Quarterly statement for the period ending 30 September 2021

Quarterly statement for the period ending 30 September 2021

Leifheit Group      Quarterly statement for the period ending 30 September 2021

At a glance

• Group turnover up by 11.9% in the first nine months of financial year 2021
• Domestic market of Germany sees turnover growth of 20.0%
• Group turnover in Q3 2021 with m€ 69.7 slightly below the high level of the prior-year quarter
• Group EBIT climbs by 8.1% to m€ 16.6 in 9M 2021
• Free cash flow improved to m€ 7.1
• Turbulence in global supply chains affects EBIT in Q3 2021
• Group turnover forecast for 2021 unchanged,
  earnings (EBIT) forecast adjusted to between m€ 15 and m€ 20

Key figures of the Group as at 30 September

			2020		2021		Change
Turnover
Group	m€	201.9		226.0		11.9%
Household		m€		161.3		182.6		13.2%
Wellbeing	m€	18.5		19.8		6.7%
Private Label	m€	22.1		23.6		6.9%
Foreign share	%	57.9		54.9		- 3.0 pps
Profitability
Gross margin	%	44.7		42.7		- 2.0 pps
Cash flow from operating activities	m€	4.6		11.2		> 100%
Free cash flow	m€		- 0.3		7.1		> 100%
Foreign currency result		m€		- 0.6		0.6		> 100%
EBIT	m€	15.4		16.6		8.1%
EBIT margin	%	7.6		7.3		- 0.3 pps
EBT	m€	14.6		16.0		9.6%
Net result for the period		m€		10.6		11.5		8.8%
EPS	€	1.11		1.21		9.0%
Investments	m€	5.0		4.3		- 14.0%

001

Foreword

Group      Quarterly statement for the period ending 30 September 2021

Dear Shareholders,

The Leifheit Group systematically drove forward its Scaling up Success growth strategy in the first nine months of financial year 2021.

As at 30 September 2021, we generated earnings before interest and taxes (EBIT) of m€ 16.6, up 8.1% compared with the previous year's figure of m€ 15.4. This increase was driven primarily by double-digit turnover growth. The first nine months of 2021 saw Group turnover reach m€ 226.0 - a significant rise of 11.9% on the corresponding 2020 figure of m€ 201.9.

The turnover growth and the substantial improvement in earnings reflect the positive effects of the Group's Scaling up Success growth strategy. In the current financial year, we have continued to invest more heavily in consumer advertising for our Leifheit and Soehnle brand products as part of our strategic initiatives. We will continue these investments until the end of the year and beyond in 2022, among other things with a large-scale print campaign, that puts the Soehnle Page Profi 300 kitchen scale into the focus of consumers. This product features intelligent four-sensor technology for precision weighing and was awarded the test rating "very good" by "Haus & Garten Test" magazine. We are also running TV campaigns in selected European markets for best-selling products such as the innovative Regulus Aqua PowerVac cordless vacuum wiper, the CLEAN TWIST Disc Mop and the Pegasus standing laundry dryer. In the third quarter, we were again able to further strengthen in particular our core brand Leifheit as a growth driver thanks to our strategic marketing measures.

From a regional perspective, our domestic market of Germany, which generates the highest turnover, saw an above-average increase in sales of 20.0% in the first nine months. The Group's positive performance in the key markets of France and Italy also continued due to successful TV campaigns and the expansion of the distribution network. As a result of stepping up our marketing activities, we likewise achieved double-digit turnover growth in our most important Eastern European market, the Czech Republic.

The overall very good business peformance in the first nine months of 2021 was increasingly impacted by the effects of the COVID-19 pandemic and the implications for procurement markets worldwide. For example, further commodity price hikes, limited availability of freight capacity and associated cost increases and supply bottlenecks weighed heavily on business development in the third quarter, as can be seen in particular in the earnings development in this period. Group EBIT amounted to m€ 3.0, compared with m€ 6.6 in the same quarter of the previous year.

At m€ 69.7, Group turnover in the third quarter of 2021 was only slightly below the exceptionally strong previous-year period, which was also influenced by the effects of the pandemic and in which growth of 28% to m€ 71.6 was recorded.

