Valora Holding AG

EANS-Adhoc: Valora Holding AG
Valora Group reports external sales up 6.5 percent - earnings adversely affected by persistent contraction of press market - retail expertise strengthened

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6-month report/Valora Group reports external sales up 6.5 percent - earnings
adversely affected by persistent contraction of press market - retail expertise
strengthened

23.08.2012

Valora Group reports external sales up 6.5 percent - earnings adversely affected
by persistent contraction of press market - retail expertise strengthened

- External sales and gross profits increased thanks to successful acquisitions -
Valora Retail outperforms local competitors
- Earnings adversely affected by persistent contraction of press market,
challenging market environment and higher costs at Corporate division 
- Sale of Valora Services Austria reduces Group's dependence on press market
- Agreement signed for sale of Muttenz facility, generating financing for future
investments
- Outlook: focus on core areas of expertise with a view to strengthening retail
activities 

 External sales and gross profits increased thanks to successful acquisitions -
Valora Retail outperforms local competitors

Pronounced press market contraction and Swiss consumers' enthusiasm for
cross-border shopping continued to characterise business conditions in the first
six months of 2012. Despite these challenges, the Valora Group generated
external sales of CHF 1 568.8 million, a +6.5 percent increase on the same
period of 2011. With external sales of some CHF 124 million generated through
its network of more than 1 200 outlets, Convenience Concept GmbH, which Valora
successfully acquired in early April 2012, made a positive contribution to Group
performance.

The Valora Group's reported first-half 2012 net revenues came in at CHF 1 387.2
million, a modest -0.7 percent lower than a year earlier. The main adverse
factors affecting the Group's performance were the weaker press market, which
depressed sales by CHF -20.0 million, and the contraction of the Services
division's relatively low-margin wholesale business, which reduced turnover by
some CHF -40 million. Additional sales totalling CHF 18.6 million were generated
from the distribution and sale of Euro 2012 collectible football picture cards,
while adverse exchange-rate effects reduced revenues by CHF -28.9 million.

Valora raised its gross profits by CHF 12.1 million compared to their first-half
2011 level, thanks to the advances achieved by the Group's Retail and Trade
divisions, both of which were able to capitalise on successful acquisitions.
First-half 2012 also saw Valora Retail's sales grow faster than the local
markets in which it operates.

 Earnings adversely affected by persistent contraction of press market,
challenging market environment and higher costs at Corporate division

The +5.6% increase in reported operating costs is essentially attributable to
the acquisitions Valora successfully integrated into its operations in the first
six months of 2012 and to costs incurred in evaluating additional options for
potential expansion. The higher costs incurred by the Group's Corporate division
resulted from the transition phase of the IT outsourcing project and the set-up
arrangements required for new logistics customers. Valora Retail's extension of
its agency business model contributed positively to operating profit. 

The decline in the overall press market and the demanding conditions facing the
retail sector resulted in the Valora Group generating a reported operating
profit of CHF 22.4 million in the first six months of 2012, compared to CHF 33.4
million a year earlier. Operating profit generated from the distribution and
sale of Euro 2012 picture cards amounted to CHF 3.2 million.

The Valora Group's net profit for the first six months of 2012 was CHF 15.1
million (CHF 26.3 million in first-half 2011). The financing requirements for
the two acquisitions the Group made as part of its Valora 4 Growth strategy -
Convenience Concept GmbH and Schmelzer & Bettenhaussen GmbH & Co. KG - amounted
to approximately CHF 90 million. As a result, the Group's net debt rose to CHF
219 million at June 30, 2012 and its shareholders' equity accounted for 34.5
percent of total assets is still at a very sound level.  

Divisions

Valora Retail
Thanks to its acquisitions of Convenience Concept in Germany and Schmelzer &
Bettenhausen in Austria, Valora Retail was able to increase its external sales
by +13.3 percent on their first-half 2011 levels, to reach CHF 991.0 million.
Valora Trade Germany generated external sales of CHF 317 million (up +57.7
percent on the same period of 2011), while those at the Luxembourg country unit
reached CHF 43 million, up 10.5 percent, and Austria, which was consolidated
into the division's results for the first time, contributed CHF 7.9 million.
External sales at the division's Swiss unit declined -1.2 percent, principally
due to lower sales at the Swiss kiosks. Valora Retail's reported net revenues
rose by +1.3 percent between the two periods, reaching CHF 807.4 million. The
division's overall operating profit in the first six months of 2012 was CHF 13.5
million, versus CHF 19.2 million a year earlier. Integration of the recently
acquired companies is progressing according to plan.
 
Valora Services
The division remains adversely affected by the persistent deterioration of the
press market in Switzerland, Austria and Luxembourg. Reported net revenues for
the first six months of 2012 were CHF 258.8 million, 
CHF -51.5 million, or -16.6 percent, lower than in the same period of 2011.
Stripping out the effects of the revenue contribution from Euro 2012 picture
cards (CHF + 14.9 million) and negative exchange-rate effects (CHF -4.7
million), net revenues contracted by CHF -61.6 million between the two periods,
the decline being attributable not only to lower press product sales, but also
to a reduction in the scale of the division's less profitable wholesale
activities. Valora Services first-half 2012 operating profit was CHF 7.5
million, compared to CHF 10.0 million in the same period of 2011.

