After a record year in 2021, Groupe SEB
delivers a resilient performance in 2022 impacted by a return to
more normal consumer behaviour and by the war in Ukraine
- Group performance driven by China and Professional,
deteriorated by France/Germany (high comps) and Russia/Ukraine
(impact of the war)
- Nine-month sales: €5,560m; -0.2%, -4.3% LFL*
- Third-quarter sales: €1,894m; -3.4%, -8.1% LFL*
- Nine-month Operating Result from Activity (ORFA): €319m vs
€528m in 2021
- Third-quarter ORFA: €120m vs €208m in 2021
- Net financial debt as of 30/09/2022: €2,581m, +€630m vs
30/09/2021
- Full-year 2022 guidance revised:
- Revenue of around €7.9 billion;
- ORFA margin in the range of 7.0% to 7.5%.
- Consolidation project for our activities in Germany
Regulatory News:
Groupe SEB (Paris:SK):
Statement by Stanislas de Gramont, Chief Executive Officer of
Groupe SEB
“After a year in 2021 that brought our performance to record
levels driven by the consumption of Small Domestic Equipment during
the Covid pandemic, the Group is holding up well over the first 9
months of 2022 in an unfavorable inflationary environment.
Our professional activities continue to grow by double digits in
most geographies. Our sales are progressing in China where Supor
has consolidated its leadership positions in its main categories.
However, our Consumer business was penalized in France and Germany
by specific issues to these two markets, as well as by the effects
of the war in Ukraine. This leads us to revise downwards our sales
and margin guidance for 2022 whilst intensifying the cost reduction
program implemented in the third quarter.
The Group's 2022 performance is strongly impacted by a major
combination of negative elements reaching up to €300m (inflation,
currencies, other headwinds) and compares to a record-high 2021.
The Group remains convinced of the structurally buoyant nature of
its Consumer and Professional markets.
The Group has always been able to adapt to crises, whether
geopolitical, health-related or monetary, thanks to the strength
and complementarity of its brands, the Consumer-Professional
combination and the balance between mature and emerging markets. We
are confident in the solidity of our business model. »
*Like-for-like: at constant exchange rates and scope of
consolidation
GENERAL COMMENTS ON GROUP SALES
The Small Domestic Equipment market has shown good resilience
against a very high 2021 history while the Professional market has
continued its recovery.
In the first nine months of the year, Groupe SEB generated
€5,560m in sales, virtually stable compared with record
performance of September 30, 2021. The 4.3% organic decline
(-€239m) was almost fully offset by a positive 4.1% contribution
from currencies (€229m, mostly related to the Chinese yuan and
US dollar). These figures reflect a sharper 8.1% LFL
decrease in sales in the third quarter.
At €5,056m, sales in the Consumer business at end-September
were down by a slight 1.2% compared to a nine-month
growth of 19.8% in 2021 vs 2020. The LFL decrease was 5.2%,
exacerbated by an 8.8% decline in the third quarter. These
figures must be considered in the context of very high base effects
in 2021.
This is especially the case for France and Germany. Representing
more than 20% of Group sales, these two countries have been
impacted by the three following negatives:
- the rebalancing of household consumption towards other sectors
to the detriment of Small Domestic Equipment, a market that
contracted by 7% at end-September;
- a penalizing category mix effect (cooking categories
overweighted and oversold during the Covid period);
- the non-recurrence in 2022 of major loyalty programs (impact
-€61m).
Also France was affected by a trade destocking effect which
impacted the sell-in of our products and has favoured private
labels in the short term.
In addition, in Russia and Ukraine, sales fell by €57m on a
reported basis over the nine months, with a negative 1.0 pt impact
on the Group’s sales growth.
In contrast, business in China continued to improve, largely
boosted by e-commerce. The momentum was driven by woks and kitchen
tools, electrical cooking, linen care, floor care and large kitchen
appliances. During the 3rd quarter, Supor continued to outperform
the market and bolstered its leadership positions in electrical
cooking, online, as well as in cookware.
Sales in the Professional business stood at €504m for the
nine-month period, up 10.7% including 6% organic growth. The
sales stability in Q3 (-0.2% LFL) was due entirely to the
high history of signed contracts in Professional Coffee in the US
and the UK in 2021. The performance of the core business was very
satisfactory and confirmed the business recovery in both equipment
and services. At the same time, the Group continued to develop its
business with Luckin Coffee in China.
