Ceconomy Ag · XETR:CEC
Ceconomy — Investor Presentation (August 2018)
60 slides from Ceconomy's investor presentation, August 2018
Slide 1: CECONOMY AG Equity Story
CECONOMY AG “Equity Story” Investor Presentation, August 2018
Slide 2: Disclaimer and Notes
DISCLAIMER (segmental or other) information in the consolidated financial statements of the former METRO Group and, thus, may not be fully comparable to such financial statements. Historical our business, results of operations, financial position or cash flows. There are, however, material limitatio
Slide 3: Disclaimer and Notes (cont'd)
Disclaimer and Notes (cont’d) We do not undertake any obligation to publicly update any CECONOMY is based on certain estimates and assumptions and presentation, warrant that the data collected, processed and forward-looking statements or to conform them to events or there can be no assurance that th
Slide 4: CECONOMY at a glance: Europe's largest CE platform
CECONOMY at a glance: Europe’s largest CE platform CECONOMY acts as a platform that brings together various businesses, concepts, formats and brands active in the area of Consumer Electronics. All these activities are based on a customer community monetisation business model. We are the 22.2 bn € sa
Slide 5: What we have achieved so far in FY 2017/18
What we have achieved so far in FY 2017/18 Recovery of unexpected Q1 EBIT/DA decline Strong growth in Online with sustained high pick-up rate Accelerated growth in Services & Solutions helped by roll-out of “smart bars” Substantial earnings improvement in Italy Further progress envisaged for the Res
Slide 6: 10% capital increase with freenet AG as new anchor investor
CECONOMY executed 10% capital increase with freenet AG joining as new anchor investor Pre-transaction structure based on voting rights* Highlights Haniel 24.9% // Issuance of around 32.6m new ordinary shares (approx. 10% of the former share capital) under Free float 50.1% exclusion of subscription r
Slide 7: Our agenda for the upcoming months
Our agenda for the upcoming months Services & Free cash flow European Retail Corporate Growth Solutions focus Alliance Structure // Further drive online // Full roll-out of “smart // Aim to reduce €250m // Set-up legal entity // Find a solution with sales bars” until end of net costs in total over M
Slide 8: Why invest in CECONOMY?
Why invest in CECONOMY? #1 #2 #3 #4 CECONOMY LEADS CECONOMY IS THE CECONOMY HAS A CECONOMY HAS THE LEADER IN STRONG THE POTENTIAL TO CONSOLIDATION MULTI-CHANNEL FINANCIAL INCREASE AND AND SCALE PROFILE MARGINS AND TRANSFORMATION FREE CASH FLOW IN A DYNAMIC GENERATION RETAIL CATEGORY Investor Present
Slide 9: CECONOMY Strategy
// CECONOMY Strategy August 2018 // 9
Slide 10: Largest Consumer Electronics platform in Europe
CECONOMY is the largest Consumer Electronics FACT BOX CECONOMY’s European market platform in Europe share 13.4% 13.5% 13.2% #1 Market position Other market position Critical market position No presence 14/15 15/16 16/17 #1 position through Fnac Darty in France and M.video in Russia // Leading in 9 o
Slide 11: Actively drives consolidation in the CE industry
CECONOMY actively drives consolidation in the Consumer Electronics industry Acquisition of c.24% Acquisition of 15% stake in Fnac Darty stake in M.video July 2017 May 2018 June 2018 Step … 6 Independence Start of the European M.video plans to join Retail Alliance with the European Retail Fnac Darty
Slide 12: One of the leading multi-channel players in Europe
One of the leading multi-channel players in Europe Online Sales (in € million) Pick-up rate (in % of online orders) 2,407 42% 42% 40% 1,952 1,766 FY 14/15 FY 15/16 FY 16/17 FY 14/15 FY 15/16 FY 16/17 Online Sales Share (in %) Online Visitors (in million) 1,318 10.9% 1,193 8.9% 1,013 8.1% FY 14/15 FY
Slide 13: We are multi-channel
