FIRST-HALF 2009 FINANCIAL RESULTS (APPROVED BY THE BOARD OF DIRECTORS)

Transcription

1 PRESS RELEASE FOR IMMEDIATE RELEASE FIRST-HALF 2009 FINANCIAL RESULTS (APPROVED BY THE BOARD OF DIRECTORS) Faster deployment of the strategy introduced at the end of 2008 to prepare for the market s recovery: Selling price adjustments in second quarter 2009 to residential units launched in 2007 and significantly reduced valuations of certain plots of land Action to rebuild the land bank in the Paris area and other major regions Gross margin sharply impacted by measures introduced in 2008 and stepped up in 2009 Marketing shift since 2008 towards first-time buyers and investors Second-quarter improvement in the number of orders that continued in June, with an excellent take-up rate for new programs (Paris - July 9, 2009) Kaufman & Broad S.A. today announced its financial results for the first half of fiscal 2009, which ended on May 31. Commenting on the Group s performance and outlook, Guy Nafilyan, Chairman and Chief Executive Officer, said: After focusing our energies in 2008 on adapting to new market conditions and renegotiating bank financing terms, we decided to speed up deployment of the strategy which was announced at the end of last year. Part of this strategy consists of selling the housing units launched in 2007 as quickly as possible in order to generate cash, pay down debt and avoid holding unsold finished inventory. To this end, in second-quarter 2009 we decided to assertively lower the selling prices of these units and write down a certain number of yet undeveloped plots of land. All of these measures have had an impact on short-term financial results, particularly on gross profit. In addition our strategy consisted of rebuilding the land bank, which had been scaled down due to project cancellations. Our aim is to develop new programs with products that benefit from French government support initiatives, adhere to the brand s values and generate gross margins in line with our operating criteria. At May 31, 2009, nearly 75% of the Kaufman & Broad offer was comprised of housing units intended for first-time buyers or investors. The overall take-up rate increased strongly to 8% in first-half 2009 compared to 3% in the prior-year period and the take-up rate for new programs stood at nearly 14%. Kaufman & Broad will pursue this strategy with the utmost determination throughout 2009 to ensure that we are well prepared for the property market s recovery. 1/9

2 Consolidated Financial Highlights (in millions) Net revenues Net housing revenues Gross profit Gross margin Current operating profit Non-recurring expenses Income (loss) attributable to shareholders H H % change % % % 12.9% 19.8% -6.9 pts n/m (23.5) - n/m (27.5) 11.7 n/m Decline in revenues, upturn in orders in the second quarter Consolidated net revenues amounted to million in the first six months of fiscal 2009, down 28.8% from the prior-year period. Sales of apartments totaled million, or 87.8% of total housing revenues, while sales of single-family homes amounted to 49.8 million, or 12.2% of the total. In all, 2,555 equivalent housing units (EHUs) were delivered during the period, versus 3,099 in first-half Showroom revenues totaled 2.5 million and commercial property revenues came to 1.6 million. In the second quarter of 2009, orders rose 2% in volume compared to the year-earlier period, but declined 9% in value. This increase in order volume was achieved despite a sharp decline in properties available for sale to 2,640 units in second-quarter 2009 from 7,483 in the prior-year period. Moreover, orders rose in the month of June by 12% in volume and 26% in value. Over the first six months of the fiscal year, net orders declined by 12% in volume to 2,298 units and by 27% in value to million including VAT. In the first half of 2009, the average price of ordered properties fell by 17%, reflecting Kaufman & Broad s newly constituted offer. In the second quarter, the offer was considerably adjusted in line with the strategy announced in In regions outside the Paris area, housing orders totaled million and represented 62% of total orders versus 66.1% in the prior-year period, reflecting Kaufman & Broad s strategy to strengthen its position in the deeper, more robust Ile-de-France market. 2/9

