Dfi Retail Group Holdings Limited · SGX:D01
Dfi Retail — Dairy Farm International Holdings — FY2018 Earnings Presentation
27 slides from Dfi Retail's earnings presentation, Mar 1, 2019
Slide 1: 2018 Full Year Results Presentation
Reshaping Dairy Farm 2018 Full Year Results Presentation 1st March 2019
Slide 2: Presentation Disclaimer
Presentation Disclaimer This Document (the “Document”) is for information purposes only. This Document is not intended to form the basis of any investment decision nor does it constitute a recommendation or advice as to how the reader should act on any matter. The information in this Document is an
Slide 3: Agenda
Agenda 1. 2018 Highlights 2. Financial Results & Business Review 3. Reshaping Dairy Farm 4. Summary 3
Slide 4: Dairy Farm Transformation Underway
Dairy Farm Transformation Underway • Consolidated sales up 4% at US$11.7bn • Underlying operating profit up 16% at US$426m • Non-trading adjustment of US$332m after tax • Essential business correction required in Southeast Asia Food • Positive performance within H&B, 7-Eleven, IKEA and Maxim’s • New
Slide 5: Agenda
Agenda 1. 2018 Highlights 2. Financial Results & Business Review 3. Reshaping Dairy Farm 4. Summary 5
Slide 6: Underlying Business Remains Positive
Underlying Business Remains Positive (US$’ m) 2018 2017 %∆ CCY%∆ Sales 11,749 11,289 +4 +4 Underlying EBITDA 655 589 +11 +11 Underlying Operating Profit 426 367 +16 +17 Share of Results of Associates and JVs* 133 142 -7 -7 Underlying Net Profit 424 403 +5 +6 Non-Trading Adjustments (Post-Tax) (332)
Slide 7: Sales by Format
Sales by Format Sales (US$’ m) 2018 2017 %∆ CCY%∆ Food 7,992 8,038 -1 -1 Supers & Hypers 5,888 6,018 -2 -2 7-Eleven 2,104 2,020 +4 +4 Health and Beauty 3,036 2,597 +17 +17 IKEA 721 653 +10 +11 Key Associates* Maxim's 2,586 2,238 +16 +16 Yonghui** 7,429 6,042 +23 +21 ** Includes 100% of Maxim’s Sales
Slide 8: H&B and 7-Eleven Lift Operating Profit
H&B and 7-Eleven Lift Operating Profit Underlying Op. Profit Margin* (US$’ m) 2018 2017 $∆ %∆ % ∆pp Food 126 220 -94 -43 1.6 -1.2 Supers & Hypers 34 135 -101 -75 0.6 -1.7 7-Eleven 92 85 +7 +8 4.4 +0.2 Health and Beauty 334 210 +124 +59 11.0 +2.9 IKEA 68 68 - +1 9.5 -0.9 SG&A (97) (58) -39 -68 Busine
Slide 9: Significant Non-Trading Adjustments
Significant Non-Trading Adjustments Non-Trading Adjustments (US$’m) 2018 Impairment of Assets (186) Onerous Lease Provisions (83) Goodwill Impairment (102) Business Correction Costs (96) Business and Asset Sales 120 Total Non-Trading Adjustments (Pre-Tax) (347) 9
Slide 10: Solid Free Cash Flow and Stable Dividend
Solid Free Cash Flow and Stable Dividend (US$'m) 2018 2017 Underlying EBITDA 655 589 ∆Working Capital (19) 92 Normal Capex (256) (279) Free Cash Flow 380 402 Investments (281) (66) Dividends Paid (284) (285) Dividends Received 94 85 ∆ Borrowings 102 (41) Other Items (55) (92) Net Cash Flow (44) 3 Ne
Slide 11: Capital Expenditure in 2018
Capital Expenditure in 2018 (US$’m) (US$’m) 279 YoY -8% 33 256 20 38 45 Supply Chain & Others IT 103 75 Store Refurbishment New Stores 105 117 2017 2018 11
Slide 12: Business Review
Business Review Positive sales and profit growth in all key markets Health ▪ Hong Kong: Strong sales growth in each customer segment & ▪ SE Asia: Significant sales increase; now over 1,000 stores Beauty ▪ Increased penetration of Beauty and Own Brand Solid sales growth achieved in all markets ▪ Prof
Slide 13: Business Review
Business Review Improved performance as customers favour convenience 7-Eleven ▪ Positive like-for-like sales driving strong profit growth ▪ Over 1,000 stores in China (c.2,500 stores overall) Underlying performance a concern Supers & ▪ Further pressure in SE Asia; essential business correction neede
Slide 14: Agenda
Agenda 1. 2018 Highlights 2. Financial Results & Business Review 3. Reshaping Dairy Farm 4. Summary 14
Slide 15: Reshaping Dairy Farm – Phase Multi-Year Plan
