Axfood AB · OMXSTO:AXFO
Axfood AB — Q3 2017 Earnings Presentation
46 slides from Axfood AB's earnings presentation, Oct 19, 2017
Slide 1: Q3 2017: Strong growth with clear future ventures
Q3 2017: Strong growth with clear future ventures Klas Balkow, President and CEO
Slide 2: Axfood – a strong Swedish food retail company
Axfood – a strong Swedish food retail company > 4 million 274 Group-owned stores customers a week 119 franchise Hemköp 23 Axfood Snabbgross 9,875 In total collaborating with employees (FTE) 1,132 stores (incl Tempo, Handar’n, Direkten, associated companies) R12 net sales of SEK 45.2 bn 4 online bran
Slide 3: Agenda
Agenda • Q3 results • Financials 9M • Strategic outlook • Reorganization of Axfood Närlivs • Outlook 2017 • Q&A 1) 1 Sep 2017 3
Slide 4: Highlights Q3
Highlights Q3 Strong overall Solid profit Clear way net sales and - especially and activities growth strong in Willys going forward 4
Slide 5: Strong LFL and overall growth
Strong LFL and overall growth • Net sales growth +7.7% – Like-for-like (LFL) store sales +4.5% 1) Net sales, SEK m • Strong growth in all segments 11,578 Concept Overall LFL 10,746 10,412 9,756 Willys 12.2% 4.9% 9,465 Hemköp 4.4% 3.6% Group-owned -0.1% 2.9% Franchise 8.4% 4.3% Axfood Närlivs 3.0% Q3
Slide 6: Strengthened market position
Strengthened market position • Store sales (including Hemköp franchise) Jan-Sep, +7.7% • Preliminary market growth Jan-Aug, 2.2% (source: HUI/SCB) % 10.0 8.0 6.0 4.0 2.0 0.0 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 -2.0 Axfood Group net sales Retail trade index (excl alcohol) 6
Slide 7: Record quarter profit despite long-term investments
Record quarter profit despite long-term investments • Operating profit SEK 604 m (599) + LFL development − Online business ■ Operating profit, SEK m − Hemköp (refurbishment, new establishments) ▬ Operating margin, % 599 604 552 • Operating margin 5.2% (5.6) 453 5.6 • Stable underlying profitability
Slide 8: Willys – strong sales and profitability
Net sales Willys – strong sales and profitability +12.2% • LFL sales, 4.9% ‒ More customers and higher average ticket value • Willys 8.1% growth excluding Eurocash ■ Net sales, SEK m ▬ Operating margin, % ‒ Good contribution from Eurocash especially 6,417 due to seasonal effects 5,243 5,560 5,720 5,
Slide 9: Hemköp – strong overall sales
Net sales Store sales Group-owned Hemköp – strong overall sales Hemköp total 0.2% +4.4% • LFL growth Hemköp total, 3,6% • Store network of total 186 stores ■ Net sales, SEK m ‒ One new store: Kalmar ▬ Operating margin, % ‒ Closed one Group-owned store and 1,426 1,464 1,467 89,0 83,0 77,0 sold one fr
Slide 10: Hemköp’s profitability 2017 affected by long-term investments
Hemköp’s profitability 2017 affected by long-term investments Jan-Sept 2017 • Refurbishment program ‒ Hemköp City ‒ 9 stores (3) • New establishments ‒ 4 stores (–) • Online ‒ 17 (3) stores in 7 cities (1) ‒ 25% of Group-owned stores 10
Slide 11: Axfood Närlivs – solid profit despite chilly summer
Net sales Axfood Närlivs – solid profit despite chilly summer +3.0% • Good sales growth in Axfood Snabbgross despite a chilly and short summer • Strong development in Tempo ■ Net sales, SEK m 1) ▬ Operating margin, % 1 • Solid profit 734 789 813 1 ‒ Good cost control 10.1 9.9 9.7 1 9 ‒ Slower growth
Slide 12: Dagab – stable sales and profit
Net sales Dagab – stable sales and profit +4.4% • Growth driven by store chain development including Hemköp franchise • Growth supported by acquisition of mat.se and ■ Net sales, SEK m 1) ▬ Operating margin, % Middagsfrid 12 11 10,181 9,754 • Solid profitability by increased strong sales and 10 9 pr
Slide 13: Financials 9M
Financials 9M Anders Lexmon Chief Financial Officer
Slide 14: Good growth and earnings in 9M 2017
