Leifheit AG

Quarterly Report • May 11, 2021

Quarterly statement for the period ending 31 March 2021

At a glance

• Group turnover grows by 25.5% from m€ 68.7 to m€ 86.2 in the first quarter of 2021
• Positive trend in the domestic market of Germany continues with turnover growth of 38.3%
• Successful inaugural TV campaign for the Soehnle brand with turnover growth of 27.5%
• Group EBIT almost doubled year-on-year from m€ 4.3 to m€ 8.3
• Further improvement in gross margin due to focus on higher-margin products
• Growth-relatet no cash flow improvement yet
• Forecast for 2021 remains unchanged: Group turnover growth by at least 5%, Group EBIT expected of between m€ 20 and m€ 24

Key figures of the Group as at 31 March

		2020	2021	Change
Turnover
Group	m€	68.7	86.2	25.5%
Household	m€	56.9	69.7	22.5%
Wellbeing	m€	6.2	7.9	27.5%
Private label	m€	5.6	8.6	53.6%
Foreign share	%	58.3	53.9	–4.4 pps
Profitability
Gross margin	%	44.7	45.2	0.5 pps
Cash flow from operating activities	m€	–9.6	–11.4	–18.9%
Free cash flow	m€	–11.1	–12.2	–9.4%
Foreign currency result	m€	–0.2	0.3	>100.0%
EBIT	m€	4.3	8.3	96.0%
EBIT margin	%	6.2	9.7	3.5 pps
EBT	m€	4.0	8.2	>100.0%
Net result for the period	m€	2.9	5.8	98.2%
EPS	€	0.31	0.61	96.8%
Investments	m€	1.6	1.0	–37.5%

Foreword

Dear Shareholders,

The Leifheit Group made an exceptional start to the financial year 2021, despite the ongoing challenges posed by the market environment, and continued its growth course in the first quarter of 2021. We were able to almost double earnings before interest and taxes (EBIT) year-on-year in the first three months of 2021 from m€ 4.3 to m€ 8.3. The increase in the gross margin and the substantial turnover growth of 25.5% in the first quarter were the main contributors to the improved result. In our domestic market of Germany we were able to pick up where we left off in the past financial year and generate strong turnover growth of 38.3%. Central Europe also made a crucial contribution to growth with a doubledigit rise in turnover. Demand among customers for floor cleaning and air purification products as well as kitchen accessories rose further in the first three months of the year on account of the ongoing pandemic.

Our Scaling up Success growth strategy is the basis for our performance. We increased our investment in consumer advertising in the first quarter, showcasing the Soehnle Style Sense Safe 300 bathroom scale on TV for the first time with its "very good" test rating from "Haus & Garten Test" magazine. The investment is already paying off: turnover with Soehnle scales has increased by 52%, and the Wellbeing segment has seen significant turnover growth of 27.5% overall. TV advertising for Leifheit and Soehnle products has therefore contributed significantly to the positive business development.

We will continue to bring selected products that have been awarded "very good" test results on account of their quality into the focus of consumers through extensive TV activities in the further course of the year. These include Leifheit rotary dryers, which recorded their most successful first quarter in the company's history in terms of turnover and sales. The Linomatic 600 Deluxe Cover rotary dryer, which was recently featured as the winner from "Meine Gartenwelt" magazine with a grade of "very good", is also providing impetus here. The Regulus Aqua PowerVac cordless vacuum wiper, that has allowed us to gain significant shares in a strong growing market in the past few months, will also be featured on TV. The innovative product is designed for thorough and hygienic cleaning at home and has been proved to eliminate up to 99.99% ¹ of viruses. Consumer demand for Soehnle air purifiers has risen due to the increased hygiene requirements, with turnover in the air category almost doubling in the first quarter. We expanded our range of air purifiers in the first quarter with the addition of the Soehnle Airfresh Clean 400, which recently finished first in a test conducted by "Haus & Garten Test" magazine. The air purifier filters out 99.95%2 of particles such as allergens, viruses and pollutants through its highperformance four-stage cleaning system, HEPA filter and UV-C light. We anticipate significant growth impetus in the second quarter of 2021 on the back of our TV advertising activities.

