Ceconomy Ag · XETR:CEC
Ceconomy — Q2/H1 2021/22 Earnings Presentation
40 slides from Ceconomy's earnings presentation, May 13, 2022
Slide 1: Results Presentation Q2/H1 2021/22
Results Presentation Q2/H1 2021/22 13 May 2022
Slide 2: Disclaimer and Notes
Disclaimer and Notes This disclaimer shall apply in all respects to the entire presentation (including registered broker-dealers nor financial advisors and the permitted use of any particular, deviate from any historical financial information based on all slides of this document), the oral presentat
Slide 3: Agenda
1 BUSINESS UPDATE 2 FINANCIAL PERFORMANCE 3 FINANCIAL OUTLOOK 4 SUMMARY 3
Slide 4: Q2 21/22: strong uplift vs. PY
Q2 21/22: strong uplift vs. PY Sales 1 Adj. EBIT 2 Guidance 3 +18.8% +84 €m confirmed vs. PY vs. PY “Slight increase in sales 1 and very clear increase in 2 Adj. EBIT expected” 1Adj. for currency and portfolio change effects. 2Excl. associates, adj. for portfolio changes and excl. non-recurring effe
Slide 5: We are addressing the global business challenges proactively
We are addressing the global business challenges proactively Most frequently discussed external influence factors and CECONOMY’s response COVID-19 SUPPLY HIGH RUSSIAN WAR PANDEMIC SHORTAGES INFLATION ON UKRAINE Footfall still below Slightly improved but Unclear impact on No direct operational pre-pa
Slide 6: Convergenta transaction: We are simplifying our structure and governance
Convergenta transaction: We are simplifying our structure and governance Pre-closing situation1 Post-closing situation1 Simplification & strong value creation Fewer committees, accelerated Convergenta decision-making and full focus on operations Shareholder Meeting Advisory 100% Unified sharehol
Slide 7: We are continuing to execute our omnichannel strategy
We are continuing to execute our omnichannel strategy Key strategic areas Continuous improvement of customer experience through new service standards & processes Growing online business and expansion of marketplace Strengthening of our B&M business by modernizing our store landscape Building an inte
Slide 8: Our customer experience initiatives are showing clear positive impact
Our customer experience initiatives are showing clear positive impact “Delivery Promise” initiative: Program to improve delivery promise for online ordering in Germany NPS development In Q2 21/22 our NPS1 improved How the measures affect various categories ∆NPS2 to 49 – highest score since measure
Slide 9: Online business substantially above pre-pandemic levels
Online business substantially above pre-pandemic levels Online sales Online dynamics 33% (as % of sales) COVID-19 as a catalyst for strong 25% growth in online business Online sales spiked during lockdowns and remained at 14% elevated levels afterwards Continuous improvement of UX will fuel fu
Slide 10: We are modernizing our store landscape
We are modernizing our store landscape Store refresh program includes >500 core format stores by FY 22/23 Clear benefits + ~ 250 + ~ 120 Capex-light remodelling ~ 150 Increased flexibility regarding usage of retail space Improved store economics and lifted profitability expected Remodelled sin
Slide 11: We are creating a resilient omnichannel logistics and systems platform
We are creating a resilient omnichannel logistics and systems platform Omnichannel Spine = Smart linking and synchronization of logistics, IT and order processes across all channels Capability & efficiency gains Better customer experience due to e.g. faster fulfilment and wider Overarching Integra
Slide 12: We are pushing the circular economy forward
We are pushing the circular economy forward Our “more-life-per-cycle” Achievements in H1 21/22 promise Product-as-a-service Aftersales & repairs Refurbishment & second life Took back ~20,000t of Repaired ~275,000 ~25,000 mobile phones Recycling old electrical devices in store at our collected with o
Slide 13: We are receiving recognition for our efforts and our progress