Good growth and earnings in 9M 2017 • Net sales growth +6.9% ‒ Like-for-like (LFL) store sales +3.9% • Operating profit SEK 1,488 m Net sales, SEK m 1) ■ Operating profit, SEK m ▬ Operating margin, % 1 501 1 488 34,142 31,952 1 312 30,456 27,972 28,506 1 075 962 4.7 4.3 4.4 3.8 3.4 9M-13 9M-14 9M-15
Slide 15: Net receivables and Eurocash-transaction closed
Net receivables and Eurocash-transaction closed 9M 2017 9M 2016 Cash and cash equivalents, 31 Dec 1,726 1,933 Operating cash flow before changes 1,996 1,988 in working capital and paid tax Paid tax -332 -270 Changes in working capital 38 -149 Investing activities -1,210 -351 Amortization of debt -96
Slide 16: Development of net debt/receivable and equity ratio
Development of net debt/receivable and equity ratio 1 449 1 249 ■ Net debt/receivable, SEK m ▬ Equity ratio, % 926 763 524 427 316 327 -4 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 -42 -161 -267 42.2 43.0 41.9 41.6 -712 38.6 39.1 38.3 38.0
Slide 17: Our investments in future growth boosting total investments
Our investments in future growth boosting total investments 9M 17 capital expenditure, SEK m SEK m Ʃ 1,624 932 806 764 643 580 1,106 Ʃ 408 3 11 122 Acquisition Acquisition 104 46 Other Other 27 IT IT Wholesale 347 Wholesale 266 Retail Retail 2012 2013 2014 2015 2016 9M 16 9M 17 17
Slide 18: Strategic outlook: Axfood’s way forward
Strategic outlook: Axfood’s way forward Klas Balkow President and CEO
Slide 19: Axfood’s foundation
Axfood’s foundation Axfood will be the leader in good and sustainable food Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food A family of successful and distinctive food concepts in close collaboration 19
Slide 20: Axfood’s foundation
Axfood’s foundation A family of successful and distinctive food concepts in close collaboration 20
Slide 21: Axfood’s business concept
Axfood’s business concept Business concept A family of successful and distinctive food concepts in close collaboration Business development Communication Finance/Accounting IT HR 21
Slide 22: Axfood’s foundation
Axfood’s foundation Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food A family of successful and distinctive food concepts in close collaboration 22
Slide 23: Axfood’s mission
Axfood’s mission Our mission Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food 23
Slide 24: Axfood’s foundation
Axfood’s foundation Axfood will be the leader in good and sustainable food Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food A family of successful and distinctive food concepts in close collaboration 24
Slide 25: Our vision
Our vision Axfood will be the leader in good and sustainable food 25
Slide 26: Axfood’s foundation
Axfood’s foundation Axfood will be the leader in good and sustainable food Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food A family of successful and distinctive food concepts in close collaboration 26
Slide 27: Axfood’s strategic areas
Axfood’s strategic areas Customer offer Customer meeting Expansion Sustainability Supply chain Work approach Our people 27
Slide 28: Vary with veggie and sustainable packaging
Vary with veggie and sustainable packaging Customer offer • Greener ”meat” at Hemköp ‒ Vegetarian alternatives next to meat block busters ‒ Vegetarian recipe booklet • Futher veggie innovations from Garant • Sustainable packaging ‒ Axfood first with charge deposits on juice bottles ‒ Fruit plastic b
Slide 29: Recent development within omni-channel system
Recent development within omni-channel system Customer meeting • Refurbishment program continues in Hemköp • Initiated customer delivery cooperation within the Group • Willys continues to expand e-commerce to additional six cities before year-end • Hemköp adding online to 2 cities before end of 2018
Slide 30: Reorganization of Axfood Närlivs
Reorganization of Axfood Närlivs Klas Balkow President and CEO
Slide 31: Structure of Axfood Närlivs today
Structure of Axfood Närlivs today Handlar’n & Tempo Convenience Axfood Snabbgross B2B E.g. 31
Slide 32: Rational of re-organization
