In a generally difficult environment, shaped by an unsettled geopolitical context, a slowing economy, and sharp currency fluctuations, appliance company Groupe SEB today reported a satisfactory performance in the first 6 months of 2003 with improved profitability and a strengthened balance sheet. The company reported that its operating margin rose by 11.6 percent, while net debt stood at euro 323.6 million, a reduction of euro 132.7 million compared with June 30, 2002.
In the 6 months ended June 30, 2003, consolidated sales declined by 6.5 percent to euro 1,026.2 million at current exchange rates, but were up 1.8 percent at constant rates. The negative 8.3 percent currency effect was primarily related to the U.S. dollar, the Brazilian real, the British pound and the Japanese yen, the Group said. Sustained in the first 3 months, business was hurt in the second quarter by a sharp decline in consumer spending in several markets, such as Germany, North America, and the Middle East, where demand was hard hit by the war in Iraq, the company said.
Operating margin rose 11.6 percent to euro 70.5 million, led by the continued recovery in profitability at Moulinex-Krups and a further reduction in purchasing costs and other expenses. The currency effect, which had a significant impact on sales, was much less severe on operating margin, which widened to 6.9 percent of net sales from 5.8 percent in first-half 2002.
Income from ordinary activities before net financial expense was nearly unchanged at euro 53.7 million, primarily due to the non-recurrence of the extraordinary gains realized in first-half 2002.
At euro 35 million, net income attributable to SEB S.A., after amortization of goodwill, was down 11.6 percent for the period, resulting from a heavier tax burden in first-half 2003.
On the balance sheet, disciplined management of current assets and the currency effect combined to reduce operating working capital requirement. Net debt was cut to euro 323.6 million from euro 456.3 million at 30 June 2002, for a net-debt-to-equity ratio of 0.64.
According to Groupe SEB, this improvement in business fundamentals reflects the Group's commitment and ability to focus on increasing profitability. This is enabling it to take the measures needed to leverage the synergies from the Moulinex-Krups take-over and to drive its sustainable, long-term growth, led by enhanced innovation, the company said. This is why, despite the difficult economic environment that is expected to keep sales stable at constant exchange rates, Groupe SEB says it is confident in its future and maintains its 2003 objective of a slight improvement in profitability.
The 2003 interim report will be available as of Oct. 1 2003, and 9-month sales will be released on October 15, 2003.
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