Ceconomy Ag · XETR:CEC

Ceconomy — Investor Presentation (September 2019)

45 slides from Ceconomy's investor presentation, September 2019

  1. Slide 1: Investor Presentation August/September 2019

    Investor Presentation August/September 2019

  2. Slide 2: Disclaimer and Notes

    DISCLAIMER (segmental or other) information in the consolidated financial statements of the former METRO Group and, thus, may not be fully comparable to such financial statements. Historical our business, results of operations, financial position or cash flows. There are, however, material limitatio

  3. Slide 3: Disclaimer and Notes (cont'd)

    Disclaimer and Notes (cont’d) We do not undertake any obligation to publicly update any CECONOMY is based on certain estimates and assumptions and presentation, warrant that the data collected, processed and forward-looking statements or to conform them to events or there can be no assurance that th

  4. Slide 4: Agenda

    Agenda 01 CECONOMY at a glance 02 Q3 18/19 Trading & Outlook 03 Strategic Update

  5. Slide 5: CECONOMY at a glance

    CECONOMY at a glance August/September 2019 // 5

  6. Slide 6: CECONOMY at a glance

    CECONOMY at a glance Shareholder structure1 Product category breakdown Highlights Other3 Haniel White Free float Entertainment 5%  Europe’s largest Consumer Electronics platform 22.7% 9% Goods 22% 47.2%  21.4 €bn of sales, 650 €m EBITDA in FY 17/18 21% 14.3% Meridian Telecom 6.6% 21%  >2.5 €bn on

  7. Slide 7: Solid progress in the Online and Services & Solutions business

    Solid progress in the Online and Services & Solutions business Strong Online business Stable pick-up rate Increasing Services & Solutions business % of total 10.6% 12.1% % of total 6.2% 6.9% 40% 42% sales sales 2,593 1,344 1,478 2,300 In % of Sales (€m) orders Sales (€m) 16/17 17/18 16/17 17/18 16/1

  8. Slide 8: New leadership teams at CECONOMY and MediaMarktSaturn in place

    New leadership teams at CECONOMY and MediaMarktSaturn in place CECONOMY AG shareholders 100 % CECONOMY AG Supervisory Board Jörn Werner (CEO) Karin Sonnenmoser (CFO) 78.38 % Advisory Board Other Operations Media-Saturn-Holding GmbH Shareholders Meeting Ferran Reverter (CEO) New leadership team Inves

  9. Slide 9: Why invest in CECONOMY?

    Why invest in CECONOMY? #1 #2 #3 #4 CECONOMY IS THE CECONOMY HAS A CECONOMY HAS CECONOMY HAS LEADER IN STRONG THE POTENTIAL TO THE POTENTIAL TO MULTI-CHANNEL FINANCIAL PROFILE INCREASE LEAD THE RETAIL AND SCALE MARGINS AND CONSOLIDATION FREE CASH FLOW AND GENERATION TRANSFORMATION IN THE FUTURE Inve

  10. Slide 10: Mid-term targets

    Mid-term targets Sales1 EBITDA margin Tax rate >3% CAGR direction 5% direction 40% Investments2 FCF conversion3 Dividend pay-out ratio4 1.5% of sales 60-70% 45-55% 1 At constant currency before portfolio effects. CAGR = Compound Annual Growth Rate. 2 Cash investments. 3 Free Cash Flow conversion def

  11. Slide 11: Q3 18/19 Trading

    Q3 18/19 Trading August/September 2019 // 11

  12. Slide 12: Solid results in Q3, despite lower gross margin partly compensated by cost savings

    Solid results in Q3, despite facing a lower gross margin which was partly compensated by operational cost savings Slight fx-adjusted sales growth despite Online and Services & Solutions growth strong World Cup campaigns in PY impacted by strong GSM campaigns in PY Germany again with sound operationa

