Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q1 2020 Earnings Presentation
41 slides from Axfood Ab's earnings presentation, 2020
Slide 1: A strong quarter in an exceptional time
A strong quarter in an exceptional time Klas Balkow President and CEO Interim Report Q1 2020
Slide 2: Agenda
Agenda • Q1 2020 • Financial position • Update on strategic agenda • Outlook 2020 • Q&A 2
Slide 3: Axfood – affordable, good and sustainable food
Axfood – affordable, good and sustainable food R12M net sales SEK 51.9 bn 10,476 employees (FTE) Efficient sourcing and Customer reach logistics for all brands >4 million customers a week and channels 305 Group-owned stores Innovative development of 132 franchise Hemköp 126 franchise Tempo private l
Slide 4: Q1 2020
Q1 2020 4
Slide 5: An exceptional time
• Food industry has important and societally An essential role in providing food and groceries as well as preventing spread of COVID-19 exceptional • Strong quarterly growth with hoarding effects, time challenges within certain parts of the organization • Sight set on the long term 5
Slide 6: March – a turbulent month
March – a turbulent month End of COVID-19 declared as global Travel Winter pandemic by WHO, upgraded restrictions holiday risk assessment in Sweden introduced in in Sweden by the Public Health Agency Norway March Hoarding in stores and online related to the spread of COVID-19 Supply constraints due
Slide 7: Exceptionally strong growth in March
Food retail market Exceptionally strong growth in March Food retail trade index (sales in stores and online) % 14 Boost from Easter Boost from Easter 12 10 8 6 4 2 0 -2 -4 Jan Feb Mar Apr 18 May Jun Jul 18 Aug Sep Oct Nov Dec Jan Feb Mar Apr 19 May Jun Jul 19 Aug Sep Oct Nov Dec Jan Feb Mar 18 18 18
Slide 8: Exceptionally strong growth in March (online)
Food retail market online Exceptionally strong growth in March Food retail trade index (online sales) % 50 45 40 35 30 25 20 15 10 5 0 Jan Feb Mar Apr 18 May Jun Jul 18 Aug Sep Oct Nov Dec Jan Feb Mar Apr 19 May Jun Jul 19 Aug Sep Oct Nov Dec Jan Feb Mar 18 18 18 18 18 18 18 18 18 18 19 19 19 19 19
Slide 9: March – a turbulent month
March – a turbulent month Hoarding vs. shelf unavailability (dry foods) Shelf 2.5 mn unavailability Sold items Increase in parcels handled by Dagab in March 2020 compared with March 2019 February 17 March 31 9
Slide 10: Significant growth, hoarding effects
Sales Significant growth, hoarding effects • Net sales increased 9.5% for the first quarter, partly driven by hoarding (+4pp of the 11.7% growth in store Net sales, SEK m +9.5% sales) and calendar effects (+1pp) 13,067 o Willys continued to deliver strong LFL growth and again 11,931 11,444 outperfor
Slide 11: Growing faster than the overall market
Growing faster than the overall market Store sales development (including online) % Axfood Q1 store sales 12 Axfood +11.7% Group 10 store sales Food retail 8 trade index 6 Market growth in Q1 +9.1% 4 2 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2018 2019 2019 2019 2019 2020 Source: Axfood/HUI Research 11
Slide 12: Outperforming online market growth
Outperforming online market growth Total sales development online % Axfood Q1 online sales 40 Axfood +39% 35 Group online 30 Food retail 25 trade index 20 Q1 market online growth +27% 15 10 5 0 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2020 Source: Axfood/HUI Research 12
Slide 13: Higher profit and margin
Operating profit Higher profit and margin • Operating profit SEK 544 m (485) Operating margin, % +12.0% + LFL development Operating profit, SEK m 544 + Higher operating profit for Willys, Hemköp and Axfood Snabbgross 485 - Lower gross margin due to product mix effects 435 408 397 − Higher personnel
Slide 14: Willys: Strong growth, outperforming the market