REVENUE BY REGION
Revenue (€m)
9 months
2021
9 months
2022
Change 2022/2021
Change Q3 2022/2021
Reported
LFL*
Reported
LFL*
EMEA
Western Europe
Other countries
2,597
1,843
755
2,302
1,625
677
-11.4%
-11.8%
-10.3%
-10.6%
-12.0%
-7.2%
-13.6%
-17.6%
-3.3%
-13.7%
-17.8%
-3.3%
AMERICAS
North America
South America
773
550
223
804
557
247
+4.0%
+1.3%
+10.8%
-6.1%
-9.5%
+2.2%
-1.3%
-1.6%
-0.6%
-12.5%
-14.8%
-7.5%
ASIA
China
Other countries
1,745
1,328
417
1,950
1,545
405
+11.7%
+16.3%
-2.7%
+3.3%
+5.5%
-4.0%
+9.7%
+14.0%
-3.7%
+1.2%
+3.4%
-5.5%
TOTAL Consumer
5,115
5,056
-1.2%
-5.2%
-4.2%
-8.8%
Professional
456
504
+10.7%
+6.0%
+5.6%
-0.2%
GROUPE SEB
5,570
5,560
-0.2%
-4.3%
-3.4%
-8.1%
Like-for-like: at constant
exchange rates and scope of consolidation Rounded figures in €m
Percentages based on non-rounded figures
WESTERN EUROPE
In Western Europe, the decline in sales observed in Q2 deepened
in the third quarter, on a demanding 2021 comparison. In practice,
the deterioration was mainly concentrated in France and
Germany, which account for more than 60% of Group sales in the
region (more than 20% of total Group revenue).
In these two countries, the market experienced a backdrop
of 7% as a result of a rebalancing of household consumption. Our
sales were down 17% over nine months compared with the record year
in 2021 (which grew by 21%). Apart from this very high comparison
base, two specific factors contributed to this decline:
- the non-recurrence of major loyalty programs from 2021 (€61m,
with a negative 5 points impact on growth in these two
countries);
- a penalizing category mix effect (cooking categories
overweighed and oversold during the Covid period).
Added to this, in France in particular, we observed a trade
destocking phenomenon in mass retailing - which impacted “sell-in”
- and, in the short-term, market share gains for private
labels.
In the other countries, the situations are contrasted
with sales globally stable over 9 months.
OTHER EMEA COUNTRIES
The decline in sales in the other EMEA countries eased
significantly in Q3, with a high comparison basis with 2021. Impact
of currencies has been neutral due especially to the opposite
developments of the ruble and the Turkish lira against the Euro.
The persistence of the war in Ukraine and its consequences
continued to impact our sales which were reduced by €80m (or 33%)
LFL since the start of the year.
In the other countries, the Small Domestic Equipment
market was resilient and we generated organic sales growth when
compared with a demanding 2021, exceeding +40%.
NORTH AMERICA
For North America, the difference between reported growth and
the contraction in our sales at constant exchange rates reflects
the substantial appreciation of the region’s three currencies. In
particular, the US Dollar fell below parity with the Euro at the
end of the summer. On a like-for-like basis, sales at end-September
were down 9.5%, on the back of a 21% growth in 2021.
In the United States, after a record year in 2021, our
cookware sales slowed down in 2022, mainly due to destocking by
distributors. T-Fal confirmed its leadership as the months
progressed and All-Clad continued to set the standard in the
high-end segment. In linen care, Rowenta sales recovered nicely,
over nine months and in the quarter, after declining in 2021 during
Covid.
In Mexico, after a strong H1, sales growth stood at 21%
for the first nine months of the year. The Group continued to
consolidate its market share in all categories.
SOUTH AMERICA
Over the first nine months of the year, sales were up 2.2% LFL,
despite weaker performances in the third quarter.
As in H1, the Group's performance in the region was mixed. In
Brazil, business was difficult in Q3, particularly due to
unfavourable weather conditions for fan sales.
In Colombia, after an exceptional performance in 2021,
our sales remain extremely dynamic over the nine months.
Furthermore, the Group leverages its local production base to
enhance competitiveness and continues its expansion, capturing
greater market share.
CHINA
In China, the Group delivered a solid 5.5% organic sales growth
over the nine months period. E-commerce, and more specifically new
platforms such as TikTok and Pinduoduo, remains the primary growth
driver and represented 67% of Supor's total domestic sales.
In Q3, sales growth was fueled by the electrical appliances,
including in particular:
- Electrical cooking appliances (rice cookers, high-speed
blenders, oil-less deep fryers...);
- Large Kitchen Appliances (extractor hoods, built-in
stoves);
- linen care and floor care, where Supor continues to expand its
product offering.
In the Cookware segment, woks – the Chinese market’s “flagship”
category – performed very well and kitchen tools accelerated
sharply.
Supor thus ended Q3 with a further improvement of its market
shares in China. It strengthens its undisputed leadership in
cookware as well as its online first place for kitchen electrics,
acquired just before the summer.