  13. Slide 13: Q3 performance supports achievement of full-year targets

    Q3 performance supports achievement of full-year targets +0.2% –628 €m Positive Change in NWC sales development in –646 €m DACH and W.&S. Europe lower than PY fx-adjusted in 9M 10 €m –45 €m Adj. EBITDA* Adj. EBIT* excl. Fnac Darty excl. Fnac Darty –16 €m below PY –15 €m below PY *Adjusted EBIT/DA ex

  14. Slide 14: Slight sales increase driven by DACH and Western & Southern Europe

    Slight sales increase driven by DACH and Western & Southern Europe Total sales (in €m) fx-adjusted +0.2% Highlights -0.5%  Overall market share gains per 9M 4,586 4,565  DACH: Successful VAT campaign in Germany and Easter business offset strong World Cup campaigns in PY; Switzerland impacted by st

  15. Slide 15: Online and Services & Solutions impacted by strong campaigns in PY

    Online and Services & Solutions impacted by strong campaigns in PY Online Sales (in €m) Highlights In % of sales 12.7% 13.0%  Slower online growth, esp. in Germany, mainly +1.7% due to strong GSM mobile campaigns in PY and 584 594 reduced free shipping offers  Online LTM accounted for 13.6% of tot

  16. Slide 16: Lower gross margin and high non-recurring items in PY partly compensated

    Lower gross margin and high level of non-recurring items in PY partly compensated by positive operational cost development Gross margin Adj. EBIT* excl. Fnac Darty Highlights (in €m) -1.6%p.  DACH: EBIT excl. non-recurring items in -15 Germany above PY, supported especially by 20.3% 18.7% optimizat

  17. Slide 17: Adjusted EBIT below PY as expected; restructuring expenses weigh on reported earnings

    Adjusted EBIT below PY as expected; restructuring-related expenses weigh on reported earnings EBIT excl. Fnac Darty (in €m) -29 -15 -45 + Operational cost reductions − Weak gross margin development -80 − High level of non- recurring items in PY -125 EBIT Q3 17/18 Yoy change Adj. EBIT Q3 18/19 Restru

  18. Slide 18: EPS negatively impacted by restructuring-related expenses

    EPS negatively impacted by restructuring-related expenses, partly offset by positive impact from METRO transaction €m Q3 17/18 Q3 18/19 Change Highlights EBITDA 26 –69 –95  Reported EBIT impacted by 80 €m restructuring-related expenses EBIT –30 –126 –95 Net financial result –154 12 166  Net financ

  19. Slide 19: Free Cash Flow impacted by expected NWC outflow

    Free Cash Flow impacted by expected NWC outflow mainly due to high starting point on 30 September 2018 and active cash management 9M 18/19: Free Cash Flow (in €m) Highlights 305  Change in NWC –646 €m lower than PY, mainly driven by anticipated decline in trade payables due to a high starting point

  20. Slide 20: Outlook for FY 18/19 confirmed

    Outlook for FY 18/19 confirmed  Adjusted for exchange rate effects and before portfolio changes  Excludes expenses in connection with the reorganization and efficiency program  Excludes expenses for already announced management changes in top management €m FY 17/18 FY 18/19 Total sales 21,418 Sli

  21. Slide 21: Strategic Update

    Strategic Update August/September 2019 // 21

  22. Slide 22: We have a strong set of assets and operate in an attractive market

    We have a strong set of assets and operate in an attractive market  Leading multi-channel player for  Digital opens up new product Consumer Electronics categories  Differentiated value proposition with  Ageing population is increasingly Services & Solutions offering seeking technical support  L

  23. Slide 23: We have not fully utilized our potential; performance disappointing in recent years

    We have not fully utilized our potential and our performance has been disappointing in recent years CECONOMY’s EBIT margin development Peers’ EBIT margin (last FY) (before special items, excl. Fnac Darty and Russia) 4.6% Peer margins 4.0% 3.8% ̴2.4% 2.3% 1.9% FY 15/16* FY 16/17 FY 17/18 Peer 1 Peer

