Financial report for the first half-year ending 30 June 2022

Leifheit Group      Financial report for the first half-year ending 30 June 2022

Key figures of the Group as at 30 June

Cash flow from operating activities

Net result for the period

Leifheit Group      Financial report for the first half-year ending 30 June 2022

The overall conditions for our company have been anything but favourable in recent months. Despite multiple challenges on a number of levels, we achieved Group turnover of m€ 136.3 in the first half of 2022. Although this figure is 12.5% below the record value of m€ 155.8 from the previous year, we nevertheless achieved the second highest turnover in a first half-year and in a second quarter in the past 15 years on a like-for-like basis. Overall, turnover remains at a significantly higher level compared to the financial years before coronavirus. The growth rates of around 4.5% compared to the first half 2020, and even around 12% compared to 2019 (i.e. before the outbreak of the pandemic), show that our Scaling up Success strategy's expanded marketing efforts are having a lasting effect.

While the past two years were shaped mainly by the effects of the coronavirus pandemic, other factors are increasingly having a significant influence on business development in 2022. Against the backdrop of the COVID-19 pandemic, we were able to benefit from greater demand for hygiene and household products as well as a general strengthening of online trade. These effects are no longer present in 2022. The lifting of restrictions on social contact has instead shifted consumer demand towards areas such as tourism, events and outdoor activities. At the same time, raw material costs, which have been at an extremely high level since 2021, and unabatedly rising energy prices are leading to continuously increasing manufacturing costs. Furthermore, the high inflationary pressure and uncertainty resulting from the Russia-Ukraine war are having a lasting negative impact on general consumer appetite. For example, the Gesellschaft für Konsumforschung (GfK) forecasts a new all-time low of - 30.6 points for the consumer climate in Germany for August 2022.

The extraordinary market conditions also influenced results in the first half of 2022. Earnings before interest and taxes (EBIT) amounted to m€ 2.1 in the reporting period. The decrease of m€ 11.5 was mainly due to the lack of contribution margins from the decline in turnover as well as the drastic rise in material and energy prices. Against this background, we continue to focus on strict cost and resource management and are in continuous negotiation with our partners. The effects of the sales price increases we implemented in 2021 and 2022 are somewhat delayed and can only partially compensate for the enormous increase in costs. In light of the ongoing bottlenecks in procurement markets and the impending gas shortage, we are also working proactively to safeguard our ability to deliver through forward-looking security and inventory management as well as a flexible production.

Our Scaling up Success growth strategy, created at the end of 2019, will once again form the basis for our strategic company orientation in the current financial year. While the current market situation presents many challenges, it also gives us the chance to further promote the core qualities of our products: many of our products are energy-saving and durable, making them sustainable by their very nature. In the face of rising energy prices, many German households are currently looking for ways to reduce their energy consumption and, with it, their electricity costs.

Leifheit Group      Financial report for the first half-year ending 30 June 2022

On average, 14% of household electricity is used just for washing and drying laundry. Switching from electronic dryers to drying racks like the Leifheit Pegasus and rotary dryers like the Linomatic not only saves electricity and money, but also reduces CO2 emissions by around 150 kg compared to an electric dryer. Our "Electricity Savers" campaign encourages consumers to switch to power-free laundry drying. Through it, we hope to benefit from the trend towards more sustainable, energy-saving alternatives as well.

Our new addition to the kitchen goods category, the Leifheit Harmonic insulating jug, allows consumers to actively save money, electricity and packaging waste. The Harmonic combines high quality with modern design and keeps drinks hot for up to 24 hours at 65°C. A comparative test of various insulating jugs by ipi Institut für Produkt- und Marktforschung recently singled it out as "by far the best at preserving heat". Coffee, for example, can be brewed and kept hot in large quantities - a genuine and sustainable alternative to the widespread use of capsule or pod machines, and one that also saves on packaging waste.

We are also launching further enhancements of our successful range of efficient cleaning appliances, accompanied by intensive marketing efforts. The Regulus Aqua PowerVac Pro, which vacuums, mops and dries all in one, can reach into every corner thanks to its new corner glider with micro duo wiper cover. The new CleanTenso Power steam mop cleaner provides hygienic cleaning without chemical products while also saving water. To underline the CleanTenso Power's high quality and durability, it is supplied with an extended warranty period.

