Carrefour Sa · EURONEXT:CA
Carrefour Sa — Investor Day (June 2005)
63 slides from Carrefour Sa's investor day presentation, Jun 30, 2005
Slide 1: Carrefour Investor Day 30th June 2005 - Second session
CARREFOUR Investor day 30th June 2005 Second session Winning market share 1 Investor day / 30.06.2005
Slide 2: Second session
Second session • Winning Market Share : organic growth and market concentration – Financing growth / Eric Reiss – New formats and franchising / Thierry Garnier – The new management structure and human resources priorities Jacques Beauchet 2 Investor day / 30.06.2005
Slide 3: Financing growth / Eric Reiss
Second session Financing growth / Eric Reiss • Age 36 After completing his studies at the School of Management in Rouen (ESC Rouen), Eric Reiss began his career with Arthur Andersen in 1992, where he held a post in Auditing and Financial Consulting He joined the Ricom Group in 1995 as Project Leader
Slide 4: Winning Market Share: Financing growth
CARREFOUR Winning Market Share Financing growth Eric REISS 30th June 2005 4 Investor day / 30.06.2005
Slide 5: We have a strong platform on which to build profitable growth
We have a strong platform on which to build profitable growth Our platform is both multi geography… EUROPE 13 countries Incl. France 88 % of group sales 9,831 stores under Group banners LATIN 3 countries AMERICA 6% of group sales 827 stores under Group banners 8 countries ASIA 6 % of group sales 332
Slide 6: Strong platform: multi format
We have a strong platform on which to build profitable growth …and multi format HYPERMARKET SUPERMARKET HARD DISCOUNT CONVENIENCE OTHER ACTIVITIES 6 Investor day / 30.06.2005
Slide 7: Ebit ex France is up 15% in 2004 versus 2003
We have a strong platform on which to build profitable growth Ebit ex France is up 15% in 2004 versus 2003 Period 2001- 2004: +38% •Sales up 5% on current 1 100,0 exchange rates •Ebit up 38% on current exchange rates 600,0 100,0 2001 2002 2003 2004 -400,0 Europe Asia Latam 7 Investor day / 30.06.200
Slide 8: We need to increase our capex
We have a strong platform on which to build profitable growth We need to increase our capex Our ratio Capex to Cash flow has fallen to 76%, whereas competition Capex / cash flow has a ratio above 100% 120% 100% Capex / sales ratio by zone 80% 60% 12,00% 40% 9,00% 2001 2002 2003 2004 6,00% 3,00% 0,00
Slide 9: Our goal is market leadership in all the countries where we choose to trade
Our goal is market leadership in all the countries where we choose to trade We need to occupy a top three position in all markets • To leverage our fixed costs • To secure the best terms of trade in the market • To improve Carrefour’s brand recognition locally • To achieve an optimal Return on Capit
Slide 10: Carrefour's financial and operating strategy go hand in hand (1/3)
Carrefour’s financial and operating strategy go hand in hand (1/3) • To achieve leading market positions (between #1 and #3) which support profitable and sustainable growth. Every business unit must achieve a return in excess of its cost of capital. Our goals • To become again a benchmark for profit
Slide 11: Carrefour's financial and operating strategy go hand in hand (2/3)
Carrefour’s financial and operating strategy go hand in hand (2/3) • We must focus on winning market share and market leadership rather than just What we opening new m2 have to do to achieve • No more « stop and go » organic growth these goals • We must anticipate our competitors’ behaviour over the
Slide 12: Carrefour's financial and operating strategy go hand in hand (3/3)
Carrefour’s financial and operating strategy go hand in hand (3/3) • We must develop a true multi format strategy to meet the needs of our customers What we • Multi format also helps improve our capital have to do allocation particularly through franchising to achieve these goals • We must concentra
Slide 13: We will accelerate organic growth from 2005
We will accelerate organic growth from 2005 Sales area 2001-2008e pro-forma* 2005 – 2008e 1.5 Million New Square meters 2001 - 2004 p.a. (CAGR +9.8%) 0.8 Million New Square meters p.a (CAGR +5.2%) * Total portfolio under banners, excl. Chile, Japan, Mexico and DPI 13 Investor day / 30.06.2005
Slide 14: Optimising our asset base through acquisitions, partnerships and divestments
We are optimising our asset base through acquisitions, partnerships and divestments • In 2005, we have added over 400,000 m2 of new space through acquisitions and have strengthened key partnerships – On a 2004 basis, those acquisitions would have represented additional net sales of € 1.2 bn under ba
Slide 15: Our acquisition criteria are clear
We are optimising our asset base through acquisitions, partnerships and divestments Our acquisition criteria are clear • Markets where we already have a strong market position and recognised commercial model • Assets which can be integrated relatively quickly, and which do not add to fixed costs • A
Slide 16: From strategy to execution (1/3)
