Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q3 2018 Earnings Presentation
39 slides from Axfood Ab's earnings presentation, 2018
Slide 1: Q3 2018: Strong sales growth and investments in the future
Q3 2018: Strong sales growth and investments in the future Klas Balkow, President and CEO
Slide 2: Agenda
Agenda • Q3 results • Financial position • Update on strategic agenda • Q&A 2
Slide 3: Axfood – a strong Swedish food retailer
Axfood – a strong Swedish food retailer R12 Net sales SEK 47.5 bn 10,179 employees (FTE) Strong supply-chain company Customer reach for all brands > 4 million customers a week 302 Group-owned stores 117 franchise Hemköp • Purchasing and product development In total collaborating with 1,176 stores •
Slide 4: Challenging summer
Challenging summer • Large part of grain production dried away • Significant lower harvest of crops and vegetables 4
Slide 5: Highlights
Highlights Axfood record Challenges in Addressing profit driven logistics due to future logistics by Willys’ strong steady, warm investments performance summer weather 5
Slide 6: Axfood Q3 2018
Axfood Q3 2018 6
Slide 7: Q3: Strong growth in all segments
Q3: Strong growth in all segments • Net sales growth 4.1% – Like-for-like (LFL) store sales (incl Hemköp franchise) 3.2% Net sales, SEK m • Good growth in all segments 12,050 11,578 Concept Overall LFL 10,412 10,853 9,756 Willys 4.4% 3.6% Hemköp 3.0% 2.5% Group-owned 3.4% 0.7% Franchise 2.8% 3.8% 1)
Slide 8: Gaining market share
Gaining market share • Store sales (incl Hemköp franchise) ‒ Q3: 4.0% ‒ Jan-Sep: 6.1% • Preliminary market growth Jan-Aug, 3.4% (source: HUI/SCB) % 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 -2.0 Axfood Group store sales Retail trade index (excl alcohol) 8
Slide 9: Q3: Record profit and solid margin
Q3: Record profit and solid margin • Operating profit SEK 620 m (604) + LFL development + Sales mix ■ Operating profit, SEK m − High logistic costs ▬ Operating margin, % 599 604 620 552 • Operating margin 5.1% (5.2) 453 • Strong profitability 5.3 5.5 5.2 5.1 Operating margin Operating profit, SEK m
Slide 10: Willys – overall very strong development
Net sales +4.4% Willys – overall very strong development • Strong sales growth ■ Net sales, SEK m • LFL sales, 3.6% ▬ Operating margin, % ‒ More customers 6,417 6,702 5,720 • Store network 208 (207) 5,243 5,560 • Strong contribution from Eurocash 5.7 4.8 5.2 4.6 4.9 • High online growth and improved
Slide 11: Hemköp – good sales growth
Net sales Store sales Group-owned Hemköp total Hemköp – good sales growth 3.4% 3.0% • LFL growth (incl Hemköp franchise), 2.5% ‒ City stores negative impacted by ■ Net sales, SEK m warm summer ▬ Operating margin, % • Continued refurbishment 1,426 1,464 1,470 1,520 65, 1,337 • Profitability in line w
Slide 12: Axfood Snabbgross – great sales growth
Net sales +11.5% Axfood Snabbgross – great sales growth • Great sales development; positively affected by ‒ Warm summer weather ■ Net sales, SEK m ▬ Operating margin, % ‒ High level of promotions 906 1 813 • LFL sales, 9.9% 1 1 • Market growth of 6.3% in July–August 9 7 ‒ Gaining market shares 5.8 5
Slide 13: Dagab – profit drop to keep up service levels
Net sales +3.1% Dagab – profit drop to keep up service levels • Good growth ‒ Axfood’s store chains ■ Net sales, SEK m ‒ Online business ▬ Operating margin, % 12 ‒ B2B (adjusted for Mathem) 11 9,754 10,178 10,491 10 • Lower profitability due to 9 8 7 ‒ Higher costs in logistics, both warehousing and
Slide 14: Financial position
Financial position Anders Lexmon Chief Financial Officer
Slide 15: 9M: Good growth and strong earnings development
9M: Good growth and strong earnings development • Net sales growth +4.6% • Operating profit SEK 1,599 m (1,488) Net sales, SEK m Operating profit, SEK m 35,715 1 599 34,142 1 501 1 488 31,952 30,456 1 312 28,506 1 075 4.7 4.5 4.3 4.4 3.8 1) 1) 9M 14 9M 15 9M 16 9M 17 9M 18 1) 9M 14 9M 15 9M 16 9M 17
Slide 16: Q3 cash flow improvements compared to last year
Q3 cash flow improvements compared to last year Q3 2018 Q3 2017 Change Cash and cash equivalents, 30 June 513 364 149 Operating cash flow before changes 798 777 21 in working capital and paid tax Paid tax -100 -98 -2 Changes in working capital 44 -82 126 Net investing activities -172 -2 -170 Debt -
Slide 17: Increasing investments in whole sale and IT
Increasing investments in whole sale and IT SEK m SEK m 1,934 1,624 599 1, 106 161 122 806 764 643 580 127 46 300 347 2013 2014 2015 2016 2017 9M 18 9M 17 Acquisition Other IT Wholesale Retail Estimated capex 2018: SEK 900–1,000 m 17
Slide 18: Improved net working capital
Improved net working capital Decreased net working capital Further focus on most important items SEK m NWC NWC as % of sales Index Accounts receivable Inventories Accounts payable 0 0,0% 120 % of sales -7.2% -0,5% 110 -500 -1,0% 4.9% -1,5% 100 -1 000 -2,0% 90 -2,5% 2.1% -1 500 -3,0% 80 2014 2015 201
