Seb S.A.: 2007 nine-month business performance

ECULLY, France - Regulatory News:

SEB S.A. (Paris:SK) (ISIN:FR0000121709):  
          
          
            (in € millions)    
         
         
            9 months 2006                        
         
         
            9 months 2007   % change
                                                                                                        Currentexchange rates                                                   Constant exchange rates
France                                                367                                                                     405                                                 +10.4   +10.4
Other EU countries                                    445                                                                     470                                                 +5.5    +5.2
North America                                         260                                                                     275                                                 +5.9    +12.9
South America                                         170                                                                     190                                                 +11.9   +11.3
Central Europe, CIS, Asia and other countries         487                                                                     572                                                 +17.4   +19.8
TOTAL                                                 1 729                                                                   1 912                                               +10.6   +12.2
  

Rounded figures Percentages based on exact figures

Groupe SEB’s third-quarter business performance was shaped by sustained strong momentum, with revenue increasing by 12.2% at constant scope of consolidation and exchange rates. For the nine months ended 30 September 2007, revenue totalled €1,912 million, a 10.6% increase over the prior-year period. This performance reflected the combination of:

* Organic growth –at constant scope of consolidation and exchange rates– of 10.6% (versus 9.7% in the first half), led by a positive contribution from all product families and firm demand in the vast majority of markets across Europe and around the world.

* A €27 million contribution from Mirro WearEver, which was consolidated over the full nine months in 2007, compared with just 1.5 months in the prior-year period.

* A negative currency effect of €27 million, half of which was due to the decline in the dollar against the euro. Note that the currency effect was a sharply negative €19 million in the first quarter and then lessened in succeeding months.

A buoyant business environment, robust growth and high-quality sales helped drive a 41% year-on-year increase in operating margin to €165 million. This pace of growth cannot, however, be extrapolated over the entire year because:

* The fourth quarter accounts for a sizeable portion of Group sales.

* Fourth-quarter 2006 in particular offers a high prior-year comparative.

* The Group will invest heavily in marketing and advertising in the fourth quarter to drive future growth.

At 30 September 2007, net debt after the acquisition of a 30% stake in China’s Supor stood at €573 million, an increase of €111 million.

Sales by region

In France, the third quarter confirmed the market’s favourable trend in terms of volumes, prices and product mix. This proved beneficial to established brands, enabling them to strengthen their positions. Groupe SEB made inroads in all retail networks thanks to an exciting portfolio comprised of flagship products (Beertender, breadmakers), blue-chip products (cookware, steam generators, hair-styling appliances) and highly popular new products. These include the Actifry oil-free fryer, the Dolce Gusto multi-drink system, the Silence Force vacuum cleaner and the Nespresso coffee maker. Only a few products reported declining sales.

In the rest of the 15-country European Union, growth accelerated in the third quarter, with the exception of the United Kingdom, where a price war is still raging among retailers. Growth in Spain picked up after a slow start and was much more sustained elsewhere, notably in Germany where the market continues its strong recovery. Sales were also very satisfactory in the Netherlands, Austria, Scandinavia and Greece—countries in which an expanded product offering enabled the Group to consolidate its positions.

In North America, reported growth of 12.9% was due to changes in the scope of consolidation. On a like-for-like basis, the increase was 2.5%, reflecting a situation that varied from one country or brand to another. In the United States, in a generally unfavourable environment, business was down by a modest 1.5%, as the recovery at All-Clad and sustained demand at Rowenta failed to fully offset declines at T-fal and Krups, which are still under pressure. At Mirro WearEver, business is gradually returning to normal. Sales were robust in Mexico and very satisfactory in Canada, where significant gains were made in premium segments.

In South America, sales increased by 11.3% at constant exchange rates. The region’s core growth drivers remained the same, and were closely linked to business in Brazil, the Group’s largest South American market. Despite heightened competition, Arno strengthened its positions, leveraging strong demand for filter coffeemakers, blenders, sandwich makers and personal care appliances. Panex also improved its performance, thanks in particular to the transfer of Groupe SEB product ranges, such as Thermospot. Sales continued to develop rapidly in Colombia and Venezuela, and business began to recover in Argentina.

In Central Europe, the CIS, Asia and other countries, the fast pace of business development continued with growth in nearly every market. Although political stability has sharply slowed demand in Turkey, other countries and regions continued to enjoy sustained growth. In the CIS, the increase in consumer spending in regions enabled the Group to leverage its well-established presence throughout the country to easily outperform the market’s already rapid pace. Sales also rose considerably in Central Europe, led by Poland. The Group made new inroads in Australia, continued its recovery in South Korea and reported strong growth in Southeast Asia, notably in Malaysia. Satisfactory growth was also recorded in Japan, despite the unfavourable impact of price increases to offset the decline in the yen against the euro.

Analysis of the growth in operating margin

For the nine months that ended 30 September 2007, operating margin increased by 41% to €165 million, from €116.8 million for the prior-year period. It included a negative contribution of €9.2 million from Mirro WearEver, compared with a negative contribution of €2.6 million over 1.5 months in the first nine months of 2006.

The increase was mostly due to volume gains and high-quality sales, as the improvement in the product mix and a slight increase in selling prices easily offset higher raw material costs. Disciplined management of overheads also produced results, enabling the Group to implement a strategy intended to drive future growth through stepped-up R&D programs and significant increases in fourth-quarter marketing and advertising budgets.

Analysis of debt

At 30 September 2007, net debt stood at €573 million, an increase of €111 million from one year earlier. The increase was mainly due to the late August acquisition of a 30% stake in China’s Supor for €115 million. Excluding this transaction, debt would have been slightly lower, despite the payment of restructuring costs in France. At 69%, net-debt-to-equity remains satisfactory. This ratio accurately reflects the Group’s situation at 30 September, which is shaped by traditionally high inventory levels before the start of the Christmas season.

A nine-month business review has also been published. More detailed than the press release, it will be available on Groupe SEB’s website at October 29, 2007.

About Groupe SEB

The world leader in small domestic equipment, Groupe SEB operates in more than 120 countries through its prestige brands-All-Clad, Arno, Calor, Krups, Lagostina, Mirro, Moulinex, Panex, Rowenta, Samurai, Seb, Tefal and WearEver-and has 13,800 employees