2010 Half Year Results




    2010 Half Year Results


    Results up sharply

    • Recurring operating income up 21%
    Improved profitability in each of our activities

    • Net income Group share up 87%
    (from continuing operations excl. non-current items)


    François-Henri Pinault, Chairman and Chief Executive Officer, noted:


    “PPR posted very good results in the first half of 2010 in an economic environment that remains hesitant. I want to express my appreciation for the remarkable work of all our teams. The vigorous initiatives we have adopted from the onset of the crisis to maintain our competitiveness, and the sales offensives we have since launched, enable us today to benefit from the early impact of the worldwide recovery. Sales growth gained further momentum in the second quarter, fueled by the success of our brands and retail concepts on the web and in international markets, where we are durably strengthening our positions. We have also bolstered the profitability of each of our activities in the first half. Our prospects for the short and medium term are good. Our sales momentum will continue to bear fruit and we maintain disciplined management efforts.”


    Operating performances


    In the first half of 2010, PPR posted revenues from continuing operations of
    EUR 8,139 million, up 3.6% in reported terms and 1.7% on a comparable basis against the first six months of 2009. The pace of sales growth further accelerated in the second quarter (up 6.3% in reported terms and 2.0% on a comparable basis), reflecting a marked rebound in international trade and the active pursuit of sales initiatives launched by all the brands and retail companies of the Group.


    The contribution of international activities to total PPR sales continued to increase, representing 60.5% of revenues in the first half of 2010 compared to 59.7% in the comparable period last year.


    The Group’s resistance to changes in its economic environments benefited from its well-balanced mix in terms of geographical presence and sales formats. In particular, PPR is becoming less dependent on Europe, as sales achieved outside of the Euro zone grew by 8.9% in the first half of 2010 (+4.2% on a comparable basis) and accounted for 43.0% of total Group revenues.


    PPR pursued its expansion in emerging markets, where comparable sales rose by 11.3% in the first half, accounting for 15.4% of total Group revenues. In period, Gucci sales in emerging markets were up 17.7% on a comparable basis, accounting for 40.3% of the total (vs. 36.7% in the first six months of 2009).


    In the first half of 2010, Group online sales rose by 14.5% in reported terms (+13.2% on a comparable basis) and accounted for 13.4% of total PPR revenues, up from 12.0% in the comparable 2009 period. Online sales at Fnac (+20%) and Redcats (+12%) achieved particularly strong growth in the first half.


    Gross margin in the first half of 2010 was EUR 3,994 million, up 5.9% compared to the first half of 2009. As a percentage of revenues, gross margin was 49.1%, up 1.1 point compared to last year. Conforama, Redcats and Gucci Group achieved strong improvements in gross margin in the half year.


    In the first half, recurring operating income exceeded EUR 708 million, up 20.7% compared to the first half of 2009. Each of the Group’s activities posted higher recurring of operating income in the period. Total recurring operating margin stood at 8.7% in the first half 2010, up 1.2 point from the comparable 2009 period.


    EBITDA totaled EUR 895 million in the first six months of the year, up 14.1% compared to the first half of 2009. EBITDA margin as a percentage of revenues was up 1 point to 11.0%.


    Financial performances


    Net financial charges totaled EUR 109 million in the first half of 2010. Net interest expense amounted to EUR 116 million, down 1.4% compared to the first half of 2009, reflecting the 24% drop in average net debt outstanding during the period, partly offset by the 110 basis point increase in average interest rate on PPR’s debt.


    The EUR 118 million favorable change in Other financial charges is mainly due to non-cash accounting entries related to IAS 39.


    Net income, Group share amounted to EUR 403 million in the first half of 2010, up 113.3%. Excluding non-current items, Net income, Group share from continuing operations totaled EUR 407 million in the first half, up 86.8% from EUR 218 million in the first six months of 2009.


    Net income per share was EUR 3.18 in the first six months of 2010 (H1 2009: EUR 1.49). Excluding non-current items, Net income per share from continuing operations was EUR 3.22 (H1 2009: EUR 1.72).


    Financial structure



    In the first half of 2010, free cash flow from operations was EUR 269 million, up
    EUR 232 million from the first six months of 2009.


