Gome Retail Holdings Limited · HKEX:493
Gome Retail — GOME Electrical Appliances Holding — H1 2009 Earnings Presentation
34 slides from Gome Retail's earnings presentation, August 2009
Slide 1: 2009 Interim Results Announcement
2009 Interim Results Announcement August 2009
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical Appliances Holding Limited (“GOME” or the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or
Slide 3: Tables of Contents
Tables of Contents 1H 2009 Financial Review 1H 2009 Business Review Future Initiatives & Outlook Appendix Interim Results 2009 | Page 2
Slide 4: 1H 2009 Financial Review
1H 2009 Financial Review Interim Results 2009 | Page 3
Slide 5: Income Statement Summary
1H 2009 1H 2009 Income Statement Summary Changes over Changes over RMB million 1H 2008 2H 2008 1H 2009 1H 2008 % 2H 2008 % Revenue 24,874 21,015 20,463 （17.73%） (2.63%) Consolidated 4,062 3,712 3,372 （16.98%） (9.16%) Gross Profit Operating Profit 1,272 672 671 （47.25%） (0.15%) Profit before tax 1,42
Slide 6: Income Statement Summary
Income Statement Summary RMB million 2008Q3 2008Q4 2009Q1 2009Q2 Revenue 11,522 9,493 9,801 10,662 Consolidated gross profit 2,035 1,677 1,549 1,823 Operating Expenses 1,438 1,603 1,228 1,473 Operating profit 598 74 321 350 Operating profit margin 5.19% 0.78% 3.28% 3.28% Sales revenue started to r
Slide 7: Financial Analysis
Financial Analysis 1H2009 1H2009 RMB million 1H2008 2H2008 1H2009 changes over changes over 1H2008% 2H2008% Cash & cash equivalents 3,397 3,051 2,716 (20.05%) (10.98%) Pledged deposits 7,001 4,840 7,400 5.70% 52.89% 3.18 12 percentage pledged deposits Ratio 65.85% 57.03% 69.03% ¹ percentage pts pts
Slide 8: Consolidated Gross Profit Margin and Other Income Analysis
Consolidated Gross Profit Margin and Other Income Analysis With supplier contract standardization and enhancement of product management capability, the consolidated gross profit margin has been increased continuously RMB million 16.48% 18% 16.33% Extended 16% Government SublesseWarranty Others 1,687
Slide 9: Operating Expenses Ratio Analysis
Operating Expenses Ratio Analysis 12.7％ 13.2％ Other operating Other operating 1.3% 11.2% 1.1% expenses1.3％ expenses1.1％ Other operating 0.9% 1.0% 1.0% expenses 1.0％ Administrative Administrative 0.7% 0.9% expenses 1.8％ expenses 1.7％ 0.8% Administrative 1.0% 1.2% 0.7% expenses 1.5％ 0.9% 0.8% 1.0% 0.4
Slide 10: Evolution of Operating Expenses Analysis
Evolution of Operating Expenses Analysis RMB：million Other operating 1,603 Other operating expenses 1,473 1,438 202 expenses Other operating 62 202 62 Other operating expenses 125 Administrative 212 97 Administrative 1,228 expenses expenses 212 131 expenses 100 59 109 59 Administrative 95 225 99 60
Slide 11: 1H 2009 Business Review
1H 2009 Business Review
Slide 12: 1H 2009 Business Performance Review
1H 2009 Business Performance Review Industry trend The macro economic environment of 2009 Q1 extended the slowdown trend of 2008 Q4, low consumer sentiment continued to affect the overall performance of the retail industry The Chinese real estate market started to pick up at the end of Q1, in gen
Slide 13: Initial Results of Store Network Optimization in 1H 2009
Initial Results of Store Network Optimization in 1H 2009 Slowdown in expansion rate, During 1H 2009, the Company closed down 110 low-efficiency stores, optimization of network structure opened 30 new stores, the total number of stores reduced by 80 compared with that at the end of 2008 Enhancement
Slide 14: Initial Results of Store Network Optimization
Initial Results of Store Network Optimization Number of Stores Sales Area at Period End Sq. m (000) 3,120 859 828 2,820 779 2,640 726 2,220 572 1,057 259 2005 2006 2007 2008 1H2008 1H2009 2005 2006 2007 2008 1H2009 Average Sales of Individual Stores Sales Per Square Meter RMB Yuan RMB 10K 3,370 4,49
Slide 15: Consolidated Gross Profit Margin Maintained Continuous Growth
Consolidated Gross Profit Margin Maintained Continuous Growth 17.67% 17.0% 16.35% 15.67% 16.0% 16.48% 16.33% 15.0% 13.83% 14.0% 14.92% 13.0% 13.51% 12.0% 12.66% 11.0% 10.0% 2H2005 1H2006 1H2007 2H2007 1H2008 2H2008 2H2006 1H2009 1H2005 Product Portfolio management: to further increase the proporti
Slide 16: Continuous Growth in Gross Profit Margin by Product
Continuous Growth in Gross Profit Margin by Product 1H2008 1H2009 15.0% 13.42% 13.31% 10.32% 10.39% 9.27% 10.21% 9.47% 9.91% 9.10% 10.0% 9.19% 7.61% 7.45% 5.99% 5.39% 5.0% 0.0% n AV h r l m es ita te Co as co pu nc g W Di r le lia m Ai fr& Te Co pp Re lA al Sm Interim Results 2009 | Page 15
Slide 17: Revenue Mix by Product Analysis
Revenue Mix by Product Analysis AV 5.41% 5.45% Refrigerator and 7.05% 7.21% washing machine 31.07% 30.95% Telecommunication 14.62% 14.66% Small electrical appliances 10.2% 10.19% Air conditioner 17.49% 17.33% 14.21% Digital 14.16% Computer 1H 2008 1H 2009 Total: RMB 24.874 billion Total: RMB 20.463
Slide 18: Stable Supplier Relationship Maintained
