GROUPE VIAL 
By PR Newswire/Les Echos/
PRESS RELEASE
Full-year 2007 net profit: €12.7m
Strategic consolidation of manufacturer/distributor model in 2008:
Acquisition of a Bolivian wood company
and construction of a glass plant at Istres
2008 target: 15 new stores
Paris, 17 April 2008
Groupe Vial, France's largest independent discount joinery specialist, announces its consolidated full-
year results for the year ended 31 December 2007.
%
(€ millions, IFRS) 2006 2007
change
87.8
Sales 107.3 +22%
50.4
Gross profit 64.4 +28%
(% of sales) 57.4% 60.0%
Personnel expenses -8.9 -13.0 +46%
Rental charges -3.7 -5.0 +35%
Sales and marketing expenses -2.6 -5.2 +100%
Other external expenses -8.5 -14.5 +71%
Taxes -1.2 -1.9 +58%
Other operating income and expenses 0.0 -0.3 ns
1
25.6
EBITDA 24.5 -4%
29.2% 22.8%
(% of sales)
Depreciation -1.6 -2.1 +31%
Provisions and write-backs -0.3 -0.7 ns
23.6
Recurring operating profit 21.7 -8%
(% of sales) 26.9% 20.2%
24.7
Operating profit 21.8 -12%
(% of sales) 28.1% 20.3%
Finance income 0.5 1.6 +220%
Cost of gross debt -1.7 -4.2 +147%
Tax -7.8 -6.6 -13%
15.9
Net profit 12.7 -20%
(% of sales) 18.1% 11.8%
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1
EBITDA: Recurring operating income before depreciation and provisions
? 2007 highlights
Accelerated network expansion
In 2007, Groupe Vial accelerated the expansion of its distribution network with the opening of 20 new
stores, compared to six in 2006. In keeping with its strategy, the Group continued to expand its
coverage of France with 18 store openings in new areas, including eastern and western France and
the greater Paris region. In Spain, the group also strengthened its network with two new stores in the
south, which are geared towards northern European customers seeking renovation products.
At 31 December 2007, the Groupe Vial network had a total of 60 stores, 41 of which have been
opened for business for less than 3 years. These new stores account for nearly 70% of the Group's
total network. Although they strain short-term profitability, they represent a unique source of growth for
the period 2009-2010.
Additional hiring and greater training capacity
To keep pace with strong network growth, Groupe Vial has accelerated recruitment thanks to a new
HR department. The Group hired 120 new employees during the year, increasing total staff size by
46%. These employees will need to be trained.
Given the lack of a skills training programme for the joinery industry, the Group developed its own
training school several years ago: through classrooms, videos and methodology kits, the Group
implicates all players in the different processes of the value chain. In 2007, the Group reinforced its
training staff and resources, and the department now has five full-time instructors.
Groupe Vial demonstrates its ability not only to hire new staff but also to train and integrate them
within the Group using a time-tested methodology.
? Consolidated 2007 results
The Group's full-year 2007 results reflect the rapid development of the network. The 20 new stores
opened during the year along with over 21 stores that have been operating for less than three years
put a strain on the Group's profitability, but these 41 stores represent a major source of growth for the
years ahead.
Sales
Full-year 2007 sales increased 22% to €107.3m despite a sharp slowdown in fourth-quarter sales due
to a deteriorating economic environment and the transfer of sales representatives from mature stores
to newly opened stores to accelerate staff training.
Excluding the 20 stores opened or integrated in 2007, organic sales growth was 13%.
At constant scope (excluding stores opened in 2007 and in 2006), sales rose 6% for the year thanks to
the growing contribution of stores opened in 2004 and 2005.
Gross profit
Gross profit increased 28% to €64.4m in 2007, with a gross margin of 60%, 2.6 points higher than
2006. In an environment of surging commodity prices, Groupe Vial reaped the benefits of 15 years of
experience in sourcing, demonstrating the pertinence of its model of integrating procurement at the
source. The weak dollar also helped boost the gross margin: 20% of purchases were in dollars in
2007, compared to 13% in 2006.
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EBITDA
In 2007, EBITDA declined 4% to €24.5m due to the accelerated development of the store network.
The store-opening phase requires a big increase in charges at a time when sales are still weak.
Personnel expenses increased 46% with the hiring of 120 new employees. Rental charges rose 35%.