The turnover-related rise in working capital had an impact on cash flow in the first quarter. Against the backdrop of the COVID-19 pandemic, we increased inventories at the end of 2020 so that we could continue to seize growth opportunities and maintain a resilient supply chain. At the same time, trade receivables rose even further due to the strong increase in turnover. The seasonally and growthrelated negative free cash flow in the first quarter stood at m€ –12.2. We expect to see a significant improvement in the cash flow situation over the next few months and plan to reduce working capital yearon-year over the year as a whole.

The Leifheit Group is currently facing challenges in the supply chain, production and logistics due to the pandemic. Ongoing restrictions and closures of key trade channels remain a factor, thus the impact of the pandemic on overall economic development and the business activities of the Leifheit Group remain difficult to assess.

As a result, the forecast for the financial year 2021 published in March remains unchanged in spite of first-quarter growth surpassing original expectations. We continue to anticipate Group turnover growth by at least 5% compared to the previous-year figure and Group EBIT of between m€ 20 and m€ 24.

Effective as at 1 May 2021, Marco Keul, who was responsible for Group Controlling for almost nine years in his previous role, took over the function of CFO from Henner Rinsche, who had held this role as Chairman of the Board of Management and CEO in personal union since April 2020. As a Management Board team of three now, we will work together continuously to drive forward the Scaling up Succes growth strategy in the interest of the sharesholders.

We greatly appreciate your loyalty to the Leifheit Group on this exciting journey.

The Board of Management

Henner Rinsche Igor Iraeta Munduate Marco Keul

Quarterly statement for the period ending 31 March 2021

¹ Tested on modified vaccinia virus Ankara with Leifheit universal cleaner (5ml in 500ml, max. water temperature 60˚ C).

² Efficiency of particle filter material tested externally in accordance with EN 1822. HEPA H13 filter material used. Aerosol removal tested by the Institute of Fluid Mechanics and Aerodynamics at the Universität der Bundeswehr München; with aerosol particles (Ø 0.4 µm) in a room with a capacity of approximately 60 m³ at performance level 4.

Quarterly statement for the period ending 31 March 2021

Business performance

The Leifheit Group began 2021 in great shape even though significant sales channels remained closed in the reporting period due to the COVID-19 pandemic. The Group generated turnover of m€ 86.2 in the first quarter of 2021, which marks a considerable increase on the previous-year figure of m€ 68.7. With growth of 25.5%, Leifheit was able to continue the growth trend of the past few quarters.

Not only did the Household segment make a substantial contribution to turnover growth, the Wellbeing segment also recorded significant growth. TV advertising for Leifheit and Soehnle products contributed significantly to the positive performance. In addition, the Group recorded rising demand for floor cleaning products, air purifying products and kitchen accessories against the backdrop of the coronavirus pandemic.

The Leifheit Group generated double-digit increases in turnover in the domestic market of Germany and in Central Europe. In Eastern Europe and in markets outside of Europe, on the other hand, the Group saw slight declines in turnover. Foreign turnover rose by m€ 6.5 to m€ 46.5 in the first quarter (previous year: m€ 40.0). The share of Group turnover generated abroad fell slightly year-on-year in the first three months of 2021 to 53.9% (previous year: 58.3%).

The positive business development in the first quarter of 2021 shows that initiatives launched as part of the Scaling up Success growth strategy are continuing to bear fruit. Intensive marketing of selected products rated "very good" paid off and resulted in an increase in consumer demand for Leifheit and Soehnle products.

Group turnover by region

Germany

In its home market of Germany, the Leifheit Group generated outstanding turnover growth of 38.3% in the first three months of the financial year 2021. Total turnover rose to m€ 39.7 (previous year: m€ 28.7). As a result, the Leifheit Group generated 46.1% of its turnover in Germany.

