Eurocash S.A. · GPW:EUR
Eurocash — Q2 2017 Earnings Presentation
24 slides from Eurocash's earnings presentation, 2017
Slide 1: 2Q 2017 Results
2Q 2Q 2017 RESULTS 2016 RESULTS DISCUSSION
Slide 2: Financial Statement - Summary
Financial Statement - Summary % of Sales % of Sales PLN m 2Q 2016 2Q 2017 Y/Y Change 2Q 2016 2Q 2017 Net sales 5 341 6 084 14% EBITDA Normalized 110 120 2,1% 2,0% 9% One-off net impact - 114 EBITDA Reported 110 6 2,1% 0,1% -95% Net profit Normalized 53 53 1,0% 0,9% -1% Net profit Reported 53 -62 1,0
Slide 3: VAT payment issue
VAT payment issue P&L impact PLN m CF impact PLN m Other operating costs -140,10 Net Profit -114,40 Other operating income 25,70 Total Impact on Net Profit -114,40 Change of liabilities (security for potential tax liability paid in cash) 95,75 Other operating costs -140,10 Potential VAT liability -1
Slide 4: 2Q 2017 Operational highlights
2Q 2017 Operational highlights GROWING INFLATION SUPPORTING MARKET EUROCASH SALES GREW BY 13.9% IN 2Q 2017 AND 11.6% IN 1H 2016 MAINLY FROM M&A AND ORGANIC GROWTH EBITDA HIGHER BY 10 M PLN IN 2Q 2017 POSITIVE LFL IN C&C AND STRONG LFL IN DELIKATESY CENTRUM STRONG OPERATIONAL CASH FLOW AT 217% OF EBI
Slide 5: Macroeconomic outlook
Macroeconomic outlook 3.4% Food inflation in 2Q YoY, while only 0.8% inflation on alcohol & tobacco Inflation 3,4% 4% 3,4% 3% 2,0% 2,0% 2% 1,1% 1,8% 1,0% 0,9% 0,9% 0,9% 0,9% 0,6% 0,6% 0,8% 1% 0,4% 0,5% 0,1% 0,8% 0,2% 1,3% 0% -0,8% -1% -0,6% -0,9% -2,1% -0,7% -0,9% -0,9% -0,8% -2% -1,5% -3% -3,7% -4%
Slide 6: FMCG market growth
FMCG MARKET GROWTH Small Format growing 2.7% vs. FMCG market growth of 3.2% in LTM May 2017 FMCG market growth by channels (YoY) Small Format Food market growth (YoY) 12% 11,1% 12% 9,8% 10% 10% 8% 8% 5,8% 6% 5,3% 5,2% 6% 3,9% 4% 4% 2,7% 2,5% 2% 2% 1,5% 1,5% 0% 0% -0,1% -2% -0,1% -2,0% -1,5% -1,6% -2
Slide 7: Small format segment
Small format segment Decline in number of stores results in increased sales per remaining stores No. of stores in Poland (thsd.) Dynamic of sales per 1 store in Poland* (Food) -5% -3% +5% 0% +1% +2% 6,0% 4,9% 45 4,2% 40,5 4,0% 3,6% 38,5 2,9% 40 2,5% 2,9% 35 1,9% 2,0% 30 28,3 27,4 0,9% 25 0,0% 20 -0,
Slide 8: Eurocash Group sales growth
Eurocash Group sales growth supported by M&A and New Projects Sales development (PLN m) Sales of goods development 13,9% 2Q 2017 YoY (PLN m) 13,5% 7 000 6,4% 1,5% -1,4% 6,3% 6 084 6 000 5 341 5 677 6 000 5 003 322 77 39 314 5 000 5 000 4 000 4 000 3 000 3 000 5 677 5 003 2 000 2 000 1 000 1 000 0 -
Slide 9: Strong sales growth supported by M&A and New Projects
Strong sales growth …supported by M&A and New Projects 7,1% 7,3% 145,6% 130,6% 6,8% 4,6% 137,9% 142,8% 34,9% 16,2% 8 000 4 500 7 034 3 834 7 000 6 589 4 000 3 580 3 500 6 000 3 000 5 000 2 500 3 6083 775 1 867 2 003 4 000 2 000 3 000 1 500 2 000 1 112 1 000 574 234 1 000 467 500 60 137 103 250 0 0 -
Slide 10: Retail segment
Retail segment Sales by formats 5,0% 88,7% 85,6% 5,8% 250 M&A effect 225 500 M&A effect 450 431 200 180 400 340 350 150 133 140 279 300 264 95 250 100 183 200 50 150 100 0 0 50 0 Inmedio Delikatesy Centrum EKO 0 Own Inmedio Delikatesy Centrum EKO 2Q 2016 2Q 2017 Own 1H 2016 1H 2017 LFL in 2Q 2017: L
Slide 11: Independent Wholesale sales dynamic
Independent Wholesale sales dynamic 2Q 2017 YoY LFL Cash&Carry 18,9% 20,0% 15% 15,0% 10,0% 10% 3,8% +11.3% 5,0% excl. Export 0,9% & M&A 5% 0,0% Cash&Carry Tobacco Alcohol 0,3% 0% -1,3% 1H 2017 YoY -4,0% -3,6% 20,0% 15,2% -5,2% -4,6% 15,0% -5% 10,0% 4,1% +8.3% 5,0% excl. Export -10% 0,0% & M&A Q1 201
Slide 12: Integrated Wholesale
Integrated Wholesale 2Q 2017 YoY 18,5% LFL Delikatesy Centrum 20,0% +5.3% 15% 15,0% 14,5% excl. Export 13,2% 10,0% 13% 4,0% 5,0% 11% 0,0% 8,4% 8,6% Delikatesy Distribution Food Service 9% Centrum 7% 6,4% 1H 2017 YoY 5% 4,4% 13,8% 2,7% 6,2% 15,0% 13,6% 3% +4.7% 10,0% excl. Export 1% 2,4% 2,0% 2,2% 5,
Slide 13: 2Q 2017 Adjusted financial summary