Valora Trade
Valora Trade generated net revenues of CHF 385.1 million in the first half of
2012, a CHF +22.3 million increase on the first six months of 2011. In local
currency terms, net revenues rose +9.8 percent. In Sweden, the successful
acquisition of the cosmetics distributor ScanCo significantly contributed to
this advance, while the German and Austrian units were able to raise their sales
by signing up new principals. Valora Trade's expansion into new categories also
enabled it to improve its gross profit margin. Although Valora Trade Switzerland
succeeded in raising its net revenues slightly on their first-half 2011 levels -
despite the effects of parallel imports and shopping tourism by Swiss consumers
- it was not able fully to offset the downward pressure on margins caused by
these two factors. Valora Trade's overall operating profit for the first six
months of 2012 was CHF 4.3 million, compared to CHF 7 million a year earlier.

 Sale of Valora Services Austria reduces Group's dependence on press market

Press sales, which have been in decline since 2011, also impinged on the
Services division's profitability. Valora's decision to sell its Valora Services
Austria subsidiary to its business partner Trunk Service GmbH is a deliberate
move aimed at reducing the Group's dependence on the press market. The press
distributor Hermann Trunk GmbH & Co. KG, whose headquarters are in Munich, is
already a well-established player in the press distribution market, focusing on
the Greater Munich area, Upper Bavaria and the administrative region of Swabia.
The geographical area served by Valora Services Austria ideally complements the
area of Southern Germany in which the purchaser currently operates, paving the
way for expansion into neighbouring markets. Under the terms of the contract,
Trunk Service GmbH will acquire 100% of the outstanding shares of Valora
Services Austria, and the firm will continue to employ the former Valora
employees on the same terms as before. In 2011, Valora Services Austria
generated some CHF 120 million in net revenues and an operating profit of CHF
3.4 million. Both parties have agreed not to disclose the purchase price of this
transaction. The transaction will be completed once the Bundeskartellamt,
Germany's independent competition authority, and the Austrian Competition
Authority have approved it.  

 Agreement signed for sale of Muttenz facility, generating financing for future
investments

A letter of intent relating to the sale of Valora's Muttenz facility was signed
on August 22, 2012. The parties have agreed not to disclose the proposed
purchase price. Valora's sale of this property will enhance the financial
flexibility available to the Group for the further implementation of its
business strategy. The Valora Group will maintain its headquarters site in
Muttenz, renting the floorspace required.

The Group expects its sale of Valora Services Austria to generate a book-value
profit which would neutralise the effect of any potential book-value loss on the
sale of the Muttenz facility.  

 Outlook: focus on core areas of expertise with a view to strengthening retail
activities 

Valora anticipates that conditions in the press market will remain very
challenging and that the decline in net press revenues can be counteracted only
through sales generated by other product ranges. Discontinuation of press
wholesaling in Austria will also help to reduce the Group's dependence on the
press market. Despite the CHF 1.20 floor which the Swiss National Bank has been
upholding against the euro since September 2011, the Swiss franc remains very
strong and the problems caused by the resulting parallel imports and shopping
tourism by Swiss consumers will continue. 
In order to continue pursuing the measures initiated in recent years and to
adjust to changed market conditions, Valora will place greater emphasis on its
retail activities. These initiatives will involve:

- optimising the Group's format structures and outlet portfolios in all its
national markets
- expanding the product range through the addition of new and innovative items
- further extending the agency business model at k kiosk and P&B in Switzerland
- streamlining structures and processes in order to interact more closely with
the market and accelerate business growth
- decentralising specific support functions along country and format lines
- shortening the implementation schedules for the measures now being implemented
- increasing profitability by streamlining cost structures
- further acquisitions in retail formats with strong growth prospects

These measures are expected to produce their first positive effects in the
second half of 2012. 

In the words of Rolando Benedick, Chairman of Valora's Board of Directors and
interim Group CEO, "We have already made substantial achievements in the last
four years. The measures we are taking now will further strengthen our retail
expertise across the Valora Group. They underscore our vision of Valora as a
lean retailer, focused on our market and our customers, operating an outstanding
outlet network. We are confident that our costs will return to normal levels in
the second six months of 2012, and that our sale of Valora Services Austria, our
planned disposal of the Muttenz facility and the new distribution of the
emphasis placed on our various activities will enable us to improve our
profitability in the second half of this year."  

