equipment (+7.8% LFL in the second half), against a backdrop of generally strong resilience in demand but a monetary environment that has been considerably tense since the summer (currency effect of -€219m on turnover stemming from the significant depreciation of the Russian ruble, Turkish lira, Brazilian real, Mexican peso, Colombian peso, and the US dollar against the euro). The Professional business declined throughout the year, with a significant disruption starting in the second quarter.

More specifically, the trend in the fourth quarter was consistent with that in the third quarter. While reported sales, at €2,228m, were down slightly on 2019 (-0.5%)owing to more penalizing currency effects (-€109m, -4.9%), organic growth came out at +2.9% (vs. +4.4% in the third quarter) and was more buoyant than expected, particularly at the end of the period. The scope effect amounted to +€32m, or +1.5%.

As in the third quarter, the LFL increase in turnover in the fourth quarter is due to the strong momentum of the Consumer business (up 6.2%), which:

• continued to be driven by all continents; the implementation from mid-November onwards of new health measures in some regions (partial lockdowns, curfews, store closures, etc.) had no impact on sell-in;
• continued to be bolstered by a strong small domestic equipment market;
• is still to be attributed mainly to e-commerce;
• benefited from increased growth drivers, as announced.

However, the fourth quarter did not see a clear improvement in the Professional business, which continued to be heavily impacted by the difficulties of the hospitality and catering sectors.

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GUIDANCE UPDATE

The improved momentum in Consumer sales in the fourth quarter, also driven by significant investments in growth drivers, should be reflected in a more limited decrease in 2020 Operating Result from Activity (ORfA) than announced at the end of October (between -25%and -30%vs. 2019).

2020 ORfA is expected to come out at around €600m (including, as expected, a negative currency effects slightly above €100m and a positive raw material effect). Ultimately, the generation of operating cash flow will be strong despite the complicated year.

DETAIL OF REVENUE BY REGION

Unaudited figures

					Change 2020/2019		Q4 Change 2020/2019
Revenue in €m	2019		2020										3
		As reported		Like-for-like*		As reported		Like-for-like	*
EMEA	3,339		3,307		-1.0%		+1.5%		+2.6%		+7.0%
Western Europe	2,442		2,406		-1.5%		-1.5%		+2.3%		+2.5%
Other countries	897		901		+0.4%		+9.6%		+3.3%		+19.7%
AMERICAS	915		876		-4.2%		-0.2%		+2.7%		+6.3%
North America	589		622		+5.7%		-0.3%		+8.6%		-0.8%
South America	326		254		-22.1%		+0.1%		-9.1%		+20.4%
ASIA	2,301		2,182		-5.2%		-3.4%		+2.4%		+4.5%
China	1,762		1,626		-7.7%		-6.1%		+1.8%		+3.1%
Other countries	539		556		+3.2%		+5.2%		+4.2%		+8.3%
TOTAL Consumer	6,555		6,365		-2.9%		-0.5%		+2.5%		+6.2%
Professional business	799		575		-28.0%		-30.7%		-30.0%		-28.5%
GROUPE SEB	7,354		6,940		-5.6%		-3.8%		-0.5%		+2.9%
* Like-for-like: at constant exchange rates and scope	Rounded figures in €m		% calculated on non-rounded figures

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COMMENTS ON CONSUMER SALES BY REGION

Change 2020/2019

Q4 Change 2020/2019

Revenue in €m

2019

2020

As reported

Like-for-like*

As reported

Like-for-like

*

EMEA

3,339

3,307

-1.0%

+1.5%

+2.6%

+7.0%

Western Europe

2,442

2,406

-1.5%

-1.5%

+2.3%

+2.5%

Other countries

897

901

+0.4%

+9.6%

+3.3%

+19.7%

WESTERN EUROPE

After a solid third quarter, business activity

4 continued to trend positively in the last three months of the year (+2.5% LFL). The slowdown in momentum resulted primarily from loyalty programs, which were more substantial in 2019. December in particular was brisker than expected.

Growth in the fourth quarter was fueled by almost all the markets, despite the retightening of health measures at the end of the period in some countries. It continued to be driven largely by e-commerce and was boosted by increased growth drivers, as announced.

In France, fourth quarter sales, up slightly, continued to benefit from robust demand for cooking categories and vacuum cleaners, the roll-out of new products such as Cookeo Touch and Companion Touch, and the buoyancy of e- commerce. However, sales were negatively impacted by the closure of our proprietary stores during the new lockdown period in October and November.

In the other countries, apart from Belgium, owing to strong 2019 comparatives, and the UK, business was sustained, overall. This was the case in Northern Europe, Portugal and the Netherlands, which were less affected by containment measures as well as Germany, Spain - thanks notably to solid performances by WMF products and an acceleration of online sales - and Italy.

The key growth drivers were kitchen electrics (electrical cooking, coffee makers and food preparation) and vacuum cleaners (notably robots).

OTHER EMEA COUNTRIES

With organic sales growth of nearly 20%, the Group confirmed its excellent third-quarter performance in the last three months of the financial year. After a slight decline in sales in the first half owing to the emergence of COVID-19,catch-up in the second half of the year proved remarkable, despite continued complications in the overall environment. The performance led to a 9.6% LFL increase in turnover for the year as a whole.

However, the performance in euros, both for the quarter and the year, was negatively impacted by the continued and sometimes considerable depreciations of some currencies, including the Russian ruble, the Turkish lira and the Ukrainian hryvnia. These depreciations were offset in part by price increases.

Our major markets (Russia, Poland, Ukraine, Romania, Turkey, etc.) and ongoing development of the core business in Central Asia were the main catalysts behind this business momentum, fueled largely by e-commerce (click

• mortar and pure players) and the implementation of our direct-to-consumer activities. However, performances were softer in the Middle East and Egypt.

In terms of products, the strong sales dynamic across the region was driven in particular by the confirmed success of our best sellers (vacuum cleaners, Optigrill, Ingenio cookware, etc.).

Despite the difficult conditions, 2020 thus marked a new step forward in our development in Eurasia.

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