Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q3 2020 Earnings Presentation
47 slides from Axfood Ab's earnings presentation, 2020
Slide 1: Higher market shares and a strong result
Higher market shares and a strong result Klas Balkow President and CEO Interim Report Q3 2020
Slide 2: • Market update • Q3 2020 • Financial position
• Market update • Q3 2020 • Financial position • Update on strategic agenda • Outlook 2020 • Q&A 2
Slide 3: Axfood – good and sustainable food for everyone
Axfood – good and sustainable food for everyone R12M net sales SEK 53.1 bn 11,406 employees (FTEs) Efficient sourcing and Customer reach logistics for all brands ~4.5 million customers a week and channels 306 Group-owned stores Innovative development of 132 franchise Hemköp 126 franchise Tempo priva
Slide 4: Market update
Market update 4
Slide 5: Strong market growth in food retail
• Strong market growth within food retail, in stores and online, as consumers have continued to eat at home Strong market • Still weak demand in restaurant market, however somewhat improved situation compared to the growth in second quarter this year food retail • Challenging situation for certain s
Slide 6: Food retail market
Food retail market High market growth rate Food retail trade index, calendar adjusted (sales in stores and online) % 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Se
Slide 7: Food retail market online
Food retail market online Accelerated growth Food retail trade index (online sales) % 180 Food retail market 160 July-Sep 2020 140 Sales online 4% 120 100 96% 80 Sales in stores 60 40 20 0 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20
Slide 8: Food retail market online
Food retail market online Market growth driven by Click and Collect Food retail trade index (online sales) % Home delivery Click and Collect in store 320 300 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Source: HUI Research 8
Slide 9: Axfood Q3 2020
Q3 2020 Axfood
Slide 10: Higher market shares and a strong result
• Strong achievement and market shares gains Higher market despite continued challenges within certain parts of the organization shares and a • High growth rate for the Willys chain strong result • Higher profit and improved profitability • Continued high activity to develop our business for the fut
Slide 11: Continued solid growth
Sales Continued solid growth • Net sales increased 5.5% during the third quarter +5.5% o Lower inflation rate compared to first half of the year Net sales, SEK m o Growth above market for Willys segment despite 13,426 12,731 continued headwind from Eurocash 12,050 11,578 o Solid growth for Hemköp in
Slide 12: Growing faster than the overall market
Growing faster than the overall market Store sales development (including online) % Axfood Q3 store sales 12 +7.6% 10 8 Axfood Group store sales 6 Food retail Market growth in Q3 trade index +5.8% 4 2 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2018 2019 2019 2019 2019 2020 2020 2020 Source: Axfood/HUI Resear
Slide 13: Outperforming online market growth
Outperforming online market growth Total sales development online % Axfood Q3 online sales 140 Axfood +120% 120 100 Group online sales Food retail trade index 80 Q3 market online growth 60 +101% 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019 2019 2019 2019 2020 2020 2020 Source: Axfood/HUI Research. Axfood began
Slide 14: Online growth driven by Click & Collect
Online Online Growing with by Click & Collect Growth driven Market online sales to Axfood online sales to consumers consumers through by delivery format Q3 2020 Click & Collect Willys and Hemköp Home delivery 183% Click and collect in store Q3 Q3 2019 2020 14
Slide 15: Strong profit growth, improved profitability
Operating profit Strong profit growth, improved profitability • Operating profit SEK 796 m (715) Operating margin, % +11.3% + LFL development Operating profit, SEK m 796 + Higher operating profit for Dagab − Losses for Eurocash and certain Hemköp stores in city centres 715 − Costs related to higher
Slide 16: Willys: Strong growth, continued challenges for Eurocash