In view of current market trends, we expect the turbulence in global supply chains to remain a challenge for the Leifheit Group in the coming months. At the same time, necessary sales price increases

can only be passed on to the market with some delay. As a result, these measueres will only have a partially effect in the current financial year.

Against the background of the described business development in the third quarter, we have reassessed our earnings expectations for the full year 2021. Based on an unchanged Group turnover forecast of at least 5% growth year-on-year, we now anticipate Group EBIT of between m€ 15 and m€ 20 for 2021.

Despite the more difficult conditions, we will continue to implement our strategic initiatives in the interests of all our shareholders and focus our work on enhancing the success of our multi-award- winning products on the market. Our European production and logistics footprint and the safeguards we have taken in the supply chain have enabled us to ensure a largely reliable supply of our bestselling products to our customers in recent months, despite the challenges. We will continue to focus on preparing the Leifheit Group for the tense situation on the global procurement markets while maintaining our growth trajectory.

We greatly appreciate your continued support on this journey and your loyalty to the Leifheit Group.

The Board of Management

Henner Rinsche

Igor Iraeta Munduate

Marco Keul

Leifheit

002

Quarterly statement for the period ending 30 September 2021

Group      Quarterly statement for the period ending 30 September 2021

Business performance

The Leifheit Group generated turnover of m€ 226.0 in the first nine months of financial year 2021, which represents growth of 11.9% on the previous year's figure (m€ 201.9). This is firstly due to the good results from our highest-turnover market, the domestic market of Germany, where turnover rose strongly by 20.0%, continuing the upward trend in this country. Secondly, the positive development reflects the momentum from the expansion of marketing activities in the current financial year. In particular, the Leifheit brand advertised in TV campaigns recorded a double-digit increase in turnover. At the same time, sales dynamics in the Wellbeing segment with the Soehnle brand product range weakened somewhat in the course of a change in consumer behavior in the third quarter. Turnover growth amounted to 6.7% in the first nine months of 2021.

Overall, business development in the third quarter was heavily impacted by the effects of the COVID-19 pandemic and the resulting global implications for procurement markets. Particularly in August and September, delivery bottlenecks and the associated cost increases for many commodities and intermediate products became increasingly noticeable. In addition, any comparison with the previous-year period should take the fact into account that a large proportion of turnover was shifted to late summer due to the closure of physical stores in spring 2020, resulting in substantial double-digit growth rates in the third and fourth quarters of last year. Nevertheless, at m€ 69.7, Group turnover in the third quarter of 2021 was only slightly below the level of the exceptionally strong comparative quarter of the previous year, in which turnover of m€ 71.6 had been generated.

In terms of its regions, the Leifheit Group generated double-digit turnover growth in almost all of its core markets in the first nine months of 2021. Bolstered by the increase in turnover in Central Europe and Eastern Europe, foreign turnover rose by a total of m€ 7.1 to m€ 124.0 (previous year: m€ 116.9). The share of turnover generated abroad therefore stood at 54.9% (previous year: 57.9% 1).

Group turnover by region
in m €
110		102.0
100
		90.4
90	85.0
	82.9
80
70
60
50
40
30				24.8	27.5
20						9.2
10						6.1
0	Germany	Central	Eastern	Rest of
			Europe	Europe	the World
9M 20201	9M 2021

1 Previous-year figure adjusted due to turnover by a major online retailer being attributed to the market in which it was generated.

Group turnover by region

Germany

The domestic market of Germany recorded extremely dynamic turnover growth in the first nine months of financial year 2021. Group turnover here totalled m€ 102.0 (previous year: m€ 85.0 1), up 20.0%. As a result, the Leifheit Group generated 45.1% of its turnover in Germany. Successful TV campaigns for selected bestselling Leifheit and Soehnle products were the main drivers of this positive trend.

