Value Ideas Blog
Investment Analysis – Hornbach Baumarkt AG

HORNBACH Baumarkt AG

Industry Overview

 
Today we want to take a look on a company that is in the retail business, which is normally a place where the competition between the several players really hard. We are talking about the Hornbach Baumarkt AG, one of Europe’s leading and Germany’s second biggest DIY-Stores operator. DIY stands for the Do-It-Yourself Industry. But where does the high competition come from? If you take a closer look at the DIY Industry in Germany, you will clearly see that you can find nearly always two or more DIY stores next to each other, and that is the case in nearly every bigger city in Germany. Until a few weeks ago there were 4 big competitors in the German market which have a market share greater than 10% each and furthermore there are numerous other players in the market. In the next chart you can see that OBI is the biggest player in the market with 24,2% of sales followed by Bauhaus 17,5%, Hornbach 12,3%, Praktiker 12%, Hagebau 10,5% and Globus 6%. Another interesting fact is that Praktiker lost over 9% of its market shares in only 5 years. (The sales numbers are out of a couple of sector magazines and annual reports, Hornbach itself says that they have a market share of about 10%, due to the fact, that they take also some companies into account, which are not clearly in the DIY industry). Furthermore you can find some regional brands. shares    read more
Sto AG is the leading manufacturer and distributor of products for heat insulation, constructing and products for the renovation of building facades. The company was founded in the year 1955 by Wilhelm Stotmeister and was the inventor of organic bonded render. The equity of the company is divided into 4.320.000 bearer shares and 2.538.000 preferred stocks. The founding family is still in charge of the company and holds all of the non-public traded voting equity. As an investor you can only invest into the preferred stocks of the company. The company divides itself in to three different segments, the first and biggest segment is face-systems. Under the roof of face-systems we can find the core business Wärmedämm-Verbundsysteme (WDVS) (in WDVS Sto is, up to its annual report, the leading producer) and vorgehängte Fassadensysteme (VHF) which represent 49.6% of the total revenue of the company. The second segment is surface coating which represents 24.5% of the revenue and in which the businesses around rendering and painting/coating are grouped. The last big segment is indoor products, render and colors for indoor usage, which represents 13.2% of sales. In addition Sto manufactures and distributes ground and floor lamination which represents 12.7% of total revenue. read more
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