Given the extremely high procurement costs and the deteriorating economic environment, along with inflation and consumer caution, we expect the Leifheit Group to continue facing extensive challenges in the second half of 2022 as well. Based on the business results of the first half of the year and the current economic environment, we revised our expectations for the full year 2022 on 14 July 2022. For financial year 2022, we now expect a sharp, but probably still single-digit percentage decrease in turnover compared to the previous year's strong figure (2021: m€ 288.3). Due to the substantial increases in procurement costs, we also expect earnings before interest and taxes (EBIT) to be in the low single-digit million range.

With our solid financial basis and Scaling up Success strategy, we consider ourselves well positioned even under the increasingly difficult overall conditions. As the Board of Management team, we continue work constantly in the interests of all shareholders to ensure that our adopted strategy remains successful in the long term. We would especially like to thank our employees for the consistently high level of commitment they have demonstrated. Together we will continue to attributed our goal of leading Leifheit on a sustainable growth path. We greatly appreciate your loyalty to the Leifheit Group on this exciting journey.

Henner RinscheIgor Iraeta Munduate Marco Keul

Unaudited interim management report as at 30 June

    Financial report for the first half-year ending 30 June 2022

The Leifheit Group is one of the leading European brand suppliers of household products. The company offers high-quality and innovative products and solutions that make everyday life at home easier and more convenient.

There were no significant changes in the foundations of the Leifheit Group in the first half of 2022. For detailed information on the company's structure, business and strategy - as well as on the control system, innovation and product development - please see the annual report for 2021, which is available on our website at financial-reports.leifheit-group.com .

Following the end of the reporting period (30 June 2022), there were no events at the Leifheit Group which can be expected to have a material influence on the net assets, financial position and results of operations of the company.

Against the backdrop of the Russia-Ukraine war, the International Monetary Fund (IMF) predicted global economic growth of 3.6% for the current year in its April 2022 report. The forecast came on the heels of a phase of worldwide recovery from the consequences of the COVID-19 pandemic. In July 2022, the IMF adjusted its forecast downward yet again and now expects global economic growth of only 3.2% for 2022, which is 0.4 percentage points lower than in its April economic forecast. According to the IMF, the economic impact of the war in Ukraine, high inflation worldwide and the unexpectedly sharp economic slowdown in China due to COVID-19 outbreaks and shutdowns are leading to a significant

slowdown in global growth. Worldwide production shrank in the second quarter, due mainly to downturns in China and Russia. In addition, consumer spending in the US fell short of expectations. The IMF also says that the impact of the war in Ukraine and tighter monetary policy are dampening growth prospects in Europe. The IMF has revised global inflation upwards as a result of food and energy prices, as well as ongoing imbalances between supply and demand, expecting it to reach 6.6% in advanced economies and 9.5% in emerging and developing economies in 2022.

The European Commission's summer forecast is equally sobering. It predicts that the EU economy will grow by only 2.7% in 2022. Overall, the impact of the geopolitical tensions and consequences of the current flow of refugees due to the Russia-Ukraine war are having a marked negative effect on the previous easing in light of the less tense pandemic situation, at least in Europe. The inflation forecast has been revised upwards by a substantial amount compared to the spring forecast. Price increases in the EU are now estimated at 8.3% in 2022, having already climbed to record levels by June.

The German economy is also steering through choppy waters, according to a joint diagnosis by the five leading economic research institutes. In their view, the buoyancy created by the abolition of pandemic restrictions, the aftermath of the coronavirus crisis and the shockwaves caused by the war in Ukraine are the reasons for conflicting economic currents. The common factor in all these influences is their effect in driving up prices. The institutes expect the German economy to grow by 2.7% in 2022. The ifo Institute also expects high inflation, the war in Ukraine and persistent supply bottlenecks to hamper economic recovery in almost all sectors of the economy. For the current year, the ifo Institute forecasts an inflation rate of 6.8% in Germany.

