Regulatory News:
(in € millions) H1 2008 H1 2009 % change
Current
exchange rates Constant
exchange rates
France 286 284 - 0.6 - 0.6
Other Western European countries 316 304 - 3.9 - 2.1
North America 170 151 - 11.3 - 17.9
South America 126 111 - 11.6 - 4.0
Central Europe, CIS and other countries 289 246 - 14.9 - 2.3
Asia-Pacific 230 280 + 21.5 + 5.6
TOTAL 1 417 1 376 - 2.9 - 2.7
In an environment shaped by persistent economic crisis, Groupe SEB (Paris:SK) reported a satisfactory performance in the second quarter of 2009, with sales virtually stable compared to the prior-year period. As a result, sales ended the first half down just 2.9% as reported and 2.7% at constant exchange rates, compared with the very strong 6.8% organic growth achieved in first-half 2008. This limited decline was due to two main factors:
* The slowdown in consumer spending and tighter credit caused a sharp fall-off in volumes in certain countries, although business continued to grow in other markets.
* The wide swings in certain currencies impacted Groupe SEB’s business, which is generated in markets worldwide. The currency effect was slightly negative on first half sales, with sharp gains in the US dollar, Japanese yen and Chinese yuan against the euro contrasting with steep falls in a number of other currencies, including the Russian rouble, the Brazilian real, the British pound and the Turkish lira. The Group reacted swiftly to these changes, by raising prices accordingly to protect its marketing subsidiaries’ margins.
Once again, business was driven by flagship products such as the Actifry deep fryer, the Silence Force vacuum cleaner, steam generators and Nespresso coffee machines.
Sales by region
In France, the small household equipment market held up relatively well given the difficult economic environment and the high prior-year basis of comparison. However, firm consumer demand was mostly satisfied through inventory drawdowns by retailers, and restocking was limited. Compared with the year-earlier periods, Group sales were virtually stable in the first-half and up 1% in the second quarter, led by demand for Clipso pressure cookers, deep fryers – riding on the success of the Actifry –, the Silence Force and Air Force vacuum cleaners, new steam generator models and Nespresso coffee machines. In addition, new food processors were launched during the period. However, sales of breadmakers and hair care appliances were sluggish.
In other Western European countries, first-half performance was varied depending on the extent of the decline in each country’s consumer spending. In Spain, business continued to grow strongly, with a sharp increase in sales in the second quarter triggered by the introduction of new products. Belgium, the Netherlands and Portugal all reported higher first-half sales, despite a certain loss of momentum in the second quarter. Sales trended downwards in Germany after a good start to the year, and continued to decline in Italy due to problems at Lagostina, despite an upswing at the end of the period. The drop in sales was much steeper in Scandinavia and also in the United Kingdom, due to the economic recession and the decline in the pound which had a significant adverse effect on Group sales.
In North America, the economic environment remained gloomy. In the United States, the first half of the year saw a lacklustre market shaped by slower consumer spending and pressure on retailers. The high end segment was particularly affected by the economic climate, because of the products’ high selling prices and reduced footfall in premium outlets. This had an impact on our All-Clad, Krups and Rowenta brands, which are all positioned in this segment. Only T-fal cookware—positioned in the mid-range segment—increased its sales in the first half, building on the growth achieved over nearly two years. Sales in Mexico fell steadily over the period, due to the difficult economic environment and the decline in the peso. In Canada, the second quarter saw a slight improvement in performance, but was unable to make up for a slow start to the year.
Markets in South America were also affected by the crisis but a change in certain economic indicators at the end of the period may be a sign of better days to come. While Group sales declined in the first half, they recovered towards the end of the period. In Brazil, which accounts for 80% of Group turnover in the region, unit sales of cookware and small household equipment were held back by the price increases undertaken to offset the decline in the real. Market share suffered somewhat as a result, in the face of very aggressive competition. However, Dolce Gusto, which received an enthusiastic response from retailers and consumers when it was introduced during the period, should help to drive growth in the coming months. Elsewhere in South America, sales were affected by the lacklustre economic environment in Colombia and Chile, but were stable in Venezuela, while Argentina continued its rapid growth.
The Asia-Pacific region represents an important source of growth for the Group, even though performances in the first half varied from one country to another. The currency effect was positive, thanks to the Japanese yen and the Chinese yuan, which were stronger than in first-half 2008. In China, the small household equipment market continued to trend upwards despite a more fragile economic climate. Supor’s sales in the domestic market were up 5%, with growth in both cookware and small electrical appliances. During the period, the product dynamic was maintained and Supor Lifestores openings continued at a fast pace. In Japan, despite a generally challenging trading environment, the Group recorded a robust increase in sales and strengthened its market positions, mainly thanks to its flagship products—pressure cookers and kettles. Sales were stable in South Korea, representing a very satisfactory performance in the current depressed economic climate. In Australia, sales eased off in a declining market, but the popularity of certain products, particularly steam generators, bodes well for the future.
In Central Europe, CIS and other countries (Turkey and other countries in the Middle East and Africa), the Group faced a number of major challenges, including:
* A sharp slowdown in consumer spending, leading to lower unit sales in most countries.
* Declines in almost all of the region’s currencies, which led the Group to raise prices considerably to protect its margins. The price increases did not result in any loss of market share in the first half.
* Problems encountered by the retail sector, which included massive inventory drawdowns, tighter credit, store closures and even bankruptcy.
Against this backdrop, the Group delivered a fairly resilient performance in Central Europe, maintaining a certain growth momentum in Poland, and experiencing only a limited decline in sales in Turkey, in a very competitive market, thanks to its powerful store network. In Russia, on the other hand, business fell sharply due to the sudden halt on development in the country’s regions, which have been driving growth in recent years. Sales also declined in Ukraine, which is currently experiencing a severe recession, despite the huge success of breadmakers. On the other hand, the signing up of a new agent in Saudi Arabia led to an upturn in the region, where sales had been stagnant for a year.
The first-half 2009 results will be published at 9pm on 26 August.
The world leader in small domestic equipment, Groupe SEB operates in more than 120 countries with a unique portfolio of top brands 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 19,000 employees worldwide.