SEB S A : Inside Information / News release on accounts, results

Better Living

Press release

July 20, 2022 - 9:00pm

2022 half-year sales and results

1

RESILIENT BUSINESS ACTIVITY FOLLOWING A RECORD YEAR

PROFITABILITY TEMPORARILY IMPACTED IN THE SECOND QUARTER

• • First-halfsales: €3,666m; +1.6%, -2.3% LFL*
  • • Second quarter sales: €1,750m; -0.4%,-5.1% LFL*
  • First-halfOperating Result from Activity (ORFA): €199m, -€121mvs 2021
  • • Second quarter ORFA: €59m; -€63m vs 2021
  • Profit attributable to owners of the parent: €72m, -€79mvs 2021
  • Net financial debt at June 30, 2022: €2,447m, up €597m vs June 30, 2021 (inventory building to address supply chain tensions)
  • Full-yearassumptions revised:
  • • Overall stable 2022 sales vs 2021
    • Operating margin from activity in the range of 8% to 8.5%
• LFL: like-for-like (at constant exchange rates and scope) - Changes vs 2021

Statement by Stanislas de Gramont, Chief Executive Officer of Groupe SEB

"2022 started in a favorable environment, which deteriorated in the second quarter, with the war ongoing in Ukraine, currency volatility and the acceleration in inflation.

Sales were resilient, driven by an excellent performance in China and by the solid momentum in the Professional business. As in 2021, the Group absorbs the impact of headwinds while the operating profitability is temporarily hit by the combined effect of the slowdown in second-quarter business in Europe and the continuation of investments already undertaken.

We keep on fueling our growth pillars: China, where we will exceed €2bn revenue this year, with great development prospects ahead; the Professional activity which is paving the way for new buoyant and profitable markets; innovation and digitization, which represent fundamentals in our businesses.

We do not expect any significant improvement in the economic situation before year-end in mature countries. This leads us to target for the full year overall stable sales and an operating margin in the range of 8% to 8.5%.

I know I can count on the commitment and agility of our teams throughout the world to pursue our strategy of profitable growth."

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GENERAL COMMENTS ON GROUP SALES

After a solid first quarter, the second quarter was characterized by a deterioration in the general environment, with the worsening economic consequences of the Russian-Ukrainian conflict, ongoing supply chain tensions and the return of inflation. This fueled consumers' concerns about their purchasing power and impacted demand, with tradeoffs of spending to services and leisure, having an adverse impact on small domestic equipment -mainly the cooking categories- which had benefited strongly from the stay- at-home requirements in 2020 and 2021. It is positive, however, for the hospitality and catering sector.

In this context, Groupe SEB achieved first-halfsales of €3,666m, up 1.6% versus demanding end-June 2021 comparatives. This increase includes an organic decline of 2.3% (-€81m), offset by a +3.9% currency effect (+€137m) due mostly to the Chinese yuan and US dollar. Revenue in the second quarter was down 0.4% and 5.1% LFL.

2 As was the case in the first quarter, organic growth was penalized by specific factors:

• the war in Ukraine: -1.6 pts in the first half and -2 pts in the second quarter;
• the non-recurrence of 2021 loyalty programs: -1.4 pts in the first half and -0.6 pt in the second quarter;
• the lockdowns in China in the second quarter: -1.1 pts in the first half and -2.2 pts in the second quarter.

Combined, these factors -concentrated mainly in the Consumer business- translated into a growth shortfall of 4.1 pts in the first half and 4.8 pts in the second quarter. Excluding these items, sales would have risen by 1.8% at June 30 and been virtually stable in the second quarter, on a like-for-like basis.

Moreover, compared with 2019, the last "normal" year pre-COVID, our half-year sales increased by 9.9%, pointing to a healthy trajectory over time.

The Consumer business revenue fell 3.3% in the first six months of the year. This decline occurred in the second quarter, which saw a sharper-than-expected slowdown in demand. The issues are concentrated on a few major markets which were hit particularly hard (France, Russia-Ukraine, of course, Japan and South Korea) while our sales in China grew steadily despite the second-quarter lockdowns.

Compared with 2019, first-half revenue are up 13.2%.

The Professional business, with 9.5% organic growth in the first half, confirmed its recovery, on more demanding 2021 comparatives in the second quarter for Professional Coffee. Excluding specific deals, the core business -machinesand services- surged by some 25% LFL versus first-half2021. This solid momentum, based largely on the expansion of our customer portfolio, covered all regions. Of particular note is the very strong performance by Wilbur Curtis in the United States and the resumption of the rollout of the Luckin Coffee contract in China.

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REVENUE BY REGION - 1st HALF-YEAR
	Sales (€m)	H1		H1		Change 2022/2021		Q2 2022
	2021		2022		As		LFL*			Like-for-like
						reported
	EMEA	1,662		1,494		-10.1%		-8.9%			-13.4%
	Western Europe	1,171		1,072		-8.5%		-8.7%			-14.5%
	Other countries	490		422		-14.0%		-9.3%			-10.6%
	AMERICAS	480		515		+7.2%		-2.2%			+1.8%
	North America	348		358		+2.9%		-6.5%			-3.8%
	South America	132		157		+18.6%		+9.0%			+16.0%	3
	ASIA	1,178		1,327		+12.7%		+4.2%			+1.3%
	China	898		1,054		+17.4%		+6.6%			+1.9%
	Other countries	280		273		-2.3%		-3.3%			-0.7%
	TOTAL Consumer	3,319		3,336		+0.5%		-3.3%			-5.9%
	Professional	290		330		+13.6%		+9.5%			+3.6%
	GROUPE SEB	3,610		3,666		+1.6%		-2.3%			-5.1%
	*Like-for-like: at constant exchange rates and	Rounded figures in €m		% calculated in non-	rounded figures
	scope of consolidation

