Carrefour Sa · EURONEXT:CA
Carrefour Sa — Investor Day (July 2005)
82 slides from Carrefour Sa's investor day presentation, Jul 1, 2005
Slide 1: Carrefour Investor Day, 1st July 2005 - Third session
CARREFOUR Investor day 1st July 2005 Third session Growing profitability 1 Investor day / 01.07.2005
Slide 2: Third session: Growing profitability
Third session Growing profitability : activity contribution and ROCE – Europe - opportunities in our core market / José Maria Folache – Asia - New engine for growth / Philippe Jarry – Latin America - Adapting the business model / Eric Uzan – The Dia growth model / Javier Campo 2 Investor day / 01.07
Slide 3: José Maria Folache biography
Third session Europe - opportunities in our core market / José Maria Folache • Age 44 After obtaining a law degree and an MBA from the IESE business school in Barcelona, José Maria Folache joined Continent in 1986 as Deputy HTCG Purchasing Director in the Merchandise Department - Spain, going on to
Slide 4: Europe: opportunities in our core market
CARREFOUR Growing profitability Europe: opportunities in our core market José-Maria FOLACHE 1st July 2005 4 Investor day / 01.07.2005
Slide 5: Carrefour in Europe
Carrefour in Europe We are Europe’s leading retailer • We are present in 13 countries in Europe, representing 88% of group sales • We have 9,831 stores under Group banners • We are market leader in each of our five key countries (France, Spain, Belgium, Italy and Greece) 5 Investor day / 01.07.2005
Slide 6: Carrefour in Europe
Carrefour in Europe We are Europe’s leading retailer * integrated 6 Investor day / 01.07.2005
Slide 7: Carrefour in Europe: stores by country
Carrefour in Europe Norway: 5 franchised stores Stores as of end of May 05 Belgium : 500 stores Poland : 100 stores Czech Republic and Slovakia : 15 stores France : 3 699 stores Romania : 4 franchised stores Portugal : 385 stores Italy : Turkey: 298 stores Spain : 3 000 stores 1 268 stores 7 Investo
Slide 8: Our business in Europe is growing
Carrefour in Europe Our business in Europe is growing • 2004 sales grew 6.1% and EBIT grew 13.8% • Spain grew EBIT 18.6% • We more than doubled EBIT contribution of Belgium and broke even in Poland • The EBIT of Italy and Greece were broadly flat despite significant price investments in both countri
Slide 9: We have a number of sources of growth
Carrefour in Europe We have a number of sources of growth • Driving sales and growing market share through the addition of new m2 – Organic growth – Acquisitions • Improving Activity Contribution through scale efficiencies, cost productivity, elimination of losses in key BUs 9 Investor day / 01.07.2
Slide 10: Accelerating creation of new sqm in 2005
New m² We are accelerating the creation of new sqm in 2005 • In 2005, we will open around 770 000 m²* versus 510 000 in 2004 • M² by country in 2005 – Spain : 125 000 m² – Italy : 230 000 m² – Belgium : 26 000 m² – Greece : 67 000 m² – Poland : 130 000 m² – Turkey : 160 000 m² * Including acquisitio
Slide 11: New m² helps grow market share
New m² New m² helps grow market share • New m² helps us leverage the strong commercial models we have developed in many European markets • With these commercial models, we have been able to drive traffic and win market share • The flexibility of our commercial models enables us to develop new format
Slide 12: Spain: eliminating supermarket losses
Improving Activity Contribution In Spain, eliminating supermarket losses will be a priority • Hypermarket productivity should grow as like for like sales increase • We will also eliminate losses in supermarkets. Actions already taken in Q1 include the following: – transfer of 11 supermarkets to Carr
