2008 Results




    2008 Results


    Another improvement in operating and financial performances


    • Increase in recurring operating income
    • Significant drop in net debt and improved debt ratios
    • 2009: intensification of action programmes to strengthen our positions

    Commenting on the results, François-Henri Pinault, Chairman and Chief Executive Officer, noted:
    “PPR posted satisfactory operating and financial performances in 2008, despite deteriorating market conditions quarter after quarter. Our Group has thus demonstrated a remarkable ability to respond and adapt to sudden and profound changes in its environment. Having gauged the impact of the crisis early on, the Group’s brands and companies implemented initial action plans that started yielding results in the second half of the year. In 2009, we will continue to use all available means to meet the challenges of an economy that remains uncertain. PPR will capitalise on its many assets: brand strength, geographical complementarity, presence in the most promising emerging markets, web leadership, as well as financial solidity and budgetary discipline. In 2009, the Group will intensify its action plans so as to build on its competitive advantages and strengthen its business lines.”


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    Sustained revenue growth


    In 2008, PPR generated revenues of €20.2 billion. Sales grew by nearly 6% in reported terms and over 2% on a comparable Group structure and foreign exchange basis, following a record performance in 2007. In a context of declining consumer demand, revenues for the fourth quarter of 2008 were roughly unchanged in reported terms and down slightly (-1.5%) on a comparable basis, versus the fourth quarter of 2007.


    The weight of the Group’s international activities continued to grow, representing 61% of total revenues in 2008, compared to 59% in 2007.


    In 2008, PPR achieved further growth in the strategic e-commerce sector, with revenues up by more than 10% on a comparable basis, to €1.9 billion.

    Growth in recurring operating income


    On a pro forma basis (consolidating Puma and United Retail over 12 months in 2007) and at comparable exchange rates, PPR operating expenses grew at a slower pace than gross margin in 2008. This deceleration was particularly pronounced in the second half, underscoring the Group’s ability to adapt swiftly to its environment.


    EBITDA rose by nearly 7% in 2008 to €2.1 billion. The Group’s EBITDA margin was 10.6% in 2008.


    Recurring operating income amounted to €1.7 billion in 2008, up by more than 5% compared to 2007 reported numbers. The recurring operating income margin was stable compared to the prior year, at 8.5% of revenues.


    This increase was driven by growth in recurring operating income at CFAO (+19%) and at Gucci Group brands (over 9% in reported terms and nearly 26% on a comparable basis), which for the first time all posted positive recurring operating income.


    On a pro forma basis and based on comparable exchange rates, PPR recurring operating income rose by nearly 4% in 2008, with the margin up by 0.1 basis point.

    Solid growth in net income per share


    In 2008, other non-recurring operating income and expenses resulted in a net expense of €361 million. This item essentially comprises asset impairment for €237 million and restructuring costs for €128 million.


    Net income, Group share stood at €924 million in 2008, up slightly over 2007. Net income from continuing operations, Group share, excluding non-current items was also up slightly (+0.1%).


    Net income per share rose by nearly 2% compared to 2007, standing at €7.33. Excluding non-current items, net income per share from continuing operations also increased by 2%, to €6.95.

    Strengthened financial structure


    Free cash flow from operations amounted to €1 billion in 2008, thus reaching the level PPR had set at mid-year.

    Capital employed declined in relation to the previous year-end, due to the disposal of YSL Beauté.


    PPR net debt fell markedly, standing at €5.5 billion at December 31, 2008.


    PPR improved its debt ratios in 2008:


    PPR bank loans comprise a sole financial covenant, pursuant to which the Group solvency ratio may not exceed 3.75.

    On December 16, 2008, the Standard & Poor’s rating agency confirmed PPR’s “BBB-“ rating with stable outlook.


    The Group is not exposed to any liquidity risk. At December 31, 2008, PPR had available cash of €1.1 billion and a balance of €5 billion in confirmed and unused credit lines. This available liquidity covers more than three times its net refinancing requirements for 2009, while there is no significant refinancing scheduled in 2010.



    The Board of Directors will ask the General Shareholders’ Meeting of May 7, 2009 to approve the distribution of a dividend for 2008 of €3.30 per share, 4% lower than the dividend for fiscal year 2007.


    This proposal reflects PPR’s intent to maintain a balanced payout ratio, reflecting the improvement in Net income from continuing operations, Group share, excluding non-current items, and the level of available cash flow for the fiscal year.


    The dividend will be paid on May 14, 2009.

    Subsequent events


    On January 1, 2009, Puma acquired a majority interest in the Dutch company Dobotex International BV, a historical partner that holds the license for Puma socks and undergarments, outside of the US


    On January 12, 2009, Puma announced the acquisition of the Swedish company Brandon AB, specialising in brand merchandising and promotion.


    On February 11, 2009, PPR announced the appointment of Jean-Michel Noir as Chairman and CEO of Redcats Group, member of the PPR Executive Committee. Jean-Michel Noir will join Redcats by early April 2009.


    On February 18, 2009, Fnac announced a plan aimed at boosting its activity in France and internationally as well as savings measures amounting to €35 million.


    In addition, on the same day, Conforama announced a plan to reduce costs by €50 million on a full-year basis, aimed at restoring its competitiveness.



    To confront the challenges of a deteriorating consumer environment in 2009, PPR can confidently rely on the strengths that have underpinned the quality of its results in 2008.


    In 2009, PPR will continue to implement all available measures to adapt to an economic environment that remains uncertain. The Group is determined to intensify its action plans in order to build on its competitive advantages and strengthen its business lines.


    Main definitions

    IFRS 5 – Non-current assets held for sale and discontinued operationsIn 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.


    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.


    Capital employed
    Capital employed includes goodwill, net intangible assets, other net non-current assets and net current assets, minus provisions.


    You are invited to attend the presentation of the 2008 Annual Results today at 8:30 am Paris time at Pavillon Gabriel – 5, avenue Gabriel – 75008 Paris.

    A live videocast (Real and Windows Media Player formats) as well as the presentation slides (PDF) will be available at 8:30 am Paris time on www.ppr.com. A replay will be available later in the day.

    You will also be able to listen to the conference by dialling:


    Following the presentation, the 2008 financial report will be available on www.ppr.com.

    Download the complete press release (pdf - 78 Ko)

    About PPR


    PPR develops a portfolio of high-growth global brands. Through its Consumer and Luxury brands, PPR generated sales of €20.2 billion in 2008. The Group is present in 90 countries with approximately 88,000 employees. PPR shares are listed on Euronext Paris (FR 0000121485, PRTP.PA, PPFP). To explore the universe of PPR brands go to 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).



    Charlotte Judet
    +33 (0)1 45 64 65 06



    Alexandre de Brettes
    +33 (01) 45 64 61 49

    Emmanuelle Marque
    +33 (01) 45 64 63 28




    Download the press release (.pdf 78.3 KB)