Distribuidora Internacional de Alimentacion SA · BME:DIA
Distribuidora Internacional de Alimentacion SA — FY2017 Earnings Presentation
65 slides from Distribuidora Internacional de Alimentacion SA's earnings presentation, 2018
Slide 1: FY17 Results
FY17 Results
Slide 2: Legal disclaimer
Legal disclaimer This document does not constitute or form part of any purchase, sales or Exchange offer, nor is it an invitation to draw up a purchase sales or exchange offer, or advice on any stock issued by Distribuidora Internacional de Alimentación, S.A. (“DIA” or the “Company”). Nor shall this
Slide 3: Agenda
Agenda Highlights 4 Financial review 9 Business review 24 Appendix 43 /3
Slide 4: Highlights
01 Highlights /4
Slide 5: Full year 2017 highlights
Full year 2017 highlights +1.5% Gross Sales Under Banner1 Achieved sales recovery in Q4 2017 and positive +3.4% LFL at year-end in every segment LFL1,2 Results affected by higher investments to EUR569m secure Dia Spain’s strategic price leadership in a Adj. EBITDA -8.9% vs 20161 highly competitive e
Slide 6: LFL growth in both segments in Q4 2017
LFL1 growth in both segments in Q4 2017 0.8% 1.2% 1.1% Iberia -1.5% 10.7% 10.1% 8.3% 6.1% Emerging Markets Q1 Q2 Q3 Q4 1 Ex-FX and calendar effect /6
Slide 7: Performance reflects the effort to face the difficult context
Performance reflects the effort to face the difficult context October Outlook 2017 results1 ▪ Low-single-digit increase ▪ +1.5% increase Gross Sales ▪ 3.4% LFL, strong recovery in Under Banner Q4 2017 ▪ Mid-single-digit decrease ▪ Adjusted EBITDA -8.9% vs 2016 Adjusted ▪ Targets achieved in all form
Slide 8: Actions taken in 2017 set a strong foundation for 2018
Actions taken in 2017 set a strong foundation for 2018 ▪ Strengthened price advantage in Iberia with good traction for 2018 ▪ Optimized space from last acquisitions and developed upgraded concepts for our 3 formats; Dia, Clarel and La Plaza ▪ Prepared ground to resume growth in Iberia, organically a
Slide 9: Financial review
02 Financial review /9
Slide 10: DIA FY 2017 summary
DIA FY 2017 summary EURm Change Business performance 2016 2017 Change (ex-FX) Gross Sales Under Banner 10,314 10,334 +0.2% +1.5% ▪ LFL1 2 8.7% 3.4% ▪ Space contribution to sales2 1.5% -1.4% Adjusted EBITDA 627.9 568.6 -9.4% -8.9% Adjusted EBIT 401.2 336.6 -16.1% -15.2% Underlying EPS (EUR) 0.44 0.35
Slide 11: In Iberia, we are undergoing a transition in a challenging context
In Iberia, we are undergoing a transition in a challenging context EURm 2017 Margin investment to secure price leadership strategy Gross Sales Under Banner 6,590 in a highly competitive environment LFL1 +0.3% Efficiency improvement through digitization Space contribution to sales1 -3.0% Footprint op
Slide 12: In Spain, we secured our strategic price leadership and recovered LFL growth
In Spain, we secured our strategic price leadership and recovered LFL growth Price competitiveness variation Investment to recover 230 bps +120 bps in price competitiveness 230 bps LFL improvement of +2.6 p.p. in -110 bps Q4 2017 achieving positive LFL in 2017 H1 2017 vs H1 2016 H2 2017 vs H2 2016 N
Slide 13: 2017 saw space contraction due to a revision of acquired space
2017 saw space contraction due to a revision of acquired space Acquisitions Organic Store selling area evolution in Iberia 000’s sqm 389 167 Review of Openings 317 110 space 44 65 71 45 34 acquired 72 57 completed in 2017 -20 -31 -20 -34 (affecting -54 Closures1 -113 -106 ~30% of stores) 2011 2012 2
Slide 14: We are improving stores' value proposition through ambitious remodeling plans
We are improving stores’ value proposition through ambitious remodeling plans New light modular remodellings Dia and La Plaza store remodellings in Iberia Lean Capex with Stores accounting 880 for ~50% sales1 modular remodelled during remodelings H1 2018 410 Double- digit NPS 322 291 Growing market
Slide 15: We continue to work on efficiency in our Iberian operations