OTHER COUNTRIES IN ASIA
In Asia outside China, the contraction of our sales over
nine months was mainly due to Japan and South Korea, when compared
with a high historical level.
In contrast, all the other countries in the area, and in
particular Australia and South-East Asia, delivered sales
growth for the quarter and over nine months, after an already
dynamic year in 2021.
In most of these markets, the Group continued to strengthen its
positions.
PROFESSIONAL
The Professional business (Professional Coffee, Hotel Equipment,
Zummo and Krampouz) generated nine-month sales of €504m, up 10.7%
LFL. This growth is the result of:
- a high basis of comparison due to the contracts signed in
Professional Coffee in the US and the UK in 2021.
- and a robust core business – machines and services – in
Professional Coffee (progression of +15,4% LFL over the first nine
months), based on the expansion and diversification of the client
portfolio, strong growth in the services activities and the
two-digit growth performance by Wilbur Curtis in the United States
leading to market share gains.
In 2022, the Group continues to develop its business with Luckin
Coffee in China.
At the same time, after a particularly brisk first half, sales
momentum remained strong in the Hotel Equipment business in the
third quarter at close to 30% at constant exchange rates.
OPERATING RESULT FROM ACTIVITY (ORFA)
Operating Result from Activity (ORFA) for the first nine
months of the year stood at €319m, compared with the all-time high
of €528m achieved at the end of September 2021. It includes a
negative currency effect of €40m. Like-for-like, ORFA was therefore
€359m, down 32% compared to the previous year.
Operating margin for the first nine months is thus 5.7% (6.7%
LFL) which compares to the 9.5% achieved in September 2021.
This difference in operating profitability LFL over the first 9
months is mainly explained by the following elements:
- a negative sales volume effect, mostly caused by the decline in
sales in France and Germany, as well as the loss of revenue in
Russia and Ukraine;
- a positive price mix effect, which incorporates the price hikes
that have been implemented but is also penalized by the
under-performance in France and Germany;
- an increase in our costs due to raw materials, freight and
storage;
- investments in growth drivers and structure costs up by €113m
at the end of September due to the on-board effect in H1 but
stabilized in Q3 compared with 2021.
DEBT AT SEPTEMBER 30, 2022
At September 30, 2022, the Group’s financial debt amounted to
€2,581m (of which €337m in IFRS 16 debt) compared with €1,951m
at September 30, 2021 (with IFRS 16 debt of €316m).
This high level is directly related to the increase in operating
working capital requirement due to the voluntary build-up of
inventories to address supply chain issues and high demand, which
prevailed until Q1 2022. The Group has implemented swift actions to
slow down its purchases and production, which materialized in a
reversal of the inventory and cash flow generation curves in
Q3.
Also, the acquisition of Zummo and the purchase of SEB and Supor
shares had an impact on the level of financial debt at the end of
September.
Our financial situation is healthy and based on a
well-balanced financial structure in terms of instruments and
maturities.
OUTLOOK
At the time of publication of its H1 results at the end of July,
the Group announced that it was aiming for overall stable sales
compared to 2021 (at €8.059bn) and an operating margin of between
8.0% and 8.5% for the year.
With the contrasting performance in Q3, the Group is revising
its guidance for 2022, now expecting:
- Sales of around €7.9 billion.
- ORFA margin in the range of 7.0% to 7.5%.
This new guidance is based on the following assumptions:
- the continuation in Q4 of the trends observed in Q3 in terms of
sales and mix
- an acceleration of the decline in operating expenses initiated
in Q3
- an unchanged envelope of annual headwinds (materials,
components, freight, currency), estimated at €300m.
GROUPE SEB CONSOLIDATES ITS BUSINESS IN THE DACH REGION
(GERMANY, AUSTRIA, SWITZERLAND)
Over the last 10 years Groupe SEB has more than tripled its
consumer business in the DACH region, thus making it the Group’s
first market in Europe and the second one worldwide.
To foster growth in this region, Groupe SEB has made the
strategic decision to combine and realign existing structures.
This consolidation will allow:
- to create one single market company operating in DACH, merging
the activities of Groupe SEB DACH and WMF Consumer.
- to create support functions for the region developing synergies
and eliminating duplicate structures,
- to confirm a WMF business unit in charge of strategic marketing
and product development for this brand worldwide
- to improve company’s competitiveness, develop talent
attractiveness and secure jobs in the long term.
Geislingen will become the headquarters of Groupe SEB’s
activities in the DACH region. Some business activities will be
retained at the current locations in Frankfurt and Munich making
them ‘satellite hubs’. Accounting activities will be integrated
into the international structures of Groupe SEB in Warsaw.