2Q 2017 Adjusted* financial summary Strong EBITDA improvement % of Sales 2Q % of Sales 2Q PLN m 2Q 2016 2Q 2017 Y/Y Change 2016 2017 Net sales 5 341 6 084 14% Gross profit 558 670 10,5% 11,0% 20% EBITDA* 110 120 2,1% 2,0% 9% EBIT* 70 75 1,3% 1,2% 7% Profit before tax* 63 67 1,2% 1,1% 6% Net profit*
Slide 14: 1H 2017 Adjusted financial summary
1H 2017 Adjusted* financial summary Growth projects affecting profitability % of Sales 1H % of Sales 1H PLN m 1H 2016 1H 2017 Y/Y Change 2016 2017 Net sales 10 105 11 278 11,6% Gross profit 1 021 1 216 10,1% 10,8% 19,2% EBITDA* 158 158 1,6% 1,4% 0,1% EBIT* 77 68 0,8% 0,6% -11,5% Profit before tax* 6
Slide 15: Integrated Wholesale driving EBITDA
Integrated Wholesale driving EBITDA New Projects and Tobacco affecting Group profitability EBITDA by segments -9% 43% 61% 32% 140% -15% 25% 72% 36% 53% 100 140 125 78 120 80 101 64 100 58 54 83 60 80 71 40 60 40 20 11 20 7 20 13 0 0 -8 -7 -20 -20 -11 -15 -16 -40 -27 -24 -32 -40 -60 Independent Integ
Slide 16: Adjusted Cash Flow
Adjusted* Cash Flow Operational CF at 217% EBITDA level Cash conversion cycle 40 PLN m 2Q 2016 2Q 2017 1H 2016 1H 2017 29 29 27 30 28 28 20 Net operating cash flow 96 261 143 181 20 20 18 19 22 20 0 Net profit (loss) before tax 63 67 66 51 -20 Depreciation 40 45 81 90 (18) (18) (18) (18) (21) (20) C
Slide 17: Net Debt vs. Adjusted EBITDA
Net Debt vs. Adjusted* EBITDA Tax impact on Net Debt: Net Debt** vs. 12M EBITDA in 1Q 2017 700 Total Pro Forma 1,6 ND: 586 m 600 584 1.80x EBITDA 1,4 1,36 1,10 500 481 477 466 1,2 440 431 441 486 1,0 400 326 317 324 0,8 300 0,74 240 0,66 231 0,6 200 0,50 0,50 0,4 100 0,2 0 0,0 1Q'16 2Q 3Q 4Q 1Q'17 2
Slide 18: Exclusivity for MILA
Exclusivity for MILA Exclusivity for negotiations until 8th September 2017 Mila locations vs. Delikatesy Centrum+EKO 188 supermarkets in Poland 2016 Sales of PLN 1.5bn 2016 EBITDA of app. PLN 5m Stores operated by MILA, rented real estate Transaction conditional on finalizing and signing of the prel
Slide 19: Strategy to develop retail operations
Strategy to develop retail operations Wholesale + Retail with M&A in Retail One Brand Integration Franchise Partners •Delikatesy •We acquire control Retail Company •We start acquiring •Brand unification •Integration of Centrum as position in main retail companies to Delikatesy Logistics with mix of
Slide 20: 1H 2017 Adjusted Financial Summary P&L
1H 2017 Adjusted* Financial Summary P&L Y/Y Y/Y PLN m 2Q 2017 2Q 2016 1H 2017 1H 2016 Change Change Sales revenues (traded goods, materials) 6 084 5 341 14% 11 278 10 105 12% Gross profit on sales 670 558 20% 1 216 1 021 19% Gross profitability on sales (%) 11,0% 10,5% 0,55p.p. 10,8% 10,1% 0,69p.p.
Slide 21: 1H 2017 Adjusted Financial Summary Cash Flow
1H 2017 Adjusted* Financial Summary Cash Flow PLN m 2Q 2017 2Q 2016 Change 1H 2017 1H 2016 Change Net operating cash flow, including: 261 96 165 181 143 39 Net profit (loss) before tax 67 63 4 51 66 -16 Depreciation 45 40 5 90 81 9 Change in working capital 134 (31) 165 33 (20) 53 Change in inventor
Slide 22: 1H 2017 Adjusted Financial Summary Balance Sheet
1H 2017 Adjusted* Financial Summary Balance Sheet PLN m 30 JUN 2017 31 DEC 2016 Change [%] Change Non-current assets 2 548 2 322 9,7% 225 Current assets 3 637 3 199 13,7% 438 Inventories 1 368 1 089 25,6% 279 Trade receivables 1 855 1 748 6,1% 107 Cash and cash equivalents 153 162 -5,2% -8 Total Ass
Slide 23: VAT fraud scheme in case of goods purchased from the Manufacturer
VAT fraud scheme in case of goods purchased from the Manufacturer Manufacturer sells goods to Manufacturer PolCo1 at 23% VAT and pays VAT to tax office F2 sells goods at the PolCo market under standard F2 23% VAT rate 1 F2 purchases goods from F1 with no VAT PolCo1 sells goods to F1 at 0% applicable
Slide 24: Disclaimer and contacts
Disclaimer and contacts This presentation and the associated slides and discussion contain forward-looking statements. These statements are naturally subject to uncertainty and changes in circumstances. Those forward-looking statements may include, but are not limited to, those regarding capital emp