Willys Strong growth, outperforming the market • Strong sales growth of 12.8% and LFL 11.0% Operating margin, % +12.8% o Increase in customer base, higher average ticket, Net sales, SEK m and strong online sales 7,740 o Sales growth partly driven by hoarding and calendar 6,513 6,860 o Challenging si
Slide 15: Hemköp: Growth in line with market
Hemköp Growth in line with market • Total store sales growth 9.2% driven by franchise sales, LFL sales growth of 5.9% Operating margin, % +1.6% Net sales, SEK m o Group owned 1.5% and LFL 4.7% 1,608 1,599 1,625 o Franchise 15.8% and LFL 6.8% 1,545 1,547 o Sales growth partly driven by hoarding and c
Slide 16: Axfood Snabbgross: Strong quarter but challenges ahead
Axfood Snabbgross Strong quarter but challenges ahead • Strong sales growth of 6.5% and LFL 6.0% Operating margin, % +6.5% o Significant slowdown in March, sales down ~25 percent Net sales, SEK m from mid-March to end of March compared to prior year 777 730 674 • Store base of 25 stores in total (24
Slide 17: Dagab: Strong growth but higher costs
Dagab Strong growth but higher costs • Strong net sales growth of 10.0% Operating margin, % +10.0% o Sales growth primarily driven by strong performance Net sales, SEK m in Willys and Hemköp 11,634 10,577 o Slowdown in sales to convenience sector from March 9,746 10,114 9,312 • Operating profit SEK
Slide 18: Creativity in light of COVID-19
Creativity in light of COVID-19 • “Seniortimmen” at Hemköp ‒ Special shopping hours for the elderly • “Matjouren” at Mat.se ‒ Dedicated online store for people who are most at risk, including the elderly and certain other vulnerable groups • Axfood Snabbgross opened up its Stockholm, Gärdet store fo
Slide 19: Safe retail
Safe retail • Safety and well-being of employees and customers always come first • Several in-store initiatives to prevent spread of COVID-19 ‒ Plexiglass shields and protective screens at checkouts ‒ Floor markings to help keep a safe distance ‒ Hand sanitisers placed around stores • Data shows mor
Slide 20: Fast track for small-scale producers
Fast track for small-scale producers • In March, to help small-scale producers, Axfood opened up its sales channels ‒ Fast track for small-scale food producers of locally produced products who normally supply restaurants • 120 suppliers have been approved ‒ These suppliers meets Axfood’s quality req
Slide 21: Financial position
Financial position Anders Lexmon Chief Financial Officer 21
Slide 22: Strong operating cash flow
Strong operating cash flow Q1 2020 Q1 2019 Operating profit 544 485 Non-cash items 566 533 Net interests -28 -30 Paid tax -114 -110 SEK 1.3 bn Working capital 367 -158 Operating cash flow 1,335 720 Investing activities -291 -153 Loans raised 200 187 Amortization of debt -379 -354 Operating cash flow
Slide 23: Investments (ex. IFRS 16)
Investments (ex. IFRS 16) Acquisition Other IT Wholesale Retail SEK m SEK m 2 000 1 934 500 1 481 450 SEK 276 mn 400 350 1 021 1 000 300 276 245 764 250 4 91 Total investments 200 69 500 580 150 32 19 in Q1 2020 100 140 165 50 0 0 2015 2016 2017 2018 2019 Q1 Q1 2019 2020 23
Slide 24: Stable net working capital
Stable net working capital NWC as % of sales NWC, SEK m -2.0% -2.3% -3.0% -2.6% -3.0% -3.0% -919 -979 -1,236 NWC as % of sales -1,513 -1,579 2016 2017 2018 2019 R12M to March 2020 24
Slide 25: Financial position
Financial position Net debt (ex. IFRS 16) 6,047 Net debt Net debt/EBITDA 1.2x Net debt/EBITDA 5,449 5,454 5,082 5,131 17.7% 1.2 1.2 116 Equity ratio -315 -404 -377 -259 -1,047 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 2018 2019 2019 2019 2019 2020 25
Slide 26: Return on capital employed
Return on capital employed Impacted by IFRS 16 ROCE Capital employed 40.4% 9,825 10,178 9,531 9,567 9,526 24.7% 30.6% 30.9% 30.6% 30.1% 24.7% 5,052 Return on capital employed 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 2018 2019 2019 2019 2019 2020 26