3 During the first six months of fiscal 2009, 13 new programs were launched representing 609 equivalent housing units (EHU), versus 43 programs representing 2,537 EHUs in the prior-year period. First-half 2009 results significantly impacted by measures taken during the period Effective management of working capital requirement Gross profit declined to 53.7 million, from million a year earlier, reflecting the 12.2 million impact of the decision to reduce selling prices on a certain number of programs launched in Gross margin stood at 12.9%. Operating expenses came in at 53.4 million, down by nearly 23% compared to the prioryear period, in line with objectives set for the full year. Current operating profit amounted to 0.3 million, versus 47.1 million in the first half of fiscal Other non-recurring income and expenses represented a net expense of 23.5 million, mainly reflecting write-downs of 12 plots of land for 11.7 million, losses on discontinued programs and provisions set aside for losses on co-developed programs. Finance costs, net amounted to 20.3 million for the period versus 20.9 million for the first six months of fiscal 2008, reflecting stable net debt. Cash flow from operating activities in the first half came to 42.2 million, mainly due to an improvement in working capital requirement that more than offset the decline in cash flow. Working capital requirement represented 31.2% of revenues, a 71 million improvement from November 30, 2008 that was mainly attributable to lower sales and a reduction in inventory resulting from price cuts on completed programs in inventory. The loss attributable to shareholders came to 27.5 million, compared with a profit attributable to shareholders of 11.7 million in the prior-year period. Preparing for the property market s recovery, a strategy introduced in 2008 Under the new strategy launched in 2008, a certain number of projects mainly intended for second time buyers and no longer in line with market conditions were discontinued and products were redefined to suit new demand. In addition, the selling prices of 500 housing units held in inventory or scheduled for delivery in the short term were cut in August Orders had been placed on almost all of these units at the end of first-half The strategy was stepped up in May 2009 by reducing prices by 8% on average 3/9

4 on all residential units launched in 2007, with a view to generating healthy cash flow from operating activities and avoiding unsold finished inventory. It also led to the write-down of 12 plots of land for non-marketed programs located primarily in regions outside the Paris area. As part of the strategy to redefine its products, Kaufman & Broad shifted its marketing focus starting in 2008 to give priority to first-home buyers and investors. This was accomplished by developing programs more suited to the changed market conditions and benefiting from the French government support initiatives. High order levels attested to the success of this strategy. The pick-up rate for all programs amounted to around 8% in first-half 2009 compared to 3% in the year-earlier period and, for new programs, the pick-up rate stood at around 14%. In order to rebuild the land bank for single-family homes and apartments mainly intended for firsthome buyers and investors, Kaufman & Broad signed in the first half of fiscal 2009 purchase options representing 3,500 housing units, of which more than 1,500 are located in the Paris area and 2,000 in other regions, thereby raising the number of housing units represented by the land bank to 10,600 at May 31, It should be noted that the process to rebuild the land bank also involved acquiring land appropriate for the development of student and tourist housing that will benefit from tax breaks in France under the Scellier Act. In the second half of the year, Kaufman & Broad will develop 53 new programs representing an estimated total of 2,500 housing units. Three quarters will consist of units designed for first-time buyers and investors benefiting from French government support initiatives, such as Pass Foncier, the doubling of the loan amount with zero interest, 5.5% VAT and tax breaks under the Scellier Act. One third of the offer will consist of programs launched in 2007 or 2008 and two thirds will correspond to new programs, all with gross margins of between 18% and 20%, in line with Kaufman & Broad s criteria. At May 31, 2009, housing backlog stood at million (excluding VAT), down 41.3% from the year-earlier period, and represented 9.3 months of housing business. For 40 years, Kaufman & Broad has been designing, building and selling single-family homes and apartments, as well as office properties on behalf of third parties. Its size, profitability and strong brand name have made Kaufman & Broad one of France s leading developers and builders of homes. Contacts Senior Vice President Finance & Strategy Philippe Misteli +33 (0) p.misteli@ketb.com Media Relations Solange Stricker / Valérie Copé +33 (0) /9

