Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Sonae — Investor Presentation (February 2010)
40 slides from Sonae Sgps Sa's investor presentation, February 2010
Slide 1: Sonae Investor Presentation February 2010
SONAE INVESTOR PRESENTATION February 2010 1
Slide 2: Investor's key questions and concerns
Investor’s key questions and concerns 2
Slide 3: What is Sonae's equity story?
What is Sonae Sonae’ss equity story? 3
Slide 4: Corporate strategic guidelines for future growth were disclosed
Q1. What is Sonae’s equity story? CORPORATE STRATEGIC GUIDELINES FOR FUTURE GROWTH WERE DISCLOSED Main goal is to transform Sonae into a large multinational retail corporation Go international • Top strategic objective • Target growth geographies and mature markets • Use concepts believed to be dist
Slide 5: Important organizational changes were implemented
Q1. What is Sonae’s equity story? IMPORTANT ORGANIZATIONAL CHANGES WERE IMPLEMENTED Changes designed to provide the necessary focus and taking into account diff different t internationalization i t ti li ti expansion i opportunities t iti off each h core unit it Reorganize g Retail into 3 separate p
Slide 6: We are a retail company
Q1. What is Sonae’s equity story? WE ARE A RETAIL COMPANY • Market leader in food and specialized retail formats • With Board control of a Shopping Centre and a Telecommunications business SONAE Turnover 5.4 billion euros (2008) ; EBITDA 617 million euros (2008); Invested Capital 4.7 billion euros (
Slide 7: With a stable shareholder structure
Q1. What is Sonae’s equity story? WITH A STABLE SHAREHOLDER STRUCTURE • Reference shareholder, Efanor, a family holding company Share Capital Efanor 2,000 million 53 1% 53.1% A Average d daily il volume l ( (2009) ) Others 33.4% ~8 million shares; 5.6 million euros Market Capitalization (as of 31 De
Slide 8: What are the growth prospects for your Food Retail business?
What are the g growth p prospects p for your Food Retail business? 8
Slide 9: Modelo Continente has reinforced its leadership position
Q2. What are the growth prospects for your Food Retail business? MODELO CONTINENTE HAS REINFORCED ITS LEADERSHIP POSITION • Food retail leader in Portugal • With 378 stores and sales area of 528,000 528 000 m2 Hypermarkets yp Supermarkets p Modelo Continente Continente Modelo • 39 stores • 125 store
Slide 10: Leadership translated into turnover and profitability growth
Q2. What are the growth prospects for your Food Retail business? LEADERSHIP TRANSLATED INTO TURNOVER AND PROFITABILITY GROWTH • In I a tough t h consumer environment i t with ith significant i ifi t food f d deflation, d fl ti turnover t was up 6% • Gains in market share and improvements in internal
Slide 11: Growth achieved while sustaining ROIC
Q2. What are the growth prospects for your Food Retail business? GROWTH ACHIEVED WHILE SUSTAINING ROIC Notwithstanding h d h highh investment llevel,l return on invested capital has remained attractive (21%) CAPEX (M€) EBIT (LTM) / Invested capital 123 23% 21% 96 18% 87 Invested Capital= investment
Slide 12: Strong investment in private label
Q2. What are the growth prospects for your Food Retail business? PERFORMANCE REFLECTS SUCCESS OF OPERATING INITIATIVES & INNOVATION Strong investment in private label • Reinforcement of value proposition, with new products and packaging • Investment started more heavily in mid 2007 • Adapted to macr
Slide 13: Success of loyalty card
Q2. What are the growth prospects for your Food Retail business? PERFORMANCE REFLECTS SUCCESS OF OPERATING INITIATIVES & INNOVATION Success of loyalty card • Launched in January 2007 • Approximately 84% of sales made using the loyalty card • Allows for targeted and customized promotions • Enhanced d
Slide 14: Investment in perishables
Q2. What are the growth prospects for your Food Retail business? PERFORMANCE REFLECTS SUCCESS OF OPERATING INITIATIVES & INNOVATION Investment in perishables • Implementation of “Missão Frescos”: project to increase leadership in the perishables category, targeted g to improve p quality q y of produ
Slide 15: Benefits from integration of ex-Carrefour stores
Q2. What are the growth prospects for your Food Retail business? PERFORMANCE REFLECTS SUCCESS OF OPERATING INITIATIVES & INNOVATION Benefits from integration of ex‐Carrefour stores • Successful integration of 12 stores, 95 000 m2 of sales area and 3,000 95,000 3 000 employees • Full completion af Ad
Slide 16: Performance also reflects strong value proposition
Q2. What are the growth prospects for your Food Retail business? PERFORMANCE ALSO REFLECTS STRONG VALUE PROPOSITION M d l Continente’s Modelo C ti t ’ formats f t have h key k differentiating diff ti ti factors f t STRONG WIDE BRANDS RANGE The most STRONG OF PRIVATE trusted brand PERISHABLES LABEL f
Slide 17: Internationalization is an opportunity and a need
Q2. What are the growth prospects for your Food Retail business? INTERNATIONALIZATION IS AN OPPORTUNITY AND A NEED GIVEN GROWTH CONSTRAINTS IN PORTUGAL Leverage on our exceptional asset base Look for international expansion opportunities; in Portugal Requirements needed for a country to be considere
Slide 18: What can we expect from your Specialized Retail business?