We are multi-channel 30% of all store visitors have initially visited our webshop Full multi-channel customer journey leads to a More than 50% of conversion rate >20% online purchases started in one of our stores There is a 60% higher likelihood of selling a 63% of our web shop product if the visito
Slide 14: Multi-channel is the winning model
Multi-channel is the winning model Where do German consumers buy CE products? Sales share in Germany (in %) 5% 6% 7% 8% 10% 11% 16% 17% 17% 17% 17% 17% Multi-channel offering with increasing relevance for consumers 78% 77% 76% 74% 73% 72% 2011 2012 2013 2014 2015 2016 Online business of brick&mortar
Slide 15: The store network is an asset again
The store network is an asset again and integral part of CECONOMY’s multi-channel and services strategy Advantages of CECONOMY’s strong physical presence // Offering customers tangible product experiences // Showroom for exclusive and high-end products offering suppliers visibility of brands // Inst
Slide 16: Full CE assortment in a connected world
CECONOMY offers the full CE assortment, reflecting a truly “connected world” Other2 Product Category Entertainment Computer Hardware1 Breakdown FY 16/17 6% & Accessories 10% 21% Telecommunications 19% 22% Brown Goods White Goods 22% 1 Telecommunication devices such as iPads without SIM card included
Slide 17: Highly relevant to suppliers and a strategic partner
CECONOMY is highly relevant to its suppliers and a strategic partner of choice Sales Share in % (CECONOMY FY 16/17) CECONOMY Supplier CECONOMY’s Weight at Vendor / Supplier1 (FY16/17) 20% Supplier 1 18% 11% Supplier 2 13% Read: CECONOMY 6% Supplier 3 29% generates 20 % of its sales with “Supplier 1”
Slide 18: Full range of Services & Solutions along the customer journey
We are solutions: a full range of Services & Solutions FACT BOX Services & Solutions Sales along the customer journey (in € million) 1,301 1,379 994 (Pre-)Buy Set-up & Use Repair 14/15 15/16 16/17 Consumer credit and Personalised products Refurbishment leasing Customer advisory & In-warran
Slide 19: Customer-centric: >14.5 million loyal members
We are customer-centric: >14.5 million loyal members in our customer programmes >14.5m 25% members in our customer programmes of all sales in Germany are generated by across all countries German MediaMarkt Club members 3.8m customer program members in >600k Saturn Card holders in just 4 months Germa
Slide 20: CECONOMY Q3/9M 2017/18
// CECONOMY Q3/9M 2017/18 Note: All figures represent the continuing operations of CECONOMY. August 2018 // 20
Slide 21: EBITDA and NWC catch-up continued in Q3
EBITDA and NWC catch-up continued in Q3 (€m) (€m) (€m) -0.7% +249 +0.8% +21 +19 4,629 4,598 90 fx-adjusted 26 -30 4 -49 -159 Q3 16/17 Q3 17/18 Q3 16/17 Q3 17/18 Q3 16/17 Q3 17/18 Q3 16/17 Q3 17/18 Sales EBITDA EBIT Change in Net Working Capital (NWC) // Fx-adjusted sales increased by 0.8% // EBITDA
Slide 22: World Cup campaigns offset shift of Easter business
Positive impact from World Cup campaigns offset shift of Easter business into Q2 Total Sales (fx-adjusted, yoy change) Highlights 1.6% // Declining sales in Germany also impacted by lacklustre Consumer Electronic environment and closure of 0.8% redcoon operations; nevertheless, broadly stable market
Slide 23: Online key growth driver
Online key growth driver, accounting for 13% of total sales Online Sales (in €m) Highlights +21% +15% 584 2,537 483 2,198 // Online sales increased by +21% yoy // Online now accounts for 12.7% of total sales vs. 10.4% in the prior-year period // Strong online growth rates across all segments Q3 16/1
Slide 24: Accelerated growth of Services & Solutions sales
Accelerated growth of Services & Solutions sales Services & Solutions Sales (in €m) Highlights +26% +15% 381 1,507 1,312 // Services & Solutions sales up +26% yoy, driven 304 especially by telco contracts, insurances, extended warranties and repair services // Services & Solutions now account for 8.