The aim is to implement the first measures as of January 2024.
This consolidation may impact 180 jobs out of 5,000. The Group will
take appropriate measures to ensure that our employees will be able
to manage the changes. Also, since several functions that are
located in Frankfurt will be transferred to Geislingen, Groupe SEB
will offer its employees an appropriate transition period in
addition to concrete options and support in close alignment with
the local Works Council and according to Group standards. The
reorganization is estimated to cost around €35m, of which €25m in
2022.
This decision is a major step to keep on building on the
165-year history of Groupe SEB and the 170-year tradition of the
WMF brand, allowing us to further strengthen the Group’s market
leadership in the entire DACH region.
GLOSSARY
On a like-for-like basis (LFL) – Organic
The amounts and growth rates at constant exchange rates and
consolidation scope in a given year compared with the previous year
are calculated:
- using the average exchange rates of the previous year for the
period in consideration (year, half-year, quarter)
- on the basis of the scope of consolidation of the previous
year.
This calculation is made primarily for sales and Operating
Result from Activity.
Operating Result from Activity (ORFA)
Operating Result from Activity (ORFA) is Groupe SEB’s main
performance indicator. It corresponds to sales minus operating
expenses, i.e. the cost of sales, innovation expenditure (R&D,
strategic marketing and design), advertising, operational marketing
as well as sales and marketing expenses. ORFA does not include
discretionary and non-discretionary profit-sharing or other
non-recurring operating income and expense.
Adjusted EBITDA
Adjusted EBITDA is equal to Operating Result from Activity minus
discretionary and non-discretionary profit-sharing, to which are
added operating depreciation and amortization.
Free cash flow
Free cash flow corresponds to adjusted EBITDA, after accounting
for the change in the operating capital requirement, recurring
investments (CAPEX), taxes and financial expense, as well as other
non-operational items.
Net financial debt
This term refers to all recurring and non-recurring financial
debt minus cash and cash equivalents, as well as derivative
instruments linked to Group financing. It also includes debt from
application of the IFRS 16 standard “Lease contracts” in addition
to short-term investments with no risk of a substantial change in
value but with maturities of over three months.
Loyalty program (LP)
These programs, run by distribution retailers, consist in
offering promotional offers on a product category to loyal
consumers who have made a series of purchases within a short period
of time. These promotional programs allow distributors to boost
footfall in their stores and our consumers to access our products
at preferential prices.
This press release may contain certain forward-looking
statements regarding Groupe SEB’s activity, results and financial
situation. These forecasts are based on assumptions which seem
reasonable at this stage, but which depend on external factors
including trends in commodity prices, exchange rates, the economic
climate, demand in the Group’s large markets and the impact of new
product launches by competitors. As a result of these
uncertainties, Groupe SEB cannot be held liable for potential
variance on its current forecasts, which result from unexpected
events or unforeseeable developments. The factors which could
considerably influence Groupe SEB’s economic and financial result
are presented in the Annual Financial Report and Universal
Registration Document filed with the Autorité des Marchés
Financiers, the French financial markets authority.
Conference with management on October 24,
6:00 p.m. CET
Click here
to access the webcast live (in English)
Replay available on our website on October 24
from 8:00 p.m. CET at www.groupeseb.com
Access (audio only): From France: +33 (0)1 7037
7166 – Password: SEB From abroad: +44 (0) 33 0551 0200 – Password:
SEB From the USA: +1 212 999 6659 – Password: SEB
Find us on www.groupeseb.com
World reference in small domestic equipment, Groupe SEB operates
with a unique portfolio of 32 top brands including Tefal, Seb,
Rowenta, Moulinex, Krups, Lagostina, All-Clad, WMF, Emsa, Supor,
marketed through multi-format retailing. Selling more than 417
million products a year, it deploys a long- term strategy focused
on innovation, international development, competitiveness, and
client service. Present in over 150 countries, Groupe SEB generated
sales of €8 billion in 2021 and has more than 33,000 employees
worldwide.
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Investor/Analyst Relations Groupe SEB Financial
Communication and IR Dept Isabelle Posth Olivier
Gernandt comfin@groupeseb.com Tel.: +33
(0) 4 72 18 16 04
Media Relations Groupe SEB Corporate
Communication Dept Cathy Pianon Marie Leroy
com@groupeseb.com Tel.: +33
(0) 6 33 13 02 00 Tel.: +33 (0) 6 76 98 87 53
Image Sept Caroline Simon Claire Doligez
Isabelle Dunoyer de Segonzac caroline.simon@image7.fr cdoligez@image7.fr isegonzac@image7.fr
Tel.: +33 (0) 1 53 70 74 70
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