Aug. 29 PPR
PPR - 2008 First-Half Results
Solid operating and financial performances
- Recurring operating income: +24%
- Net income, Group share: +141%
- PPR confirms its 2008 objectives
Francois-Henri Pinault, Chairman and CEO, commented:
"Our solid performances in the first half can be attributed to the
favorable balance of our Group profile and the strength of our global brands.
PPR has always been able to take advantage of periods of slower growth and
the present case is no exception. We are determined to further improve our
commercial effectiveness and optimize our operational structure in order to
benefit from a decisive and immediate competitive advantage as soon as there
is an upturn in growth. Specific and quantified action plans are currently
being implemented. These underscore PPR's ability and ambition to intensify
its development and profitability ever further. We are confident in the
outlook for the second half and stand by our objectives for growth and
improved financial performance for 2008."
(in EUR million) H1 2008 H1 2007Change
Revenues 9,584 8,573 + 11.8%
EBITDA 942 773 + 21.8%
EBITDA margin 9.8%9.0% + 0.8 pt
Recurring operating income 742 599 + 23.9%
Recurring operating income margin 7.7%7.0% + 0.7 pt
Net income, Group share 779 323 + 140.9%
Net income from continuing operations, 344 293 + 17.3%
Group share, excluding non-current
items
Net income per share from continuing2.732.29 + 19.2%
operations, Group share, excluding
non-current items (in EUR)
Sustained revenue growth
In the first half of 2008, PPR generated revenues from continuing
operations of EUR9,584 million, up 12% in reported terms and 5% in comparable
terms versus the first half of 2007.
Solid growth in recurring operating income: +10% on a pro forma basis and
at comparable exchange rates
Group recurring operating income amounted to EUR742 million, up 24%
compared to the first half of 2007. The recurring operating income margin
stood at 7.7%, up 0.7 percentage point compared to June 30, 2007.
This substantial increase was primarily driven by growth in recurring
operating income from CFAO (+19%), Fnac (+3%) and Gucci Group (+13% in
reported terms and +36% at comparable exchange rates). In Luxury Goods, Gucci
maintained a very satisfactory level of profitability, with Bottega Veneta
recording the strongest growth.
EBITDA for the first half of 2008 stood at EUR942 million, up 22%
compared to the first half of 2007. The EBITDA margin increased by 0.8 point
to 9.8% in the first half of 2008.
On a pro forma basis (consolidating Puma and United Retail over the first
six months of 2007), Group recurring operating income for the first half of
2008 posted growth of 1% and EBITDA rose by 2% at actual exchange rates. On a
pro forma basis and at comparable exchange rates, Group recurring operating
income rose by 10%.
Significant increase in net income, Group share
Net income from continuing operations, Group share, excluding non-current
items amounted to EUR344 million, up 17% compared to the first half of 2007.
This increase reflects the continuous improvement of Group operating
performances, and tighter control over financial charges and the tax rate.
Net income from discontinued operations, Group share amounted to EUR418
million, largely attributable to the realized capital gain on the sale of YSL
Beaute.
Net income, Group share stood at EUR779 million, a substantial 141%
increase compared to the first half of 2007.
Net income per share amounted to EUR6.18, compared to EUR2.52 for the
half-year ended June 30, 2007. Excluding non-current items, net income per
share from continuing operations increased by over 19% to EUR2.73 for the
half-year ended June 30, 2008.
Robust financial structure
(in EUR million) June 30, Dec 31, 2007 June 30, 2007
2008
Capital employed16,798 16,728 16,700
Net assets held for sale 355
Shareholders' equity10,595 10,662 11,319
Net indebtedness6,2066,121 5,381
At June 30, 2008, net indebtedness stood at EUR6,206 million, up 1%
compared to December 31, 2007. This nearly unchanged debt level primarily
reflects:
- negative free cash flow from operations of EUR170 million
(compared to an exceptionally positive EUR249 million for the six months
ended June 30, 2007), reflecting the impact of seasonality and temporary
increases in working capital requirements;
- proceeds from the sale of YSL Beaute;
- payment of the 2007 dividends.