Stable Supplier Relationship Maintained Top 5 suppliers’ contribution to GOME’s purchase for 1H 2008 32.8% 10.2% 8.2% 5.6% 4.7% 4.1% Haier Samsung Sony Midea Nokia Total of top 5 suppliers Top 5 suppliers’ contribution to GOME’s purchase for 1H 2009 32.8% 9.4% 7.7% 5.5% 5.5% 4.7% Haier Samsung Midea
Slide 19: Steady Increase in Operational Efficiency
Steady Increase in Operational Efficiency Sale of individual stores Comparison of sale of individual stores (vs. corresponding period) against overall sale (1H 2009 Comparing with 1H2008) 8.95% 5.00% 3.17% 0.00% Decrease Rate of Decrease 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 -5.00% in sale store
Slide 20: Future Initiatives and Prospects
Future Initiatives and Prospects Interim Results 2009 | Page 19
Slide 21: Overview of 2H 2009 Business Strategies
Overview of 2H 2009 Business Strategies Change from rapid To continue increase consolidated gross profit margin through product management expansion to profit oriented and improvement in relationship with suppliers business strategy To increase operational efficiency through store network optimi
Slide 22: Store Network Optimization and Transformation & Reform Program
Store Network Optimization and Transformation & Reform Program Optimize store network To continue to close stores with poor operational quality, open new stores in first and second tier cities at the same time Change display methods of products To change the layout of one-brand-one-hall in the p
Slide 23: Product Management Enrichment and Supplier Relationship Improvement
Product Management Enrichment and Supplier Relationship Improvement Enrich product management To increase the exclusive distribution rights, sale authorization as the first seller, exclusive product sale of classical models, and private label products To increase the product categories and model
Slide 24: State Subsidy Policy Stimulates Sales Growth
State Subsidy Policy Stimulates Sales Growth Go Rural Subsidy To contribute to sales by the adoption of Go Rural policy Program To set up “Go Rural” special counters in existing stores To cooperate with regional retailers To expand product category and brand To follow and analyze sales dat
Slide 25: Bain Capital's Capital Contribution
Bain Capital’s Capital Contribution Capital contribution With the convertible bonds due 2016 for which Bain Capital subscribed and an open offer of shares by the Company, the Group obtained supplementary capital Strategies & operation Given its rich global investment experience in the retail ind
Slide 26: Thank you!
Thank you! Interim Results 2009 | Page 25
Slide 27: Appendix
Appendix
Slide 28: Coverage Of Store Network Optimization
Coverage Of Store Network Optimization As at the end of June 2009 GOME Group GOME China Paradise CellStar 75 57 18 0 Flagship stores Standard stores (incl. supermarket stores) 675 552 123 0 Specialized stores 29 6 2 21 Total: 779 615 143 21 481 357 106 18 Tier 1 Market Tier 2 Market 298 258 37 3 Net
Slide 29: Analysis on Revenue by Region
Analysis on Revenue by Region Shanghai Beijing 14% 14% Guangzhou 38% 11% 11% Shenzhen 37% Tianjin 10% 11% Fuzhou 10% 10% Chengdu 6% 6% 5% 6% Others 4% 7% 1H2008 1H2009 Total: RMB24.87 billion Total: RMB20.463 billion Interim Results 2009 | Page 28
Slide 30: Huge Potentials still Exist for the Growth of Extended Warranty Service
Huge Potentials still Exist for the Growth of Extended Warranty Service 1H 2009 gross profit of sale of RMB ‘000 extended warranty service 40,560 30,195 1H2008 1H2009 Leading companies GOME of international counterparts Average gross profit margin on sales 51.25% 80% Participation rate 5.93% 30% Pro
Slide 31: Positive Macro Economic Outlook
Positive Macro Economic Outlook Nominal GDP and per capita GDP of China (1) Urban population in China(1) (USD billion) e annual (million) nnual erag verage a pound) av pound a 0 1 3 e xp ected com 1 .6 % (2 3 e xp e cted com.2% (3) al – 2 te = 1 1 4 2008 actu grow th ra 5,663 tual – 20 growth rate =
Slide 32: Growth Opportunities of Rural Areas in China
Growth Opportunities of Rural Areas in China Household electrical appliance subsidy Ownership rate of household electrical appliance program for rural areas Per hundred families (2007/2006) The government grants a 13% subsidy on the retail prices of specified household electrical appliances Main
Slide 33: Exchange Old for New Subsidy Program
Exchange Old for New Subsidy Program Trial province & city Beijing city, Shanghai city, Tianjin city, Fuzhou province, Changsha city, Guangdong province, Shandong province, Zhejiang province, Jiangsu province Implementation period 1 June 2009 to 31 May 2010 Scope of subsidized Television set,
Slide 34: Energy-Saving Subsidy Program
Energy-Saving Subsidy Program Launching period June 2009 to June 2011 Scope of subsidized products Applied to 10 product categories including air conditioner, refrigerator, washing machine, slim TV, microwave machine, electric cooker, electromagnetic induction stove, water heater, computer monit
GOME Electrical Appliances Holding — H1 2009 Earnings Presentation on 6ix