Groupe SEB : First-Quarter 2007 Summarized Business Review: A Fast Start to the Year

Regulatory News: Groupe SEB (Paris:SK)   (in € millions)   Q1 2006   Q1 2007 % change year-on-year Current exchange rates Constant exchange rates France 118  124  + 5.3  + 5.3  Other EU countries 148  151  +1.9  + 1.6  North America 82  89  + 7.6  + 17.1  South America 56  60  + 8.3  + 14.5  Central Europe, CIS, Asia and other countries 163  189  + 16.4  + 21.7  Total 567  613  + 8.2  + 11.6  Rounded figures Percentages based on exact figures Groupe SEB reported solid growth in consolidated sales in the first quarter of 2007, confirming second-half 2006 trends. The performance, which was particularly strong in light of the significant improvement already achieved in the first three months of 2006, may be analyzed as follows: Organic growth of 9.2%, much higher than the 6.6% reported in the first quarter of 2006. A €13.5 million contribution from Mirro WearEver, which was not consolidated in the prior-year quarter. A negative €19 million currency effect which, as expected, worsened considerably following the sharp depreciation of the US Dollar against the euro compared with first-quarter 2006, when the currency effect was a positive €24 million. In this environment, consolidated operating margin rose 11.4% to €42.6 million for the period. Note that while first-quarter operating margin represents only a very small portion of the full-year total, the quarterly increase nevertheless demonstrates an improvement in the quality of sales for the period. At 31 March 2007, net debt stood at €352 million, down €71 million from 31 December 2006. Sales by geographical area In France, firm demand helped to buoy sales volumes, improve the product mix and lift average unit prices, especially for cookware. As a result, the Group enjoyed robust growth during the period, led by several product families among which breadmakers, the BeerTender draught beer system, the Brush Activ hair dryer, pressure cookers and vacuum cleaners. However, sales of linen care products and fryers (despite the satisfactory launch of Actifry) were down for the quarter. Elsewhere in the 15-country European Union, business was generally favourable, with Germany experiencing a sharp upturn in sales and Italy continuing to recover. Sales contracted only in the United Kingdom, where market remains under heavy pressure, and Spain, which suffered from an unfavourable comparison to the exceptionally brisk start to the year in 2006. Growth in the euro zone was mainly led by cookware, personal care appliances and espresso coffee machines. In North America, growth in sales primarily reflected the contribution of the newly acquired Mirro WearEver. In the United States, where sales were stable on an organic basis, business got off to a slow start for T-fal and Rowenta. Krups, meanwhile, benefited from favourable prior-year comparatives and reported higher sales for the quarter. All-Clad continued to expand, but at a more moderate pace, while Mirro WearEver pursued its commitment to recapturing market share. Business was satisfactory in Mexico and Canada. In South America, sales rose by 14.5% at comparable scope of consolidation and constant exchange rates. Growth was driven by sustained strong momentum in Brazil, where Arno benefited from the continuing success of such flagship products as blenders, filter coffee makers, vacuum cleaners, fans and semi-automatic washing machines. Robust performance in Colombia also contributed to the strong growth in sales. In Central Europe, CIS, Asia and other countries, organic growth stood at 21.7%. Despite the strong euro’s negative impact on exports, the Group maintained its growth trajectory in its leading markets, including Central Europe (especially Poland), CIS, Japan and Saudi Arabia. On the other hand, sales slowed down significantly in Turkey, where consumers were hesitant ahead of the upcoming elections, but stopped declining in South Korea. Analysis of the change in operating margin Depending on the year, the first-quarter generally accounts for approximately 15% of annual operating margin, compared with 21-22% of annual sales. It is therefore not representative of the Group’s full-year performance. In the first three months of 2007, operating margin came to €42.6 million, versus €38.3 million for the first quarter 2006. This 11.4% improvement was achieved against a backdrop of unfavourable conditions, including: Higher raw materials prices, a portion of which the Group passed on in cookware prices and offset by enhancing the product mix of small electrical appliances. The depreciation of the US dollar between the two first quarters. This is positive for purchases (which are mainly dollar denominated), but it penalizes revenue when translated into euros. In addition, business at Mirro WearEver was disrupted by the transfer of manufacturing operations from the Nuevo Laredo plant to Brazil (Panex) and China. Analysis of debt At 31 March 2007, net debt stood at €352 million, down by €71 million from 31 December 2006. Gearing was a very reasonable 42%, with 31 March representing the date at which debt is traditionally at its lowest due to the seasonal nature of the business. For the first time, a more detailed quarterly business review will be published in addition to the press release. It will shortly be available and downloadable from www.groupeseb.com. Groupe SEB specifies that sales are provisional and that operating margin and net debt were not audited. 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.