We continue to work on efficiency in our Iberian operations beyond space contraction Alliances and supplier -6.6% -6.5% negotiations contributed to Total labor cost Total other reduction vs 2016 operating costs capture ~50bps reduction vs 2016 in 2017 (+50 bps expected in 2018) / 15
Slide 16: In Emerging Markets, we continued our successful performance
In Emerging Markets, we continued our successful performance EURm 2017 Gross Sales Under Banner 3,745 Achieved significant LFL growth despite deflation in Brazil LFL1 +8.6% Continued market share gains (0.4 p.p. in Argentina Space contribution to sales1 +2.4% and 0.6 p.p. in Brazil) Sustained EBITDA
Slide 17: Space expansion continued despite the macro context
Space expansion continued despite the macro context Argentina Brazil Footprint evolution 000’s sqm 720 741 651 591 251 239 Footprint expansion 231 in Emerging Markets 204 to recover double-digit sales growth 481 490 387 420 On track to reach objective of 2,600 2014 2015 2016 2017 stores in 2020 # of
Slide 18: Market shares and adjusted EBITDA margin in Argentina and Brazil
We steadily improved market shares and adjusted EBITDA margin in Argentina and Brazil % 12.6 13.7 14.1 8.8 Market 7.8 6.9 7.2 share 5.5 4.6 3.8 4.1 Adjusted EBITDA 3.0 margin 2011 2015 2016 2017 Source: Nielsen for market share (food retail organized maket) / 18
Slide 19: Cash flow generation in 2017 remained strong
Cash flow generation in 2017 remained strong EURm Adj. EBITDA 569 Capex1 Cash From Operations2 Other Cash items 302 207 60 1 Adjusted by discontinuation of DIA China; 2 Defined as adjusted EBITDA less ‘Other cash items’ less Capex on an organic basis / 19
Slide 20: More than EUR1bn returned to shareholders since listing
More than EUR1bn returned to shareholders since listing ROI Dividend proposal Total remuneration to shareholders since 18.1% EUR0.18 listing vs. sector’s 11.9%1 50.7% dividend payout vs sector’s 49.5%1 EUR1,045m 2016 2016 19.4% EUR0.21 1 2016 data, Carrefour, Casino, Jeronimo Martins, Metro, Morriso
Slide 21: Sound balance sheet with comfortable leverage ratios
Sound balance sheet with comfortable leverage ratios EURm Net debt 1,132 878 891 Stable net debt and leverage ratios support investment grade 2015 2016 2017 Stable net debt leverage ratios Liquidity available in 1.8x excess of 1.4x 1.6x1 EUR1.1bn3 3.5x 3.4x 3.6x2 Avg. debt maturity of 3.7 years 2.5x
Slide 22: 2018 financial outlook
2018 financial outlook Iberia Group objectives ▪ Top-line growth with positive ▪ Continued efficiency LFL throughout the year improvement ▪ Adjusted EBITDA growth in ▪ CFO double-digit growth Iberia ▪ Capex aligned with 3.5-4% Emerging Markets over net sales long-term guidance with growing weight ▪
Slide 23: Long-term view aligned with DIA's track record
Long-term view aligned with DIA’s track record Long-term vision Targets ▪ Become undisputed #2 food retailer: ▪ > 5% annual growth in Gross Sales Under Banner – Strengthen leadership in proximity discount ▪ Capex 3.5-4.0% over Iberia – Participate actively in market net sales consolidation – Lead fo
Slide 24: Business review
03 Business review
Slide 25: Since listing, we focused on developing our proximity model
Since listing, we focused on developing our proximity model in selected geographies We have made a number of bold moves… … creating growth opportunities for the future Divestments Adj. EBITDA margin ~8% Growth 2010 2011 2012 2013 2014 2015 2016 2017 opportunities in ~5% 3 profitable formats in Iberi
Slide 26: Customer-centric value proposition based on four key dimensions
Creating a customer-centric value proposition based on four key dimensions P rice P artners Customer at the center P roximity T alent & echnology / 26
Slide 27: Customer satisfaction continues to be at the center of our strategy