Slide 13: The turnaround in Belgium is far from over
Improving Activity Contribution The turnaround in Begium is far from over • When we bought GB in 2000, the business was losing around €100m a year. In 2004, the business contributed around €20m of EBIT • A reduction in logistics costs, and faster organic growth, should enable us to achieve an Activi
Slide 14: Italy: strong platform for growth
Improving Activity Contribution In Italy, we have a strong platform for growth • Activity Contribution in Italy has been diluted by the relatively low margin of the hypermarket business. As hypermarket sales productivity improves, so should margin • Acquisitions have strengthened our multi format po
Slide 15: Italy: acquisitions strengthen multi format portfolio
Improving Activity Contribution In Italy, acquisitions have strengthened our multi format portfolio • At the beginning of January, we concluded a franchise agreement with Ce. Di Marche • In March, we reinforced our partnership with the Brunelli family and Finiper • In April, we signed an agreement w
Slide 16: Aligros and Cedi.Marche stores
Improving Activity Contribution Aligros store under Gulliver banners Cedi.Marche store remodeled under GS banner in Fabriano 16 Investor day / 01.07.2005
Slide 17: Greece: reinforced sales base
Improving Activity Contribution In Greece, we have reinforced the sales base of Carrefour Marinopoulos • We bought 26 stores in Greece from Xinos in July 2004 (8 supers, 18 convenience stores) • In May 2005 we bought Chris Cash & Carry, the number 2 food retailer in Cyprus (3 Hypermarkets and 3 Supe
Slide 18: Chris cash and carry store in Cyprus
Improving Activity Contribution Chris cash and carry store in Paphos (Cyprus) 18 Investor day / 01.07.2005
Slide 19: Turkey represents a huge new opportunity
Improving Activity Contribution Turkey represents a huge new opportunity • Turkey has around 70 million inhabitants with a higher proportion of young people than any other European country • Real GDP growth in 2004 was 8% • The Turkish market is relatively fragmented (multiples account for around 40
Slide 20: Turkey: market leader after Gima and Endi
Improving Activity Contribution In Turkey, we are now market leader following the agreement to buy Gima and Endi • Gima is the number 3 supermarket chain in Turkey operating 81 stores throughout the country • Endi is the number 4 discount chain in Turkey operating 45 stores • With Gima and Endi we w
Slide 21: Gima and Endi stores in Turkey
Improving Activity Contribution Gima and Endi stores in Turkey 21 Investor day / 01.07.2005
Slide 22: Poland: among the market leaders
Improving Activity Contribution In Poland, we are now among the market leaders • We are now number two in the Polish market following the integration of 12 hypermarkets from Ahold • Having achieved break even in 2004, we are now well positioned to begin to make money 22 Investor day / 01.07.2005
Slide 23: Hypernova store in Elblag, Poland
Improving Activity Contribution Hypernova store in Elblag (Poland) Now under Carrefour banner 23 Investor day / 01.07.2005
Slide 24: Continued improvement of key financial ratios
Improving Activity Contribution We expect to continue to improve our key financial ratios • In Europe, we have reduced costs and increased margin over the last three years, and expect further progress in 2005 Ebit / Sales Distribution costs / Sales 2002 2003 2004 2002 2003 2004 24 Investor day / 01.