Slide 19: Strong financial position
Strong financial position Net debt (+)/receivable (-) SEK m Equity ratio, % 50 400 200 40 42 0 30 -200 -400 20 -327 -600 -581 10 -800 -763 -1 000 -926 0 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 19
Slide 20: Maintained return on capital employed
Maintained return on capital employed Capital employed ROCE (RTM) 6 000 60% 5 000 50% 4 000 40% 3 000 30% 2 000 20% 1 000 10% 0 0% Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 20
Slide 21: Update on strategic agenda
Update on strategic agenda Klas Balkow President and CEO
Slide 22: Strategy to become the leader in good and sustainable food
Strategy to become the leader in good and sustainable food Growth Efficiency Customer Customer Supply Work Our Expansion offer meeting chain approach people Sustainability 22
Slide 23: Customer offer
Customer offer 23 axfood
Slide 24: Summer drought’s effect
Summer drought’s effect • Shorter season for Swedish vegetables • Challenge with root vegetables/potatoes since normally Swedish all year around • Inflation pressure in certain categories • Secure Swedish food production through close cooperation with industry/farmers • Better exposure of Swedish or
Slide 25: Customer meeting
axfood ing Customer meet 25
Slide 26: Willys – new touch to exceed customers expectations
Willys – new touch to exceed customers expectations 26
Slide 27: Expansion
Open 4-8 new stores 2018 Expansion 27
Slide 28: Low level of new stores – ramped up going forward
Low level of new stores – ramped up going forward 2018 • Planned 4-8 stores • Projected outcome: ‒ 1 Willys Hemma (Malmö) ‒ 1 Hemköp (Helsingborg) ‒ 1 Hemköp (previous Tempo) ‒ 3 Hemköp (previous franchise) ‒ 1 converted Hemköp -> Willys (Eskilstuna) ‒ 1 converted Hemköp -> Willys (Stockholm) 28
Slide 29: Supply-chain
Lt \ \ | 020-26 2526 Supply-chain axfood 29
Slide 30: Building the logistic solution of the future
Building the logistic solution of the future • Highly automated warehouse • Highly automated picking • Combined warehouse for stores and e-commerce • Planned opening 2023 in Stockholmpicking Store E-Commerce picking Articles in 30
Slide 31: Rationale for increased automation
Rationale for increased automation • Increased customers benefit by improved delivery quality and service • Coordination gains and less climate impact by combining retail and consumer picking • Modern and more efficient warehouse processes • Significantly improve productivity 31
Slide 32: Additional capex need going forward
Additional capex need going forward Indicative capex 2019-2022 for automation • Approx. SEK 400-600 m yearly (based on current estimate) 32
Slide 33: Summary
Summary • Strong sales growth ‒ Especially in Axfood Snabbgross and Willys ‒ Online growth in all three brands • Record profit ‒ Supported by positive sales mix • Strong financial position • Exciting plans for the future 33
Slide 34: Questions & answers
Questions & answers Klas Balkow, President and CEO Anders Lexmon, CFO
Slide 35: Axfood Q3 2018 Key ratios
Axfood Q3 2018 Key ratios ■ Net sales, SEK m Q3 Q3 9M 9M SEK m Change Change 2018 20171) 2018 20171) ▬ Operating margin, % Net sales1) 12,050 11,578 4.1% 35,715 34,142 4.6% 0.80 35,715 34,142 31,952 0.70 30,456 Change in like-for- 28,506 0.60 3.1% 4.5% -1.4 3.3% 3.9% -0.6 like sales 0.50 4.7 4.4 4.5
Slide 36: Willys Q3 2018 Key ratios
Willys Q3 2018 Key ratios ■ Net sales, SEK m Q3 Q3 9M 9M Change Change SEKm 2018 20171) 2018 20171) ▬ Operating margin, % 20,033 Net sales 6,702 6,417 4.4% 20,033 18,782 6.7% 18,782 16,512 17,186 15,558 Change in like-for-like 3.6% 4.9% -1.3 3.9% 4.3% -0.4 sales 4.4 4.7 4.1 4.1 4.2 Operating profit
Slide 37: Hemköp Q3 2018 Key ratios
Hemköp Q3 2018 Key ratios ■ Net sales, SEK m Q3 Q3 9M 9M Change Change SEKm 2018 20171) 2018 20171) ▬ Operating margin, % Net sales 1,520 1,470 3.4% 4,735 4,561 3.8% 4,572 4,561 4,735 65,0 4,297 4,056 55,0 Change in like-for-like 0.7% 2.9% -2.2 0.7% 2.5% -1.8 sales 45,0 4.3 3.8 3.8 4.0 Operating pro
Slide 38: Axfood Snabbgross Q3 2018 Key ratios
Axfood Snabbgross Q3 2018 Key ratios ■ Net sales, SEK m Q3 Q3 9M 9M Change Change ▬ Operating margin, % SEKm 2018 20171) 2018 20171) 80 Net sales 906 813 11.5% 2,446 2,257 8.4% 2,446 70 2,257 60 50 Operating profit 45 47 -4.0% 96 96 0.0% 4.3 3.9 40 30 Operating margin 5.0% 5.8% -0.8 3.9% 4.3% -0.4 2
Slide 39: Dagab Q3 2018 Key ratios
Dagab Q3 2018 Key ratios ■ Net sales, SEK m Q3 Q3 9M 9M Chang Change SEKm 2018 20171) 2018 20171) e ▬ Operating margin, % Net sales 10,491 10,178 3.1% 31,391 30,601 2.6% 33 30,601 31,391 32 31 28,960 30 29 28 27 26 25 Operating profit 170 208 -18.0% 516 556 -7.2% 24 23 22 21 20 19 18 17 16 1.8 1.8 O