Sales and marketing expenses doubled due to special promotional campaigns to accompany store
openings.
Recurring operating income
The recurring operating margin was 20.2% in 2007. This figure integrates the operating losses of
stores open for less than a year (a third of the network); the below-average operating income of stores
operating for 1 to 3 years; and the normal positive operating income of mature stores, in business for
over three years.
Consequently, the decline in recurring operating income reflects the strategic decision to accelerate
network development in order to guarantee strong growth in the future.
Net financial income
The Group reported financial income of €1.6m in 2007, thanks to cash management and the proceeds
from the issuance of OCEANE bonds convertible into and/or exchangeable for new or existing shares
at the end of September 2007.
The cost of gross debt was higher, notably due to the increase in debt with the OCEANE issue. The
Group follows a conservative interest-rate policy, and all debt is covered by fixed-rate instruments.
The average interest rate for the year 2007 is 4.97%, compared to 4.19% in 2006.
Net profit
The Group reported consolidated net profit of €12.7m despite very strong development efforts.
? Balance sheet
At 31 December 2007, shareholders' equity amounted to €75.1m, up 23% compared to 31 December
2006.
Of the €80m OCEANE convertible bond issue, €2.9m was reported as shareholders' equity and the
remainder as long-term debt. Consequently, gross debt totalled €132m, of which €17.5m matures in
less than one year and €79.5m matures in over five years. The net debt to equity ratio is 53.7%.
Cash and equivalents amounted to €91.7m at 31 December 2007, including €77.4m in net proceeds
from the OCEANE convertible bond issue.
The change in working capital requirements was a negative €40.4m in 2007. This increase in WCR is
mainly due to higher inventory (€75.7m at 31 December 2007), reflecting the greater number of stores
and the increase in average safety reserves.
? Strategic consolidation of Groupe Vial's business model
In 2008, the Group will strategically consolidate its business model as an integrated
manufacturer/distributor of discount joinery. The goal is to sustain the Group's development over the
long term.
Since the beginning of 2008, Groupe Vial has carried out several operations to strengthen each phase
in the business process: design, sourcing, production and distribution.
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Expansion of the renovation product line
The renovation product line will be expanded with the release of a new catalogue in May. This
decision addresses three needs by:
adapting the product offer to a tougher economic environment for new construction
promoting innovation to meet growing demand from consumers
preparing for the introduction of the RT 2010 standard, which should revitalise the sector as of
2009.
The Group will begin marketing numerous innovations to offer customers tailor-made renovation
products at discount prices. For example, Groupe Vial has developed internally a line of customised
wooden stairs at a fixed price; shutter panels with various cuts; etc.
Thanks to its in-house design office, Groupe Vial will develop product lines targeting the very buoyant
renovation sector.
Creation of an eco label
As part of its ecology policy, the Group has created an eco label to participate in reforestation. The
Group pledges to pay 1% of its sales to reforestation associations or structures for each article
purchased with an ?Eco Vial? label.
Acquisition of a Bolivian company: securing wood supplies and prices
In April 2008, Groupe Vial finalised the acquisition of a Bolivian company that manufactures semi-
finished wood products. The company owns timber rights on forestry concessions in Bolivia, 4
woodworking facilities (sawmill, drying facility, plane mill) and a wood closet factory. The wood is
certified by the Forestry Stewardship Council (FSC), which guarantees reforestation. All 70 employees
will be integrated within Groupe Vial. The founder and chief executive has worked with Groupe Vial for
over 15 years to supply wood.
This investment represents a unique opportunity for the Group for several reasons:
It secures a minimum of seven years of wood supplies
It guarantees the stability of wood prices in a saturated market hit by fierce pricing pressures
It strengths our line of wood products at very competitive prices
It will eventually boost margins.
Fabrice Vial, Chairman of Groupe Vial, comments on the acquisition: "We are delighted with this
Bolivian acquisition, which will be a major source of value creation for the Group. We are pursuing our
integration model by securing supplies and prices of one of the most sought after commodities in our
industry. With these new resources, we will be able to develop new products using new varieties of
wood. Moreover, we have worked with the company's manager for numerous years, which should
facilitate its smooth integration within our Group."
Construction of a double-glazing factory in Istres
To increase our independence with suppliers and to secure 100% of double-glazing supplies, Groupe
Vial will invest in the creation of a glass plant at Istres (13), near the Gignac industrial site. The Group
obtained the building permit in early 2008 and construction should start-up in early June. The plant is
to be delivered in the first half of 2009 and will be operational in 2010. The €7m investment, including
equipment, will be reported in 2008 and 2009.