The significant increase was fuelled in particular by demand for products advertised on TV, which made a disproportionately high contribution to turnover. These included the Pegasus drying rack, the Linomatic rotary dryer, the Profi XL cleaning system and the innovative Regulus Aqua PowerVac cordless vacuum wiper.

3M 2020 3M 2021

Central Europe

In Central Europe, the Leifheit Group generated robust turnover growth of 24.3% to m€ 35.1 (previous year: m€ 28.2) in the first quarter of 2021. The Group made significant gains in France and Italy in particular, which was due to the increased marketing activities in these markets. There was also significant turnover growth in Austria as a result of the expanded distribution network. Following significant growth due to increased consumer advertising in the first quarter of the previous year, turnover in the Netherlands failed to match the previous-year figure in the first three months of 2021 due to the pandemic-related closure of a significant customer.

Eastern Europe

Turnover in the Eastern Europe region fell by 3.4% in the first three months of the year from m€ 9.6 in the previous year to m€ 9.3. Significant double-digit growth rates were recorded in the Czech Republic and in Romania, but turnover was down slightly year-onyear in other markets in Eastern Europe. In Poland, for instance, a decline in turnover was reported due to changes in the campaign schedule.

Rest of the world

In markets outside of Europe, the Leifheit Group generated turnover roughly on a par with the previous year in the first quarter of 2021. Turnover decreased marginally by 0.4% from m€ 2.2 to m€ 2.1. The Group was able to generate increases in turnover in South America, Australia and the US. However, growth in these areas was not able to compensate fully for declines in turnover in other markets outside of Europe.

Group turnover by segment

The reportable segments have been divided as follows:

• the Household segment, in which we market and sell the Leifheit brand and products from the cleaning, laundry care and kitchen goods categories;
• the Wellbeing segment, featuring the Soehnle brand and a range of scales, health products and room air treatment products; and
• the Private Label segment, featuring the French subsidiaries Birambeau and Herby, which includes kitchen goods and laundry care products created especially for private-label brands.

Group turnover by segment in m€

Household

In the Household segment, the Leifheit Group generated a 22.5% increase in turnover to m€ 69.7 (previous year: m€ 56.9) in the first quarter of 2021. The segment's share in Group turnover declined year-on-year from 82.9% to 80.9% in the reporting period.

All product categories contributed to the strong performance with double-digit growth rates. In the kitchen goods and cleaning categories, Leifheit benefited from TV advertising for cleaning products and changes in consumer behaviour caused by the pandemic. There has been a noticeable increase in the need for good hygiene among the general population, which continues to boost sales of cleaning products. In addition, people are cooking more at home due to restaurant closures and the risk of infection, which is reflected in sales of kitchen products.

The laundry care category also developed positively once again in the reporting period. Strong demand for Leifheit rotary dryers made a major contribution to turnover growth. The Leifheit Linomatic 600 Deluxe Cover rotary dryer emerged victorious in a "Meine Gartenwelt" magazine test with the grade "very good".

Wellbeing

The Leifheit Group was able to generate total turnover of m€ 7.9 (previous year: m€ 6.2) in the Wellbeing segment with the Soehnle brand, which equates to significant growth of 27.5% compared to the first quarter in the previous year. The share of Group turnover attributable to this segment rose accordingly from 9.0% in the previous year to 9.1%.

Strong growth of Soehnle scales, which were advertised on TV for the first time in the first quarter of 2021, was a primary factor in the positive turnover performance. There was a further increase in demand for Soehnle air purifiers on account of the rise in need for good hygiene. The range of air purifiers was expanded in the first quarter with the addition of the Soehnle Airfresh Clean 400, which recently finished first in a test conducted by "Haus & Garten Test" magazine. The air purifier filters out 99.95% ¹ of particles such as allergens, viruses and pollutants through its high-performance fourstage cleaning system, HEPA filter and UV-C light. This product innovation already made a positive contribution to turnover. All in all, the Leifheit Group was able to almost double turnover in the air product group.