Subsequent events
Redcats UK sold its portfolio of trade receivables as well as a portion
of the inventory relating to Empire Stores operations to Littlewoods Shop
Direct Group on July 11, 2008.
On July 28, 2008, Redcats USA sold its Missy Division including the
Chadwick's(R), metrostyle(TM) and Closeout Catalog Outlet(TM) brands to
Monomoy Capital Partners, a US investment fund.
As of August 25, 2008, the Group held a controlling interest of 68.5% in
the share capital of Puma.
Outlook
Given its solid economic model, the power of its brands and companies,
the geographical balance of its activities and the responsiveness of its
organization, PPR is confident in its outlook for the second half of 2008 and
stands by its objectives for growth and improved financial performance for
2008.
Definitions
IFRS 5 - Non-current assets held for sale and discontinued operations
In accordance with IFRS 5 - Non-current assets held for sale and
discontinued operations, the Group has presented certain activities as
"operations discontinued, sold or to be sold." The net income of these
activities is presented under a separate income statement heading, "Net
income from discontinued operations," and restated in the cash flow statement
and the income statement over all published periods.
The assets and liabilities arising from "operations sold or to be sold"
are presented on separate lines in the Group's balance sheet and not restated
for previous periods.
The assets and liabilities arising from "discontinued operations" are not
presented on separate lines in the balance sheet.
In the first half of 2008, YSL Beaute, sold to L'Oreal during the period,
had been presented in accordance with IFRS 5. As a result, the line item
"Discontinued operations" in the income statement concerns both this
transaction and those which took place in previous fiscal years (particularly
the Missy Division of Redcats USA, the Agency activity of Empire Stores at
Redcats UK, Conforama Poland and Surcouf).
Definition of net indebtedness
Net indebtedness comprises gross indebtedness less net cash, as defined
by French National Accounting Council recommendation no. 2004-R.02 of October
27, 2004.
Net indebtedness includes fair value hedging instruments recorded in the
balance sheet that relate to bank borrowings and bonds whose exchange rate
risk is fully or proportionally hedged as part of a fair value relationship.
For fully consolidated consumer credit companies, the financing of
customer loans is presented in borrowings. Group net indebtedness excludes
the financing of customer loans by consumer credit businesses.
Definition of EBITDA
EBITDA corresponds to recurring operating income and depreciation,
amortisation and provisions for non-current operating assets recognised in
recurring operating income. Definition of free cash flow from operations and
available cash flow
Free cash flow from operations measures net operating cash flow less net
operating investments (defined as purchases and sales of property, plant and
equipment and intangible assets).
Available cash flow corresponds to free cash flow from operations and
interest and dividends received minus interest paid and equivalent.
PRESENTATION
You are invited to attend the presentation of the 2008 Half Year Results
today at 8:30 am Paris time at the "Academie Diplomatique Internationale" -
4bis, avenue Hoche - 75008 Paris.
A live videocast (Real and Windows Media Player formats) as well as the
presentation slides (PDF) will be available at 8:30am Paris time at
http://www.ppr.com. A replay will be available later in the day.
You will also be able to listen to the conference by dialling:
For French version For English version
Live conference:Live conference:
+33-(0)1-72-28-25-81 +44-(0)203-043-2433
Replay dial-in details Replay dial-in details
+33-(0)1-72-28-01-39 +44-(0)207-075-3214
Replay Passcode : 227403# Replay Passcode : 227404#
The replay will be available until Friday September 14th, 2008
The 2008 half-year report will be available at http://www.ppr.com at the
end of the presentation.
About PPR
PPR develops a portfolio of high-growth global brands. Through its
Consumer and Luxury brands, PPR generated sales of EUR 19.1 billion in 2007.
The Group is present in 90 countries with approximately 90,000 employees. PPR
shares are listed on Euronext Paris (# 121485, PRTP.PA, PPFP).