From strategy to execution (1/3) To drive an expansion strategy which is – Work with the BUs to establish an profitable and sustainable overall strategy on a medium to long term basis – Construct budget on a 3 to 4 year To give the necessary basis resources to the teams responsible for expansion – T
Slide 17: From strategy to execution (2/3)
From strategy to execution (2/3) – Equip the expansion teams with To drive an expansion strategy which is the resources necessary to profitable and sustainable achieve their plans – Develop internal processes which enable us to open more new m², more cheaply and more profitably To give the necessary
Slide 18: From strategy to execution (3/3)
From strategy to execution (3/3) As far as the real estate policy is concerned : • We want to have the control of the largest sales areas in mature countries. For smaller sales areas and in emerging markets, leasing may be more appropriate • Major sales & leaseback transactions are no longer on the
Slide 19: We must grow ROCE by improving cash flow
We must grow ROCE by improving cash flow, not by under investing in our core business We must grow ROCE the right way • Although we are divesting non-core and insufficiently profitable businesses, the long term trend in ROCE should be driven by the stronger cash flows we will generate from our core
Slide 20: Restoring growth will be our priority
Restoring growth will be our priority We understand why the market likes share buy backs • We already have a strong balance sheet and have met the 3 year financial objectives we established two years ago (net debt reduction of €1.5bn, net debt/cash flow of 50%) one year early • Buying back shares is
Slide 21: Restoring growth will be our priority
Restoring growth will be our priority We understand why the market likes share buy backs • Nevertheless, our top priority is to become again an industry benchmark for profitable growth - Top line growth is our first priority - We are committed to invest in profitable and value creating operations -
Slide 22: Conclusion
Conclusion The only sustainable economic model in our industry is one driven by top line growth • We have the platform and the financial means to accelerate sales growth. Organic growth is our priority • To meet our growth objectives, we need to accelerate capex while optimising our asset base by co
Slide 23: New formats and franchising / Thierry Garnier
Second session New formats and franchising / Thierry Garnier • Age 39 After studying engineering first at the Ecole Polytechnique and then at the Ecole Nationale Supérieure des Mines, Thierry Garnier held a variety of posts within industrial concerns including Total and Usinor, before entering the F
Slide 24: Winning Market Share: New formats and franchising
CARREFOUR Winning Market Share New formats and franchising Thierry GARNIER 30th June 2005 24 Investor day / 30.06.2005
Slide 25: Why develop new formats?
Why develop new formats? • To speed expansion and saturate priority markets • To cover new customer segments and Why is this programme capture new purchase opportunities strategic for the group? • To respond to new formats developed by competitors • Because the process of monitoring will be more for
Slide 26: The objectives of the new priority formats
The objectives of the new priority formats SMALL HYPER SUPERMARKET GROWTH FORMATS • To create new hypermarkets • Knowing that the supermarket in areas with a catchment format represents one third of area too small for a classic organised distribution: hypermarket - To define a group strategy for exp
Slide 27: Small hyper – hyperChampion
Small hyper – hyperChampion • Strategic objective – To open sites in medium sized cities where there are no classic hypermarkets, mainly by site expansion. We expect 100 stores over the next 3 years • Customer benefits – To offer a local hypermarket, focused on certain non-food categories • Business
Slide 28: Small hyper – Carrefour Spain Mini
Small hyper – Carrefour Spain Mini • Context Origin : the change in fascia of two Champion supermarkets in 2002. These stores with 2,200 m² in Andalusia faced strong competition in the food segment. Sales in these two stores have increased in two years by a multiple of 4 and an EBIT loss has been pr
Slide 29: Small hyper – Carrefour Spain Mini
Small hyper – Carrefour Spain Mini • Business model – Sales area : 2,500 m² – Sites: 13 stores at the end of 2005 – Sales / m²: 4,000 € in year 1 / estimated at 5,700 € in year 4 – Dry Grocery: a compact offering (around 5,500 lines) – Self-service fresh food (excluding fish) – Non-food representati
Slide 30: Very urban super – Champion France
Very urban super – Champion France • Context – Stores in the centre of big cities, with 1,000 to 2,000 m² selling area, surrounded by shops and businesses – Large pedestrian traffic immediately near the store – Young and cosmopolitan customers, typically CSP+/ABC – Heavy traffic (>10 000 weekly), wi
Slide 31: Very urban super – Champion France
Very urban super – Champion France • Business model – Sales area : 1,000 to 2,000 m² – Sales / m²: 14,000 € – Stores positioned around purchasing comfort and saving time – Long opening hours (9h-22h without interruption) – Stores 100% self-service – Non-food convenience 31 Investor day / 30.06.2005
