Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q1 2017 Earnings Presentation
38 slides from Axfood Ab's earnings presentation, 2017
Slide 1: Q1 2017: Good growth and stable profitability
Q1 2017: Good growth and stable profitability Klas Balkow, President and CEO
Slide 2: Agenda
Agenda • Q1 results • Focus areas • Outlook 2017 • Q&A
Slide 3: Axfood – a strong Swedish retail company
Axfood – a strong Swedish retail company > 3 million 264 Group-owned stores customers a week 120 franchise Hemköp 23 Axfood Snabbgross 9 065 In total collaborating with employees (FTE) 1,129 stores (inkl Tempo, Handarn, Direkten, associated companies) R12 net sales of SEK 43.3 bn 3 online brands
Slide 4: Additional BTB customers
Additional BTB customers OKQ8 Preem EMAB Circle K Hemmakväll Reporting net sales Mathem Pressbyrån Customer relations Linas and therefore Matkasse 7-Eleven operating profit Middagsfrid
Slide 5: Highlights Q1
Highlights Q1 Gaining market Integration of share acquisitions - good growth - mat.se both total and - Eurocash like-for-like
Slide 6: Continued good growth
Continued good growth • Net sales growth +3.2% – Like-for-like (LFL) Group-owned store sales +1.3% • All concepts contributed to sales growth Net sales, SEK m Concept Overall LFL 10,639 10,305 9,566 Willys 2.1% 1.2% 8,950 8,946 Hemköp 5.1% 2.6% Group-owned -0.3% 2.0% Franchise 10.4% 3.1% Axfood Närl
Slide 7: Increased market share
Increased market share • Store sales (including Hemköp franchise) +3.2% • Preliminary market growth Jan-Feb, 0.0% (source: HUI/SCB) % 10.0 8.0 6.0 4.0 2.0 0.0 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Axfood Group Retail trade index (excl alcohol)
Slide 8: Solid profitability
Solid profitability • Operating profit SEK 397 m (408) + LFL development − mat.se − Acquisition costs − Development projects Operating profit, SEK m 408 397 • Operating margin 3.7% (4.0) 329 • Stable profitability in all business segments 254 246 Willys 3.5% (3.5) Hemköp 3.8% (3.8) Axfood Närlivs 3.
Slide 9: Willys – fine sales growth and solid profitability
Net sales Willys – fine sales growth and solid profitability +2.1% • More customers and higher average purchase • One new store: Oskarshamn • Online in four new cities (Malmö, Luleå, ■ Net sales, SEK m ▬ Operating margin, % Köping, Västerås) and further reach within Greater Stockholm Area (Bro) 5,64
Slide 10: Hemköp – strong sales development
Net sales Net sales Group-owned Hemköp – strong sales development Hemköp total +0.0% • LFL growth +5.1% ‒ Group-owned 2.0% ‒ Franchise 3.1% ■ Net sales, SEK m ▬ Operating margin, % • Two group-owned stores converted to franchise 1,545 1,545 • Two new stores: Stockholm, Göteborg 1,407 1,355 1,401 6 •
Slide 11: Axfood Närlivs – strengthened position
Net sales Axfood Närlivs – strengthened position +3.3% • Good sales growth • One new Axfood Snabbgross ■ Net sales, SEK m ▬ Operating margin, % ‒ Helsingborg 1 1 • Stable profitability 595 634 655 1 9 7 5 3.5 3.4 3.2 3 1 - Q1-13 Q1-14 Q1 -15 Q1-16 Q1-17 Note: Due to reorganisation as of January 2015
Slide 12: Dagab – good growth and solid profitability
Net sales Dagab – good growth and solid profitability +4.7% • Good growth driven both by store chain development and whole sales business 1) • Solid profitability ■ Net sales, SEK m ▬ Operating margin, % • Strong delivery reliability 12 11 9,748 10 9,312 • Fruit & vegetable warehousing as of 1 Jan 9