Customer satisfaction continues to be at the center of our strategy Spain example Real-time tracking of customer >30,000 satisfaction for each monthly store and surveys section received since May 2017 Every DIA employee +2.5 NPS variable compensation points increase in linked to NPS H2 2017 / 27
Slide 28: Introducing new elements in our value proposition
Introducing new elements in our value proposition We already have positive results from new upgraded stores ▪ New services New sections +20 NPS ▪ Modern layout to increase sales area sale points contribution increase ▪ More customer needs and of 15-20% consumption moments ▪ Extended opening hours EU
Slide 29: Getting closer to our customers at anytime of the day
Getting closer to our customers at anytime of the day / 29
Slide 30: New customer needs addressed with the best prices
New customer needs addressed with the best prices New value-added products with focus on health and food-to-go products / 30
Slide 31: We are leading the way into digital grocery
We are leading the way into “digital grocery” Unique platform to engage with customers Increase in engagement Club Dia Player A Player B 47 online with customer NPS in Coupon and increased Spain tracking1 sales growth (+10 points) (+25% store Sales tracking visits) Online sales > 800k users #1 +35%
Slide 32: Outstanding online sales evolution
Outstanding online sales evolution Online sales evolution >10% market EURm 57.6 share 2.4x in online sales vs sales1, above 2016 offline share 24.0 Expanded >60% of the capabilities Spanish with 3h population 8.8 delivery covered with slots e-commerce 2015 2016 2017 offer 1 December 2017, Spain SOUR
Slide 33: Our #1 loyalty program yields higher spending
Our #1 loyalty program yields higher spending and improved customer knowledge Club DIA value proposition continuously improving… … with more projects underway Customized offer by store >20 million total active members #1 1.8x avg ticket vs Fully personalized Loyalty program in food retail non-Club m
Slide 34: Launch of a consumer finance offer with CaixaBank
Launch of a consumer finance offer with CaixaBank1 #1 loyalty program and biggest store network in Spain Large customer base Rich knowledge of loyalty clients Integrated financial offer including: #1 retail bank in Spain ▪ Credit cards Leading consumer finance ▪ Consumer finance capabilities and mar
Slide 35: Health and food solutions Private Brands
We keep developing our health and food solutions Private Brands Strengthening our Delicious and Vital brand Developing new food solutions ▪ >250 Delicious products available ▪ New value-added in >3,500 stores products (coffee, juice, chicken, food-to-go, etc.) ▪ New categories in healthy Vital Brand
Slide 36: Franchisees' satisfaction continues to improve
Franchisees’ satisfaction continues to improve General satisfaction >10% of Clarel stores improved for franchised 3rd consecutive year in Iberia (+20 bps) +85 +50 bps franchisees satisfaction with added in total profitability to Dia (~60% of in Iberia stores) / 36
Slide 37: We engaged with new partners to improve our value proposition
We engaged with new partners to improve our value proposition Online sales Consumer finance Sourcing Other in-store services / 37
Slide 38: Vehicle to develop start-up partnerships
, our vehicle to develop start-up partnerships Knowledge Providing sharing customer between intelligence employees solutions Food dynamic Artificial intelli- pricing engine gence to build the world´s best cooking assistant Main technology applied: Mobility Internet of things Artificial Intelligence
Slide 39: Reorganized around our multi-format business model in Spain
We have reorganized around our multi-format business model in Spain New Organized around formats to businesses focus on customer needs and operations Specific format strategies with a Technology global coordination to deliver synergies Supply chain Finance Increased agility to deploy new Human Resou
Slide 40: Working on new efficiency measures to improve operations