Whatt can we expectt from Wh f your Specialized Retail business? 18
Slide 19: Specialized retail unit with market leader formats
Q3. What can we expect from your Specialized Retail business? SPECIALIZED RETAIL UNIT WITH MARKET LEADER FORMATS Operation of 7 different non‐food retail formats, the most significant related with ith Sports, S t Textile T til andd Consumer C El Electronics. t i Sports Home Appliances Apparel Kids A
Slide 20: Clear growth during 2009
Q3. What can we expect from your Specialized Retail business? CLEAR GROWTH DURING 2009 • Turnover showing significant growth, mainly driven by strong expansion of the last 12 months • Like‐for‐like sales down by only 3% • Growth in the textile and sports formats mitigating the performance of the con
Slide 21: Consolidation in Portugal and push towards internationalization
Q3. What can we expect from your Specialized Retail business? CLEAR GROWTH DURING 2009 Consolidation of position in Portugal and strong push towards internationalization Success in i ddefending f di market k Entrance into i Spanish i h market k leadership in: with positive first signs: • Home applia
Slide 22: Clear growth during 2009: EBITDA
Q3. What can we expect from your Specialized Retail business? CLEAR GROWTH DURING 2009 • Portuguese operation posting an increase in EBITDA, EBITDA driven by scale benefits mainly at the textile formats • Entrance costs in Spain explain the decrease in EBITDA for the specialized retail business p in
Slide 23: Investment impacting short term returns
Q3. What can we expect from your Specialized Retail business? INVESTMENT IMPACTING SHORT TERM RETURNS Commitment C i to grow international retailing activities has short term impact on returns CAPEX (M€) EBIT (LTM) / Invested capital 87 16% 15% 72 49 Invested Capital= investment properties + technic
Slide 24: Internationalization is an opportunity and a need
Q3. What can we expect from your Specialized Retail business? INTERNATIONALIZATION IS AN OPPORTUNITY AND A NEED GIVEN GROWTH CONSTRAINTS IN PORTUGAL Leverage on our exceptional asset Be an international retail player, base in Portugal starting with a strong expansion in Spain • Complete coverage of
Slide 25: Strategic options for Shopping Centre and Telecommunications businesses
What are your strategic options for the Shopping Centre and Telecommunications businesses? 25
Slide 26: A self sustainable company with no call for money
Q4.1. What are your strategic options for the Shopping Centre business? A SELF SUSTAINABLE COMPANY WITH NO “CALL FOR MONEY” AND A DIVIDEND PAYER ON A REGULAR BASIS An iinternational A t ti l shopping h i centret specialist, i li t 50% % owned d joint j i t venture t with ith Grosvenor G • with prese
Slide 27: Yields across Europe continue to increase
Q4.1. What are your strategic options for the Shopping Centre business? YIELDS ACROSS EUROPE CONTINUE TO INCREASE... BUT AT A LOWER RATE... In 3Q09, there were already some properties stabilizing/increasing in value YIELD EVOLUTION 2008 9M09 Portugal +56bp +55bp Spain +95bp +55bp Italy +78bp +39bp G
Slide 28: Adapt business priorities to current financial market constraints
Q4.1. What are your strategic options for the Shopping Centre business? ADAPT BUSINESS PRIORITIES TO THE CURRENT CONSTRAINTS IN FINANCIAL MARKETS Be resilient under the current market turmoil Slow down the pace of launch and prepare to exploit all the growth of projects in pipeline opportunities t i
Slide 29: Sonaecom is a significant player and a valuable asset
