2010 Annual Results

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    Wednesday, February 16, 2011

    2010 Annual Results


    Outstanding operating and financial performances


    • Recurring net income from continuing operations Group share surges 56%
    • Recurring operating income up 24%
    • Record double-digit operating margin
    • Revenue up 7.5% to €14.6 billion


    François-Henri Pinault, Chairman and CEO, noted: "The operating and financial performance of the Group as a whole and of each of its businesses was outstanding in 2010. Cost-control efforts launched during the height of the economic crisis and the sales offensive implemented successfully in 2010 to drive profitable revenue growth enabled the Group to take full advantage of the upturn. The excellent results in 2010 are a testimony to the commitment of our teams, the creativity of our brands and the momentum of our retail businesses. They also confirm the pertinence of our strategy of focusing on higher-margin activities, which allows us to consistently and structurally raise our performance levels. I am confident that, thanks to the solidity of its business model and its proven ability to adapt, PPR will continue to achieve robust revenue growth in 2011 and deliver a better financial performance than in 2010."



    Operating performance


    Revenue in the fourth quarter of 2010 climbed 9.6% as reported and 5.4% on a comparable basis (constant Group structure and exchange rates) versus 2009. On a comparable basis, the year-on-year increases in consolidated revenue were 1.1% in the first quarter of 2010, 1.4% in the second quarter and 7.8% in the third quarter. The Luxury Business Group delivered a stellar performance in the fourth quarter of 2010, particularly in the US.


    The main financial indicators for 2010 reflect the Group’s highly satisfactory performance during the year. Consolidated revenue from continuing operations amounted to €14,605 million, up 7.5% on 2009 as reported and up 4.0% on a comparable basis.


    The proportion of revenue generated outside France continued to grow in 2010, accounting for 66.6% of the Group total, versus 65.2% the previous year (on a comparable basis).


    During the year, PPR continued its expansion in emerging countries, with these markets reporting 15.5% growth and representing 18.1% of total Group revenue, up 180 basis points on 2009 on a comparable basis.


    In 2010, revenue from online sales came in at €2.3 billion, up 14.3% on 2009 on a comparable basis. E-commerce accounted for 15.5% of total Group revenue, versus 14.1% in 2009 on a comparable basis.


    With recurring operating income of €1,531 million in 2010, up 23.5% on 2009, PPR raised its operating margin by 140 basis points to 10.5%.


    At comparable exchange rates, recurring operating income climbed 14.2% and operating margin improved by 100 basis points. All of the Group's activities contributed to the surge in recurring operating income.


    Gross margin for 2010 amounted to €7,429 million, up €746 million or 11.2% on 2009 as reported and up 6.4% based on comparable exchange rates.


    Operating expenses increased by 8.3% as reported, and by 4.5% based on comparable exchange rates. In particular, payroll expenses rose by 8.6% on a reported basis and by 2.4% at comparable exchange rates.


    Group EBITDA posted by the Group advanced 18.2% year-on-year on a reported basis to €1,861 million. This led to a significant improvement in the EBITDA margin, which rose to 12.7% from 11.6% in 2009. At comparable exchange rates, EBITDA increased by 10.9% and the EBITDA margin was 80 basis points higher than in 2009.


    Financial performance


    In 2010, other non-recurring operating income and expenses represented a net expense of €194 million, and included asset impairment charges of €122 million.


    In 2010, the Group had net income of €200 million from discontinued or sold operations, including nearly €136 million in gains on disposals (net of taxes and expenses) and €64 million in net income generated by discontinued operations.


    Net income Group share totaled nearly €965 million in 2010, up 1.4% on 2009. Adjusted for the impact of non-recurring items, attributable net income from continuing operations amounted to €932 million, representing a 55.8% increase on the previous year.


    Earnings per share stood at €7.62, up 1.3% on 2009. Excluding non-recurring items, earnings per share from continuing operations amounted to €7.36, a 55.6% increase over 2009.


    Solid financial structure


    In 2010, PPR once again strengthened its financial structure.



    In 2010, the Group’s free cash flow from operations totaled €1,081 million, representing a €110 million decrease from the record level achieved in 2009.


    As of December 31, 2010 capital employed was up by a slight 0.9% on the previous year-end level. Excluding the receivable relating to the sale of Conforama, capital employed was down 6.9% year-on-year.