5 Website: Certain matters discussed in this press release are forward-looking statements, which may be affected by known or unknown risk factors that are difficult for KBSA to foresee or control, and which could cause actual events and results to differ materially from those expressed, implied or otherwise forecast by the company. These risk factors include those described in the Risk Factors section of the Registration Document filed with the Autorité de Marchés Financiers on March 31, /9

6 KAUFMAN & BROAD SA Statement of Income (in thousands) H H Revenues 417, ,014 Cost of sales (363,531) (469,761) Gross profit 53, ,253 Selling expenses (12,689) (16,636) General & administrative expenses (28,133) (37,388) Other current operating income and expenses (12,608) (15,111) Current operating profit ,118 Other non-recurring income and expenses (23,515) - Operating profit (loss) (23,253) 47,118 Finance costs, net (20,301) (20,890) Income taxes 17,526 (4,184) Share of income from equity affiliates 74 1,524 Net income (loss) from fully (25,954) 23,568 consolidated companies Of which minority interests 1,543 11,873 Of which income (loss) attributable to (27,497) 11,695 shareholders Earnings (loss) per share ( ) (1.28) /9

7 KAUFMAN & BROAD SA BALANCE SHEET (in thousands) ASSETS May 31, 2009 November 30, 2008 Goodwill 68,511 68,511 Intangible assets 80,912 81,202 Tangible assets 7,934 7,271 Invest. in equity affiliates and JV 35,478 35,069 Other non-current assets 34,578 1,049 Deferred tax assets Non-current assets 228, ,102 Inventories 429, ,521 Accounts receivable 255, ,257 Other receivables 149, ,742 Cash and cash equivalents 90, ,705 Prepaid expenses 2,096 2,187 Current assets 927,357 1,110,412 TOTAL ASSETS 1,155,689 1,303,514 EQUITY AND LIABILITIES May 31, 2009 November 30, 2008 Issued capital 5,793 5,793 Additional paid-in capital, reserves and 126, ,891 other Income attributable to shareholders (27,497) 8,174 Interim dividend - (32,385) Treasury shares (29,344) (29,719) Shareholders equity 75, ,754 Minority interests 6,804 15,749 Total equity* 82, ,503 Provisions 25,758 20,725 Long-term borrowings 516, ,830 Deferred tax liabilities Non-current liabilities 542, ,361 Short-term borrowings 5,170 7,860 Trade payables 447, ,648 Other payables 75,212 65,811 Deferred income 2,678 2,331 Current liabilities 530, ,650 TOTAL EQUITY AND LIABILITIES 1,155,689 1,303,514 * Following an adjustment to opening equity at 1 December 2007, equity at 30 November 2008 was reduced by 1.7 million by adjusting Other receivables and Deferred tax liabilities. 7/9

8 KAUFMAN & BROAD SA Additional Information Single-Family Homes H H H (in units) , , ,109 Backlog (in thousands, excluding VAT) 88, , ,659 Backlog (in months of business) Deliveries (in EHUs) Apartments H H H (in units) 2,036 2,271 3, , , ,858 Backlog (in thousands, excluding VAT) 581,645 1,005,279 1,076,547 Backlog (in months of business) Deliveries (in EHUs) 2,335 2,772 2,885 Commercial Property H H H (in sq.m) ,368 19,552 Backlog (in thousands, excluding VAT) 3,326 68,517 35,300 8/9

9 KAUFMAN & BROAD SA Additional Information Single-Family Homes Q Q Q2 2007* (in units) ,251 49,263 60,724 Deliveries (in EHUs) Apartments Q Q Q (in units) 1,125 1,121 1, , , ,037 Deliveries (in EHUs) 1,326 1,448 1,604 Commercial Property Q Q Q (in sq.m) ,368 18,060 9/9