Consumer sentiment in Germany continues to worsen. The consumer research organisation Gesellschaft für Konsumforschung (GfK), for example, forecasts a new all-time low for the consumer climate of - 30.6 points for August 2022. This represents the lowest value since the start of the survey for the whole of Germany in 1991 and means a further decline of 2.9 points compared to the previous month of July 2022. According to the GfK, the reasons for the historically poor consumer sentiment are the ongoing war in Ukraine and the continual disruption of supply chains, which are causing energy and food prices in particular to explode. Concerns about sufficient gas supplies in the coming winter are also having a further impact on consumer sentiment, the GfK says. The organisation also reports that the economic outlook declined further after a brief recovery in May 2022 to - 18.2 points in July 2022, a fall of around 73 points compared to the same period last year. Income expectations as measured by the GfK also continued their steep downhill slide in July 2022, reaching - 45.7 points, 12.2 points lower than in June 2022. Alongside its negative effect on consumer sentiment, the historically high inflation is also significantly eroding the purchasing power of private households. As a result, any savings built up in the pandemic years will probably not be channelled into purchases and acquisitions as hoped. After slumping the previous month, propensity to buy recorded another slight decline of 0.8 points to - 14.5. Since private households are having to pay considerably more for energy and food, there are correspondingly fewer financial resources available for other purchases.

This also creates challenging conditions for the German retail sector. In a survey by the German retail association Handelsverband Deutschland (HDE), 44% of the companies surveyed accordingly anticipate a decline in turnover for the whole of 2022. The HDE still expects nominal growth in turnover of 3% for the sector as a whole compared to the previous year. But after adjusting for inflation, the retail sector will slip into the red by 2%.

Group      Financial report for the first half-year ending 30 June 2022

The euro reference rate for the Chinese currency renminbi (yuan) was € 7.21 at the beginning of 2022. In line with the euro-dollar exchange rate, the euro lost strength against the yuan overall in the course of the first half of the year. This culminated in 2022 in the euro exchange rate's all-time low of CNY 6.88 on 8 March 2022. After a moderate recovery of the euro, the exchange rate temporarily rose above the CNY 7 per euro mark again and posted a moderately lower value of CNY 6.96 per euro as at the reporting date of 30 June 2022.

After trading at an exchange rate of USD 1.13 at the beginning of 2022, the euro continuously lost value against the US currency through to June and fell to USD 1.04 by 30 June 2022. The benchmark interest rate rises planned and already implemented by the Federal Reserve have, combined with the ECB's continued hesitant stance and the strong performance of the US dollar overall, to keep the euro under pressure. The Russia-Ukraine war is compounding this situation, as it has so far impacted the euro area more than the US economy. On 12 July 2022, the euro fell to parity with the US dollar for the first time since 2002.

Net assets, financial position and results of operations

In the first six months of financial year 2022 the Leifheit Group's turnover fell to m€ 136.3, compared to m€ 155.8 in the first half of 2021. Despite the 12.5% drop in turnover compared to the extremely successful first half of 2021, the company achieved the second highest turnover in a first half-year and in a second quarter in the past 15 years on a like-for-like basis.

Alongside general consumer restraint, the historically low consumer climate and the resulting drop in footfall in the retail sector, a shift in consumer behaviour - for example, to more spendings in tourism - due to the extensive removal of coronavirus restrictions also had a negative impact on turnover development in the first half of 2022. This trend was particularly apparent in the German domestic market, where the online and retail trade initially sold off existing high stock levels and therefore demanded fewer products. In view of the extremely high raw material costs since 2021 and energy prices that continue to rise unabated, the Leifheit Group has only been able to partially compensate for the increased purchasing and production costs through previous sales price increases.

At the same time, however, turnover remained at a high level. As a result, Group turnover in the first six months of 2022 was about 4.5% higher than the corresponding figure in the first half of 2020 and about 12% higher than the corresponding figure for the pre- coronavirus year 2019. The continuing high level of turnover in spite of difficult market conditions demonstrates the lasting success of our expanded marketing efforts, especially with the Leifheit and Soehnle core brands.

Turnover for the first six months of financial year 2022 was divided by region as follows: Germany accounted for 44.1% of Group turnover (previous year: 46.7%), Central Europe excluding Germany 40.8% (previous year: 38.9%), Eastern Europe 12.1% (previous year: 11.7%) and the Rest of the World 3.0% (previous year: 2.7%).

Turnover with a major online retailer that had previously been allocated partly to Central Europe because the customer centre is located there has been attributed to Germany since the third quarter of 2021. The relevant 2021 figures have been adjusted for the sake of comparability.

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Leifheit AG published this content on 09 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2022 05:35:06 UTC.