Slide 25: Growth in customer programme members
Sustained growth in the number of members of our customer programmes Members in Customer Programmes MM Club Saturn Card Highlights in Germany (in k) +582 +693 +845 +777 5,925 // German MediaMarkt Club with sustained growth in 5,343 4,650 3,805 the number of members, counting 4.5m in June 2018 3,028
Slide 26: Selective store expansion with small-area formats
Selective store expansion with a focus on small-area store formats Number of stores H1 17/18 Q3 17/18 Highlights 29 1,019 19 -2 -4 -6 // Selective store expansion continued with 10 openings 996 10 // Out of this, 6 small-scale stores opened in Turkey and 1 store each in Germany, Poland, Italy and Sp
Slide 27: EBITDA catch-up in Western & Southern and Eastern Europe
EBITDA catch-up in Western & Southern Europe and Eastern Europe EBITDA & EBIT excl. Fnac Darty (in €m) EBITDA EBIT Highlights +22 +20 26 // Broadly stable gross margin at 20.2% (-0.1%p.) // Positive effect from a change in the valuation of gift -29 card liabilities following a revision in the prevai
Slide 28: Underlying EPS improved; reported EPS hit by METRO impairment
Underlying EPS improved due to higher EBIT/DA; reported EPS impacted by impairment of METRO AG stake €m Q3 2016/17 Q3 2017/18 Change Highlights EBITDA 4 26 21 EBITDA margin 0.1% 0.6% 0.5%p. Includes €138m impairment of Metro AG stake to €10.59 EBIT –49 –30 19 per ordinary and €11.95 per preference s
Slide 29: Slight improvement of Free Cash Flow
Slight improvement of Free Cash Flow 9M 2017/18: Free Cash Flow (in €m) Highlights 18 Incl. reversal of 436 non-cash Fnac Darty profit contribution -89 256 // NWC catch-up thanks to favourable development in Incl. c. €40m -109 Q3, particularly due to improved trade payables higher tax refund 25 // O
Slide 30: 10% capital increase with freenet AG as new anchor investor
CECONOMY executed 10% capital increase with freenet AG joining as new anchor investor Pre-transaction structure based on voting rights* Highlights Haniel 24.9% // Issuance of around 32.6m new ordinary shares (approx. 10% of the former share capital) under Free float 50.1% exclusion of subscription r
Slide 31: Outlook
Outlook The outlook is adjusted for currency effects and portfolio changes. FY 2016/171 FY 2017/18 €m Total 1 Salessales 21,628 Slight increase 2 EBITDA (excl. Fnac Darty) 714 Low to mid single-digit % growth EBIT (excl. Fnac Darty) 494 Low to mid single-digit % growth Fnac Darty profit share n.a. A
Slide 32: Quarterly building blocks 2017/18
Quarterly building blocks 2017/18 Illustrative EBIT (excl. Fnac Darty) Low to mid-single digit % growth + Phasing effect Italy + Operational + World Cup improvements Italy + Valuation of gift + Restructuring Shift of December + No VAT campaign card liabilities entities (SE, sales into more + Absen
Slide 33: CECONOMY Targets, Value Drivers & Enablers
// CECONOMY Targets, Value Drivers & Enablers August 2018 // 33
Slide 34: Progressing through change phases in Consumer Electronics
CECONOMY is well progressing in the different change phases in the Consumer Electronics space Rationalisation Active management of country, brand and store portfolio, competitive cost base Digitalisation Digitalisation has changed customer behaviour, impacted retail processes and has created new bus
Slide 35: Plans show clear value creation potential
CECONOMY’s plans show a clear and strong value creation potential #1 #2 #4 #5 Category Value #3 Online, Services & Customer Selective driver Management, Mobile, Solutions Data / CRM Expansion Pricing, Supply Store Chain Enabler #6 #7 #8 Portfolio Competitive Cost Base Net Working Capital #9 Digital
Slide 36: What we plan to do in FY 2017/18
What we plan to do in FY 2017/18 Further develop Leader of consolidation store/online/mobile in the European CE sector experience Roll-out service Improve performance in “smartbars” and Russia and Sweden “@ home services” Milestones in FY 2017/18 Introduce multi-level Reach more than logistics conce
Slide 37: Key initiatives to grow online/mobile/store
Key initiatives to further grow online/mobile/store // Expansion of online CE assortment from currently c. 350k SKUs to 1m SKUs Assortment // Dropshipment initiatives to increase assortment without capital locked Online Sales1 (% of total sales) // Taking advantage of our high traffic we include mor
Slide 38: Increased services penetration to drive sales and margin
Increased services penetration will also drive CECONOMY’s sales and margin targets // Full roll-out of in-store service and repair “smart bars” until the end of 2018 In-store services (642 already in place) // Additional services to be added: e.g. trade in, personalisation of products Services & Sol
Slide 39: Selective store expansion contributing to sales growth
CECONOMY also continues selective store expansion contributing to the overall sales growth target Number of stores (at period end) Formats and measures 1,053 1,023 // Roll-out especially of smaller store formats such as proximity 1,007 986 and shop-in-shop concepts // Focus on smaller formats leads
Slide 40: Resolved 3 portfolio issues, 1 critical market remaining