Q4.2. What are your strategic options for the Telecommunications business? SONAECOM IS A SIGNIFICANT PLAYER AND A VALUABLE ASSET IN THE TELCO MARKET An integrated operator • Sonaecom is present in all Telco segments ‐ residential, corporate, SME and SOHOs and Wholesale ‐ with mobile, wireline and co
Slide 30: Showing strong EBITDA results and positive cash flow
Q4.2. What are your strategic options for the Telecommunications business? SHOWING STRONG EBITDA RESULTS AND POSITIVE CASH FLOW These results are a clear demonstration of the company’s ability to meet and, in some measures surpass the challenging targets for the year measures, year… …amid the enviro
Slide 31: Sustainable stand alone business
Q4.2. What are your strategic options for the Telecommunications business? SUSTAINABLE STAND ALONE BUSINESS • Stable/growing mobile business: growing market share; sustaining good margins • Good performing wholesale: Corporate & Wireline business • Fully integrated telecom’s structure and convergent
Slide 32: Mature Portuguese telecommunications market
Q4.2. What are your strategic options for the Telecommunications business? MATURE PORTUGUESE TELECOMMUNICATIONS MARKET Sonaecom h S has b been able bl to strengthen h its market position, in a market that is not growing in revenues SHARE OF TOTAL REVENUES 6,879M€ 6,784M€ 6,760M€ 6,830M€ 6,999M€ Othe
Slide 33: Competitive Portuguese telecommunications market
Q4.2. What are your strategic options for the Telecommunications business? COMPETITIVE PORTUGUESE TELECOMMUNICATIONS MARKET Four main players offering/planning to offer Voice, Broadband and Pay TV over different Fixed and Mobile access technologies VOICE BROADBAND PAY TV Fixed Mobile Fixed Mobile Fi
Slide 34: Isn't Sonae a highly leveraged company?
IIsn’t ’t Sonae S a highly hi hl leveragedg company? p y 34
Slide 35: Adequate structure at each business with long average maturities
Q5. Isn’t Sonae a highly leveraged company? ADEQUATE STRUCTURE AT EACH BUSINESS WITH LONG AVERAGE MATURITIES (end 9m09) NET DEBT/EBITDA (end 9M09) • Sonae’s weighted average maturity standing at approximately 5.2 years RETAIL: 4.2x(~3.5x estimated Fy09) • No major debt repayments in the short term •
Slide 36: Total net debt is expected to drop significantly
Q5. Isn’t Sonae a highly leveraged company? TOTAL NET DEBT IS EXPECTED TO DROP SIGNIFICANTLY Total net debt is expected to drop steadily Plan to reach investment grade during the next 6 years: by 2012 • Strong growth efforts combined with planned • Each company should be perceived reduction of debt
Slide 37: Newly created retail properties business unit
Q5. Isn’t Sonae a highly leveraged company? NEWLY CREATED RETAIL PROPERTIES BUSINESS UNIT Expected to be an important source of capital RATIONALE HYPERMARKETS • Manage Assets more proactively CONTINENTE • Build Retail Real Estate • 34 stores owned competencies • 90% total sales area • Partial releas
Slide 38: What is your dividend policy?
What is your dividend policy? 38
Slide 39: Maintain the shareholder remuneration policy
Q6. What is your dividend policy? MAINTAIN THE SHAREHOLDER REMUNERATION POLICY The resilence of the cash flows generated gives confidence on the ability to maintain shareholder h h ld remuneration ti policy li DIVIDEND PER SHARE 2008: 3 Cents DIVIDEND YIELD: 6.9% Considering 2008.12.31 Share Price P
Slide 40: Sonae an attractive investment opportunity
Conclusion SONAE AN ATTRACTIVE INVESTMENT OPPORTUNITY • Confirmed g growth in Turnover and Profitabilityy in the face of adverse macroeconomic conditions • A clear and ambitious strategy that will enable for future growth and value creation • Strong culture and values • High Hi h quality lit managem