Slide 13: Financials
Financials Anders Lexmon Acting Chief Financial Officer
Slide 14: Cash flow affected by dividend payout and increased debt
Cash flow affected by dividend payout and increased debt Q1 2017 Q1 2016 Cash and cash equivalents, 31 Dec 1,726 1,933 Operating cash flow before changes 565 581 in working capital and paid tax Paid tax -72 -124 Changes in working capital -455 -53 Investing activities -722 -122 Increased debt 501 ─
Slide 15: Improved working capital
Improved working capital % of net sales 70,0 6.8 6.9 65,0 6.6 6.6 6.6 6.6 6.7 6.4 6.5 60,0 55,0 5.0 5.0 5.0 4.9 4.9 4.9 50,0 4.8 4.8 4.8 Inventories 45,0 Accounts 40,0 receivable 35,0 Accounts 30,0 payable 2.6 2.5 25,0 2.3 2.2 2.2 2.2 2.2 2.2 2.2 20,0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Slide 16: Balance sheet effect of mat.se
Balance sheet effect of mat.se Amount in SEK m mat.se Goodwill 429 Other intangle assets 83 Property, plant and equipment 25 Other non-current assets 40 Current assets -499 Total assets 78 Shareholders’ equity 5 Non-current liabilities 32 Current liabilities 41 Total shareholders’ equity and liabili
Slide 17: Normal level of investments excluding acquisitions
Normal level of investments excluding acquisitions Quarterly capital expenditure, SEK m SEK m 932 806 764 788 643 580 622 Other Other Acquisition Acquisition IT 136 IT 37 41 Wholesale Wholesale 7 6 Retail Retail 92 118 2012 2013 2014 2015 2016 Q1 16 Q1 17
Slide 18: Focus areas
Focus areas Klas Balkow President and CEO
Slide 19: Focus areas Omni channel
Focus areas Secure continued growth Progress on sustainability Fysisk bild Omni Further channel steps in omni- Further channel steps in omni strategy experience channel strategi
Slide 20: Secure continued growth
Secure continued growth • Growth going forward ‒ Establish 2 Willys, 4 Hemköp, 1 Axfood Snabbgross ‒ Continued concept update of Hemköp ‒ Increase warehouse capacity of fresh products ‒ Range development > 2,000 new products in Q1 ‒ of which almost 300 private labels • Development of cross-border se
Slide 21: Entering the cross-border shopping segment
Entering the cross-border shopping segment • Acquisition of Eurocash (2nd largest cross-border food retailer) ‒ 7 Eurocash stores and Strömstad Mat Storlien • Present supplier to Eurocash Eda/Charlottenberg • Joint acquisition with Norgesgruppen Töcksfors ‒ Awaiting approval from EU Svinesund Åmål S
Slide 22: Focus areas Omni channel
Focus areas Secure continued growth Progress on sustainability Fysisk bild Omni Further channel steps in omni- Further channel steps in omni strategy experience channel strategi
Slide 23: Axfood’s market appearance
Axfood’s market appearance Direct Stores mail Willys Plus Visitors e-mails Customer Members events Mailings Customer E-mail journal SMS Deliveries Dark stores Own deliveries
Slide 24: Online development
Online development • mat.se ‒ Full-year 2016: Net sales SEK 287 m and EBITA SEK -55 m ‒ Continued good growth ‒ Ongoing integration: Dagab supplier starting as of April for full roll-out in summer • willys.se and hemköp.se ‒ Growth in accordance with accelerated roll-out
Slide 25: Further steps in omni-channel strategy
Further steps in omni-channel strategy • Accelerating the roll-out of Willys’ and Hemköp’s online ‒ further 17 and 10 cities respectively • Evaluate and develop ”pick-up-in-store” solutions bild • Free wifi in all Willys, Hemköp, Tempo and Axfood Snabbgross ‒ Infrastructure for future customer commu