Slide 25: Conclusion: Europe offers new engines for growth
Conclusion Europe offers new engines for growth for the Group • We are accelerating new m² in order to win market share and drive sales • Tactical aquisitions and the development of new formats gives us the opportunity to reinforce exisiting market positions • Sales and productivity improvements sho
Slide 26: Philippe Jarry biography
Third session Asia - New engine for growth / Philippe Jarry • Age 55 After a successful career with Comptoirs Modernes, Philippe Jarry joined Carrefour in 1980 as a Grocery Manager, going on to become a Fresh Products department Manager two years later In 1984 he became Store Manager. In 1987 he joi
Slide 27: Asia: an engine for growth
CARREFOUR Growing profitability Asia: an engine for growth Philippe JARRY 1st July 2005 27 Investor day / 01.07.2005
Slide 28: One of the most important international food retailers in Asia
Carrefour is one of the most important international food retailers in Asia • We are present in 8 countries in Asia, representing 7% of group sales… • …but representing 18% of the Carrefour’s total sales growth in 2004 • We have a multi format strategy: we operate* from 381 stores under banners with
Slide 29: Asian leader in hypermarket format
Carrefour is the Asian leader in Hypermarket format • In 6 countries out of 8, we have a top 3 position: # 1 China Taiwan Indonesia #2 Malaysia Singapore #3 Thailand 29 Investor day / 01.07.2005
Slide 30: Aggressive organic expansion of hypermarkets
Carrefour has pursued an aggressive organic expansion of hypermarkets... Japan Indonesia 170 Singapore 145 Korea Thailand 126 China 108 97 Malaysia 82 Taiwan 60 40 25 14 5 9 1 1 4 6 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* Hypermarkets under banner without DIA
Slide 31: Strong record of profitable growth
We have a strong record of profitable growth 2000/2004 Sales +70% Profitable growth EBITDA EBIT +78% +82% 31 Investor day / 01.07.2005
Slide 32: Our strategy is to consolidate our leadership
Our strategy is to consolidate our leadership • Accelerate our expansion path Consolidate • Be the preferred banner leadership anywhere we operate • Strengthen our management capabilities 32 Investor day / 01.07.2005
Slide 33: Accelerating hypermarket expansion through organic growth
We are accelerating our hypermarket expansion plans through organic growth 33 26 + c. 30% 33 Investor day / 01.07.2005
Slide 34: Regional programme to be the preferred banner
We have developed a comprehensive regional programme to be the preferred banner Private Price labels perception Be the preferred banner everywhere we operate Entry price Localized point lines assortment (No 1) 34 Investor day / 01.07.2005
Slide 35: Strengthening our management capabilities
We are strengthening our management capabilities • New regional organization in China to better meet our customer demand • Training centers in China, Thailand • ExecutiveTraining Programme • Promoting local talents 35 Investor day / 01.07.2005
Slide 36: Our strategy is to consolidate our leadership
Our strategy is to consolidate our leadership • Accelerate our expansion path Tangible • Be the preferred results Consolidate leadership banner anywhere we to operate date • Strengthen management capabilities 36 Investor day / 01.07.2005
Slide 37: Accelerating our expansion path: China
Accelerating our expansion path: China • 61 hypermarkets 1 • 15 new openings in 2005 • Coverage of 25 out of the 30 top cities • Market leaders in 19/25 cities • Testing multi format approach with Champion • Rolling out aggressive Dia strategy 37 Investor day / 01.07.2005
Slide 38: Consolidating our leadership: Taiwan
Consolidating our leadership: Taiwan 1 • 34 hypermarkets • 50% of the openings are Carrefour • Our remodeling programme is paying off • In a highly competitive environment we enjoy positive Like For Like growth 38 Investor day / 01.07.2005
Slide 39: Accelerate our expansion path: Indonesia
Accelerate our expansion path: Indonesia • 16 hypermarkets • Huge untapped potential 1 • Aggressive growth plan • High profitability to further found the growth • The banner preferred by Indonesians * • Carrefour 76% • Second player 12% * Source Nielsen 39 Investor day / 01.07.2005
Slide 40: Offer meeting local demand: Korea
Our offer is increasingly meeting local demand : Korea LFL sales uplift 2 -7 2003 2004 H1 2005 estimated 40 Investor day / 01.07.2005
Slide 41: Offer meeting local demand: Thailand
Our offer is increasingly meeting local demand : Thailand • Continue to grow our revenues and profit in Bangkok • Highly successful in competitive situation in up country • Back on the expansion track 41 Investor day / 01.07.2005
Slide 42: Offer meeting local demand: Malaysia
Our offer is increasingly meeting local demand : Malaysia • Successful profitable commercial platform • The whole portfolio is remodeled • High profile partnership confirmed • Back on the expansion track 42 Investor day / 01.07.2005