CECONOMY has resolved 3 portfolio issues with 1 critical market position remaining redcoon Turkey Russia Sweden // Restructuring of redcoon // Succeeded in turning // Faced strong pressure over // Initiated cost savings completed around Turkey: profitable in the past years due to its sub- program 20
Slide 41: New category management initiatives
New category management initiatives aim offering the right range and assortment at the right price Preparation Implementation Results // Change of organizational structure by // Category management pilots have been // Aligning brand and price structure to centralizing purchasing activities on a star
Slide 42: Multi-level logistics concepts
Introducing multi-level logistics concepts with central warehouses, cross- docking platforms and regional delivery hubs Central warehouses Regional delivery hubs Online warehouses (Parcel factory) // Pilot central warehouses introduced // Regional warehouses especially for // Expansion of eCommerce
Slide 43: Case study Germany: Dropshipment and supply chain centralisation
Case study: Germany Centralisation of supply chain processes from predominantly direct store delivery to a more central and regional structure Product flows and logistics locations: Today Product flows and logistics locations: Target picture INDUSTRY INDUSTRY Central Regional warehouse warehouses Pa
Slide 44: Case study Germany: End-to-end supply chain set-up
Case study: Germany End-to-end supply chain set-up including centralisation of procurement and systems infrastructure offers great value potential Optimisation levers Roadmap to achieve target picture // Solution based on 3 interlinked pillars (procurement, 1 Product availability 1 logistics infrast
Slide 45: Overall mid-term ambitions
CECONOMY’s overall mid-term ambitions CORE METRICS 2015/16 2016/17 MID-TERM COMMENTARY AMBITIONS // Moderate market growth expected Sales1 €21.9bn €22.2bn > 3% CAGR // // Further increase in market shares in core markets Online, mobile, multi-channel, CRM and Services & (1.5% yoy) (1.4% yoy) Solutio
Slide 46: Impressions
// Impressions August 2018 // 46
Slide 47: Smart Bars
Smart Bars Investor Presentation Public August 2018 // 47
Slide 48: In-store experience areas
In-store experience areas Investor Presentation Public August 2018 // 48
Slide 49: Pick-up points for online orders
Pick-up points for online orders Investor Presentation Public August 2018 // 49
Slide 50: Digital shelf labels
Digital shelf labels Investor Presentation Public August 2018 // 50
Slide 51: Back Up
// Back Up August 2018 // 51
Slide 52: Sales & store network per September 2017
Sales & store network per 30 September 2017 Sales (€m) Number of Stores FY 2015/16 FY 2016/17 FY 2015/16 Openings Closures FY 2016/17 Germany 10,273 10,556 424 5 - 429 Austria 1,139 1,169 49 1 - 50 Switzerland 674 635 28 - -1 27 Hungary 272 302 22 2 - 24 DACH 12,358 12,662 523 8 -1 530 Belgium 681 6
Slide 53: Store network as per June 2018
Store network as per 30 June 2018 Openings Closings 30/03/2018 Q3 2017/18 Q3 2017/18 30/06/2018 Austria 52 52 Belgium 29 29 Germany 431 1 432 Greece 12 12 Hungary 24 24 Italy 116 1 -2 115 Luxembourg 2 2 Netherlands 49 49 Poland 85 1 86 Portugal 10 10 Spain 84 1 85 Sweden 27 27 Switzerland 28 28 Turk
Slide 54: Net Working Capital
Net Working Capital €m 30/09/2016 30/06/2017 Change 30/09/2017 30/06/2018 Change Inventories 2,293 2,788 495 2,449 2,819 371 Trade receivables 322 418 97 497 545 48 Receivables due from suppliers1 1,157 1,005 –151 1,197 1,102 –95 Receivables from credit cards 28 40 13 66 57 –9 Advance payments on in
Slide 55: CECONOMY's new shareholder structure
CECONOMY’s new shareholder structure Pre-transaction structure based on voting rights* Beisheim reported 23,615,334 Haniel voting rights to METRO Number of % of Date of Wholesale & Food Specialist AG Shareholder voting rights voting rights publication 24.9% (now METRO AG) on 12 July 2017 Haniel 81,0
Slide 56: Deep-dive: Back Margin Accounting Method
Deep-dive: Back Margin Accounting Method for Variable Purchase Conditions Step 3: Settlement of payables & Step 1: Purchase of inventory Step 2: Sale of goods receivables Assets (EURm) Liabilities (EURm) Assets (EURm) Liabilities (EURm) Assets (EURm) Liabilities (EURm) Cash Equity Cash Equity Cash E
Slide 57: Fnac Darty consolidation
Fnac Darty consolidation FNAC H2 2017 FNAC H1 2018 FNAC H2 2018 4/6 CEC Q4 16/17 CEC Q1 17/18 CEC Q2 17/18 CEC Q3 17/18 CEC Q4 17/18 CEC Q1 18/19 30.06. 01.09. 30.09. 31.12. 31.03. 30.06. 30.09. 31.12. 2017 2017 2017 2017 2018 2018 2018 2018 // Our 24.33% stake in Fnac Darty is accounted for as “Inv
Slide 58: MediaMarktSaturn and Fnac Darty start European Retail Alliance
MediaMarktSaturn and Fnac Darty start “European Retail Alliance” Partnerships Private Label Innovation Insights Sourcing // Establish a joint strategic supplier // Creation of a single private label // Cooperation in relation to the // Gain insights from CRM data, partnership management on an sourci
Slide 59: Upcoming events
Upcoming events Q4/FY 2017/18 Trading Statement Thursday, 25 October 2018 FY 2017/18 Results Wednesday, 19 December 2018 Investor Presentation Public August 2018 // 59
Slide 60: Date: 13/08/2018
Date: 13/08/2018 // 60