Central Europe

In Central Europe, the Leifheit Group's turnover rose by 9.1% in the first nine months of financial year 2021 to a total of m€ 90.4 (previous year: m€ 82.9 1). Positive performance with double-digit growth rates was delivered not only by Scandinavia, but above all by the key markets of France and Italy, where the fruits of the successful TV campaigns were evident. Another positive effect came from the further expansion of the distribution network in the two countries as a result of the efforts to step up marketing activities. As a consequence, turnover in both regions grew by strong double-digit percentages.

Eastern Europe

Turnover in the Eastern Europe region amounted to m€ 27.5 in the first three quarters of 2021, 10.6% higher than the comparable figure of the previous year (m€ 24.8). The Czech Republic - the regions' highest-turnover market - again saw double-digit growth. Here, too, this was attributable to efforts to intensify marketing activities. In the first nine months of 2021, turnover in Poland and Ukraine also exceeded the previous-year period, rising by double- digit percentages in both countries.

Leifheit

003

Rest of the World

Turnover in non-European regions declined overall, falling by 33.9% in the reporting period to m€ 6.1 (previous year: m€ 9.2). This trend is mainly due to effects caused by the COVID-19 pandemic, which are evident in the year-on-year comparison. For example, online business increased sharply in the previous year, especially in the US but also in Asia, following the temporary closure of physical stores. As this effect was no longer present in the current reporting period, turnover decreased accordingly, in particular in the US market.

	Group turnover by segment
	in m €
	250		226.0
	225
	201.9	23.6
	200
	22.1	19.8
	175
	18.5
	150
2021	125
100		182.6
September	25	161.3
	75
	50
30	0		9M 2021
ending		9M 2020
Household	Wellbeing	Private Label
Quarterly statement for the period

Leifheit Group     

Group turnover by segment

Reporting segments are divided as follows: Household, Wellbeing and Private Label.

Household

In the Household segment, the Leifheit Group grew turnover by 13.2% in the first nine months of financial year 2021 to a total of m€ 182.6 (previous year: m€ 161.3). Thanks to this strong increase, the share of Group turnover accounted for by this segment rose from 79.9% in 2020 to 80.8%. With growth of 22.6%, the cleaning category in particular contributed to the robust performance of the Household segment. In this category, Leifheit benefited from the positive effects of the expansion of TV advertising campaigns for cleaning products. The highest-turnover category, laundry care, also developed positively in the reporting period, achieving growth of 9.1%. However, the kitchen goods category was weaker, reflecting the change in consumer spending priorities in the non-food sector.

Wellbeing

The Leifheit Group generated total turnover of m€ 19.8 (previous year: m€ 18.5) with the Wellbeing segment's Soehnle brand. At 6.7%, the growth dynamic slowed somewhat compared to the same period of the previous year, which was also characterized by the effects of the protective measures in the course of the COVID-19 pandemic. This segment accounted for 8.8% of Group turnover (previous year: 9.2%). In the Wellbeing segment, too, the expansion of marketing activities was instrumental in driving turnover growth. In particular, the Soehnle scales that featured in advertising campaigns recorded a significant increase in turnover. By contrast, the strong demand for air treatment products seen in the previous- year period as well as in the first half of 2021 eased in the third quarter.

Private Label

The Private Label segment, which mainly comprises sales of private- label brands by the French subsidiaries Birambeau and Herby, achieved turnover of m€ 23.6 in the reporting period (previous year: m€ 22.1), which equates to a rise of 6.9%. This segment accounted for 10.4% of Group turnover (previous year: 10.9%). Business here was affected by the fact that physical stores in the French market were hit especially hard by the pandemic-related restrictions in the same period of the previous year, which meant that major sales channels were temporarily closed. The trend is normalising again there in the current year, and the Leifheit Group has been able to benefit from the uptick in turnover.

Net assets, financial position and results of operations

The Leifheit Group generated earnings before interest and taxes (EBIT) of m€ 16.6 in the first nine months of financial year 2021 (previous year: m€ 15.4). This corresponds to an increase of m€ 1.2 or 8.1%.

