Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q2 2017 Earnings Presentation
38 slides from Axfood Ab's earnings presentation, 2017
Slide 1: Q2 2017: Good growth with high activity level
Q2 2017: Good growth with high activity level Klas Balkow, President and CEO
Slide 2: Agenda
Agenda • Q2 results • Strategic focus areas • Outlook 2017 • Q&A 2
Slide 3: Axfood – a strong Swedish food retail company
Axfood – a strong Swedish food retail company > 3 million 272 Group-owned stores customers a week 120 franchise Hemköp 23 Axfood Snabbgross 9,369 In total collaborating with employees (FTE) 1,140 stores (inkl Tempo, Handarn, Direkten, associated companies) R12 net sales of SEK 44.3 bn 4 online brand
Slide 4: Additional BTB customers
Additional BTB customers OKQ8 Preem EMAB Circle K Reporting net sales Hemmakväll Pressbyrån Customer relations and therefore Linas 7-Eleven operating profit Matkasse 4
Slide 5: Highlights Q2
Highlights Q2 Strong overall Profitability Investments in net sales and in line with future growth growth forecast 5
Slide 6: Strong growth, both LFL and through acquisitions
Strong growth, both LFL and through acquisitions • Net sales growth +9.4% – Like-for-like (LFL) Group-owned store sales +5.9% 1) Net sales, SEK m • Strong growth in all segments 11,925 Concept Overall LFL 10,901 10,478 9,557 9,804 Willys 13.4% 6.7% Hemköp 5.2% 3.7% Group-owned -1.7% 2.6% Franchise 1
Slide 7: Strengthened market position
Strengthened market position • Store sales (including Hemköp franchise) Jan-June, +6.9% • Preliminary market growth Jan-May, 2.6% (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 Q2 17 -2.0 Axfood Group net sales Retail trade index (excl alcohol) 7
Slide 8: Operating profit in line with full-year forecast
Operating profit in line with full-year forecast • Operating profit SEK 487 m (494) + LFL development − Online business − Investments in future growth including increased joint costs Operating profit, SEK m 494 487 − Temporary closure of Hemköp City, Stockholm 431 376 • Operating margin 4.1% (4.5) 3
Slide 9: Willys – fine sales growth and solid profitability
Net sales Willys – fine sales growth and solid profitability +13.4% • LFL sales, 6.7% ‒ More customers and higher average purchase • Excl Eurocash 7.0% growth in Willys ■ Net sales, SEK m ▬ Operating margin, % ‒ Good contribution from Eurocash both in sales 6,601 and earnings 5,174 5,374 5,691 5,823
Slide 10: Hemköp – strong sales development
Net sales Store sales Group-owned Hemköp – strong sales development Hemköp total -1.3% +5.2% • LFL growth Hemköp total, 3,7% • Store structure ■ Net sales, SEK m ‒ One group-owned store converted to ▬ Operating margin, % franchise 1,563 1,542 1,470 6 1,392 1,364 ‒ One new store: Örebro 5 • Online in
Slide 11: Impacts on Hemköp’s profitability
Impacts on Hemköp’s profitability Items affecting comparability • Refurbishment of Stockholm City • Until June higher youth social security costs than in 2016 Investing in future growth • 3 new stores in H1 • Higher IT operational costs and amortization on online platform • Start-up cost for wide on
Slide 12: Axfood Närlivs – strong profitability
Net sales Axfood Närlivs – strong profitability +3.8% • Good sales growth ‒ Higher average ticket ■ Net sales, SEK m 1) ▬ Operating margin, % ‒ Increased growth from recently 789 1 760 1 established stores 717 1 • Increased profitability 8.2 8.5 9 7.5 7 ‒ Higher sales both in Axfood Snabbgross 5 and
Slide 13: Dagab – good growth and solid profitability
Net sales Dagab – good growth and solid profitability +7.9% • Growth driven both by store chain development and whole sales business including online 1) ‒ Strengthened online business by acquisition ■ Net sales, SEK m ▬ Operating margin, % of Middagsfrid 12 10,680 11 9,894 ‒ Continued growth in mat.