Slide 43: Conclusion: strong platform to consolidate leadership in Asia
Conclusion: We have a strong platform to consolidate our leadership in Asia Accelerating our expansion path : China, Indonesia Consolidating our strong leadership : Taiwan Back on the expansion track : Korea, Thailand, Malaysia 43 Investor day / 01.07.2005
Slide 44: Eric Uzan biography
Third session Latin America-Adapting the business model / Eric Uzan • Age 46 After completing his studies at France’s Mans University, Eric Uzan joined Carrefour in 1981 as a trainee section supervisor, becoming a fully-fledged section supervisor in 1982 He was appointed Fresh Products Department Ma
Slide 45: Latin America: Adapting the business model
CARREFOUR Growing profitability Latin America: Adapting the business model Eric UZAN 1st July 2005 45 Investor day / 01.07.2005
Slide 46: One of the largest retailers in Latin America
Carrefour in Latin America We are one of the largest retailers in Latin America * Excluding Mexico Source : M+M Planet Retail 46 Investor day / 01.07.2005
Slide 47: Leading market positions in key markets
Carrefour in Latin America We have leading market position in the region’s key markets 47 Investor day / 01.07.2005
Slide 48: In 1998, EBIT contribution from the region
Carrefour in Latin America In 1998, we achieved EBIT of € 232 m from the region • In 1998, sales in Latin America were €6.2bn, equivalent to 22.7% of the group total • EBIT was € 232 M, or 21.4% of the group total • Latin America was the second largest EBIT contributor to the group after France, nea
Slide 49: By 2003 EBIT had fallen
Carrefour in Latin America However, by 2003 EBIT had fallen to €12.6m • Between 1998 and 2003, the region experienced a combination of falling currencies and economic hardship • By 2003, our sales in the region had fallen to €4.6bn while EBIT had collapsed 49 Investor day / 01.07.2005
Slide 50: Economic crisis required a rethink of business model
Carrefour in Latin America The economic crisis in the region required a rethink of our business model • In order to adapt our offer in each store more closely to the needs of consumers in its catchment area, we adopted the strategy of “Clusterisation” in Argentina in 2003 • This meant segmenting the
Slide 51: Cluster A and Cluster C in Argentina
Carrefour in Latin America Cluster A in Argentina Cluster C in Argentina 51 Investor day / 01.07.2005
Slide 52: Clusterisation in Argentina has produced good results
Carrefour in Latin America Clusterisation in Argentina has produced good results • As a result of this strategy, we saw a recovery in like for like sales in 2004 of 9.9% in Argentine supermarkets and 13.5% in hypermarkets • In Q1 2005, hypermarkets in Argentina grew like for like sales by 8.5% and s
Slide 53: Clusterisation has benefitted Brazil
Carrefour in Latin America Adoption of clusterisation has also benefitted Brazil • “Clusterisation” has also been rolled out in Brazil. In 2004, hypermarkets and supermarkets in Brazil grew like for likes by 5.7% and 7.9% respectively • Growth in Q1 2005 was 9.8% and 1.5% in hypermarkets and superma
Slide 54: New business model provides platform for faster organic growth
Carrefour in Latin America Our new business model provides a platform for faster organic growth • In the past two years, we have opened only 218 000 m² of new space in the region and have sold Mexico • For 2005, we plan to open around 155 000 m² of new space 54 Investor day / 01.07.2005
Slide 55: No more stop and go
Carrefour in Latin America No more "stop and go" • In Brazil, opening two hypermarkets a year, as we have done over the last few years, is insufficient. We must open at least between 5 and 10 to allow us to reinforce our market share and grow the business. We will open 7 in 2005 • In Argentina, we a
Slide 56: Optimise the asset portfolio in the region
Carrefour in Latin America Our goal is to optimise the asset portfolio in the region… • We are allocating capital across the region to maximise returns • We sold Mexico in March 2005 to Chedraui as part of our programme to divest non-strategic or underperforming activities • At the same time, we are
Slide 57: Optimising assets in each of our markets
Carrefour in Latin America …as well as in each of our markets • Optimising the asset portfolio in each of its markets also means allocating capital to each format to maximise returns • Thus, we are making tactical acquisitions in key markets (eg the purchase of 10 hypermarkets in Sao Paulo in June 2
Slide 58: Tactical acquisitions: 10 hypermarkets in Sao Paulo
Carrefour in Latin America Tactical acquisitions will complement faster organic growth • With the acquisition of 10 hypermarkets in the Sao Paulo area from Sonae, we have strengthened our share in this key market • These 10 hypermarkets reported 2004 net sales of BRL 455 millions (approx. € 128 m).