    The Group’s net debt totaled €3,781 million as of December 31, 2010, representing a decrease of €587 million or 13.4% compared with the previous year end. This figure will be reduced by a further €1.2 billion in March 2011 upon receipt of the proceeds from the sale of Conforama shares.


    PPR continued to enhance its debt ratios in 2010:


    PPR’s confirmed credit facilities are subject to a single financial covenant, which provides that the solvency ratio must not exceed 3.75.


    On December 17, 2010, Standard & Poor’s affirmed PPR’s “BBB-” rating with a stable outlook.


    As of December 31, 2010, PPR had cash and cash equivalents totalling €1,398 million (€945 million as of December 31, 2009), as well as confirmed undrawn medium-term credit facilities amounting to €6,123 million (€5,944 million as of December 31, 2009). The Group is therefore not exposed to liquidity risk.


    2010 highlights


    • Sale of Conforama


    On December 9, 2010, PPR announced that it had received a firm offer from the South African group Steinhoff International Holdings Ltd to purchase Conforama. The transaction was approved by the employee representative bodies of Conforama in January 2011. It will be completed during the first quarter of 2011 once it has received approval from the relevant competition authorities and Steinhoff International's shareholders.


    • Other significant events


    On October 25, 2010, PPR was informed of the findings of an audit performed by Puma AG which revealed fraud and irregularities committed within the company’s Greece-based joint venture, Puma Hellas SA. As a result, the consolidated financial statements of the PPR Group for 2009 and 2010 have been restated proportionate to PPR's ownership interest in Puma AG.




    At the General Shareholders’ Meeting of May 19, 2011, the Board of Directors will recommend a dividend payment of €3.50 per share, up 6.1% on the previous year. If this dividend is approved, the total dividend payout would amount to €444 million.


    This recommended dividend reflects PPR’s goal of maintaining well-balanced payout ratios bearing in mind, on the one hand, changes in net income from continuing operations (excluding non-recurring items) attributable to owners of the parent and, on the other hand, the amount of available cash flow.


    The dividend will be paid on May 26, 2011.


    Subsequent events


    On January 14, 2011, PPR signed a €2.5 billion revolving credit facility, maturing in January 2016. This transaction, part of current Group liquidity management, was largely oversubscribed.




    As the pace of the worldwide economic recovery picks up in 2011, the Luxury Goods brands of PPR will continue to realize their considerable growth potential, thanks to their creativity, geographical expansion and sales momentum. Puma will achieve further growth through investment in its brand, aimed at supporting its activities in core markets. The Group’s retail businesses will once again outperform their respective segments, notably through their growing web presence. PPR is confident in its ability to achieve in 2011 another robust increase in sales and to deliver higher financial performances than in 2010.


    At its meeting of February 16, 2011, the Board of Directors of PPR, under the chairmanship of François-Henri Pinault, approved the audited consolidated financial statements for 2010.





    A live videocast (Real and Windows Media Player formats) of the presentation of the 2010 Annual Results as well as the presentation slides and 2010 financial report (pdf) will be available at 8:30am 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 dialing:


    Live conference:
    +33 (0)1 72 00 13 66


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


    Replay passcode: 272186#



    Live conference:
    +44 (0)203 367 94 59


    Replay dial-in details
    +44 (0)203 367 94 60


    Replay passcode: 272194#


    The replay will be available until March 10, 2011.


    The 2010 financial report is available on www.ppr.com.


    This press release is a free translation of the French original press release.
    The original French version of this press release is available on our website at


    About PPR
    PPR nurtures a group of high-growth global brands distributed in more than 120 countries. Through its Consumer and Luxury brands, PPR generated revenue of €14.6 billion in 2010, and had approximately 60,000 employees at December 31, 2010. The PPR share is listed on Euronext Paris (FR 0000121485, PRTP.PA, PPFP).
    To explore the PPR brand universe, please visit www.ppr.com: the Luxury Business Group (Gucci, Bottega Veneta, Yves Saint Laurent, Balenciaga, Boucheron, Sergio Rossi, Alexander McQueen and Stella McCartney), Puma, Fnac and Redcats (La Redoute, Vertbaudet, Somewhere, Cyrillus, Daxon, Ellos, The Sportsman's Guide, The Golf Warehouse and large size division brands).



    Charlotte Judet
    +33 1 45 64 65 06


    Paul Michon
    +33 1 45 64 63 48


    Alexandre de Brettes
    +33 1 45 64 61 49


    Emmanuelle Marque
    +33 1 45 64 63 28


    Download the press release (.pdf 635.18 KB)