    Group net financial debt at June 30 is traditionally higher than at the end of the fiscal year, reflecting operating seasonality and the schedule of the dividend payment. At June 30, 2010, net financial debt was EUR 4,865 million.


    PPR’s financial structure remains solid; on May 13, 2010, Standard & Poors confirmed the Group’s BBB- rating, with stable outlook.


    The Group is not exposed to any liquidity risk. At June 30, 2010, PPR had available cash and equivalents of EUR 927 million in addition to EUR 6,325 million in untapped medium-term confirmed lines of credit.


    Key developments of the second half


    Changes in the scope of operations
    On April 8, 2010, Puma acquired a 20.1% interest in the capital of Wilderness Holdings Ltd. Wilderness operates ecotourism activities in South Africa and Botswana.
    On April 16, 2010, Puma completed the acquisition of the Cobra golf equipment maker. This acquisition includes the Cobra brand, inventories, intellectual property and sponsorship contracts.


    Strengthening of financial structure
    In the first half of 2010, PPR pursued the strengthening of its financial structure through extension of its average debt maturity and diversification of its financing sources.
    As part of its EMTN program, PPR launched a EUR 500 million issue of 3.75% notes due April 2015.


    Subsequent events


    On July 9, 2010, Fnac announced that it had entered exclusive negotiations with ID Group for the sale of Fnac Eveil & Jeux.




    In an economic environment that remains uncertain, the strengths that underpinned the quality of PPR’s results in the first six months of the year should once again be at work in the second half.
    The Group is determined to intensify its management efforts and pursue its sales offensives throughout the year.


    Main 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”. Net income and losses from these activities are included under a separate income statement heading, “Net income (loss) from discontinued operations”, and are restated in the statement of cash flows and income statement for all reported periods.
    The assets and liabilities arising from “operations sold or to be sold” are presented on separate lines in the Group’s balance sheet, but are not restated for prior periods. The assets and liabilities associated with discontinued operations are not presented on separate lines in the balance sheet.


    Definition of “reported” and “comparable” revenue
    The Group’s reported revenue corresponds to published revenue. Non-Group revenue is defined as revenue from each company or brand, after elimination of intra-group sales.
    The Group also uses “comparable” data to measure organic growth. “Comparable” revenue is 2009 revenue restated for the impact of changes in Group structure in 2009 or 2010, and for translation differences relating to foreign subsidiaries’ revenue in 2009.


    Definition of consolidated net debt
    As defined by French National Accounting Council (CNC) recommendation No. 2009-R.03 of July 2, 2009, net debt comprises gross debt, including accrued interest, less net cash.
    Net debt includes fair value hedging instruments recorded in the balance sheet relating to bank borrowings and bonds whose interest rate risk is fully or partly hedged as part of a fair value relationship (see Note 16 to the condensed consolidated interim financial statements).
    The financing of customer loans by fully-consolidated consumer credit businesses is presented in borrowings. However, Group net debt excludes the financing of customer loans by consumer credit businesses.


    Definition of EBITDA
    The Group uses EBITDA to monitor its operating performance. This financial indicator corresponds to recurring operating income plus net charges to depreciation, amortisation and provisions on non-current operating assets recognised in recurring operating income.


    Definition of free cash flow from operations and available cash flow
    The Group also uses an intermediate line item, "Free cash flow from operations", to monitor its financial performance. This financial indicator 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 plus interest and dividends received less interest paid and equivalent.




    You are invited to attend the presentation of the 2010 Half Year Results today at 8:30am (Paris time) at the “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 8:30am Paris time at www.ppr.com. A replay will be available later in the day.


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


    For French version
    +33 (0)1 72 00 13 61


    Replay dial-in details
    +33 (0)1 72 00 15 01
    Replay Passcode : 270573#


    For English version
    +44 (0)203 367 94 61


    Replay dial-in details
    +44 (0)203 367 94 60
    Replay Passcode : 270580#


    The 2010 half-year report will be available at www.ppr.com.



    About PPR
    PPR develops a portfolio of high-growth global brands. Through its Consumer and Luxury brands, PPR generated sales of €16.5 billion in 2009. With approximately 73,000 employees the Group is present in 59 countries. 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, 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 68.73 KB)