EANS-Adhoc: Valora Group reports solid results as strategy programme yields first fruits

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Valora Group reports solid results as strategy programme yields first
fruits

27.08.2009

Valora Group reports solid results as strategy programme yields first
fruits

- Adjusted net revenues increased - Determined cost discipline
improves adjusted EBIT margin - "Valora 4 Success" strategy is on
track and producing first results > Swiss retail business showing
positive trends > Media division´s initial measures to counteract
market contraction inspire confidence > Logistics transformation on
course for successful completion by year end > Additional scope for
cost reductions identified - Projections for 2012 confirmed

Adjusted* net revenues increased

Valora generated net revenues of CHF 1 414.6 million in the first six
months of 2009, a 3.7% decline compared to the same period of 2008.
After adjustment for the effects of acquisitions in Germany (+1.7%),
the non-recurrence of collectible EURO 08 picture card sales in
Austria and Switzerland (-3.2%) and exchange rate fluctuations in
Europe, especially Scandinavia (-3.6%), Group net revenues for
first-half 2009 amounted to CHF 1 442.3 million, 1.4% up on
first-half 2008.

The Retail** division generated net sales of CHF 778.1 million, a
0.6% increase on first-half 2008 levels after the adjustments cited
above. This result, a pleasing one in the current climate, was
principally driven by the strong performance of Retail Germany, which
achieved excellent like-for-like growth in sales. Adjusted net sales
at the Swiss kiosks nearly matched first-half 2008 levels,
registering a modest 0.4% decline. First-half 2009 sales at
convenience stores and Tamoil filling station shops rose 3.5% on 2008
levels.

Valora Media** turned in first-half 2009 net sales of CHF 345.1
million. On an adjusted basis, this represents a 4.6% decline on the
same period a year earlier. The division´s three national markets
(Germany, Austria and Switzerland) each saw overall press sales fall
by more than 5%, in line with those elsewhere in Europe. For the
first time, the ongoing structural decline of newspaper sales was
accompanied by a fall in sales of magazines.

In the face of demanding market conditions, Valora Trade notched up
net revenues of CHF 381.2 million in the first six months of 2009, a
6.5% increase on the corresponding adjusted figure for the same
period of 2008. The division was particularly successful in
Scandinavia, where sales rose by 11% in local currency terms.

(*excluding effects of currency fluctuations, acquisitions and EURO
08) (**As of January 1, 2009, a sub-business area of Valora Retail
was transferred to Valora Media)

Consistent cost discipline improves adjusted (EBIT) margins

In the first six months of 2009, Valora generated operating profits
of CHF 23.0 million (versus CHF 28.6 million a year earlier)
achieving an operating margin of 1.6% (versus 2.0% in first-half
2008). After adjusting for EURO 08, acquisitions and currency
effects, this equates to a 20% increase in operating profits and a
0.2 percentage point increase in adjusted EBIT margin (from 1.4% in
first-half 2008 to 1.6% in first-half 2009). A key factor in this
improvement in adjusted operating profit was that the proportion of
sales accounted for by costs was cut by 0.8 percentage points. This
improvement in cost efficiency exceeds the target set for first-half
2009, improving current operating margins by 0.1 percentage points.

The Retail division raised its operating profits to CHF 10.1 million
(as against CHF 4.1 million in first-half 2008), which equates to an
operating margin of 1.3% (versus 0.5% a year earlier). Valora Trade
also improved its first-half operating profits - from CHF 7.1 million
in 2008 to CHF 7.4 million in 2009 - raising its operating margin
from 1.8% to 1.9%. Valora Media was the only division reporting lower
operating profits, registering a marked decline from CHF 20.8 million
in first-half 2008 to CHF 7.1 million in the same period of 2009.

Valora´s net income for the first six months of 2009 was CHF 18.1
million. The balance sheet at June 30, 2009 remains sound, with
shareholders´ equity accounting for a substantial 43.4% of total
assets. This modest 1.7% decline in equity cover since year-end 2008
is attributable to the costs of share buyback programme which was
completed in late February 2009, after which the Group´s outstanding
share capital was reduced following the cancellation of 500 000
shares of treasury stock. With current net debt of CHF 37.6 million
at June 30, 2009 (versus net cash of CHF 6 million at year-end 2008)
- reflecting dividend disbursements, share buyback costs and
acquisitions - the Valora Group maintains a comfortable liquidity
position. Valora´s objective is to reduce its net debt levels by
year-end 2009.