Slide 26: Focus areas Omni channel experience
Focus areas Secure continued growth Progress Progress on on sustainability sustainability Fysisk bild Omni channel Further steps in omni experience channel strategi
Slide 27: Axfood’s sustainable work areas
Axfood’s sustainable work areas The overall strategic enrvironmental target: climat neutral 2020 Sustainable products Climate and energy Employees Transports Responsible suppliers Corporate social responsibility and influence 27
Slide 28: Progress on sustainability
Progress on sustainability • Trend towards food with less climate impact continues ‒ New Garant veggie products: e.g. green pea steak, seed burger ‒ Veggie sales growth New key ratio! • More products with the Swedish country of origin labeling • Actions to reduce food waste while contributing to a g
Slide 29: Outlook 2017
Outlook 2017 Klas Balkow President and CEO
Slide 30: Market outlook 2017
Market outlook 2017 • Concluded wage negotiations ‒ 3 years agreement ‒ Approx 6.5% salary increase until 2019 • Competitive market • Low food price inflation ‒ 1-2% expected for 2017 30
Slide 31: Axfood’s forecast
Axfood’s forecast Axfood is focusing on growth and new investments, and the forecast is an operating profit in 2017 to be level with the outcome for 2016 31
Slide 32: Summary
Summary • Continue to grow and gaining market share • Solid profitability • Strong financial position despite dividend payout and acquisitions • High level of activities to enable future growth ‒ Further steps in omni-channel strategy ‒ Entering cross-border segment
Slide 33: Questions & answers
Questions & answers Klas Balkow, President and CEO Anders Lexmon, Acting CFO
Slide 34: Axfood Q1 2017
Axfood Q1 2017 Key ratios ■ Net sales,1) SEK m SEK m Q1 2017 Q1 2016 Change ▬ Operating margin, % Net sales 10,639 10,305 3.2% 1.00 10,305 10,639 0.90 9,566 Change in like-for-like 8,950 8,946 0.80 1.3% 5.2% -3.9 0.70 sales 0.60 0.50 Operating profit 397 408 -2.7% 4.0 0.40 3.7 3.4 0.30 2.8 2.7 0.20
Slide 35: Willys Q1 2017
Willys Q1 2017 Key ratios ■ Net sales, SEK m SEKm Q1 2017 Q1 2016 Change ▬ Operating margin, % Net sales 5,764 5,643 2.1% 5,643 5,764 5,261 Change in like-for-like 4,919 4,941 1.2% 4.9% -3.7 sales Operating profit 201 195 3.1% 3.5 3.4 3.5 3.5 3.3 Operating margin 3.5% 3.5% 0.0 Q1-13 Q1 -14 Q1 -15 Q1
Slide 36: Hemköp Q1 2017
Hemköp Q1 2017 Key ratios ■ Net sales, SEK m SEKm Q1 2017 Q1 2016 Change Net sales ▬ Operating margin, % Hemköp total 1,545 1,545 Net sales 1,545 1,545 0.0% +5.1% 65 1,407 1,355 1,401 Change in like-for-like Like-for-like 2.0% 6.2% -4.2 55 45 sales +2.6% 3.8 3.8 Operating profit 59 59 0.0% 3.6 35 2.
Slide 37: Axfood Närlivs Q1 2017
Axfood Närlivs Q1 2017 Key ratios ■ Net sales, SEK m ▬ Operating margin, % SEKm Q1 2017 Q1 2016 Change 150 Net sales 655 634 3.3% 130 634 655 595 110 90 Operating profit 22 22 0.0% 70 50 3.2 3.5 3.4 30 Operating margin 3.4% 3.5% -0.1 10 -10 Q1-13 Q1-14 Q1 -15 Q1-16 Q1-17 Number of stores: Axfood Sna
Slide 38: Dagab Q1 2017
Dagab Q1 2017 Key ratios 1) ■ Net sales, SEK m SEKm Q1 2017 Q1 2016 Change ▬ Operating margin, % 12 Net sales 9,748 9,312 4.7% 11 9,748 10 9,312 9 Distributed sales 7,627 7,355 3.7% 8 1.8 1.8 7 6 5 Operating profit 177 168 5.4% 4 3 2 Operating margin 1.8% 1.8% 0.0 1 0 Q1-13 Q1 -14 Q1 -15 Q1-16 Q1-17