Reshaping Dairy Farm – 3 Phase Multi-Year Plan Making a Difference for Building a Strong Base Delivering Consistently Well Every Customer 1. Build a strong leadership 1. Establish leadership strength in 1. High performing teams with team depth strong succession plans Performance 2. Define store bran
Slide 16: Reshaping Dairy Farm – Initial Progress
Reshaping Dairy Farm – Initial Progress Building a Strong Base Initial Progress 1. Build a strong leadership team - 80% change in leadership - 40 of “Top 70” new in 2018 Performance 2. Define store brand customer - Priorities defined; pilots underway proposition by sector and - Portfolio correction
Slide 17: Strategic Priorities and Improvement Programmes
Strategic Priorities and Improvement Programmes Strategic Priorities Improvement Programmes Build capability Fresh Labour Supply Chain Productivity Efficiency Drive Grow in digital China innovation Assortment Procurement Optimisation Centralisation Maintain Revitalise HK SE Asia strength 17
Slide 18: Build Capability
Build Capability ▪ Strengthened leadership team in place ▪ Functional specialists bringing expertise to drive change ▪ Enhanced in-store operating standards developed ▪ Focus on improving today and transforming tomorrow ▪ Building an integrated business culture ▪ Focus on removing business silos 18
Slide 19: Drive Digital Innovation
Drive Digital Innovation ▪ Significant investment in digital taking place ▪ Chief Digital Officer and Chief Information Officer appointed ▪ Strategic digital capability review underway ▪ Assessing digital priorities within each business and region ▪ Developing partnerships with key technology player
Slide 20: Grow Presence in China
Grow Presence in China ▪ Untapped growth potential evident ▪ More effective definition of range, space, store size and location ▪ Integration potential of shared expertise ▪ Technology enhancing customer experience ▪ Closer relationship developing with Yonghui ▪ Top 4 food retailer in China 20
Slide 21: Maintain Hong Kong Strength
Maintain Hong Kong Strength ▪ Strong brands, strong customer base ▪ Strong Mannings performance ▪ Momentum maintained in 7-Eleven and IKEA ▪ Wellcome space strategy review to drive higher returns ▪ Supply Chain changes driving better Fresh quality ▪ Enhanced customer insight informing better decisio
Slide 22: Revitalise Southeast Asia
Revitalise Southeast Asia External Internal ▪ Shifting shopping habits ▪ Leadership instability ▪ Underestimation of competition ▪ Sub-optimal strategic planning ▪ Traditional formats remain strong ▪ Ingrained short-term focus ▪ Local competition more aggressive ▪ Disparate property plan ▪ Varied ma
Slide 23: Revitalise Southeast Asia
Revitalise Southeast Asia IKEA Health and Beauty ▪ Capitalise on customer engagement ▪ Strategic inconsistency addressed ▪ Accelerate development opportunities ▪ Network expansion defined ▪ New stores ▪ Stronger growth already being achieved ▪ Clearer category management ▪ New formats ▪ Better opera
Slide 24: Revitalise Southeast Asia
Revitalise Southeast Asia Food ▪ Key priority: Arresting Food performance decline will take time ▪ Market by market, location by location review undertaken ▪ Supply Chain and Network optimisation essential ▪ Early improvement in premium store performance encouraging ▪ Transformation of Giant custome
Slide 25: Agenda
Agenda 1. 2018 Highlights 2. Financial Results & Business Review 3. Reshaping Dairy Farm 4. Summary 1st March 2019 25
Slide 26: 4 of 5 Divisions Well-Positioned
4 of 5 Divisions Well-Positioned ▪ Health and Beauty business has scope for significant growth ▪ Strong expansion plans in Home Furnishings ▪ Good growth opportunities for Convenience, especially in China ▪ Restaurants division expected to continue to perform strongly ▪ Supermarkets and Hypermarkets
Slide 27: Thank you!
Thank you! 2018 Full Year Results Presentation 1st March 2019
Dairy Farm International Holdings — FY2018 Earnings Presentation on 6ix