To explore the universe of PPR brands go to http://www.ppr.com: Fnac,
Redcats Group (La Redoute, Vertbaudet, Somewhere, Cyrillus, Daxon, Ellos, The
Sportsman's Guide, The Golf Warehouse and brands of the plus-size division),
Conforama, CFAO, Puma and the Luxury brands of Gucci Group (Gucci, Bottega
Veneta, Yves Saint Laurent, Balenciaga, Boucheron, Sergio Rossi, Alexander
McQueen and Stella McCartney).
PPR CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2008
Summary
Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated income statement
(in EUR million)30/06/2008 30/06/2007 31/12/2007
CONTINUING OPERATIONS
Revenue9 584,18 572,719 111,7
Cost of sales(5 344,0) (4 836,7) (10 797,9)
Gross profit 4 240,13 736,0 8 313,8
Payroll expenses (1 393,6) (1 290,5) (2 698,4)
Other recurring operating income (2 104,3) (1 846,4) (3 984,3)
and expenses
Recurring operating income 742,2 599,1 1 631,1
Other non-recurring operating 22,7 112,7 102,3
income and expenses
Operating income 764,9 711,8 1 733,4
Finance costs (179,8)(117,7) (310,8)
Income before taxes 585,1 594,1 1 422,6
Income taxes (156,3)(150,3) (338,9)
Share in earnings of associates (0,9)1,2
Net income from continuing 427,9 443,8 1 084,9
operations
o/w attributable to equity 361,6 393,4 966,5
holders of the parent
o/w attributable to minority 66,3 50,4 118,4
interests
DISCONTINUED OPERATIONS
Net income from discontinued 418,7 (69,5) (43,5)
operations
o/w attributable to equity 417,6 (70,0) (44,2)
holders of the parent
o/w attributable to minority 1,10,5 0,7
interests
Net income of consolidated companies 846,6 374,3 1 041,4
o/w attributable to equity holders of779,2 323,4 922,3
the parent
o/w attributable to minority interests67,4 50,9 119,1
Net income attributable to equity779,2 323,4 922,3
holders of the parent
Earnings per share (in EUR) 6,18 2,527,19
Fully diluted earnings per share 6,18 2,517,17
(in EUR)
Net income from continuing operations361,6 393,4 966,5
attributable to equity holders of the
parent
Earnings per share (in EUR) 2,87 3,067,53
Fully diluted earnings per share 2,87 3,057,51
(in EUR)
Net income from continuing operations344,1 293,4 870,4
excluding non-recurring items
attributable to equity holders of the
parent
Earnings per share (in EUR) 2,73 2,296,79
Fully diluted earnings per share 2,73 2,286,77
(in EUR)
Consolidated balance sheet
ASSETS 30/06/2008 30/06/2007 31/12/2007
(in EUR million)
Goodwill 6 334,26 060,6 6 653,6
Other intangible assets 10 150,9 10 110,010 135,2
Property, plant and equipment 2 125,12 061,2 2 174,3
Investments in associates 75,6 18,819,7
Non-current financial assets 253,1 212,6 266,1
Deferred tax assets 629,2 747,9 701,7
Other non-current assets 12,5 14,830,4
Non-current assets19 580,6 19 225,919 981,0
Inventories3 298,03 168,8 3 234,1
Trade receivables 1 408,41 480,9 1 503,8
Customer loans 220,9 384,9 235,3
Current tax receivables 97,0 65,6 105,1
Other current financial assets85,2 79,793,5
Other current assets 973,81 392,4 1 062,6
Cash and cash equivalents 1 193,71 742,4 1 713,2
Current assets 7 277,08 314,7 7 947,6
Assets classified as held for sale 185,1 283,5
Total assets 27 042,7 27 540,628 212,1
LIABILITIES & SHAREHOLDERS' EQUITY 30/06/2008 30/06/2007 31/12/2007
(in EUR million)
Shareholders' equity attributable to 9 348,58 886,5 9 218,2
equity holders of the parent
Shareholders' equity attributable to 1 246,92 432,8 1 443,3