Slide 27: Update strategic agenda
Update strategic agenda Klas Balkow President and CEO 27
Slide 28: Strategic focus areas
Strategic focus areas Customer Customer Expansion Supply chain Work approach Our people offering meeting We will grow in new and We will be a driver of We will develop an We will attract, recruit We will offer our existing markets by sustainable product innovative, customer- and develop the Through
Slide 29: Expansion online
Expansion online • More Willys stores offering online shopping • Expansion online at Hemköp ‒ Increasing pace of 2020 rollout for Click & Collect at group-owned Hemköp stores ‒ Expanding Click & Collect to Hemköp franchise • New management at Mat.se 29
Slide 30: Apohem
Apohem • Hectic period in March for Axfood’s online pharmacy Apohem ‒ Sudden and sharp increase in demand ‒ Significant increase in site visits ‒ Strong sales development, high share of new customers 30
Slide 31: Supply chain
Supply chain • Work with the Bålsta logistics centre is continuing according to plan ‒ Service agreement signed with Witron, covers ongoing maintenance and functionality of the automation in new highly automated logistics centre • Integration of Gothenburg dark store • Expansion of Stockholm dark st
Slide 32: Outlook 2020
Outlook 2020 32
Slide 33: An exceptional time
An exceptional time • Difficult to assess long-term impacts from COVID-19 + Food retail market relatively insensitive to economic swings, however a weaker economy may impact overall consumption + Less eating at restaurants, shift to food retail + Price/value important in weaker economy - Virtually n
Slide 34: Outlook 2020
Outlook 2020 • Planned capital expenditures in 2020 of SEK 900−1,000 m ‒ Excluding acquisitions and leasehold ‒ No investment during 2020 in automation for the new logistics centre in accordance with payment plan • Plans to establish 5-10 new stores 34
Slide 35: Summary
An exceptional time • Strong growth supported by hoarding and calendar effects, continued outperformance of the market Summary • Increased profit and profitability • High activity level in the organization • Strong financial position 35
Slide 36: Q&A
Q&A XX Axfood 20 years Axfo od
Slide 37: Axfood key ratios
Axfood Key ratios Q1 Q1 Operating margin, % SEK m 2020 2019 Change 2019 Net sales, SEK m 50,740 51,876 Net sales 13,067 11,931 9.5% 50,740 48,085 45,968 42,974 Change in like- 9.3% 5.0% for-like sales 4.4 4.5 4.5 4.1 4.2 Operating profit 544 485 12.0% 2,288 Operating 4.2% 4.1% 0.1 4.5% margin Number
Slide 38: Willys key ratios
Willys Key ratios Q1 Q1 Operating margin, % SEK m 2020 2019 Change 2019 Net sales, SEK m 29,910 29,029 27,066 Net sales 7,740 6,860 12.8% 29,029 25,415 23,164 Change in like- 11.0% 4.8% 6.2 6,2% 4.9 5.0 for-like sales 4.2 4.4 Operating profit 348 294 18.3% 1,429 4.0 Operating 4.5% 4.3% 0.2 4,9% marg
Slide 39: Hemköp key ratios
Hemköp Key ratios Q1 Q1 Operating margin, % SEK m 2020 2019 Change 2019 Net sales, SEK m 6,403 6,378 6,404 Net sales 1,625 1,599 1.6% 6,378 6,171 6,199 Change in like- 4.7% 1.0% 3.7 1.3% for-like sales 3.8 3.8 3.8 Operating profit 61 59 2.8% 243 3.5 4.2 Operating 3.7% 3.7% 0.0 3.8% margin Number of
Slide 40: Axfood Snabbgross key ratios
Axfood Snabbgross Key ratios Q1 Q1 Operating margin, % SEK m 2020 2019 Change 2019 Net sales, SEK m 3,490 3,443 3,241 2,984 Net sales 777 730 6.5% 3,443 4.8 4.9 Operating profit 24 18 31.7% 167 3.7 3.7 Operating 3.0% 2.5% 0.6 4.8% margin Number 2016 2017 2018 2019 R12M to 25 24 1 24 of stores March
Slide 41: Dagab key ratios
Dagab Key ratios Q1 Q1 Operating margin, % SEK m 2020 2019 Change 2019 Net sales, SEK m 44,895 45,952 Net sales 11,634 10,577 10.0% 44,895 41,128 42,456 39,091 1.7 1.7 1.6 1.5 1.5 Operating profit 164 165 -0.4% 678 Operating 1.4% 1.6% -0.1 1.5% margin Delivery 2016 2017 2018 2019 R12M to 92.7 96.9 -