Working on new efficiency measures to improve operations 2.5x Real-time data from all stores technology & New POS innovation software Self check-out development budget vs. Efficiency Improved demand and stock 2014 improvement management driven by digitization and innovation Back office digitization
Slide 41: In summary…
In summary… 2017 2018 ▪ In 2017, we focused on sustaining our ▪ We will recover growth in Iberia, with: price leadership in Dia Spain, eroding – Positive LFL operating margins – Improved space contribution to sales growth ▪ However, all other banners and segments continue their strong upward traject
Slide 42: A strong and diverse Board of Directors
A strong and diverse Board of Directors UPDATES Mrs. Ana María Llopis Mr. Richard Golding Mr. Mariano Martín Mr. Julian Díaz Mr. Antonio Urcelay 1 Request by Letterone to appoint two board members to be submitted to AGM: - Mr. Stephan Ducharme Mr. Juan María Nin Mrs. Angela Spindler Mr. Borja de la
Slide 43: Appendix
04 Appendix
Slide 44: Gross Sales Under Banner & adjusted EBITDA by segment
Gross Sales Under Banner & adjusted EBITDA by segment EURm Emerging1 Gross Sales Under Banner Adjusted EBITDA Iberia 10,334 568.6 471.1 25% 7,810 36% 12% 28% 88% 75% 64% 72% 2011 2017 2011 2017 1 Only includes Brazil and Argentina / 44
Slide 45: Gross Sales Under Banner growth contribution by segment
Gross Sales Under Banner growth contribution by segment EURm Change -2.2% +3.7% -1.3% +0.2% -134 10,334 10,314 +379 -225 2016 Iberia LatAm FX 2017 / 45
Slide 46: Gross Sales Under Banner growth breakdown
Gross Sales Under Banner growth breakdown EURm Change 3.4% -1.4% -1.8% +0.2% -144 +351 10,314 -187 10,334 2016 LFL Space FX & Calendar 2017 effect / 46
Slide 47: EBITDA margin evolution in Iberia
EBITDA margin evolution in Iberia 8.8% Structural investment 7.7% Seasonal investment adj. EBITDA Price Customer Sourcing Efficiency adj. EBITDA margin 2016 Investment service programs margin 2017 and mix / 47
Slide 48: EBITDA margin evolution in Emerging Markets
EBITDA margin evolution in Emerging Markets 4.6% 4.1% adj. EBITDA Price Customer Sourcing Efficiency FX mix adj. EBITDA margin 2016 investment service programs margin 2017 and mix / 48
Slide 49: DIA Iberia 2017 P&L Summary
DIA Iberia 2017 P&L Summary EURm Business performance Q4 2016 Q4 2017 Change Gross Sales Under Banner 1,712 1,661 -2.9% ▪ LFL1,2 +1.1% +1.1% ▪ Space2 -2.0% -2.8% Adjusted EBITDA 147.1 85.3 -42.0% Adjusted EBIT 104.6 43.2 -58.6% Business performance 2016 2017 Change Gross Sales Under Banner 6,815 6,5
Slide 50: DIA Emerging Markets 2017 P&L Summary
DIA Emerging Markets 2017 P&L Summary EURm Change Business performance Q4 2016 Q4 2017 Change (ex. Fx) Gross Sales Under Banner 980 939 -4.2% +10.0% ▪ LFL1,2 +18.1% +8.3% ▪ Space2 +5.4% +2.6% Adjusted EBITDA 49.2 51.6 +4.9% +15.9% Adjusted EBIT 35.5 36.2 +2.1% +12.2% Change Business performance 2016
Slide 51: Business review: Iberia
Business review: Iberia EURm Change SPAIN 2014 2015 2016 2017 17-16 # stores 4,781 4,941 4,875 4,713 -162 # franchised stores 1,646 1,954 2,147 2,170 23 Total store selling area (sqm) 1,829,400 1,939,900 1,876,400 1,802,300 -3.9% Gross Sales Under Banner 5,219 5,915 5,967 5,737 -3.8% Net Sales 4,497
Slide 52: Business review: Emerging Markets
Business review: Emerging Markets EURm Change Change ARGENTINA 2014 2015 2016 2017 17-16 17-16 (ex-FX) # stores 724 846 872 930 58 # franchised stores 486 584 576 627 51 Total store selling area (sqm) 204,100 230,800 238,700 251,300 5.3% Gross Sales Under Banner 1,374 1,922 1,643 1,748 6.4% 21.5% Ne
Slide 53: Trade working capital breakdown
Trade working capital breakdown EURm Change 31 Dec 20163 31 Dec 2017 Change (ex. Fx) Inventories (A) 658.0 569.6 -13.4% -6.1% Trade & other receivables (B) 164.9 221.9 34.5% 43.8% With franchisees 101.2 122.7 21.2% With suppliers & other 63.7 99.2 55.6% Trade & other payables (C) 1,815.1 1,710.8 -5.