We are receiving recognition for our efforts and our progress #1 in customer satisfaction Omnichannel player Leading ESG player Achievements Best German ESG Retailer 2022 Results Presentation Q2/H1 2021/22 on 13 May 2022 13
Slide 14: Agenda: Financial Performance
1 BUSINESS UPDATE 2 FINANCIAL PERFORMANCE 3 FINANCIAL OUTLOOK 4 SUMMARY 14
Slide 15: Q2: Sales and EBIT increased very clearly – H1 above PY
Q2: Sales and EBIT increased very clearly – H1 above PY Sales Adj. EBIT2 (€m) (€m) +18.8%1 +84 €m Sales improvement supported by gradual lifting of COVID-19 restrictions; Q2 21/22 sales1 above pre-COVID-19 level 5,019 4,322 Q2 -62 Increase in adjusted EBIT in Q2 mainly driven by Germany and the -146
Slide 16: Online sales on continuously elevated level and with expected decline vs. PY
Online sales on continuously elevated level and with expected decline vs. PY Online sales (€m) -40.2% -27.9% Q2 H1 4,378 2,119 3,155 1,267 49.0% as % of sales 25.3% 37.1% as % of sales 26.6% Q2 20/21 Q2 21/22 H1 20/21 H1 21/22 Online sales share below record-breaking PY performance, but Online sales
Slide 17: Operational improvements in Services & Solutions business fuel growth
Operational improvements in Services & Solutions business fuel growth Services & Solutions sales (€m) +54.5% +20.1% Q2 H1 651 542 307 199 4.6% as % of sales 6.1% 4.6% as % of sales 5.5% Q2 20/21 Q2 21/22 H1 20/21 H1 21/22 Services & Solutions almost back to pre-pandemic levels; very Improved functio
Slide 18: Gross margin improved noticeably
Gross margin improved noticeably Gross margin1 (as % of sales) Q2 +2.2%p. Positive contribution from recovery in B&M business and reduced logistic costs in line with lower online share 17.1% 14.9% Goods margin decrease mainly due to high competition, inflationary environment and intensified campaign
Slide 19: Stable OPEX-ratio in Q2 despite increasing inflationary pressure
Stable OPEX-ratio in Q2 despite increasing inflationary pressure OPEX1 (as % of sales) -0.1%p. Q2 Stable OPEX ratio despite strong COVID-19-related cost mitigation of around 100 €m in PY (COVID-19-related subsidies and lockdown related operational cost savings) 19.3% 19.2% Cost savings in transporta
Slide 20: Strong growth in DACH and Eastern Europe
Strong growth in DACH and Eastern Europe DACH EASTERN EUROPE €m / % Q2 21/22 €m / % Q2 21/22 DACH benefited from a recovery in Total sales 2,815 Total sales 416 B&M business, particularly driven by Growth in LC1 22.6% Growth in LC1 35.4% Germany, and a low comparison base Reported yoy change 22.9% R
Slide 21: EPS decrease mainly due to Fnac Darty impairment reversal in PY
EPS decrease mainly due to Fnac Darty impairment reversal in PY EBITDA to EPS (€m) Q2 H1 Q2 20/21 Q2 21/22 H1 20/21 H1 21/22 EBITDA 54 132 575 578 Reported EBIT in PY impacted by Fnac Darty impairment reversal (150 EBIT -2 -35 338 241 €m) in Q2/H1 Net financial result 4 -7 -6 -17 Earnings before tax
Slide 22: Adjusted FCF above weak PY, underlying NWC burdened by high stock levels
Adjusted FCF above weak PY, underlying NWC burdened by high stock levels YOY change Free Cash Flow in H1 21/22 (€m) +3 +445 -55 -293 -17 +83 +17 +100 578 PY supported by capital gains refund Reversal of PY‘s COVID-19-related VAT Investments for deferrals in DE modernization -407 and store-refresh -7
Slide 23: Agenda: Financial Outlook
1 BUSINESS UPDATE 2 FINANCIAL PERFORMANCE 3 FINANCIAL OUTLOOK 4 SUMMARY 23
Slide 24: CECONOMY's outlook for FY 21/22
CECONOMY’s outlook for FY 21/22 FY 20/21 FY 21/22 Key Assumptions Influence of the COVID-19 pandemic less harmful as in FY 20/21 (e.g., fewer and shorter Sales 1 21,361 €m Slight closure of stores), availability of goods expected to normalize increase over the course of the year Inflation and Ru
Slide 25: Agenda: Summary
1 BUSINESS UPDATE 2 FINANCIAL PERFORMANCE 3 FINANCIAL OUTLOOK 4 SUMMARY 25
Slide 26: Our winning formula