"Valora 4 Success" on track and achieving its first successes

The "Valora 4 Success" strategy programme, launched in the autumn of
2008, is now being implemented and is progressing well. A number of
sub-projects are nearing completion. All the initiatives are on
schedule and on budget. During the first six months of 2009, the
programme was focused on four key projects: improving the
profitability of the kiosks, measures to enhance the Media division´s
performance, expansion of the convenience store sales channel and
improved efficiency and effectiveness both in central processes and
logistics.

Positive trends in Swiss retail

All the key adjustments planned for improving the kiosks´
profitability were initiated during the first six months of 2009.
These are now bearing their first fruits. The period from May to July
has seen noticeable growth in sales, accompanied by improved
profits.This is the direct result of the measures taken in the k
kiosk area.

Changes to kiosk operations have included a concerted effort to test
new product ranges and service offerings, the successful launch of
the "ok." product line, a range of attractively priced, own-label
items, and a more professional approach to price management. The
positive reaction of young and price-conscious kiosk customers to the
first "ok." products has been particularly encouraging, setting the
stage for further growth opportunities in the future. Valora also
concluded a new, long-term tenancy agreement for some 200 outlets
with Switzerland´s federal railways (SBB). This agreement will give
Valora greater flexibility in the formats it uses on these sites and
the product ranges on sale there. A streamlined sales organisation
and the introduction of professional shift rota planning also enabled
Valora Retail to achieve significant cost savings. Use of the newly
implemented closed loop inventory management system will also help to
improve goods throughput efficiency and to streamline processes at
the sales outlets.

Expansion of the avec. convenience store network continues apace.
During the spring of 2009, a new store layout offering a modified
product range was successfully tested at outlets in Kloten and
Richterswil. Working with its business partner Tamoil, a filling
station operator, Valora Retail also launched three additional test
sites. Through a combination of new outlet openings and conversions
of existing facilities, the division will have implemented its plan
of having more than 50 avec. shops up and running by the end of
September 2009. Assuming appropriate sites are available, Valora
Retail intends to have a network of some 100 avec. shops operating in
Switzerland in the next six to nine months. Further impetus was lent
to the convenience store growth strategy by the opening of Valora´s
first avec. shop in Germany (in Gelsenkirchen). A second outlet will
be opened in Essen in the second half of 2009.

Valora Media´s initial measures to counteract market contraction are
inspiring confidence

Valora´s Media division has been hardest hit by the economic
downturn. To address this, the division has launched an initiative to
optimise its product range. The objective here is to counteract the
decline in the press market by presenting its press offerings more
attractively and expanding the range of services provided to third
party sales channels. A number of first steps have already been taken
towards this. Since March 2009, for example, selected k kiosk outlets
have been devoting more sales space to the "top 50" press titles.
Results from these tests have been very encouraging so far, with
sales of top 50 titles rising by more than 6% compared to the same
period of 2008. At the same time, the decline in overall press sales
was reversed by nearly 6 percentage points to a level of +0.3%
compared to the same period of 2008. Other initiatives include
expanding and streamlining the range of services offered to other
sales channels. Based on the results achieved so far, management is
confident that a trend reversal in press sales can be achieved.

Logistics transformation to be successfully completed by year end

Of the various projects in the "Valora 4 Success" programme, the
transformation of the logistics operations is the furthest advanced.
The move of Valora´s internal logistics functions from Muttenz to
Egerkingen is now largely complete. Introduction of the WAMAS
operating system and the successfully tested switch to decentralised
processes for picking, sorting and packing press products in the
second quarter of 2009 are two further major steps towards improved
levels of service quality and efficiency in Valora´s logistics
capability. Relocation of logistics operations and modernisation of
the logistics systems will result in a significant improvement in
efficiency and effectiveness. It is realistic to assume that the
projected annual cost savings of CHF 11 million by 2010 will be
achieved, as will the planned improvements in quality levels.

