Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q3 2019 Earnings Presentation
37 slides from Axfood Ab's earnings presentation, 2019
Slide 1: Strong growth generates results
Strong growth generates results Klas Balkow President and CEO Interim Report Q3, 2019 1
Slide 2: Agenda
Agenda • Q3 2019 • Financial position • Brief update on strategic agenda • Outlook 2019 • Q&A 2
Slide 3: Axfood – a leading Swedish food retailer
Axfood – a leading Swedish food retailer RTM Net sales SEK 50.1 bn 11,049 employees (FTE) Efficient sourcing and Customer reach logistics for all brands >4 million customers a week and channels 305 Group-owned stores Innovative development of 128 franchise Hemköp private label products Collaborating
Slide 4: Highlights
Highlights Improved Investments for Strong growth performance in all future profitable segments growth 4
Slide 5: Q3 2019
Q3 2019 5
Slide 6: Yet another quarter of strong sales growth
Sales Yet another quarter of strong sales growth Net sales, SEK m • Group net sales growth of 5.7% 12,731 12,050 – Willys continues to outperform the market 11,578 10,853 10,412 Sales Total LFL Willys 8.3% 7.0% Hemköp incl. franchise 3.4% 2.1% Axfood Snabbgross 4.2% 4.2% Q3-15 Q3-16 Q3-17 Q3-18 Q3-1
Slide 7: Gaining market shares
Gaining market shares 8% Total sales development, store and online Axfood growth Axfood Group Q3 2019 6% 6.7% 4% Market growth Q3 2019 2% Food retail trade index 3.5% 0% Q3 Q4 Q1 Q2 Q3 2018 2018 2019 2019 2019 Source: Axfood//HUI Research 7
Slide 8: Growing faster than market
Growing faster than market % Axfood online growth Q3 2019 60 38.0% 50 Q3 40 Q3 30 20 Market online growth Q3 2019 10 29.6% 0 2014 2015 2016 2017 2018 2019 Source: D-´food Index, SvDH Index Swedish online market growth Axfood Group 8
Slide 9: All segments improving in the quarter
Profit All segments improving in the quarter ■ Operating profit, SEK m ▬ Operating margin, % • Operating profit SEK 715 m (620), including 715 a positive IFRS 16 effect of SEK 43 m 604 620 599 + LFL development 552 + Improved results in all segments 5.5 5.6 5.3 5.2 5.1 + Meeting challenging logistic
Slide 10: Willys: Continues to outperform the market
Willys Continues to outperform the market ■ Net sales, SEK m • Strong sales growth of 8.3% and LFL 7.0% ▬ Operating margin, % • More customers, higher average ticket, increased 7,259 online sales 6,702 • Store expansion and re-opening of refurbished stores 6,417 5,720 6.3 5,560 5.7 • Store network 2
Slide 11: Hemköp: Growth driven by strong franchise sales
Hemköp Growth driven by strong franchise sales - now supported by Östenssons ■ Net sales, SEK m • Total store sales growth 3.4% and LFL 2.1% ▬ Operating margin, % • Group owned -0.5% and LFL 0.7% 1,520 1,464 1,470 1,514 • Franchise 6.6% and LFL 3.2% 1,426 4.4 4.6 • Total store network 196 (187), of
Slide 12: Axfood Snabbgross: Deliver stable growth and improved results
Axfood Snabbgross Deliver stable growth and improved results ■ Net sales, SEK m ▬ Operating margin, % • Sales growth of 4.2% and LFL 4.2% 944 906 • Growth in line with market supported by strong online sales 813 6.2 5.8 5.0 • Operating profit SEK 58 m (45), including a positive IFRS 16 effect of SEK
Slide 13: Dagab: Stable performance while investing for future profitable growth
Dagab Stable performance while investing for future profitable growth ■ Net sales, SEK m ▬ Operating margin, % • Good net sales growth 6.3% 11,152 ‒ Supported by strong sales in Willys, Hemköp (franchise incl. 10,178 10,491 Östenssons) and Axfood Snabbgross 9,754 2.0 2.0 • Operating profit SEK 182 m
Slide 14: Financial position
Financial position Anders Lexmon Chief Financial Officer 14
Slide 15: Solid growth and profit development
Axfood Solid growth and profit development Net sales, SEK m 37,700 ■ Operating profit, SEK m 35,715 ▬ Operating margin, % 34,142 31,952 1,801 30,456 1,599 1,501 1,488 1,312 4.7 4.5 4.8 4.3 4.4 9M-15 9M-16 9M-17 9M-18 9M-19 9M-15 9M-16 9M-17 9M-18 9M-19 Operating profit including a positive IFRS 16 e
Slide 16: Cash flow
Cash flow SEK m 9M 2019 9M 2018 Change Cash and cash equivalents, 1 Jan 1,571 1,376 195 Operating cash flow before changes 3,324 2,147 1,177 in working capital and paid tax Paid tax -365 -345 -20 Changes in working capital -505 82 -587 Net investing activities -597 -662 65 Amortization of debt -1,07
Slide 17: Increased investments according to plan (excl. IFRS 16)
Increased investments according to plan (excl. IFRS 16) SEK m SEK m 1,934 688 599 1,021 764 643 Acquisition 580 Other IT Wholesale Retail 2014 2015 2016 2017 2018 9M-18 9M-19 17
Slide 18: Decreased net working capital