Slide 59: Eliminating losses in Brazil supermarkets
Optimising the asset portfolio Eliminating losses in Brazil supermarkets is a priority • Our supermarket business in Brazil is an amalgam of a number of different chains acquired in 2001 • The cost base of this business is still too high to achieve a positive activity contribution • We will take rad
Slide 60: Brazil likely to remain principal motor for growth
Improving profitability and ROCE Brazil is likely to remain the principal motor for growth in the region • Sales growth should accelerate as new m² are added faster (we will add 5 to 10 new stores per year versus 2 per year over the last couple of years) and as we in-fill through tactical acquisitio
Slide 61: Argentina continues its recovery
Improving profitability and ROCE Argentina continues its recovery • Our new commercial model has enabled us to recover market share from informal retailing • Selective additions to our network of stores will enable us to build on our market leadership • We are continuing to adapt our formats to the
Slide 62: Colombia represents an additional source of growth
Improving profitability and ROCE Colombia represents an additional source of growth in the region • An acceleration of organic growth will enable us to grow market share relative to our principal competitors • We are among the top three retailers in Colombia in terms of market share Number of stores
Slide 63: Conclusion: Latin America an important engine for growth
Conclusion Latin America is an important engine for growth • Latin America may never achieve the levels of profitability seen at the end of the last decade, but nonetheless represents an important source of growth for Carrefour group • We are accelerating growth in new m2 to build on already strong
Slide 64: Javier Campo biography
Third session The Dia growth model / Javier Campo • Age 49 After studying engineering at the Universidad Politicnica in Madrid, Javier Campo’s career has included, notably, a period as Managing Director of TYCESA before he joined the Carrefour group in 1985 as Merchandise Director for Dia. In 1986 h
Slide 65: The DIA growth model
CARREFOUR Growing profitability The DIA growth model Javier CAMPO 1st July 2005 65 Investor' day 01/07/2005
Slide 66: Dia is the world's third largest hard discounter
Dia is the world’s third largest hard discounter Chain Group and country of origin No of Countries Number of stores 1995 2000 2004 1 Aldi Aldi - Germany 15 4,171 5,246 7,219 2 Lidl Lidl & Schwarz - Germany 18 2,194 3,927 6,023 3 + 8 2,329 3,430 4,934 4 Plus Tengelmann - Germany 9 2,662 2,950 3,950 5
Slide 67: Dia represents over 8% of Carrefour sales
Dia represents over 8% of Carrefour sales France Turkey Portugal China Spain Greece P LV S VLTRA • 8 countries • € 7.2 bn gross sales Brazil R G R E • 4.934 stores O S S O O R DE M E P • 1,7 Million m² selling area Argentina • 37.000 employees * As of end december 2004 67 Investor' day 01/07/2005
Slide 68: Dia is the 4th biggest business in Carrefour Group
Dia is the 4th biggest Business in Carrefour Group Dia is the 4th biggest business in Carrefour Group in terms of sales and has become the 4th biggest business in terms of EBIT Top EBIT BU in 2000 Top EBIT BU in 2004 68 Investor' day 01/07/2005
Slide 69: Dia among market leaders in each market
Dia is among the market leaders in each market in which it trades 69 Investor' day 01/07/2005
Slide 70: Dia concept based on price, proximity and quality
The Dia concept is based on price, proximity and quality BASIC OFFER REASONS FOR SHOPPING PRICE 81 % PROXIMITY 58 % QUALITY 31 % 0 % 100 % 70 Investor' day 01/07/2005