Private Label

The Private Label segment, which mainly distributes private-label through its French subsidiaries Birambeau and Herby, generated turnover of m€ 8.6 in the reporting period (previous year: m€ 5.6), which equates to a rise of 53.6%. The share of Group turnover attributable to this segment rose accordingly to 10.0% (previous year: 8.1%).

The increase in turnover was partly due to the lockdown in France in the first quarter of the previous year, which significantly impacted business in the first three months of 2020. In addition, Private Label business was also able to achieve growth in the first quarter of 2021 as a result of pipeline filling effects caused by distribution expansion and the acquisition of new customers.

¹ Efficiency of particle filter material tested externally in accordance with EN 1822. HEPA H13 filter material used. Aerosol removal tested by the Institute of Fluid Mechanics and Aerodynamics at the Universität der Bundeswehr München; with aerosol particles (Ø 0.4 µm) in a room with a capacity of approximately 60 m³ at performance level 4.

Net assets, financial position and results of operations

The Leifheit Group generated earnings before interest and taxes (EBIT) of m€ 8.3 in the first three months of the financial year 2021, which is almost double the previous-year figure of m€ 4.3.

Additional contribution margins from the m€ 17.5 increase in turnover and the rise in the relative gross margin of 0.5 percentage points resulted in an m€ 8.3 increase in gross profit. This was offset by the planned increase in advertising costs of m€ 2.7 due to TV activities, a rise in freight out to m€ 1.0 due to the turnover growth and higher commission of m€ 0.4. Research and development costs, administrative costs and other operating income and expenses remained roughly stable year-on-year. The foreign currency result improved by m€ 0.5 in the first quarter due to exchange rate development.

Earnings before taxes (EBT) stood at m€ 8.2 (previous year: m€ 4.0). Less taxes, this equalled a net result for the period of m€ 5.8 in the first quarter of 2021 (previous year: m€ 2.9).

Group liquidity declined by m€ 12.3 in the first three months of 2021 and stood at m€ 26.5 as at 31 March 2021. Cash outflow from operating activities amounted to m€ 11.4 in the reporting period (previous year: m€ 9.6). This was primarily due to the turnover-related m€ 19.7 increase in working capital. At m€ 1.0, investment was down year-on-year in the first three months of 2021 (previous year: m€ 1.6). The seasonally and growth-related negative free cash flow in the first quarter stood at m€ –12.2 (previous year: m€ –11.1).

The balance sheet total rose by m€ 12.6 to m€ 242.6 compared to 31 December 2020 on account of the growth. On the assets side, the rise in trade receivables of m€ 26.3 was offset by the decline in cash and cash equivalents of m€ 12.3. On the equity and liabilities side, equity rose by m€ 9.3 and trade payables and other liabilities increased by m€ 8.9, while pension obligations fell by m€ 3.7 due to interest rate development. The equity ratio climbed to 45.2% (31 December 2020: 43.7%).

Risks

The risks for the Leifheit Group were described in detail in the combined management report as at 31 December 2020. In the reporting period there were no significant changes in the main risks for the remaining months of the financial year. There has also been no significant change in the overall risk assessment in relation to the coronavirus crisis due to the ongoing COVID-19 pandemic.

Turnover and earnings forecast for the current financial year 2021

The Leifheit Group's earnings performance in the first quarter of 2021 was above original expectations. Nevertheless, it remains extremely difficult to assess the implications of COVID-19 and particularly the challenges caused by the pandemic in the supply chain, production and logistics, as well as ongoing restrictions and closures in key trade channels, on business development and the financial position and results of operations of the Leifheit Group. The forecast for the financial year 2021 published in March therefore remains unchanged.

The Board of Management of Leifheit AG anticipates an increase in Group turnover by at least 5% compared to the previous year. Our strategy further centers on expanding our core business with the Leifheit and Soehnle brands, which we aim to drive forward with increased consumer advertising and adequate TV campaigns. We have earmarked a large part of our 2021 advertising spendings in the first half of the year. On this basis, we again expect significant growth impetus in the second quarter of 2021.