Decreased net working capital Decreased net working capital Continuous focus on most important items NWC, SEK m NWC as % of sales Index % of sales 0 0% 120 Accounts payable -7.4% -1% 110 -500 Inventories -2% 100 4.9% -1,000 -3% 90 Accounts receivable 2.1% -1,500 -4% 80 2015 2016 2017 2018 RTM 19 201
Slide 19: Equity ratio above year end target
Equity ratio above year end target 5,082 Net debt (+)/receivable (-), SEK m Equity ratio 0.0% 41.6% 38.3% 38.0% 36.7% 0.0% 0.0% 23.6% 0.0% 0.0% 0.0% 0.0% 0.0% -327 -404 0.0% -581 0.0% -763 0.0% -926 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-19 excl IFRS 16 19
Slide 20: Return on capital employed affected by IFRS 16
Return on capital employed affected by IFRS 16 Capital employed 9,825 ROCE 43.4% 42.5% 42.1% 37.2% 30.6% 4,704 4,699 4,732 4,311 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 20
Slide 21: Brief update on strategic agenda
Brief update on strategic agenda Klas Balkow 21
Slide 22: Axfood's strategic areas
Customer Customer Supply Work Our Expansion offer meeting chain approach people Sustainability Axfood’s strategic areas 22
Slide 23: Customer meeting
Customer meeting Priorities 2019 Strengthen the digital Roll out updated Develop and strengthen customer customer meeting concepts program for increased relevance 23
Slide 24: Relevant and personal customer meeting
Relevant and personal customer meeting Popular customer programmes provide wealth of data More than 4 million members Ease in registering purchases leads to high share of identified purchases Modern IT systems implemented New marketing automation, analysis system and modern ERP Continuous developmen
Slide 25: Expansion
Expansion Priorities 2019 Establish 5-10 Expand online Establish presence new stores in online pharmacy market 25
Slide 26: Expansion in line with 2019 plan
Expansion in line with 2019 plan Number of stores as of 30 September 2019 New stores/conversions 2019 Online offering as of 30 September Willys: 213 5 75 stores + 1 (Strömstad, planned Q4 2019) (2019: +19) 2 group owned Hemköp totalt: 196 +1 (Västerås planned Q4 2019) 18 stores 13 franchise +1 (Karl
Slide 27: Supply chain
Supply chain Priorities 2019 Implement common Start the development of Increase efficiency dark store for online automated warehouse for in logistics orders store and online picking 27
Slide 28: Preparations for automatized logistics centre in progress according to plan
Preparations for automatized logistics centre in progress according to plan ✓ Long-term lease agreement signed with NREP Logistics in July ✓ Building permit in place as of 3 September ✓ Land preparation initiated ✓ Negotiations with Witron regarding automatization in final stage, investment agreemen
Slide 29: Outlook 2019
Outlook 2019 29
Slide 30: Outlook 2019
Outlook 2019 Planned capex 2019 SEK 1,500−1,600 m Including approx. Excluding acquisitions SEK 600 m investment and leasehold in automation for future logistics solution 30
Slide 31: Summary
Summary • Strong growth • Outperforming the market and gaining market share • Improved performance in all segments – in total a record for the third quarter • Investments for the future 31
Slide 32: Q&A
Q&A 32
Slide 33: Axfood
Axfood ■ Net sales, SEK m ▬ Operating margin, % Key ratios Q3 Q3 9M 9M SEK m 2019 2018 Change 2019 2018 Change FY 2018 37,700 Net sales 12,731 12,050 +5.3% 37,700 35,715 +5.6% 48,085 35,715 34,142 31,952 30,456 Change in like- 5.4% 3.2% +2.2 pp 5.2% 3.4% +1.8 pp 3.7% for-like sales 4.7 4.5 4.8 Opera
Slide 34: Willys
Willys ■ Net sales, SEK m ▬ Operating margin, % Key ratios Q3 Q3 9M 9M SEK m 2019 2018 Change 2019 2018 Change FY 2018 21,541 20,033 Net sales 7,259 6,702 +8.3% 21,541 20,033 +7.5% 27,066 18,782 16,512 17,186 Change in like- 7.0% 3.6% +3.4 pp 6.6% 3.9% +2.7 pp 4.3% 5.2 for-like sales 4.7 4.1 4.2 4.4
Slide 35: Hemköp
Hemköp ■ Net sales, SEK m ▬ Operating margin, % Key ratios Q3 Q3 9M 9M SEK m 2019 2018 Change 2019 2018 Change FY 2018 4,572 4,561 4,735 4,726 Net sales 1,514 1,520 -0.4% 4,726 4,735 -0.2% 6,403 4,297 Change in like- for-like sales 0.7% 0.7% 0.0 pp 1.1% 0.7% +0.4 pp 1.1% group owned 4.3 Operating 3.
Slide 36: Axfood Snabbgross
Axfood Snabbgross ■ Net sales, SEK m ▬ Operating margin, % Key ratios Q3 Q3 9M 9M SEK m 2019 2018 Change 2019 2018 Change FY 2018 2,598 2,446 2,257 Net sales 944 906 +4.2% 2,598 2,446 +6.2% 3,241 5.1 Operating 58 45 +29.5% 133 96 +37.7% 121 4.3 profit 3.9 Operating 6.2% 5.0% +1.2 pp 5.1% 3.9% +1.2 p
Slide 37: Dagab
Dagab ■ Net sales, SEK m ▬ Operating margin, % Key ratios Q3 Q3 9M 9M SEK m 2019 2018 Change 2019 2018 Change FY 2018 33,238 30,601 31,391 28,960 Net sales 11,152 10,491 +6.3% 33,238 31,391 +5.9% 42,456 Operating 182 170 +7.2% 526 516 +2.1% 685 1.8 1.8 profit 1.6 1.6 Operating 1.6% 1.6% 0.0 pp 1.6%