Slide 71: Dia is well adapted to the local environment
Dia is well adapted to the local environment 71 Investor' day 01/07/2005
Slide 72: The Maxi Dia concept creates growth opportunities
The Dia model is flexible The Maxi Dia concept creates additional opportunities for growth • Format launched in Spain with 6 stores in 2004 • Average selling area of 1,200 m² • Offers wider range, particularly in perishables • Crossover between smaller Champion stores in Spain and the Maxi Dia conce
Slide 73: The Maxi Dia concept in Spain
The Dia model is flexible The Maxi Dia concept in Spain 73 Investor' day 01/07/2005
Slide 74: Dia: one of the fastest growing retail formats (sales)
With Dia we have one of the fastest growing and profitable retail formats anywhere Over the last five years, Dia has grown sales by 12.4% per year on average • Net sales between 2000 and 2004 have grown by 49% 7 000 6 500 6 000 5 500 5 000 4 500 4 000 3 500 3 000 2000 2001 2002 2003 2004 74 Investor
Slide 75: Dia: one of the fastest growing retail formats (EBIT)
With Dia we have one of the fastest growing and profitable retail formats anywhere Over the last five years, Dia has grown EBIT by 26% per year on average • EBIT between 2000 and 2004 have grown by 140% 230 210 190 170 150 130 110 90 70 50 2000 2001 2002 2003 2004 75 Investor' day 01/07/2005
Slide 76: Accelerated new store openings since 2000
We will build on Dia’s already strong commercial and strategic position We have accelerated the number of new store openings since 2000 • We have opened 1,466 stores between 2000 and 2004 5 500 4 934 5 000 + 478 + 442 4 456 4 500 + 260 4 014 4 000 + 286 3 754 3 468 3 500 3 000 2000 2001 2002 2003 20
Slide 77: Goal to increase store openings further
We will build on Dia’s already strong commercial and strategic position Our goal is to increase this further • We plan to open around 600 and 700 stores a year between 2005 and 2008 c.7 500 stores 7 500 7 000 6 500 6 000 5 489 5 500 5 000 2005 2006 2007 2008 77 Investor' day 01/07/2005
Slide 78: Dia is also growing through acquisition
We will build on Dia’s already strong commercial and strategic position Dia is also growing through acquisition • Dia in France has made a number of acquisitions – In July 2003, Ed acquired 44 Treff stores from Edeka in the East of France (Alsace, Lorraine and Franche-Comté) – In November 2004, Ed s
Slide 79: Dia leveraging its role within Carrefour group
We will build on Dia’s already strong commercial and strategic position Dia is leveraging more and more its role within Carrefour group • Dia now buys more in common with Carrefour group (70% of purchasing through our central buying office is now undertaken together with Dia) • There is a greater tr
Slide 80: With Dia we are able to develop new markets
With Dia we have one of the fastest growing and profitable retail formats anywhere With Dia, we are able to develop new markets • We have the skills to develop Dia in new markets • Since 2000, we have entered Turkey, Brazil, and China • New markets are currently under study 80 Investor' day 01/07/20
Slide 81: Conclusion: Dia an important engine for growth
Conclusion Dia represents an important engine for growth for Carrefour group • Dia will make an important contribution to the group objective of accelerating new m² • Dia is a critical element to our multi format strategy • Further improvement in EBIT and ROCE will support growth in group profitabil
Slide 82: Investor day / 01.07.2005
82 Investor day / 01.07.2005