The new plant will also help Groupe Vial to reduce production turnaround times. The Group will be
able to offer customers standard or customised windows in aluminium, wood or PVC in less than four
days, which is a veritable revolution for this market, where the average delivery period is six weeks.
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Implementation of Enterprise Resource Planning (ERP)
Since 2006, Groupe Vial has anticipated the need to set up a high-performance computer system to
automate all information flows, from retail stores to production facilities, inventory management and
accounting. The ERP system is designed to enhance the flow of information and increase data
processing capacity.
As early as 2006, the Group purchased SAP software and selected a systems integrator. All business
units were put to work on this project, which was initially to be delivered in mid 2007. For reasons
beyond the Group's control, the initial switchover planned for early 2008 was unsuccessful and
disrupted the entire production chain.
Corrective measures were taken immediately with the selection of a new SAP-approved systems
integrator. The system, which has the capacity to accommodate the Group's rapid network growth,
should be operational by late 2008. Once in place, the system will save time and generate significant
productivity gains.
Ongoing development of the distribution network
Groupe Vial has made the strategic decision to continue expanding its distribution network at a rapid
pace in 2008. In a sluggish economic and financial environment, the Group intends to seize
opportunities to locate in new areas at very attractive prices. Moreover, the Group has the financial
resources necessary to pursue network expansion.
In 2008, the Group is targeting about 15 store openings, including 12 in France, 2 in Spain and 1 in
Portugal.
By the end of 2008, the Group will have virtually doubled its distribution network compared to the level
at the time of the IPO, with a total of 75 stores, compared to an initial target of 64 stores by 2009.
In France, 9 of the 12 new locations have already been signed at 31 March 2008, with store openings
planned in the second half of 2008.
In Spain, contracts have also been signed for two new stores in Malaga and Alameria, with openings
slated for H2 2008. In Portugal, the Group plans to open its first store in Faro.
At the end of first-quarter 2008, 11 of the 15 new stores planned this year have already been
confirmed.
? Outlook
2008: a transition year and more store openings
The year 2008 will be devoted to consolidating our business model and pursuing a dynamic policy of
new store openings. The priority will be on securing supplies, optimising information flows, hiring and
training new staff, and integrating new stores and bringing them up to Group standards.
Sales growth will be milder in 2008 but the gross margin should be maintained, while accelerated
network expansion will probably strain the Group's operating results.
2009-2010: growing contribution of our business model and the realisation of investments
With the 45 stores opened in 2006-08 reaching maturity (3 years), we expect strong sales growth as of
2009. With the stabilisation of the scope of consolidation, the realisation of 2007/08 investments in
sourcing and production, and the rollout of the new information system, we should be able to return to
strong growth of operating results as of 2009.
By strengthening the value chain from design to distribution Groupe Vial will be able to deploy its
value-creating model in the years ahead and to impose itself as the leader in discount joinery in
France and Europe.
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Next press release:
First-quarter 2008 sales: 8 May 2008 (after the market closes)
About Groupe VIAL (www.groupe-vial.com)
Listed on the Eurolist (Compartment B) of Euronext Paris since December 2006, Groupe VIAL manufactures and
distributes aluminium, PVC and wood joinery products (doors, windows, gates, stairs, etc.) offering unparalleled
value for money through tight control of supply lines; efficient, modern production facilities and the 60-store VIAL
Menuiseries distribution network (including 3 stores in Spain).
Groupe VIAL is France's largest independent discount joinery specialist.
The Group reported 2007 consolidated sales of €107.3m (+22.2%), an operating margin of 20.2% and net profit of
€12.7m.
Public site: www.vial-menuiseries.com
Listed on Euronext Paris compartment B of NYSE Euronext
ISIN: FR0010340406 - Mnemonic: VIA
Reuters: VIA.PA - Bloomberg: VIA FP
Contacts
NewCap.
Groupe VIAL
Jean-François Buigues Financial Communications Investor Relations
Chief Financial Officer Steve Grobet / Pierre Laurent
investisseurs@groupe-vial.com Tel: +33 (0)1 44 71 94 94
Fax: +33 (0)1 44 71 94 90
vial@newcap.fr
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