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COMMENTS ON CONSUMER BUSINESS BY REGION

	Sales (€m)		H1		H1		Change 2022/2021		Q2 2022
	2021			2022		Reported		LFL			LFL
	EMEA		1,662			1,494		-10.1%		-8.9%			-13.4%
	Western Europe		1,171			1,072		-8.5%		-8.7%			-14.5%
	Other countries		490			422		-14.0%		-9.3%			-10.6%

WESTERN EUROPE

4 In Western Europe, the deterioration in the economic environment led to a sharper decline in our sales in the second quarter. In addition, the non-recurrence of major loyalty programs in 2021 adversely affected first-half revenue by 3.3 points.

In this environment, the most popular products during the lockdown (food preparation, for instance) leveled off while cookware, floor care and linen care enjoyed positive momentum.

In France, in a sharply contracting small domestic equipment market in the second quarter, our sales fell by about 20% LFL vs the record performance in 2021. Within this decline, the non-recurrence of loyalty programs had a 6-point negative impact. Compared with 2019, revenue rose by 4%, reflecting a positive business trend over time in almost all product lines, despite the challenges faced.

In Germany, the market was still slightly growing in the first quarter but reversed course as from April, as it was impacted by the collapse in household confidence. Our sales, which had been robust at the beginning of the year, thus dropped in the second quarter.

In other European countries, performances varied by market, with Italy, Spain, the Netherlands and the United Kingdom holding up better than Belgium, for example. Half-yearrevenue was nonetheless stable at constant exchange rates compared with 2021, after a more challenging second quarter.

OTHER EMEA COUNTRIES

After years of strong, uninterrupted organic growth, our sales in the region slackened in the first half of the year due to the impacts of the war in Ukraine. This was reflected in a ca. €60 million loss of revenue as of June 30, with a sharp acceleration in the second quarter. As a result, growth in the region was penalized by 12 points. Excluding this impact, sales in the region would have been up by nearly 3% LFL. Currencies - mainly the Turkish lira - also had a €23m negative impact on revenue.

Against this backdrop, momentum in the small domestic equipment market has slowed since March/April, with more promotional activity. The product categories that remained promising were robot vacuum cleaners, automatic espresso machines and "oil-less" fryers. We also continued our successful rollout of the Ingenio cookware ranges and the Cookeo pressure multicooker.

Beyond the issues in Russia and Ukraine, there were contrasting performances across countries.

In Central Europe, our sales were down overall, with the exception of Poland where the Group continued to progress and increased its market share. In Turkey, the nearly 70% organic growth (driven solely by price increases) should not mask the fact that the general environment has deteriorated significantly. In other countries, we note in particular the further inroads made in Egypt, where the Group keeps on investing in order to develop pillars of future growth. Moreover, the Groupe SEB Morocco joint venture, which is 55% controlled by the Group, was set up in Casablanca to start operations in July.

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Sales (€m)	H1		H1		Change 2022/2021		Q2 2022
2021		2022		Reported		LFL			LFL
AMERICAS	480		515		+7.2%		-2.2%			+1.8%
North America	348		358		+2.9%		-6.5%			-3.8%
South America	132		157		+18.6%		+9.0%			+16.0%

NORTH AMERICA

In North America, reported growth in first-half sales can be attributed to the significant appreciation of the three currencies in the region in the second quarter, with a dominant impact from the US dollar. On a like-for-like basis, sales for the six months ended June 30 were down 6.5%, on the back of extremely high 2021 comparatives (+51% LFL).

This base of comparison is particularly demanding in the United States, where the economic recovery was accompanied by substantial government consumption support packages. Conversely, in the first half of 2022, acceleration in inflation and its effects on consumer behavior affected demand for small electrical appliances and cookware. However, T- fal and All-Clad remain the leading brands on the US cookware market, in the mid-range and high- end segments, respectively. Our sales were also temporarily held back by the non-recurrence of a major campaign with one of our clients in 2021. Conversely, against a backdrop of a return to socializing and to the office, our linen care business recovered strongly, driven by all product categories (steam irons, steam generators and garment steamers).

In Canada, in a highly competitive market, the Group returned to growth in the second quarter with, in particular, very satisfactory performances for linen care and the assertion of the Group's leadership in this category.

In Mexico, our half-year sales increased by more than 25% LFL. The solid start to the year gained additional steam in the second quarter, driven by nearly all product families in small domestic appliances and cookware. This led to the continued strengthening of our market positions.

SOUTH AMERICA

Like North America, the differential between reported growth and organic growth stems from

currency appreciation (Brazilian real and 5 Colombian peso mainly), which gathered pace in

the second quarter.

Like-for-like sales were up 9% over the first half, with a marked acceleration in the second quarter.

In Colombia, in a buoyant market, the Group generated organic growth of close to 30% for the first-half, which surged to almost 40% in the second quarter. These very impressive performances were driven by continued progress in cookware and small domestic appliances where all product categories contributed to growth. Despite the persistence of certain raw material and component procurement issues, the Group leveraged the competitiveness of its local industrial sites to pursue its expansion and market share gains.

In Brazil, significant inventory destocking in the retail was unfavorable for sell-in, overall. The decline in our sales eased somewhat by June 30, after a second quarter that enjoyed slight organic growth. Business held up well for cookware, through sustained activation both offline and online, but trends were more mixed in small domestic appliances amid heavy promotional activity.

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