Dfi Retail Group Holdings Limited · SGX:D01
Dfi Retail — Dairy Farm — FY2017 Earnings Presentation
33 slides from Dfi Retail's earnings presentation, Mar 8, 2018
Slide 1: 2017 Full Year Results Presentation
2017 Full Year Results Presentation 8th March 2018 1
Slide 2: Presentation Disclaimer
Presentation Disclaimer This Document (the “Document”) is for information purposes only. This Document is not intended to form the basis of any investment decision nor does it constitute a recommendation or advice as to how the reader should act on any matter. The information in this Document is an
Slide 3: Agenda
Agenda 1. 2017 Highlights 2. Financial Results 3. Review by Division 4. Initial Perspectives 5. Future Priorities 8th March 2018 3
Slide 4: Group results held back by Southeast Asia Food
Group results held back by Southeast Asia Food • Consolidated sales up 1% to $11.3bn*; total sales up 8%* • Reported underlying net profit down 13%* to US$403m • Adjusted underlying net profit up 1%* to US$467m • One-off charges of US$64m, primarily in Southeast Asia Food • Strategic review underway
Slide 5: Agenda
Agenda 1. 2017 Highlights 2. Financial Results 3. Review by Division 4. Initial Perspectives 5. Future Priorities 8th March 2018 5
Slide 6: Adjusted underlying profit ahead of last year
Adjusted underlying profit ahead of last year (US$’ m) 2017 %∆ CCY%∆ Sales 11,289 +1 +1 EBITDA 589 -12 -12 Underlying Operating Profit 367 -19 -19 Adjusted Underlying Operating Profit 440 -3 -3 Share of Results of Associates and JVs 144 +22 +23 Underlying Net Profit 403 -13 -13 Adjusted Underlying N
Slide 7: Strong performance in most formats
Strong performance in most formats Sales (US$’ m) 2017 %∆ CCY%∆ Food 8,038 -2 -1 Supermarkets & Hypermarkets 6,018 -3 -3 Convenience stores 2,020 +4 +4 Health and Beauty 2,597 +7 +7 Home Furnishings 653 +9 +7 Key Associates* Maxim's 2,238 +11 +11 Yonghui 8,658 +17 +19 * Includes 100% of Maxim’s Sale
Slide 8: Decline in Food partially offset by other divisions
Decline in Food partially offset by other divisions Adj. Op. Profit Margin* (US$’ m) 2017 $∆ %∆ %∆ ∆pp Food 220 -47 -18 2.7 -0.5 Supermarkets & Hypermarkets^ 135 -59 -30 2.2 -0.9 Convenience stores 85 +11 +16 4.2 +0.4 Health and Beauty 210 +34 +20 8.1 +0.9 Home Furnishings# 77 +4 +3 11.8 -0.4 507 -9
Slide 9: Free cash flow remains healthy
Free cash flow remains healthy (US$'m) 2017 2016 Commentary EBITDA 589 672 One-off costs in Food ∆Working Capital 92 (97) Timing of supplier payments Normal Capex (279) (245) Higher capex in IKEA Free Cash Flow 402 330 Investments (66) (199) Buy out of the remaining 34% of RSCI Dividends Paid (285)
Slide 10: Capital expenditure in 2017
Capital expenditure in 2017 (US$’ m) Annual Capex Spending 300 279 YoY 250 245 14% 33 Supply Chain & 18 38 Others 200 46 IT 150 103 Store 94 Refurbishment 100 New Stores 50 106 87 0 2016 2017 • Increased investments in supply chain • Continued progress for IT investments • IKEA store expansion cost
Slide 11: Agenda
Agenda 1. 2017 Highlights 2. Financial Results 3. Review by Division 4. Initial Perspectives 5. Future Priorities 8th March 2018 11
Slide 12: Strength of performance continues in North Asia
Strength of performance continues in North Asia North Asia Southeast Asia 9.6bn 4.5bn Proportionate Sales* (US$) 607m 34m Profit Mix^ (US$) *Including share of associates and joint ventures ^Operating profit and share of results of associates and joint ventures, and excluding store support centre co
Slide 13: Well-balanced profit mix
Well-balanced profit mix *Including share of associates and joint ventures ^Operating profit and share of results of associates and joint ventures, and excluding store support centre costs, business change costs and non-trading items. 8th March 2018 13
Slide 14: Supermarkets and Hypermarkets
Supermarkets and Hypermarkets Challenging, with intensifying competition and changing consumer behaviour ▪ Resilient performance in Hong Kong ▪ Underperformance in Malaysia, Singapore and Indonesia ▪ Malaysia: weak consumer spending ▪ Singapore: increased competition ▪ Indonesia: continued rise of m
Slide 15: Convenience Stores
Convenience Stores Service offerings contributing to strong performance ▪ Sales higher in Hong Kong, China and Macau ▪ Strong like-for-like growth in all countries ▪ Higher profits in all our markets ▪ Benefit from customer shift to convenience ▪ Encouraging growth achieved in Guangdong ▪ New initia
Slide 16: Health and Beauty