  24. Slide 24: We need to become a more agile organization

    We need to become a more agile organization – our current structures and processes slow down execution Group administrative expenses1 in Complex structures and redundant functions Germany +12% Unclear roles and responsibilities ̴0.5 €bn Non-standardized processes Limited resources for future investm

  25. Slide 25: Four strategic initiatives, short-term focus on reducing complexity and costs

    We have identified four strategic initiatives – short-term, we focus on reducing complexity and costs DIGITAL SERVICES & CATEGORY & ORGANIZATION & GROWTH SOLUTIONS SUPPLY CHAIN COST STRUCTURE MANAGEMENT ONGOING ONGOING GRADUAL PROGRESS SHORT TERM Reorganization & Efficiency Program Investor Presenta

  26. Slide 26: Program focuses on two pillars: central functions and operational entities portfolio

    Our program focuses on two pillars: reorganizing central functions and optimizing the operational entities portfolio Reorganization & Efficiency Program (expected duration up to 18 months) Central Functions Portfolio c. 85% c. 15% of savings1 of savings Reorganization of central functions at Review

  27. Slide 27: Our goal is a savings run-rate of around 110-130 €m

    Our goal is to achieve a savings run-rate of around 110-130 €m Sustainable savings run-rate in FY 20/21 Savings run-rate expected Opposite effect in the low double-digit €m from build-up of new personnel, e.g. in Expenses1 supply chain 110-130 €m Pay-back period of <1.5 years for program related exp

  28. Slide 28: Progress on streamlining central functions and optimizing portfolio

    We have made progress regarding the streamlining of central functions and the optimization of our operational entities portfolio Reorganization & Efficiency Program Central Functions Portfolio  One function responsible for CECO & MMSRG  Sustainable solution with Public in Greece  Completed manage

  29. Slide 29: MediaMarktSaturn and Olympia Group create a new company in Greece

    CECONOMY’s majority shareholding MediaMarktSaturn and Olympia Group create a new company with a 25%/75% shareholding in Greece Target structure Highlights  CECONOMY’s majority shareholding MediaMarktSaturn and Olympia Group have signed a deal to create a new company in Greece and Cyprus 78.38%  Tr

  30. Slide 30: A sustainable solution for our Greek MediaMarkt activities

    We have found a sustainable solution for our Greek MediaMarkt activities and gain an immediate scale advantage Further optimizing CECONOMY’s portfolio Closing the gap to the market leader  In line with “Lead or Leave” principle  With an estimated share of c. 14%1 at eye level with the market leade

  31. Slide 31: Short-term focus on reducing complexity and costs

    Short-term, we focus on reducing complexity and costs – but we also continuously work on the other three initiatives DIGITAL SERVICES & CATEGORY & ORGANIZATION & GROWTH SOLUTIONS SUPPLY CHAIN COST STRUCTURE MANAGEMENT ONGOING ONGOING GRADUAL PROGRESS SHORT TERM Reorganization & Efficiency Program In

  32. Slide 32: Accelerating Digital Growth and Services & Solutions efforts

    We accelerate our Digital Growth and Services & Solutions efforts to become the partner of choice for our customers at all touchpoints Digital Growth Services & Solutions Full roll-out of SmartBars including core services: Full multi-channel integration of online, mobile Ready2Use, screen protection

  33. Slide 33: Centralizing Category and Supply Chain Management

    We also centralize our business, improving our Category and Supply Chain Management, but the full roll-out will take time Pricing Category Management Supply Chain Developed a central pricing Buying in Spain, Italy, Poland Piloting first central strategy using advanced data and the Netherlands alread

  34. Slide 34: Business transformation of overriding importance for ongoing initiatives

    Business transformation of overriding importance for ongoing initiatives Business Transformation Defines Strategic target Customer value proposition / Customer experience picture Sets Framework Fuels Success Factors & Services & Ctg. Mgmt. & Organization & Digital Growth … Requirements Solutions SCM