minority interests
Shareholders' equity 10 595,4 11 319,310 661,5
Long-term borrowings 4 467,73 306,7 4 670,3
Other non-current financial liabilities 27,4 18,6
Provisions for retirement and similar216,9 278,2 250,0
benefits
Provisions 140,6 146,2 145,6
Deferred tax liabilities 2 895,32 972,2 2 879,0
Non-current liabilities7 747,96 721,9 7 944,9
Short-term borrowings 2 914,43 797,8 3 184,8
Financing of customer loans 220,9 384,9 235,3
Other current financial liabilities 74,6 77,572,6
Trade payables 2 497,22 343,7 2 942,6
Provisions for retirement and similar 19,3 12,117,2
benefits
Provisions83,5 180,095,5
Current tax liabilities 299,7 299,4 319,5
Other current liabilities 2 408,12 404,0 2 509,1
Current liabilities8 517,79 499,4 9 376,6
Liabilities associated with assets 181,7 229,1
classified as held for sale
Total liabilities and shareholders' 27 042,7 27 540,628 212,1
equity
Gross borrowings excluding the 7 382,17 104,5 7 855,1
financing of customer loans
Fair value hedging derivative 17,6 18,6 (20,6)
instruments (interest rate)
Cash and cash equivalents(1 193,7) (1 742,4) (1 713,2)
Net financial indebtedness 6 206,05 380,7 6 121,3
Consolidated cash flow statement
(in EUR million) 30/06/2008 30/06/2007 31/12/2007
Net income from continuing operations427,9 443,8 1 084,9
Net recurring charges to depreciation, 199,8 174,1 372,2
amortisation and provisions on
non-current operating assets
Other non-cash income and expenses (64,5) (61,3) (89,5)
Cash flow from operating activities 563,2 556,6 1 367,6
Interest paid/received 181,8 103,5 275,3
Dividends received (0,6) (0,4) (0,7)
Net income tax payable 176,7 118,9 307,8
Cash flow from operating activities 921,1 778,6 1 950,0
before tax, dividends and interest
Change in working capital requirement (710,6)(236,5) 220,3
Change in customer loans 7,32,7 (0,6)
Income tax paid(163,3)(112,0) (304,0)
Net cash from operating activities54,5 432,8 1 865,7
Purchases of property, plant and (253,0)(203,3) (574,0)
equipment and intangible assets
Proceeds from sale of property, plant 28,3 19,046,4
and equipment and intangible assets
Acquisitions of subsidiaries, net of (172,0) (1 420,7) (3 337,5)
cash acquired
Proceeds from disposal of subsidiaries 1 133,5 10,9 349,2
net of cash transferred
Purchases of other financial assets (26,5) (97,2) (118,3)
Proceeds from sale of other financial 2,45,412,0
assets
Interest and dividends received 23,3 25,959,2
Net cash from investing activities 736,0 (1 660,0) (3 563,0)
Share capital increase/decrease (1) (131,0) 13,0 (6,7)
Treasury share transactions (165,6) (8,8) (147,9)
Dividends paid to parent company(433,8) (385,2) (385,2)
shareholders
Dividends paid to minority interests(38,0) (54,5) (72,1)
Bond issues 432,11 546,6 1 797,1
Bond redemptions (1) (1 328,4)(231,2) (606,7)
Increase (decrease) in other borrowings 389,2 666,4 1 650,5
Interest paid and equivalent (170,6) (97,0) (331,1)
Net cash from (used in) financing(1 446,1)1 449,3 1 897,9
activities
Net cash from assets classified as held 25,8 25,940,1
for sale
Impact of exchange rate variations 9,87,1 (5,7)
Net increase/(decrease) in cash and cash (620,0) 255,1 235,0
equivalents
Cash and cash equivalents at beginning 1 450,81 215,8 1 215,8
of the year
Cash and cash equivalents at end of the 830,81 470,9 1 450,8
year
Website: http://www.ppr.com
SOURCE PPR