Willys Strong growth, continued challenges for Eurocash • Strong sales growth of 8.3% and LFL 6.9% Operating margin, % +8.3% o Strong growth for Willys’ stores, positive effect from higher consumption at home Net sales, SEK m 7,862 7,259 o Higher average ticket and strong online sales for Willys’ st
Slide 17: High activity level for the Willys chain
Willys High activity level for the Willys chain Willys continues to expand online, continued roll-out and new solutions to increase availability for consumers High pace in modernizing and improving stores, more than 25 stores have been refurbished during the year Roll-out of digital tools in stores,
Slide 18: Difficult situation for Eurocash
Willys Difficult situation for Eurocash Timeline – Norwegian travel restrictions towards Sweden July** August** September October Värmland (location of three Eurocash stores) Västra Götaland (location of three Eurocash stores*) Jämtland Härjedalen (location of one Eurocash store) The graphic above i
Slide 19: Hemköp: Growth in line with market despite challenges
Hemköp Growth in line with market despite challenges • Total store sales growth 6.2%, LFL sales growth of 3.9% Operating margin, % o Group owned -2.2% and LFL 1.9% Net sales, SEK m -2.0% o Total sales for Group-owned stores negatively impacted by conversions and weak performance in city centre-based
Slide 20: Snabbgross: Strong recovery from second quarter
Snabbgross Strong recovery from second quarter • Sales growth of 4.9% and LFL 3.2% +4.9% Operating margin, % o Market share gains in a volatile market Net sales, SEK m 990 o Increase in customer base, positive effect from 944 906 attracting customers from competition 813 6.5 6.2 o More than half of
Slide 21: Snabbgross: Outperforming the market
Snabbgross Outperforming the market Sales development private food service market in Sweden March to September 2020 (y-o-y) -2.1% 19,1% Snabbgross market share Mar-Sep 2020 ↑4,5pp vs. -25.1% Mar-Sep 2019 Market Snabbgross Source: Delfi Marknadspartner AB. Private food service market, index mar-sep -
Slide 22: Dagab: Higher sales and operating profit
Dagab Higher sales and operating profit • Net sales growth of 7.6% +7.6% o Strong sales to Willys, Hemköp and Snabbgross Operating margin, % Net sales, SEK m 11,995 o Negative impact from lower sales to Eurocash and service trade 11,152 o Sales decline for Urban Deli 10,178 10,491 9,754 o Positive d
Slide 23: Financial position
Financial position Anders Lexmon Chief Financial Officer 23
Slide 24: Sales and operating profit growth
Sales and operating profit growth Net sales, SEK m Operating margin, % Operating profit, SEK m +6.3% +7.9% 40,062 37,700 1,944 34,142 35,715 1,801 31,952 6.3% 1,599 1,501 1,488 4.7 4.8 4.9 4.4 4.5 Net sales growth 9M’16* 9M’17 9M’18 9M’19 9M’20 9M’16 9M’17 9M’18 9M’19 9M’20 * Pro forma 24
Slide 25: Strong operating cash flow
Strong operating cash flow SEK m 9M 2020 9M 2019 Operating profit 1,944 1,801 Non-cash items 1,721 1,611 Net interests -85 -88 Paid tax -318 -365 SEK 3.4 bn Working capital 99 -505 Operating cash flow 3,361 2,454 Investing activities -760 -597 Amortization of debt -1,133 -1,075 Share repurchases -53
Slide 26: Investments (ex. IFRS 16)
Investments (ex. IFRS 16) Acquisition Other IT Wholesale Retail SEK m SEK m 2 000 1 934 800 1 481 688 713 9 SEK 713 mn 700 12 600 203 214 1 021 500 1 000 83 764 400 92 Total investments 500 580 300 in 9M 2020 200 381 407 100 0 0 2015 2016 2017 2018 2019 9M 9M 2019 2020 26
Slide 27: Improved net working capital
Improved net working capital NWC as % of sales NWC, SEK m -2.0% -2.3% -3.2% -2.6% -3.0% -3.2% -979 -919 -1,236 -1,513 NWC as % of sales -1,673 2016 2017 2018 2019 R12M to Sep. 2020 27
Slide 28: Financial position
Financial position Net debt (ex. IFRS 16), SEK m 6,047 Net debt, SEK m Net debt/EBITDA 1.1x Net debt/EBITDA 5,449 5,454 5,218 5,185 5,082 5,131 24.0% 1.2 1.2 1.1 1.1 116 Equity ratio -315 -404 -377 -259 -478 -350 -1,047 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 30 Sep. 2018 2019 2019 2
Slide 29: Return on capital employed
Return on capital employed Impacted by IFRS 16 ROCE Capital employed, SEK m 40.4% 9,825 10,178 10,149 9,531 9,567 9,526 9,648 24.5% 30.6% 30.9% 30.6% 30.1% 24.7% 24.5% 24.5% 5,052 Return on capital employed 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 30 Sep. 2018 2019 2019 2019 2019 2020