  35. Slide 35: Importance of executing the transformation and setting the course

    The recent developments emphasize the importance of executing the transformation and setting the course for the future Fixing the basics Simplifying the corporate structure Transforming the business with a customer-centric approach Investor Presentation Public August/September 2019 // 35

  36. Slide 36: Back-up

    Back-up August/September 2019 // 36

  37. Slide 37: Reorganization & Efficiency Program: savings, P&L expenses and cash outflows

    Reorganization & Efficiency Program: savings, P&L expenses and cash outflows Annual gross savings (in €m) 100-120 110-130 0-10 20 Non-cash accounting effects Total P&L expenses 34 Top management changes (in €m) (already booked in Q1) 150-170 Reorganization & Efficiency Program Cash outflows (in €m)

  38. Slide 38: Net Working Capital

    Net Working Capital €m 30/09/20171 30/06/2018 Change 30/09/2018 30/06/20192 Change Inventories 2,449 2,819 371 2,480 2,802 322 Trade receivables 497 545 48 613 493 –120 Receivables due from suppliers 1,197 1,102 –95 1,239 1,157 –82 Receivables from credit cards 66 57 –9 71 77 5 Advance payments on i

  39. Slide 39: IFRS 9 and 15 accounting changes

    IFRS 9 and 15 accounting changes  The IFRS 9 accounting change will reduce the Financial Impact1 impairment requirement for the receivables portfolio  According to an impact analysis no material Not material IFRS 9 impact expected Financial Instruments Effective: 1 Oct. 2018  IFRS 15 related chan

  40. Slide 40: CECONOMY's new shareholder structure

    CECONOMY’s new shareholder structure Pre-transaction structure based on voting rights* Beisheim reported 23,615,334 Haniel voting rights to METRO Number of % of Date of Wholesale & Food Specialist AG Shareholder voting rights voting rights publication 24.9% (now METRO AG) on 12 July 2017 Haniel 81,0

  41. Slide 41: Fnac Darty consolidation

    Fnac Darty consolidation FNAC H1 2019 FNAC H2 2019 FNAC H1 2020 CEC Q2 18/19 CEC Q3 18/19 CEC Q4 18/19 CEC Q1 19/20 CEC Q2 19/20 CEC Q3 19/20 31.12. 31.03. 30.06. 30.09. 31.12. 31.03. 30.06. 2018 2019 2019 2019 2019 2020 2020  Our c.24% stake in Fnac Darty is accounted for as “Investment accounted

  42. Slide 42: Store network

    Store network 31/03/2019 Openings Closures 30/06/2019 Highlights Germany 432 0 –1 431 Austria 52 0 0 52  Selective expansion with 11 openings: 2 stores Switzerland 26 0 0 26 in Turkey and 1 each in Italy and Poland + Hungary 25 7 0 32 7 Shop-in-Shops with Tesco in Hungary DACH 535 7 –1 541 Belgium

  43. Slide 43: Sales & number of stores by country

    Sales & number of stores by country Sales (€m) Number of Stores FY 16/17 FY 17/18 FY 16/17 Openings Closures FY 17/18 Germany 10,556 10,340 429 5 –2 432 Austria 1,169 1,161 50 2 0 52 Switzerland 635 569 27 1 –1 27 Hungary 302 340 24 0 0 24 DACH 12,662 12,410 530 8 –3 535 Belgium 686 701 28 1 0 29 Gr

  44. Slide 44: Financial calendar and events

    Financial calendar and events Financial calendar Q4/FY 2018/19 trading statement 24 October 2019 FY 2018/19 results 17 December 2019 Upcoming events Roadshow Frankfurt 14 August 2019 Commerzbank Sector Conference (IR only) 29 August 2019 Roadshow US & GS Global Retailing Conference 3-5 September 201

  45. Slide 45: Investor Presentation Public August/September 2019 // 45

    Investor Presentation Public August/September 2019 // 45

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