Health and Beauty Record year for sales and profits ▪ Market share growth in Hong Kong – outperformance in a growing market ▪ Capitalising on higher tourist numbers & increased local spending in Hong Kong ▪ Strong growth in Indonesia and Vietnam ▪ Weakness seen in Singapore and Malaysia ▪ Benefiting
Slide 17: Home Furnishings
Home Furnishings Improving accessibility and customer experience ▪ Sales and profit* increased ▪ Accelerating market expansion - 4th store opened in Hong Kong - New sites in Taiwan approved (South Taipei and Taoyuan City) - Exploring new sites in Indonesia ▪ Online sales growth in all markets with n
Slide 18: Restaurants
Restaurants Strong results in China and mooncake sales drove 2017 growth ▪ Regional expansion into Southeast Asia and China - Starbucks Singapore - Genki Sushi in Singapore and Malaysia - Entry to Guangxi Province and expansion in Beijing ▪ New franchises/concepts - Shake Shack franchise in HK, Maca
Slide 19: Agenda
Agenda 1. 2017 Highlights 2. Financial Results 3. Review by Division 4. Initial Perspectives 5. Future Priorities 8th March 2018 19
Slide 20: Strong Brands
Strong Brands 8th March 2018 20
Slide 21: Brand Challenges in Southeast Asia: External
Brand Challenges in Southeast Asia External ▪ Growing competitor footprints ▪ Increasing price competition ▪ Local competition more aggressive ▪ Differing market demographics, differing challenges ▪ Significant shift in shopping habits ▪ Government regulation challenges ▪ Wet markets remain strong 8
Slide 22: Brand Challenges in Southeast Asia: Internal
Brand Challenges in Southeast Asia Internal ▪ Leadership instability ▪ Sub-optimal strategic focus ▪ Sub-optimal space growth ▪ Fragmented brand strategies − Range and price optimisation − Supplier-driven vs customer-driven ▪ Underinvestment in technology ▪ Health and Beauty challenges less severe 8
Slide 23: Agenda
Agenda 1. 2017 Highlights 2. Financial Results 3. Review by Division 4. Initial Perspectives 5. Future Priorities 8th March 2018 23
Slide 24: 5 Strategic Priorities
5 Strategic Priorities An integrated, high-performing business in all our markets Build capability Drive Grow in digital China innovation Maintain Revitalise HK SE Asia strength 8th March 2018 24
Slide 25: Build capability
Build capability ▪ Build strong top team ▪ Balance central and local control ▪ Streamline decision making ▪ Improve consistency of approach ▪ Leverage scale - Including own brand ▪ Leverage partner expertise 8th March 2018 25
Slide 26: Grow Presence in China
Grow Presence in China ▪ Results improving ▪ New CEO appointed ▪ Footprint expansion planned ▪ Results improving ▪ New CEO appointed ▪ Further profit improvement anticipated 8th March 2018 26
Slide 27: Maintain Hong Kong Strength
Maintain Hong Kong Strength ▪ Strong market shares ▪ Optimise range and price architecture ▪ Capitalise on China cross-border demand ▪ Invest in brand strength across demographics ▪ Stay alive to competitive threats 8th March 2018 27
Slide 28: Revitalise Southeast Asia
Revitalise Southeast Asia ▪ Leadership recruitment underway ▪ Strategic review will continue − People, product, price, portfolio ▪ Immediate action already taken − Closing underperforming stores − Clearing aged and redundant stock ▪ Consistent operational approach needed 8th March 2018 28
Slide 29: Revitalise Southeast Asia: Key Strategic Programmes
Revitalise Southeast Asia Key Strategic Programmes ▪ In-depth commercial review: − Range, space, price ▪ Consolidate sourcing ▪ Capital investment control ▪ Pilot new formats ▪ Improve cost control ▪ Improve labour productivity 8th March 2018 29
Slide 30: Drive Digital Innovation
Drive Digital Innovation ▪ Enhanced, customer-focused leadership − Qualitative and quantitative capabilities − Big data, customer insights, marketing ▪ Invest in strong IT backbone ▪ Build CRM / data analytics capability ▪ Develop cohesive omni-channel strategy ▪ Build e-commerce within markets 8th
Slide 31: Way Forward
Way Forward ▪ Sustainable change will take time ▪ Strong top team crucial ▪ Big opportunities in China and Southeast Asia ▪ Root and branch review in Southeast Asia ▪ North Asia performance a strength ▪ Strong foundation exists to build better future performance 8th March 2018 31
Slide 32: Strong foundation
Strong foundation North Asia Southeast Asia 9.6bn 4.5bn Proportionate Sales* (US$) The The Strength! Opportunity! Profit Mix^ (US$) 607m 34m 8th March 2018 32
Slide 33: Thank you!
Thank you! 2017 Full Year Results Presentation 8th March 2018