Slide 32: Super discount – MAXI DIA
Super discount – MAXI DIA • Context Destination stores with 1,200 m² of selling area and parking • Strategic objective To develop a lower priced discount supermarket. We have 27 Maxi Dia currently and expect to open around 100 a year from 2006 • Customer benefit To improve the DIA shopping experienc
Slide 33: Super discount – MAXI DIA
Super discount – MAXI DIA • Business model – Sales area : 1,200 m² – Sales /m²: 5 400 € – A complete dry grocery and fresh foods offer, with 50% Dia brand products – A full range of Dia dairy and chilled and pre prepared products – Apparel/General merchandise: 300 permanent lines and one-off product
Slide 34: New formats: key messages (1/2)
"New formats": key messages (1/2) Preliminary paths as of • Three concepts have been launched today – Very urban super – Maxi Dia – Hyper Champion 34 Investor day / 30.06.2005
Slide 35: New formats: key messages (2/2)
"New formats": key messages (2/2) Organisation • The necessary conditions for profitability are an integrated organisation and a centralised back-office • Organisation should be independent of the banner Operational • To develop new formats successfully, we must optimise: Challenges – Our organisati
Slide 36: Franchising: a growth opportunity
Franchising : a growth opportunity • Franchising is already a significant and very profitable business for the group 20% 20% 10% 16% Of sales under Of Of group Of group m² banner brands consolidated EBIT sales – The consolidated sales from franchising represent sales through our warehouses (integrat
Slide 37: Franchising: a significant presence
Franchising: a significant presence – Belgium Le "G 5" – Norway – Japan – French territories The DPI – Tunisia Dia Management of – Egypt International parners – Saudi Arabia – France – United Arab Emirates – Spain – Qatar – Greece – Dominican republic – Portugal – Romania – Turkey – Argentina – Braz
Slide 38: Franchising offers a wealth of possibilities
Franchising offers a wealth of possibilities • Lease management • Franchises • Master franchises • Affiliations / supply agreements By mastering franchising in all formats Carrefour has unchallenged know-how in mass retailing 38 Investor day / 30.06.2005
Slide 39: Franchising requires true know-how
Franchising requires true know-how • Successful franchising requires: – A targeted business and economic model – Close support for our partners (we offer a dedicated team of professional support which brings added value to the partners, an investment in relationships and the implication of country/
Slide 40: We have identified opportunities by country and by format
We have identified opportunities by country and by format • Opportunities for the group – The acceleration of growth in market share (China, Poland) – Improved profitability of insufficiently profitable business models (supers with low sales densities, supers with difficulties in Argentina and Brazi
Slide 41: Franchising: key messages
Franchising: key messages • We are one of the world’s leading franchisers, with a stable of attractive and versatile brands offering franchisees the opportunity to share in our growth as part of the Carrefour family • We see an important opportunity to develop our franchise activity both in existing
Slide 42: Conclusion
Conclusion • We have established teams working on developing new growth opportunities • New formats and franchising build on skills we have already developed and leverage the scale of the group • We expect these initiatives to impact our Activity Contribution over the medium to long term 42 Investor
Slide 43: The new management structure and HR priorities / Jacques Beauchet
Second session The new management structure and human resources priorities / Jacques Beauchet • Age 53 After completing his studies at the European School of Management in Paris (ESCP), Jacques Beauchet began his career in 1977 in the Management Auditing Department of Shell, where he remained for al
Slide 44: The new management structure and HR priorities
CARREFOUR Winning Market Share The new management structure and HR priorities Jacques BEAUCHET 30th June 2005 44 Investor day / 30.06.2005
Slide 45: The new management structure; simplified organisation; HR priorities
1- The new management structure 2- How we have simplified the organisation 3- HR priorities 45 Investor day / 30.06.2005
Slide 46: The new management structure is well adapted to our needs
The new management structure is well adapted to our needs The management Board The Supervisory is presided over by José Luis Board Duran and is composed of 4 other members as controlling body is presided over by Luc Vandevelde The Executive Committee in charge of the operational implementation of th
Slide 47: The Supervisory Board
The new management structure is well adapted to our needs The Supervisory Board • Its primary responsibilities are: - The appointment and dismissal of members of the Management Board and its President - The validation of any change in group structure and changes in capital structure - The Supervisor