Slide 30: Update strategic agenda
Update strategic agenda Klas Balkow President and CEO 30
Slide 31: 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 32: Private label launches
Customer offering Private label launches Axfood private label share of sales (value) 0.7pp 30.2% 30.9% 9M 9M 2019 2020 32
Slide 33: Klubb Hemköp
Customer meeting Klubb Hemköp • Improved and modern loyalty programme to engage customers ‒ Personal and relevant with tailored offers and exclusive deals ‒ Beneficial programme where customers earn points when they shop for groceries • Innovative launch that rewards sustainable and healthy choices
Slide 34: Snabbgross Club
Customer meeting Snabbgross Club • In late November, Snabbgross Club will be established, a new food retail concept ‒ New store in Stockholm (Enebyängen) • Through a membership-only club, consumers can buy the same high- quality groceries as cafés and restaurants ‒ Unique and affordable assortment i
Slide 35: Strengthening the digital experience
Customer meeting Strengthening the digital experience App-based mobile self-checkout Mat.se the first food retailer to introduce Roll-out of new payment terminals allowing item scanning and payment voice-controlled personalized shopping to improve payment process 35
Slide 36: Pilot of transport management system
Supply chain Pilot of transport management system Work on new, highly Doubling of the In late 2020, a pilot Collaboration with automated logistics warehouse area in the of the new transport Scania for electrification centre in Stockholm Stockholm (Årsta) management system in the transition to more (
Slide 37: Launched Food 2030 report
Sustainability Launched Food 2030 report 37
Slide 38: Outlook 2020
Outlook 2020 38
Slide 39: Still exceptional time due to Covid-19
Still exceptional time due to Covid-19 • Food retail market relatively insensitive to economic swings ‒ However, a weaker economy may impact overall consumption ‒ Price/value important • Eating at restaurants still at a low level, shift of food consumption to food retail • Entire border to Norway cl
Slide 40: Outlook 2020 (unchanged)
Outlook 2020 (unchanged) • 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 40
Slide 41: Summary
Higher market shares and a strong result • Market shares gains despite continued challenges within certain parts of the organization • Strong growth, especially within Willys Summary • Higher profit and profitability • High activity level in the organization • Strong financial position 41
Slide 42: Q&A
Q&A XX Axfood 20 years Axfo od
Slide 43: Axfood key ratios
Axfood Key ratios Q3 Q3 9M 9M Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m Net sales 13,426 12,731 5.5% 40,062 37,700 6,3% 50,740 40,062 37,700 35,715 Change in like- 34,142 31,952 5.9% 5.4% 0.5 7.2% 5.2% 2.0 5.0% 4.9 for-like sales 4.7 4.8 4.4 4.5 Operating 796 715 11
Slide 44: Willys key ratios
Willys Key ratios Q3 Q3 9M 9M Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 23,670 Net sales 7,862 7,259 8.3% 23,670 21,541 9.9% 29,029 21,541 20,033 18,782 Change in like- 17,186 5.2 5.1 6.9% 7.0% -0.1 8,3% 6.6% 1.7 6,2% 4.7 for-like sales 4.4 Operating profit 474 455
Slide 45: Hemköp key ratios
Hemköp Key ratios Q3 Q3 9M 9M Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 4,735 4,726 4,699 Net sales 1,483 1,514 -2.0% 4,699 4,726 -0.6% 6,378 4,572 4,561 Change in like- 1.9% 0.7% 1.2 2.9% 1.1% 1.8 1.3% for-like sales* 3.8 4.0 3.8 3.7 Operating profit 62 67 -8.0% 17
Slide 46: Snabbgross key ratios
Snabbgross Key ratios Q3 Q3 9M 9M Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m Net sales 990 944 4.9% 2,626 2,598 1.1% 3,443 2,598 2,626 2,446 Change in like- 2,257 3.2% 4.2% -1.0 -0.1% 6.5% -6.6 6.4% 5.1 for-like sales 4.7 4.3 3.9 Operating profit 64 58 10.4% 122 133
Slide 47: Dagab key ratios
Dagab Key ratios Q3 Q3 9M 9M Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 35,781 Net sales 11,995 11,152 7.6% 35,781 33,238 7.7% 44,895 33,238 30,601 31,391 28,960 1.8 1.8 1.7 1.6 1.6 Operating profit 246 182 34.9% 599 526 13.8% 678 Operating 2.1% 1.6% 0.4 1.7% 1.6% 0.