 

Valora Group key financial data           

Income statement

in CHF million                    H1 2012       H1 2011

External sales                    1 568.8       1 473.0
Adjusted* external sales          1 587.8       1 473.0
Net revenues                      1 387.2       1 397.6
Adjusted* net revenues            1 397.5       1 397.6
Gross profit                        441.7         429.6
Gross profit margin                 31.8%         30.7%
Operating costs, net               -419.3        -396.2
Operating profit (EBIT)              22.4          33.4
Adjusted* operating profit (EBIT)    20.5          33.4
EBIT margin                          1.6%          2.4%
Adjusted* EBIT margin                1.5%          2.4%
Group net profit                     15.1          26.3

* Adjusted for currency fluctuations and Euro 2012 picture cards 

Liquidity, balance sheet

in CHF million                    30.06.2012      31.12.2011
Cash and cash equivalents              122.3           109.6
Shareholders' equity                   423.1           462.3
Equity cover                           34.5%           41.9%
Net debt                               218.8            41.0

Valora divisions' key financial data
Key metrics               Retail                 Services            Trade
in CHF million      H1 2012 H1 2011 +/-  H1 2012 H1 2011 +/- H1 2012 H1 2011 +/-
External sales        991.0 874.6 +13.3%
Adjusted* external 
sales                 007.3 874.6 +15.2%
Net revenues          807.4 797.4  +1.3% 258.8 310.3 -16.6%   385.1 362.9 +6.1%
Adjusted* net 
revenues              815.1 797.4  +2.2% 248.6 310.3 -19.9%   398.6 362.9 +9.8%
Operating profit
(EBIT)                 13.5  19.2 -29.4%   7.5  10.0 -24.8%    4.3   7.0 +38.2%
Adjusted* operating 
profit (EBIT)          13.6  19.2 -29.2%   5.2  10.0 -47.7%    4.7   7.0 -33.7%
EBIT margin            1.7%  2.4% -0.7pP  2.9%  3.2% -0.3pP    1.1%  1.9% -0.8pP
Adjusted* EBIT margin  1.7%  2.4%  -0.7pP 2.1%  3.2% -1.1pP    1.2%  1.9% -0.7pP


* Adjusted for currency fluctuations and Euro 2012 picture cards


The following documents are available on www.valora.com

Half-year report 2012
http://www.valora.com/media/documents/english/reports/2012/halbjahresbericht_2012_en.pdf  

Press release
http://www.valora.com/en/media/newsinformation/news_00460.php 

2012 half-year results presentation 2012
http://www.valora.com/media/documents/english/presentations/2012/praes_halbjahresabschluss_2012_en.pdf 


************************************

Valora Telephone Conference - Half-Year Results 2012
Thursday, August 23 | 15:00 CET German, 16:00 CET English

Rolando Benedick, CEO of Valora Holding AG, Lorenzo Trezzini, CFO and Andreas
Berger, 
CEO Valora Retail, will provide information about the Group's first-half 2012
results during a telephone conference. 
To participate in the conference: call the following number 
(please call 10 to 15 minutes before the hour):

+41 (0)   91 610 56 00 (Europe)
+44 (0) 203 059 58 62 (UK)
+  1 (1) 866 291 41 66 (USA - toll-free)

The playback will be available one hour after the conference on the following
homepage: http://www.valora.com/en/investor/documents/multimedia/index.php 

************************************
 
Disclaimer
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THIS DOCUMENT IS NOT BEING ISSUED IN THE UNITED STATES OF AMERICA AND SHOULD NOT
BE DISTRIBUTED TO U.S. PERSONS OR PUBLICATIONS WITH A GENERAL CIRCULATION IN THE
UNITED STATES. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO
SUBSCRIBE FOR OR PURCHASE ANY SECURITIES. IN ADDITION, THE SECURITIES OF VALORA
HOLDING AG HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED STATES OR TO U.S.
PERSONS ABSENT REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE UNITED STATES SECURITIES LAWS.

This document contains forward-looking statements about Valora which may
incorporate an element of uncertainty and risk. The reader must therefore be
aware that such statements may diverge from actual future events. These
forward-looking statements are projections relating to future possible
developments. All the forward-looking statements contained in this document are
based on data available to Valora at the time this document was prepared. Valora
makes no commitment whatsoever to update forward-looking statements in this
document at a later date, or to adapt them to reflect new information, future
events or the like.


Further inquiry note:
For further information on the above, please contact:

Media Relations:	Phone:	+41 61 467 36 31
Stefania Misteli	E-mail:	stefania.misteli@valora.com
	
Investor Relations:	Phone:	+41 61 467 36 50
Mladen Tomic	E-mail:	mladen.tomic@valora.com

end of announcement                               euro adhoc 
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issuer:      Valora Holding AG
             Hofackerstrasse 40
             CH-4132 Muttenz
phone:       +41 61 467 20 20
FAX:         +41 58 789 12 12
mail:     info@valora.com
WWW:      www.valora.com
sector:      Retail
ISIN:        CH0002088976
indexes:     
stockmarkets: Main Standard: SIX Swiss Exchange, stock market: BX Berne eXchange 
language:   English
 



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