Slide 48: The Management Board
The new management structure is well adapted to our needs The Management Board • The Management Board is a management structure which is appointed by the Supervisory Board and oversees the management of the company. It closes the financial statements and calls shareholder meetings. It reports to the
Slide 49: The Executive Committee
The new management structure is well adapted to our needs The Executive Committee • The Executive Committee remains the operational structure which executes the strategy as defined by the Management Board. Its role and its level have not changed. • The make-up of the Executive Committee has been mod
Slide 50: To summarize
To summarize This new organisation allows: • Efficient oversight by the Supervisory Board on behalf of all shareholders • Greater collegiality in decision-making by the Management Board • Increased effectiveness in the implementation of decisions thanks to shorter reporting lines and a tighter Execu
Slide 51: The new management structure; simplified organisation; HR priorities
1- The new management structure 2- How we have simplified the organisation 3- HR priorities 51 Investor day / 30.06.2005
Slide 52: An example of the simplification of our reporting lines (1/2)
An example of the simplification of our reporting lines (1/2) Reporting lines of our 2 principle BU's (hypers and supers France) In 2004 In 2005 Chairman and CEO Chairman of the Management Board Managing Director Managing Director INTERNATIONAL EUROPE SUPERMARKETS SUPERMARKETS HYPERMARKETS Managing
Slide 53: An example of the simplification of our reporting lines (2/2)
An example of the simplification of our reporting lines (2/2) The creation of sales development teams • In 2004, the buying teams for Carrefour France were responsible for ranging and merchandising across all formats • We have now created sales development teams, each directly reporting to the heads
Slide 54: The new management structure; simplified organisation; HR priorities
1- The new management structure 2- How we have simplified the organisation 3- HR priorities 54 Investor day / 30.06.2005
Slide 55: We are working on all aspects of people and organisation
We are working on all aspects of people and organisation Customer / growth orientation STRUCTURE "Organisational" STRATEGY levers SYSTEMS SHARED KNOW- SKILLS VALUES HOW "Human and cultural" levers BEHAVIOUR Our values Operational "Carrefour Attitude" programs 55 Investor day / 30.06.2005
Slide 56: Our priorities in developing our organisation
Our priorities in developing our organisation • Construct an organisation based on recent initiatives rather than going over the same ground again and again • Focus our efforts on high priority issues which necessitate changing fundamentally the way we do things • Create an impetus (putting growth a
Slide 57: Putting growth and the customer at the centre of our organisation
Putting growth and the customer at the centre of our organisation From… To… …"artificial“ opposition …the mobilisation of all our between: resources to: •Strengthen growth and Front vs. Back customer dynamics office office •Put into practice the Operational vs. Functional strategic orientation of th
Slide 58: Building on our organizational principles
Building on our organizational principles SUBSIDIARITY RESPONSIVENESS Decisions are taken People always act and as close as possible respond quickly in all to where they will be aspects of our business implemented, with a constant concern for the interests of How can these the entire group SIMPLICIT
Slide 59: People and culture: a strategic issue
“People and culture" : a strategic issue where we are making fundamental changes To give support to the rapid execution of our goals Why Why isis the the issue issue by developing our skills and appropriate behaviours “people “people and and culture" culture" at every organisational level strategic
Slide 60: Our HR principles
Our HR principles To improve the quality of our recruitment to 1 strengthen growth and reinforce customer orientation To increase our skill levels, through the 2 clarification of internal career paths and the development of training To give responsibility and stability to our people 3 and the organi
Slide 61: Our HR principles
Our HR principles To promote the diversity of team members 5 (balance between graduates and non-graduates, local management/ expatriate management, men / women To strengthen the performance culture, by linking 6 promotions and remuneration to results To monitor the respect of the values and the 7 po
Slide 62: Conclusion
Conclusion • With our new corporate structure, we have enhanced our corporate governance • In order to execute our customer-driven priorities we are putting into place a more simple and flexible management structure • We are building on our organisational principles to strengthen the skills of our p
Slide 63: Investor day / 30.06.2005
63 Investor day / 30.06.2005