Our winning formula STRONG STRONG STRONG STRONG STRONG PRESENCE BRANDS MARKET POSITION RELATIONSHIPS PARTNERSHIPS 2.6bn customer Higher unaided brand #1 or #2 > 40k employees in contacts annually and Long-standing awareness than in 8 European > 1k stores countries >27mn loyalty club supplier relatio
Slide 27: In a nutshell
In a nutshell We delivered a solid Q2 and strongly increased both sales and EBIT. H1 slightly above PY We confirm our guidance, assuming important external factors will stabilize and gradually recover Omnichannel model with strong customer centricity and sustainability will fuel our future gro
Slide 28: Q&A
Q&A Dr Karsten Wildberger Florian Wieser Results Presentation Q2/H1 2021/22 on 13 May 2022 28
Slide 29: Financial calendar
Financial calendar Q3/9M 21/22 Q4/FY 21/22 Q4/FY 21/22 results trading statement results 11 AUGUST 2022 26 OCTOBER 2022 15 DECEMBER 2022 Results Presentation Q2/H1 2021/22 on 13 May 2022 29
Slide 30: Upcoming events
Upcoming events Corporate Governance Roadshow CEO post-Q2 Roadshow Erste Group CEE Consumer Conference 17 MAY 2022 25 MAY 2022 14 JUNE 2022 Results Presentation Q2/H1 2021/22 on 13 May 2022 30
Slide 31: Contact
Contact CECONOMY AG Investor Relations Kaistr. 3 40221 Düsseldorf Germany PHONE +(49) 211 5408-7222 EMAIL IR@ceconomy.de https://www.ceconomy.de/en/investor-relations/ Results Presentation Q2/H1 2021/22 on 13 May 2022 31
Slide 32: Appendix
APPENDIX Results Presentation Q2/H1 2021/22 on 13 May 2022 32
Slide 33: Heterogenous segment developments, profitability below pre-pandemic levels
Heterogenous segment developments, profitability below pre-pandemic levels DACH EASTERN EUROPE €m / % H1 21/22 €m / % H1 21/22 Total sales 6,733 Total sales 969 Growth in LC1 0.1% Growth in LC1 20.6% Reported yoy change 0.3% Reported yoy change -0.2% Adj. EBIT2 137 Adj. EBIT2 29 Adj. EBIT margin 2.0
Slide 34: Reported EBIT Q2
Reported EBIT Q2 Adj. EBIT1 excl. associates to reported EBIT in Q2 21/22 (€m) Mainly Fnac Darty profit share (33 €m) -35 Mainly related to the introduction of our 34 new Operating Model -62 -7 ADJ. EBIT NON-RECURRING EFFECTS OTHER ADJ. ITEMS (PORTFOLIO, ASSOCIATES) REPORTED EBIT 1Excl. non-recurrin
Slide 35: Reported EBIT H1
Reported EBIT H1 Adj. EBIT1 excl. associates to reported EBIT in H1 21/22 (€m) 241 212 33 -4 Mainly Fnac Darty Roughly equally split profit share (33 €m) between • COVID-19-related store closures • Convergenta transaction2 ADJ. EBIT NON-RECURRING EFFECTS OTHER ADJ. ITEMS (PORTFOLIO, ASSOCIATES) REPO
Slide 36: Net Working Capital
Net Working Capital €m 30/09/2020 31/03/2021 Change 30/09/2021 31/03/2022 Change Inventories 2,949 3,512 562 3,111 3,618 507 Trade receivables and similar claims 488 322 -166 361 396 35 Receivables due from suppliers 1,302 1,094 -208 1,142 1,163 20 Trade liabilities and similar liabilities -5,996 -5
Slide 37: Simplified structure & governance with MediaMarktSaturn as a wholly-owned subsidiary
Simplified structure & governance with MediaMarktSaturn as a wholly- owned subsidiary and Convergenta as an anchor shareholder of CECONOMY Major Free float Post-closing situation based on voting rights shareholders (<5%) 58.7% 41.3% Convergenta Shareholder Other major Free float Convergenta Meeting
Slide 38: Transaction is a liberating blow for CECONOMY reducing historical complexity
Transaction is a liberating blow for CECONOMY reducing historical complexity Reduction of complexity entailed by the current structure Governance simplification Optimization and acceleration of decision-making Additional potential not quantified for valuation purposes processes allowing full foc
Slide 39: Key parameters of transaction and consideration components
Key parameters of transaction and consideration components The commercial terms have essentially remained the same Consideration components 125.8m new ordinary CECONOMY shares to be issued Designed to limit cash-out and debt, complying with CECONOMY’s conservative financing strategy c. 1,510 new CEC
Slide 40: CECONOMY
CECONOMY