Slide 14: Financials
Financials Anders Lexmon Chief Financial Officer
Slide 15: Good growth and earnings in H1 2017
Good growth and earnings in H1 2017 • Net sales growth +6.4% ‒ LFL Group onwed store sales +3.6% • Operating profit SEK 884 m Net sales, SEK m Operating profit, SEK m 22,564 902 884 21,206 20,044 760 18,507 18,750 622 580 4.3 3.8 3.9 3.1 3.3 H1-13 H1-14 H1-15 H1-16 H1-17 H1-13 H1-14 H1-15 H1-16 H1-1
Slide 16: Reduced net debt and closed repurchase of shares
Reduced net debt and closed repurchase of shares 6M 2017 6M 2016 Cash and cash equivalents, 31 Dec 1,726 1,933 Operating cash flow before changes 1,219 1,229 in working capital and paid tax Paid tax -234 -205 Changes in working capital 120 11 Investing activities -1,208 -266 Increased debt 28 ─ Repu
Slide 17: Improved working capital
Improved working capital % of net sales 70,0 6.8 6.9 6.8 65,0 6.5 6.6 6.6 6.6 6.6 6.7 60,0 55,0 50,0 5.0 5.0 Accounts payable 4.9 4.8 4.8 4.8 4.9 4.9 4.9 45,0 40,0 Inventories 35,0 30,0 Accounts 2.5 receivable 25,0 2.3 2.2 2.2 2.2 2.2 2.2 2.2 2.2 20,0 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Slide 18: Balance sheet effects of recent acquisitions
Balance sheet effects of recent acquisitions Amount in SEK m H1 17 Goodwill 802 Other intangible assets 155 Property, plant and equipment 139 Other non-current assets 43 Current assets -811 Total assets 328 Shareholders’ equity 5 Non-current liabilities 108 Current liabilities 215 Total shareholders
Slide 19: Our investments in future growth boosting total investments
Our investments in future growth boosting total investments Quarterly capital expenditure, SEK m SEK m Ʃ 1,420 932 806 764 643 580 1,095 Other Ʃ 301 Acquisition Acquisition 4 2 Other2 76 84 IT 20 IT 13 Wholesale Wholesale 208 219 Retail Retail 2012 2013 2014 2015 2016 H1 16 H1 17 19
Slide 20: Strategic focus areas
Strategic focus areas Klas Balkow President and CEO
Slide 21: Strategic focus areas
Strategic 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 21
Slide 22: Secure continued growth
Secure continued growth • Strong growth platform in cross boarder segment ‒ New Managing Director of Eurocash ‒ Continued integration • Strengthened online offer through mat.se by Middagsfrid • Remaining store expansion 2017 ‒ 1 Willys, 3 Hemköp, 1 Axfood Snabbgross • Continued concept update of Hem
Slide 23: Strategic focus areas
Strategic 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 23
Slide 24: Axfood’s market appearance
Axfood’s market appearance Direct Stores mail Willys Plus Visitors e-mails Customer Members events Mailings Customer E-mail magazine SMS Deliveries Dark stores Own 24 delivery
Slide 25: Next steps in omni-channel development
Next steps in omni-channel development • Solid structure for improved delivery solutions going forward ‒ mat.se increased dark store capacity in Stockholm and Gothenburg • Four brands within different segments ‒ Continued roll-out • New online platform in Axfood Snabbgross ‒ Replacing throughout Swe
Slide 26: Focus areas
Focus areas Secure continued growth Progress Progress on on sustainability sustainability Fysisk bild Omni channel Further steps in omni experience channel strategi 26
Slide 27: Axfood’s climate footprint: -79% reduction since 2009
Axfood’s climat footprint: -79% reduction since 2009 Co2-equivalents 120 000 0% 2016 100 000 -20% 5% 80 000 -40% 26% 60 000 43% -60% 40 000 -80% 20 000 26% 0 -100% 2009 2013 2014 2015 2016 1) CO2-emissions Change vs base year 2009 Refrigerants Transports Electricty consumption Business travel 1) Gro
Slide 28: Progress on sustainability
Progress on sustainability • Directive from EU: As of June 50% reduction of plastic carrying bags until 2025 ‒ Swedish Act for information requirement by retailers • Support Sweden’s food strategy ‒ Axfood a member of steering committee ‒ Innovation area: approx. 40 food related companies/org. • Mat
Slide 29: Outlook 2017
Outlook 2017 Klas Balkow President and CEO
Slide 30: Market outlook 2017
Market outlook 2017 • 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 • Strong growth, both LFL and by acquisitions • Operating profit in line with last year and forecast • Strong financial position • High level of activities to enable future growth 32
Slide 33: Questions & answers
Questions & answers Klas Balkow, President and CEO Anders Lexmon, CFO
Slide 34: Axfood Q2 2017
Axfood Q2 2017 Key ratios ■ Net sales, SEK m SEK m Q2 2017 Q2 2016 Change 6M 2017 6M 2016 Change ▬ Operating margin, % 1) 11,925 Net sales1) 11,925 10,901 9.4% 22,564 21,206 6.4% 10,901 1.00 10,478 9,804 0.90 9,557 Change in like-for-like 0.80 5.9% 0.9% 5.0 3.6% 3.0% 0.6 0.70 sales 0.60 0.50 Operati
Slide 35: Willys Q2 2017
Willys Q2 2017 Key ratios ■ Net sales, SEK m SEKm Q2 2017 Q2 2016 Change 6M 2017 6M 2016 Change ▬ Operating margin, % 6,601 Net sales 6,601 5,823 13.4% 12,365 11,466 7.8% 5,691 5,823 5,174 5,374 Change in like-for-like 6.7% -0.2% 6.9 4.0% 2.3% 1.7 sales 4.1 4.1 4.0 4.2 4.0 Operating profit 263 245 7
Slide 36: Hemköp Q2 2017
Hemköp Q2 2017 Key ratios ■ Net sales, SEK m SEKm Q2 2017 Q2 2016 Change 6M 2017 6M 2016 Change ▬ Operating margin, % 1,563 1,542 Net sales 1,542 1,563 -1.3% 3,087 3,108 -0.7% 1,470 65,0 1,392 1,364 55,0 Change in like-for-like 2.6% 5.2% -2.6 2.3% 5.7% -3.4 sales 4.5 45,0 3.8 Operating profit 46 71
Slide 37: Axfood Närlivs Q2 2017
Axfood Närlivs Q2 2017 Key ratios ■ Net sales, SEK m ▬ Operating margin, % 1) SEKm Q2 2017 Q2 2016 Change 6M 2017 6M 2016 Change 150 789 Net sales 789 760 3.8% 1,444 1,394 3.6% 760 130 717 110 8.5 90 Operating profit 67 57 17.5% 89 79 12.7% 8.2 7.5 70 50 Operating margin 8.5% 7.5% 1.0 6.2% 5.7% 0.5
Slide 38: Dagab Q2 2017
Dagab Q2 2017 Key ratios ■ Net sales, SEK m SEKm Q2 2017 Q2 20161) Change 6M 2017 6M 20161) Change ▬ Operating margin, % 1) Net sales 10,680 9,894 7.9% 20,428 19,206 6.4% 12 10,680 11 9,894 10 Distributed sales 8,305 7,778 6.8% 15,932 15,133 5.3% 9 8 1.6 1.6 7 6 Operating profit 169 160 5.6% 346 328