We expect turnover growth in the Household segment of at least 6%. In the considerably smaller Wellbeing segment, we anticipate a plus of at least 7%. In the Private Label segment, we expect turnover to be slightly above the previous year's level.

We continue to expect EBIT of between m€ 20 and m€ 24.

We will continue to follow our fundamentally conservative financial policy in the current financial year. We expect a free cash flow of around m€ 10 to m€ 14 in 2021, together with a decline in working capital compared to 2020. This assessment is based on the expected increase in receivables due to the anticipated customer structure and the forecast growth. At the same time, in connection with the gradual phase out of COVID-19 containment measures and our strategic measures to streamline our product lines, we anticipate a reduction in inventories compared to 2020.

Further information can be found in the recently published annual financial report for the financial year 2020 of the Leifheit Group, which is available on our website at financial-reports.leifheit-group.com.

Statement of comprehensive income k€

	1 Jan to 31 Mar 2020	1 Jan to 31 Mar 2021
Turnover	68,713	86,240
Cost of turnover	–38,029	–47,285
Gross profit	30,684	38,955
Research and development costs	–1,198	–1,381
Distribution costs	–20,698	–25,226
Administrative costs	–4,532	–4,549
Other operating income	237	343
Other operating expenses	–49	–120
Foreign currency result	–192	314
EBIT	4,252	8,336
Interest income	3	7
Interest expenses	–250	–191
Net other financial result	–4	–
EBT	4,001	8,152
Income taxes	–1,081	–2,366
Net result for the period	2,920	5,786
Contributions that are not reclassified in future periods in the statement of profit or loss
Actuarial gains/losses on defined benefit pension plans	4,325	3,385
Income taxes from actuarial gains/losses on defined benefit pension plans	–1,267	–992
Contributions that may be reclassified in future periods in the statement of profit or loss
Currency translation of foreign operations	–784	130
Currency translation of net investments in foreign operations	–1,096	58
Income taxes from currency translation of net investments in foreign operations	321	–17
Net result of cash flow hedges	511	1,184
Income taxes from cash flow hedges	–141	–342
Other comprehensive income	1,869	3,406
Comprehensive income after taxes	4,789	9,192
Earnings per share based on net result for the period (diluted and undiluted)	€ 0.31	€ 0.61

006

Current assets Cash and cash equivalents 38,825 26,485 Trade receivables 57,427 83,701 Inventories 59,720 62,067 Income tax receivables 579 744 Contractual assets 1,078 1,049 Derivative financial instruments 374 1,047 Other current assets 4,297 1,533 Total current assets 162,300 176,626 Non-current assets Intangible assets 18,755 18,566 Tangible assets 37,597 37,032 Right of use assets from leases 1,011 1,109 Deferred tax assets 10,234 9,158 Derivative financial instruments – 39 Other non-current assets 112 113 Total non-current assets 67,709 66,017 Total assets 230,009 242,643 Current liabilities Trade payables and other liabilities 47,059 55,965 Income tax liabilities 3,395 1,799 Other provisions 4,917 4,922 Derivative financial instruments 641 100 Lease liabilities 670 699 Total current liabilities 56,682 63,485 Non-current liabilities Provisions for pensions and similar obligations 68,004 64,294 Other provisions 3,880 3,907 Deferred tax liabilities 524 867 Derivative financial instruments 149 – Lease liabilities 344 412 Total non-current liabilities 72,901 69,480 Equity Subscribed capital 30,000 30,000 Capital surplus 17,026 17,029 Treasury shares –7,445 –7,388 Retained earnings 78,072 83,858 Other reserves –17,227 –13,821 Total equity 100,426 109,678 Total equity and liabilities 230,009 242,643		k€	31 Dec 2020	31 Mar 2021
	Balance sheet