Slide 54: Trade working capital evolution
Trade working capital evolution Inventories Net # days evolution -38 -54 -49 Trade & other receivables Trade & other payables 35 31 9 12 -98 -92 2016 2017 / 54
Slide 55: Cash from operations review
Cash from operations review EURm Total 2016 2017 2016-17 Adjusted EBITDA 627.91 568.6 1,196.5 Organic Capex 340.22 301.8 642.0 Other cash items 52.33 59.8 112.1 CFO 235.4 207.0 442.4 CFO (at constant 2015 FX) 239.5 210.2 449.7 1 EUR2.8m DIA China discontinuation 2 EUR5.2m DIA China discontinuation 3
Slide 56: EUR1,045m distributed since listing
EUR1,045m distributed since listing Dividend evolution (EUR per share) 0.21 0.20 0.18 0.18 0.16 0.13 0.11 2011 2012 2013 2014 2015 2016 2017 proposal / 56
Slide 57: Credit rating maintained, diverse funding sources
Credit rating maintained, diverse funding sources EURm Debt maturity Financial leverage Bilaterals Bond 2019 Net debt/ adj. EBITDA RCF 2014 Bond 2021 RCF 2015 Bond 2023 1.1x 0.9x 1.8x 1.4x 1.6x 321 15 300 300 300 1,132 240 878 891 15 176 651 306 533 101 225 75 2018 2019 2020 2021 2022 2023 2013 2014
Slide 58: Dia Iberia highlights
<50 stores 200-400 Dia Iberia highlights 50-100 stores >400 EURm 100-200 Further footprint 20171 Change2 optimization expected in Gross sales under banner 5,238 -3.5% 2018 Stores (#) 3,534 -116 franchises 62% Sales density (EURk/m2) 3.3 -0.5% Adjusted EBITDA margin ~8% 613 in 2017 LFL in 2017 remode
Slide 59: Evolution of food stores acquired in Spain
Evolution of food stores acquired in Spain Supermarket stores acquired as of 31/12/2017 To 13 84 97 6 - 6 92 160 290 35 171 206 Closures 147 452 599 Total stores acquired / 59
Slide 60: Growing penetration of franchised stores
Growing penetration of franchised stores % over total Dia and Cada Dia/Mais Perto stores 61.1% 62.3% 62.4% 54.4% 48.3% 41.8% 2012 2013 2014 2015 2016 2017 Reported data / 60
Slide 61: La Plaza highlights
La Plaza highlights <20 stores 20-50 stores EURm 50-100 >150 new 2017 Change1 remodellings in 2018 Gross sales under banner 813 -6.2% Stores (#) 306 -49 Sales density (EURk/m2) 3.4 >10 new openings Adjusted EBITDA margin >5% in 2018 +6.8% LFL in 2017 1 Change vs 2016 Note: LFL excluding calendar eff
Slide 62: Clarel Iberia highlights
Clarel Iberia highlights <20 stores 20-50 stores EURm 50-100 100-300 >600 2017 Change1 +1.3% LFL in Gross sales under banner 358 +2,6% 2017 Stores (#) 1,251 +18 franchises 11.7% 360 remodellings in Sales density (EURk/m2) 1.7 2018 including additional Adjusted EBITDA margin ~8% >50 new services stor
Slide 63: E-commerce for Group DIA sales share and evolution
E-commerce for Group DIA sales share and evolution E-commerce market share1 Online sales evolution EURm 10% 57.6 8% 24.0 8.8 DIA online DIA offline 2015 2016 2017 1 December 2017, Spain SOURCE: Nielsen / 63
Slide 64: Food inflation in Emerging Markets
Food inflation in Emerging Markets National Food Inflation in Brazil National Food Inflation in Argentina 16.7% 39.2% 39.1% 11.9% 29.9% 4.6% 26.1% 1.0% 22.2% 21.7% -4.5% -5.1% SOURCE: IBGE (Instituto Brasileiro de Geografia e Estatística) & INDEC (Instituto Nacional de Estadística y Censos Average o
Slide 65: Currency performance
Currency performance % EUR/ARP 28.2 EUR/BRL 18.6 16.4 8.0 6.5 -2.5 -4.8 -4.8 -7.6 -7.4 -12.2 -17.4 -17.8 -19.7 -25.1 -34.1 -38.5 -38.1 -38.4 -37.4 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 SOURCE: Bloomberg average currency rates (a negative change in exchange r
Distribuidora Internacional de Alimentación, S.A. (DIA) — FY2017 Earnings Presentation on 6ix