2008 First-Half Results

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    Tuesday, August 26, 2008

    2008 First-Half Results


    Solid operating and financial performances

    •Recurring operating income: +24%
    •Net income, Group share: +141%
    •PPR confirms its 2008 objectives

    François-Henri Pinault, Chairman and CEO, commented:
    “Our solid performances in the first half can be attributed to the favorable balance of our Group profile and the strength of our global brands. PPR has always been able to take advantage of periods of slower growth and the present case is no exception. We are determined to further improve our commercial effectiveness and optimize our operational structure in order to benefit from a decisive and immediate competitive advantage as soon as there is an upturn in growth. Specific and quantified action plans are currently being implemented. These underscore PPR’s ability and ambition to intensify its development and profitability ever further. We are confident in the outlook for the second half and stand by our objectives for growth and improved financial performance for 2008.”


    Download the complete press release (.pdf 138 Ko)


    Sustained revenue growth

    In the first half of 2008, PPR generated revenues from continuing operations of €9,584 million, up 12% in reported terms and 5% in comparable terms versus the first half of 2007.

    Solid growth in recurring operating income: +10% on a pro forma basis and at comparable exchange rates


    Group recurring operating income amounted to €742 million, up 24% compared to the first half of 2007. The recurring operating income margin stood at 7.7%, up 0.7 percentage point compared to June 30, 2007.


    This substantial increase was primarily driven by growth in recurring operating income from CFAO (+19%), Fnac (+3%) and Gucci Group (+13% in reported terms and +36% at comparable exchange rates). In Luxury Goods, Gucci maintained a very satisfactory level of profitability, with Bottega Veneta recording the strongest growth.


    EBITDA for the first half of 2008 stood at €942 million, up 22% compared to the first half of 2007. The EBITDA margin increased by 0.8 point to 9.8% in the first half of 2008.

    On a pro forma basis (consolidating Puma and United Retail over the first six months of 2007), Group recurring operating income for the first half of 2008 posted growth of 1% and EBITDA rose by 2% at actual exchange rates. On a pro forma basis and at comparable exchange rates, Group recurring operating income rose by 10%.


    Significant increase in net income, Group share

    Net income from continuing operations, Group share, excluding non-current items amounted to €344 million, up 17% compared to the first half of 2007. This increase reflects the continuous improvement of Group operating performances, and tighter control over financial charges and the tax rate.

    Net income from discontinued operations, Group share amounted to €418 million, largely attributable to the realized capital gain on the sale of YSL Beauté.

    Net income, Group share stood at €779 million, a substantial 141% increase compared to the first half of 2007.


    Net income per share amounted to €6.18, compared to €2.52 for the half-year ended June 30, 2007. Excluding non-current items, net income per share from continuing operations increased by over 19% to €2.73 for the half-year ended June 30, 2008.

    Robust financial structure


    At June 30, 2008, net indebtedness stood at €6,206 million, up 1% compared to December 31, 2007. This nearly unchanged debt level primarily reflects:

    • negative free cash flow from operations of €170 million (compared to an exceptionally positive €249 million for the six months ended June 30, 2007), reflecting the impact of seasonality and temporary increases in working capital requirements;

    • proceeds from the sale of YSL Beauté;

    • payment of the 2007 dividends.


    Subsequent events

    Redcats UK sold its portfolio of trade receivables as well as a portion of the inventory relating to Empire Stores operations to Littlewoods Shop Direct Group on July 11, 2008.

    On July 28, 2008, Redcats USA sold its Missy Division including the Chadwick’s®, metrostyle™ and Closeout Catalog Outlet™ brands to Monomoy Capital Partners, a US investment fund.

    As of August 25, 2008, the Group held a controlling interest of 68.5% in the share capital of Puma.


    Given its solid economic model, the power of its brands and companies, the geographical balance of its activities and the responsiveness of its organization, PPR is confident in its outlook for the second half of 2008 and stands by its objectives for growth and improved financial performance for 2008.

    Download the complete press release (.pdf 138 Ko)



    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.” 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.


    In the first half of 2008, YSL Beauté, sold to L’Oréal during the period, had been presented in accordance with IFRS 5. As a result, the line item “Discontinued operations” in the income statement concerns both this transaction and those which took place in previous fiscal years (particularly the Missy Division of Redcats USA, the Agency activity of Empire Stores at Redcats UK, Conforama Poland and Surcouf).


    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.


    You are invited to attend the presentation of the 2008 Half Year Results today at 8:30 am Paris time at the “Académie Diplomatique Internationale” – 4bis, avenue Hoche – 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 dialling:



    The 2008 half-year report will be available at www.ppr.com at the end of the presentation.

    Download the complete press release (.pdf 138 Ko)

    About PPR
    PPR develops a portfolio of high-growth global brands. Through its Consumer and Luxury brands, PPR generated sales of EUR 19.1 billion in 2007. The Group is present in 90 countries with approximately 90,000 employees. PPR shares are listed on Euronext Paris (# 121485, 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 138.38 KB)