Strong turnover growth of m€ 24.1, or 11.9% was the main factor in this rise in earnings. In absolute terms, gross profit climbed by m€ 6.1 to m€ 96.4, while the gross margin fell by 2 percentage points from 44.7% in the previous-year period to 42.7%. The reason for this was a sharp increase in commodity prices and inbound freight. At the same time, necessary sales price rises can only be passed on to the market with some delay, and have therefore had barely any impact on business so far. Nevertheless, the EBIT margin of 7.3% was only 0.3 percentage points below the comparable figure for the previous year (7.6%). A strict cost management made a significant contribution to this.

004

Group      Quarterly statement for the period ending 30 September 2021

Distribution costs were up by m€ 6.1 to m€ 65.8. This was due to the further increase in advertising costs in the first nine months of 2021, which totalled m€ 4.8 and primarily resulted from TV advertising campaigns. Higher turnover also led to a rise in freight out of m€ 1.5. The slight decrease in administrative costs of m€ 0.3 to m€ 11.4 was mainly attributable to lower personnel costs.

Earnings before taxes (EBT) were up by m€ 1.4 to m€ 16.0 (previous year: m€ 14.6). Less taxes, this equalled a net result for the period of m€ 11.5 in the first nine months of 2021 (previous year: m€ 10.6).

The Leifheit Group maintains a solid liquidity base, although Group liquidity fell by m€ 3.2 to m€ 35.6 in the first nine months of 2021. Cash inflow from operating activities rose by m€ 6.6 in the reporting period to m€ 11.2 (previous year: m€ 4.6). This is due to the fact that receivables and inventories increased significantly more in the prior- year period than in the reporting period. At m€ 4.3, investments in the first three quarters of 2021 were m€ 0.7 lower than the previous year's figure of m€ 5.0. Free cash flow climbed to m€ 7.1 (previous year: m€ - 0.3), which resulted from the increase in cash inflow from operating activities. The free cash flow was offset by cash flow from financing activities of m€ -10.3 - mainly the dividend payment - which led to a decrease of Group liquidity by m€ 3.2.

As at the balance sheet date of 30 September 2021, the balance sheet total remained virtually unchanged at m€ 230.5, compared with m€ 230.0 as at the end of 2020. Trade receivables increased by m€ 4.9 as against 31 December 2020 (previous year: rise of m€ 16.2).

Our strategic measures to streamline our product lines led to a reduction in the volume of inventories. Nevertheless, the value of inventories grew because of higher procurement prices in particular. Therefore, inventories increased by m€ 2.7 compared with 31 December 2020 (previous year: rise of m€ 12.6). VAT receivables fell by m€ 1.6.

Current trade payables and other liabilities were up by m€ 0.9 and mainly consisted of turnover deductions. Income tax liabilities decreased by m€ 2.2 due to higher advance payments.

The dividend in the current year of m€ 10.0 was paid out in the second quarter. By contrast, the dividend of m€ 5.2 was not paid out until the fourth quarter in the previous year. Equity rose by m€ 6.1 compared with 31 December 2020 to m€ 106.6 as at 30 Sep­ tember 2021. The equity ratio increased accordingly to 46.2% (31 December 2020: 43.7%). The net result for the period of m€ 11.5 also includes a rise in other reserves of m€ 4.4, while the dividend payment reduced equity by m€ 10.0.

Opportunities and risks

The opportunities and risks for the Leifheit Group were described in detail in the combined management report as at 31 December 2020, which we herby refer. In the reporting period there were no significant changes in the main opportunities and risks for the remaining months of the financial year. The ongoing COVID-19 pandemic has not led to any significant changes in the risk assessment in this regard. Taking into consideration each probability of occurrence and the potential financial effects of the explained risks, as well as in light of the solid balance sheet structure and the current business outlook, the Board of Management does not anticipate any substantial risk to the continuation of the company as a going concern.

Turnover and earnings forecast for the current financial year 2021

Overall, the Leifheit Group can look back on a successful first nine months of financial year 2021. However, the global impact of the pandemic on procurement markets became even more acute in the third quarter. Further commodity price hikes, limited availability of freight capacity and associated cost increases and supply bottlenecks weighed even more heavily on the Leifheit Group's results of operations. The turbulence in global supply chains will remain a challenge in the coming months. At the same time,

Leifheit

005