Rational of re-organization • Strengthen customer offering within each businesses • Capitalize on Dagab nation-wide whole sale operations • Increase efficiency ‒ Increase focus on different logistic solutions ‒ Use and increase coordination of joint group functions • Improve reporting lines 32
Slide 33: Changes as of January 1, 2018
Changes as of January 1, 2018 Handlar’n & Tempo Convenience Axfood Snabbgross B2B 33
Slide 34: Tempo to be included in Hemköp
Tempo to be included in Hemköp B2B Strengthening Axfood’s franchise offering within retail Handlar’n & Tempo • Take advantage of Hemköp's support functions and processes • Have same/similar logistics flow • Improve customer offerings • Strengthen the Tempo brand 34
Slide 35: Axfood Snabbgross to be its own segment
Axfood Snabbgross to be its own segment B2B Clarifying Axfood’s offerings to café and restaurant market • Strong ambition for high growth market • Potential for further acceleration of customer base • Develop assortment Axfood Snabbgross 35
Slide 36: Gathered external wholesales
Gathered external wholesales Gather responsibility, sales and profitability of external customers by forming a new business area in Dagab Handlar’n& Tempo Convenience B2B • Capitalize on Dagab’s strong nation wide whole sales coverage • Move B2B and Handlar’n to new business area due to close relati
Slide 37: Financial structural impact as of January 2018
Financial structural impact as of January 2018 • Tempo profit within Hemköp, external sales in Dagab (as today) • Handlar’n and B2B profit within Dagab, external sales in Dagab (as today) • Axfood Snabbgross own reporting segment Willys Hemköp Axfood Snabbgross Dagab DD DD DD DD BA External business
Slide 38: Outlook 2017
Outlook 2017 Klas Balkow President and CEO
Slide 39: Axfood’s forecast
Axfood’s forecast Axfood is focusing on growth and new investments, and the forecast is an operating profit in 2017 to be level with the outcome for 2016 39
Slide 40: Summary
Summary • Strong growth, both overall and LFL • All time high quarter profit ‒ Including large future ventures • Clear agenda for future growth • Strong financial position 40
Slide 41: Questions & answers
Questions & answers Klas Balkow, President and CEO CMD Anders Lexmon, CFO 28 Nov
Slide 42: Axfood Q3 2017
Axfood Q3 2017 Key ratios ■ Net sales, SEK m SEK m Q3 2017 Q3 20161) Change 9M 2017 9M 20161) Change ▬ Operating margin, % 1) 11,578 Net sales1) 11,578 10,746 7.7% 34,142 31,952 6.9% 1.00 10,412 10,746 0.90 9,465 9,756 0.80 Change in like-for-like 4.5% 0.7% 3.8 3.9% 2.2% 1.7 0.70 sales 0.60 5.3 5.6
Slide 43: Willys Q3 2017
Willys Q3 2017 Key ratios ■ Net sales, SEK m SEKm Q3 2017 Q3 2016 Change 9M 2017 9M 2016 Change ▬ Operating margin, % 6,417 Net sales 6,417 5,720 12.2% 18,782 17,186 9.3% 5,560 5,720 5,092 5,243 Change in like-for-like 4.9% 0.3% 4.6 4.3% 1.6% 2.7 sales 4.9 4.8 5.0 4.3 4.6 Operating profit 323 277 16
Slide 44: Hemköp Q3 2017
Hemköp Q3 2017 Key ratios ■ Net sales, SEK m SEKm Q3 2017 Q3 2016 Change 9M 2017 9M 2016 Change ▬ Operating margin, % Net sales 1,467 1,464 0.2% 4,554 4,572 -0.4% 1,426 1,464 1,467 65,0 1,341 1,337 55,0 Change in like-for-like 2.9% 2.4% 0.5 2.5% 4.6% -2.1 sales 4.5 4.6 45,0 4.1 Operating profit 42 6
Slide 45: Axfood Närlivs Q3 2017
Axfood Närlivs Q3 2017 Key ratios ■ Net sales, SEK m ▬ Operating margin, % 1) SEKm Q3 2017 Q3 2016 Change 9M 2017 9M 2016 Change 180 789 813 Net sales 813 789 3.0% 2,257 2,183 3.4% 734 160 140 120 Operating profit 79 78 1.3% 168 157 7.0% 10.1 9.9 9.7 100 80 60 Operating margin 9.7% 9.9% -0.2 7.4% 7.
Slide 46: Dagab Q3 2017
Dagab Q3 2017 Key ratios ■ Net sales, SEK m SEKm Q3 2017 Q3 20161) Change 9M 2017 9M 20161) Change ▬ Operating margin, % 1) Net sales 10,181 9,754 4.4% 30,609 28,960 5.7% 12 11 10,181 9,754 10 Distributed sales 7,889 7,637 3.3% 23,821 22,770 4.6% 9 8 7 2.0 1.9 Operating profit 197 196 0.5% 543 524 3