Statement of cash flow k€

	1 Jan to 31 Mar 2020	1 Jan to 31 Mar 2021
Net result for the period	2,921	5,786
Depreciation and amortisation	1,975	1,876
Change in provisions	49	–295
Result from disposal of fixed assets and other non-current assets	–9	–58
Change in inventories, trade receivables and other assets not classified as investment or financing activities	–10,376	–26,079
Change in trade payables and other liabilities not classified as investment or financing activities	–4,221	7,505
Other non-cash expenses and income	111	–151
Cash flow from operating activities	–9,550	–11,416
Proceeds from the sale of tangible assets and other non-current assets	16	186
Payments for the purchase of tangible and intangible assets	–1,586	–991
Cash flow from investment activities	–1,570	–805
Changes in treasury shares	–	60
Payments for lease liabilities	–180	–191
Cash flow from financing activities	–180	–131
Change in cash and cash equivalents	–11,300	–12,352
Change in cash and cash equivalents due to exchange rates	–1	12
Cash and cash equivalents at the start of the reporting period	50,301	38,825
Cash and cash equivalents at the end of the reporting period	39,000	26,485

Segment reporting Key figures by reportable segments

as at 31 March 2021 in m€	Household	Wellbeing	Private Label	Total
Turnover	69.7	7.9	8.6	86.2
Gross profit	33.9	3.4	1.7	39.0
Segment result (EBIT)	7.2	0.4	0.7	8.3

Key figures by reportable segments as at 31 March 2020 in m€	Household	Wellbeing	Private Label	Total
Turnover	56.9	6.2	5.6	68.7
Gross profit	26.8	2.6	1.3	30.7
Segment result (EBIT)	4.1	0.4	–0.2	4.3

Information on the segments and their management is available in our annual financial report 2020.

Additional information

This quarterly statement is in accordance with section 53 of the exchange rules for the Frankfurter Wertpapierbörse. It is not a quarterly financial report according to the requirements of section 115 of the German securities trading act (WpHG). It was neither audited nor reviewed by an auditor. The results of the current reporting quarter do not necessarily make it possible to draw conclusions regarding the development of future results.

The accounting and valuation principles used by Leifheit correspond to those of the most recently published consolidated financial statements as at the end of the previous financial year, while taking into consideration the accounting standards to be applied for the first time. A detailed description can be found in the notes to the annual financial report 2020 of the Leifheit Group, which is available on our website at financial-reports.leifheit-group.com.

There were no changes in the scope of consolidation or major changes in the organisational structure or business model in the reporting period.

Personnel changes were made to Leifheit AG organs after the end of the reporting period:

The Supervisory Board appointed Marco Keul as a member of the Board of Management and Chief Financial Officer (CFO) effective as at 1 May 2021. Marco Keul takes over the CFO function from Henner Rische (Chairman of the Board of Management, CEO), who took over both roles in April 2020. As a result, the Leifheit AG Board of Management now consists of three members again.

Disclaimer

Forward-Iooking statements

This quarterly statement contains forward-looking statements which are based on the management's current estimates with regard to future developments. Such statements are subject to risks and uncertainties which are beyond Leifheit's ability to control or estimate precisely, such as statements on the future market environment and economic conditions, the behaviour of other market participants and government measures. If one of these or other uncertain or unforeseeable factors occur, or if the assumptions on which these statements are based prove inaccurate, actual results could differ materially from the results cited explicitly or contained implicitly in these statements. Leifheit neither intends to, nor does it accept any specific obligation to, update forwardlooking statements to reflect events or developments after the date of this statement.

In the event of any discrepancies between this English translation of the quarterly statement and the German version, the German version will take precedence.

Minor differences may occur when using rounded amounts and percentages due to commercial rounding.

Financial calendar

2 Jun 2021	Virtual Annual General Meeting
11 Aug 2021	Financial report for the first half-year ending 30 June 2021
11 Nov 2021	Quarterly statement for the period ending 30 Sept 2021

PO Box 11 65 56371 Nassau/Lahn, Germany Telephone: +49 2604 977-0 www.leifheit-group.com ir@leifheit.com