Additional scope for cost cutting identified

Overall, the efficiency-boosting measures now already implemented can
be expected to reduce costs by the CHF 10 million planned for the
second half of 2009.When the strategy programme was initiated, the
total savings in recurring costs identified for 2010 (compared to
2008 levels) totalled CHF 23 million, some ¾ of the overall annual
savings of CHF 30 million scheduled for realisation from 2012
onwards. Subsequent initiatives and new insights have made it
possible to identify incremental scope for cutting costs. These
further efficiency gains, principally relating to outlet costs and
improved purchasing terms, should enable additional annual cost
savings of at least CHF 6 million to be achieved. Detailed project
planning for these additional measures will take place during the
second half of 2009 and will be communicated in a timely fashion.

Projected results for 2012 confirmed

Valora´s Board of Directors and Group Executive Management are
convinced that the "Valora 4 Success" strategy has put the Group on
the right course for the future. The greater stability of the
management team will enhance Valora´s ability to execute planned
initiatives rapidly and effectively, thus maintaining a tight rein on
costs. Given the challenges posed by the economic conditions
prevailing this year, the targets Valora has set for its overall 2009
results are ambitious. "We nevertheless reaffirm our objective of
achieving full-year EBIT of CHF 69-72 million and are confident that
our 2009 results will exceed those for 2008." says Thomas
Vollmoeller, the Valora Group´s CEO. Valora´s Board and management
confirm their stated objective of generating an operating profit
margin of 3% to 4% by 2012.

Key financial data for the Valora Group

Income statement

in CHF million H1 2009 H1 2008

Adjusted* net revenues 1,442.3 1,422.1
Net revenues 1,414.6 1,468.5
Gross profit 428.3 443.5
Gross profit margin 30.3% 30.2%
Operating expenses -408.9 -420.2
Adjusted* operating profit (EBIT) 23.6 19.6
Adjusted* EBIT margin 1.6% 1.4%
Operating profit (EBIT) 23.0 28.6
EBIT margin 1.6% 2.0%
Net income from continuing operations 18.1 21.1
Net income from discontinued operations - 5.5
Group net income 18.1 26.6

*excluding effects of currency fluctuations, acquisitions and EURO 08

Liquidity, balance sheet

in CHF million 30.06.2009 31.12.2008
Cash and cash equivalents 146.5 158.4
Shareholders´ equity 479.2 493.9
Equity cover 43.4% 45.1%
Net debt 37.6 -6.0
Net working capital 132.3 129.7
Net working capital in % of
net revenues (annualised) 4.7% 4.4%

Key financial data for Valora´s divisions

Key metrics Retail Media Trade
in CHF million H109 H108** Diff H109 H108** Diff H109 H108 Diff
Adjusted* net revenues 766.6 761.7 +0.6% 352.0 368.7 -4.6% 414.7 389.4 +6.5%
Net revenues 778.1 771.7 +0.8% 345.1 401.1-14.0% 381.2 393.5 -3.1%
Adjusted* operating
profit (EBIT) 9.6 0.1 n.a. 7.5 15.8-52.4% 8.1 7.1+14.3%
Operating profit
(EBIT) 10.1 4.1+150.3% 7.1 20.8-65.7% 7.4 7.1 +4.7%
Adjusted* EBIT margin 1.3% 0.0%+1.3pP 2.1% 4.3%-2.2pP 2.0% 1.8%+0.2pP
EBIT margin 1.3% 0.5%+0.8pP 2.1% 5.2%-3.1pP 1.9% 1.8%+0.1pP

* excluding effects of currency fluctuations, acquisitions and EURO 08

** restated: a sub-business area of Valora Retail was transferred to
Valora Media with effect from 1.1.2009

The complete 2009 half-year report, the press release and the
presentation may be downloaded from the www.valora.com website

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end of announcement euro adhoc
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ots Originaltext: Valora Holding AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Should you require further information, please contact:

Investor Relations: Tel: +41 58 789 12 20

Mladen Tomic +41 79 571 10 56

E-Mail: mladen.tomic@valora.com

Media Relations: Tel: +41 58 789 12 01

Stefania Misteli +41 79 467 52 16

E-Mail: stefania.misteli@valora.com

Branche: Retail
ISIN: CH0002088976
WKN: 208897
Börsen: SIX Swiss Exchange / official market
BX Berne eXchange / official dealing