Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Sonae — Non-Deal Roadshow (November 2009)
40 slides from Sonae Sgps Sa's roadshow presentation, November 2009
Slide 1: Sonae Investor Presentation November 2009
SONAE INVESTOR PRESENTATION November 2009
Slide 2: Investor's key questions and concerns
Investor’s key questions and concerns 02
Slide 3: What is Sonae's equity story?
What is Sonae Sonae’ss equity story? 03
Slide 4: Q1. What is Sonae's equity story? 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 5: Q1. 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 10% 53.10% Average daily volume (YTD Oct O t 09)) Others ~9 million shares 35.50% Market Capitalization (as of 30 Oct 09) 1 8 billion
Slide 6: What are the growth prospects for your food retail formats?
What are the growth prospects for your food retail formats? 06
Slide 7: Modelo Continente has reinforced its leadership position
Q2. What are the growth prospects for your food retail formats? MODELO CONTINENTE HAS REINFORCED ITS LEADERSHIP POSITION • Food retail leader in Portugal • With 347 stores and sales area of 509,000 509 000 m2 Hypermarkets yp Supermarkets p Modelo Continente Continente Modelo • 39 stores • 121 (1) st
Slide 8: Leadership translated into turnover and profitability growth
Q2. What are the growth prospects for your food retail formats? 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 7% % • Gains in market share and improvements in interna
Slide 9: Growth achieved while sustaining ROIC
Q2. What are the growth prospects for your food retail formats? 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 p
Slide 10: Performance reflects success of operating initiatives: private label
Q2. What are the growth prospects for your food retail formats? 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 macro
Slide 11: Success of loyalty card
Q2. What are the growth prospects for your food retail formats? 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 di
Slide 12: Investment in perishables
Q2. What are the growth prospects for your food retail formats? 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 produc
Slide 13: Benefits from integration of ex-Carrefour stores
Q2. What are the growth prospects for your food retail formats? 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 AdC
Slide 14: Performance also reflects strong value proposition
Q2. What are the growth prospects for your food retail formats? 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 fo
Slide 15: What can we expect from your Specialized Retail formats?
What can we expect from your Specialized Retail formats? 15
Slide 16: Specialized retail unit with market leader formats
Q3. What can we expect from your Specialized Retail formats? SPECIALIZED RETAIL UNIT WITH MARKET LEADER FORMATS Exploitation of business opportunities that leverage on Sonae’s exceptional assett base b iin P Portugal... t l a way to t expand d growth th options ti Sports Home Appliances Apparel Kids
Slide 17: Clear growth during the last 9 months
Q3. What can we expect from your Specialized Retail formats? CLEAR GROWTH DURING THE LAST 9 MONTHS • Turnover at double digit growth, mainly driven by strong expansion of the last 12 months • Like‐for‐like sales down only 5% • Growth in the textile and sports formats mitigating the performance of th
Slide 18: Consolidation in Portugal and push towards internationalization
Q3. What can we expect from your Specialized Retail formats? CLEAR GROWTH DURING THE LAST 9 MONTHS 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: •
Slide 19: EBITDA reflects investment in organic growth
Q3. What can we expect from your Specialized Retail formats? CLEAR GROWTH DURING THE LAST 9 MONTHS • EBITDA reflects the strong investment in organic growth both in Portugal and in Spain • Portuguese operation posting an increase in EBITDA, driven by scale benefits mainly at the textile formats • En
Slide 20: Investment impacting short term returns
Q3. What can we expect from your Specialized Retail formats? 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 + technica
Slide 21: Can we expect further negative impacts from devaluation of properties?
Can we expect further negative impacts from devaluation of properties? 21
Slide 22: Yields across Europe continue to increase, at a lower rate
Q4. Can we expect further negative impacts from devaluation of properties? 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 +39b
Slide 23: Shopping centres continues improving direct results
Q4. Can we expect further negative impacts from devaluation of properties? SHOPPING CENTRES CONTINUES IMPROVING DIRECT RESULTS Reflecting the cost control initiatives implemented and... • Occupancy rates kept at high levels (96%) • Flat total rents collected (variable + fixed) on a like like‐for‐lik
Slide 24: What should we expect from your Shopping Centres pipeline?
What should we expect from your Shopping Centres pipeline? 24
Slide 25: The pace of launch will be slowed down
Q5. What should we expect from your Shopping Centres pipeline? THE PACE OF LAUNCH WILL BE SLOWED DOWN A total of 13 projects disclosed in the pipeline • Projects under analysis regarding their opening • Adapted to current constraints in financial markets (only projects committed with financing will
Slide 26: What are your strategic options for the telecommunications business?
What are your strategic options for the telecommunications business? 26
Slide 27: Sonaecom is a significant player and valuable asset in telco market
Q6. 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 conv
Slide 28: Showing strong EBITDA results and positive cash flow
Q6. 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 environm
Slide 29: Sustainable stand alone business
Q6. 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 m
Slide 30: Mature Portuguese telecommunications market
Q6. 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€ Others
Slide 31: Competitive Portuguese telecommunications market
Q6. 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 Fixe
Slide 32: Isn't Sonae a highly leveraged company?
Isn’t Sonae a highly leveraged company? 32
Slide 33: Adequate structure at each business with long average maturities
Q7. 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 • No major debt repayments in the short term RETAIL: 4.2x • Retail R t il formats
Slide 34: What are your value triggers for the next years?
What are your value triggers for the next years? 34
Slide 35: Corporate strategic guidelines for future growth were disclosed
Q8. What are your value triggers for the next years? CORPORATE STRATEGIC GUIDELINES FOR FUTURE GROWTH WERE DISCLOSED Main goal is to transform Sonae into a large multinational corporation Go international • Top strategic objective • Target growth geographies and mature markets • Use concepts believe
Slide 36: Important organizational changes were implemented
Q8. What are your value triggers for the next years? IMPORTANT ORGANIZATIONAL CHANGES WERE IMPLEMENTED Changes designed to provide the necessary focus as well as to further develop internal competencies and management abilities Reorganize g Retail into 3 separate p Businesses • 2 core businesses: Fo
Slide 37: Newly created Retail Properties business unit
Q8. What are your value triggers for the next years? 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 • Parti
Slide 38: What is your dividend policy?
What is your dividend policy? 38
Slide 39: Gradually increase the dividend per share
Q8. What is your dividend policy? GRADUALLY INCREASE THE DIVIDEND PER SHARE The resilence of the cash flows generated at almost all businesses gives confidence on the ability to maintain shareholder remuneration policy DIVIDEND PER SHARE 2008: 3 Cents DIVIDEND YIELD: 6.9% 9 Considering 2008.12.31 Sh
Slide 40: Conclusion: Sonae an attractive investment opportunity
Conclusion SONAE AN ATTRACTIVE INVESTMENT OPPORTUNITY • Confirmed growth in Turnover and Profitability • Showing resilence in the face of macroeconomic conditions • A clear l and d ambitious bi i strategy, with i h high hi h growth th potential i l • Strong culture and values • High quality manageme