Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Millennium BCP Portuguese Equities Forum, London, 15-16 April 2008
39 slides from Sonae Sgps Sa's conference presentation, April 2008
Slide 1: Sonae SGPS Management Presentation
SONAE SGPS MANAGEMENT PRESENTATION April 2008
Slide 2: Agenda
AGENDA 1 Sonae SGPS: Who we are 2 Success factors 3 2007 Group results 4 Outlook for 2008 5 Appendix: Macroeconomic environment #1
Slide 3: Sonae SGPS: Who we are
Sonae SGPS: Who we are
Slide 4: Who we are – Corporate profile
SONAE SGPS: WHO WE ARE – CORPORATE PROFILE Sonae SGPS controls and actively manages a portfolio of companies, each run in an independent manner SONAE SGPS* 100% 50% 50.3% 100% Sonae Distribuiç Distribuição Sonae Sierra Sonaec Sonaecom FOOD & NON FOOD SHOPPING CENTRES TELECOMMUNICATIONS RETAIL Market
Slide 5: Who we are – Retail portfolio
SONAE SGPS: WHO WE ARE – RETAIL PORTFOLIO SONAE DISTRIBUIÇÃO Food Retail Non- Non-Food Retail Consumer Elect. Computers Hypermarkets (Average sales area = 8,000 m2) Hypermarkets (Average sales area = 2,000 m2) Sports Goods Apparel DIY Supermarkets (Average sales area = 1,000 m2) Travel Agencies + 4
Slide 6: Who we are – Retail key facts
SONAE SGPS: WHO WE ARE – RETAIL KEY FACTS The leading food retailer in Portugal, considered an international benchmark in the sector in terms of profitability MODERN FOOD No.1 FOOD MARKET SHARE RETAILER (%) in Portugal 30% Market Share Others, 1.1% 646 STORES Plus, 1.6% 13 brands amounting to MARKET
Slide 7: Who we are – Shopping centre portfolio
SONAE SGPS: WHO WE ARE – SHOPPING CENTRE PORTFOLIO SONAE SIERRA Shopping Centres Sierra development Sierra investment Sierra management Sierra Brazil Responsible for Owns Sonae Sierra’s Responsible for day to Similar business development of assets – shopping day management of structure in Brazil; sh
Slide 8: Who we are – Shopping centre key facts
SONAE SGPS: WHO WE ARE – SHOPPING CENTRE KEY FACTS BOLDNESS Consolidation of expansion and internationalization strategy throughout 2007 INTERNATIONAL PRESENCE INTERNATIONAL SHOPPING CENTRE SPAIN 27 SPECIALIST INTEGRATED Projects in pipeline 12 APPROACH Development+ Under development with ITALY Owne
Slide 9: Who we are – Telecommunications portfolio
SONAE SGPS: WHO WE ARE – TELECOMMUNICATIONS PORTFOLIO SONAECOM 100% 100% 99% 100% Telco Mobile Mobile Telco Fixed Media SSI (1) SSI (1) #3 mobile Operator; Leading altnet Reference newspaper Information system operator in Portugal; in Portugal; and Technology Mobile communications products provider;
Slide 10: Who we are – Telecommunications key facts
SONAE SGPS: WHO WE ARE – TELECOMMUNICATIONS KEY FACTS BOLDNESS Market position strengthening during 2007 PORTUGUESE TELECOMS MARKET LEADING EVOLUTION(1) INTEGRATED (%) ALTERNATIVE 5.6% 5.5% 5.2% TELCO In Portugal 19.4% 19.9% 20.9% 13.5% MARKET 20% MARKET SHARE SHARE 11.6% 13.1% 13.5% Portuguese Tele
Slide 11: Who we are – Holding as a value enhancer
SONAE SGPS: WHO WE ARE – HOLDING AS A VALUE ENHANCER Value Value Proposal: Proposal: Collaboration Collaboration with with the the sub-holdings sub-holdings in in strategy strategy and and strategic strategic goals goals definitions; definitions; Capital Capital allocation allocation among among cur
Slide 12: Success factors
Success factors
Slide 13: Success factors – Strong values and management culture
SUCCESS FACTORS – STRONG VALUES AND MANAGEMENT CULTURE Sonae: a Group with confirmed sustainable growth and profitability LONG- LONG-TERM LONG-TERM AMBITION PERSPECTIVE aimed at growth approach to its and creating businesses shareholder value ABOVE AVERAGE SHAREHOLD ER RETURN AIMING FOR LEADERSHIP t
Slide 14: Success factors – Ambition aimed at growth and creating value
SUCCESS FACTORS – AMBITION AIMED AT GROWTH AND CREATING VALUE Ambition aligned to offer superior economic value to our shareholders Industry consolidation and portfolio value management • Demerger of Sonae Indústria (2005) Expansion into new • Demerger of Sonae Capital territory at (2007) Shopping C
Slide 15: Success factors – Long-term perspective approach
SUCCESS FACTORS – LONG-TERM PERSPECTIVE APPROACH Focus on profitability does not stop us from preparing the future LONG TERM GROWTH EVENTS Retail and Shopping • Assets’ location are premium, unique and difficult to replicate; centres assets • Important competitive advantage on the long-run. • Policy
Slide 16: Success factors – Efficiency driven
SUCCESS FACTORS – EFFICIENCY DRIVEN Continuously pushing for efficiency gains Merger of mobile and • Anticipating the future convergence of technologies; fixed divisions • Separation of fixed and mobile markets became obsolete • Continuing efforts to modernize the company: 30 major refurbishments in
Slide 17: Success factors – Eternal challenger in its markets
SUCCESS FACTORS – ETERNAL CHALLENGER IN ITS MARKETS BOLDNESS Relentlessly exploring new and challenging business opportunities BOLDNESS Pioneering the expansion of mobile frontiers at our telco business • Fixed-mobile convergent product • Wireless broadband offer INNOVATION Launch of the Aggressive
Slide 18: Success factors – Aim for leadership
SUCCESS FACTORS – AIM FOR LEADERSHIP BOLDNESS Aiming to be number one player in our markets • Reinforcement of market leadership from 25% to 30%; Acquisition of • 12 hypermarkets in operation; Carrefour • 13 licensed projects; • Total sales area (including projects):166.500 m2 Acquisition of Tele2 a
Slide 19: 2007 Group results
2007 Group results
Slide 20: Retail performance 2007
2007 GROUP RESULTS – RETAIL PERFORMANCE 2007 BOLDNESS Strong set of results and significant expansion of sales network 3,385.0 299 3,091.0 8.8% TURNOVER EBITDA +10% +18% (M.€ (M.€) (M.€ (M.€) 254 8.2% 2006 2007 2006 2007 Sales Area Number of (‘000 sqm) sqm) 709 stores 646 +30% +30% 496 249 545 473 N
Slide 21: Retail corporate developments 2007
2007 GROUP RESULTS – RETAIL CORPORATE DEVELOPMENTS 2007 Launch of loyalty card at Continente and Modelo stores, at 1 January 2007; Loyalty Card Card allows consumers to take full advantage of continuous promotional campaigns and to accumulate discounts valid for 12 months after the purchase. Sales a
Slide 22: Shopping centre performance 2007
2007 GROUP RESULTS – SHOPPING CENTRE PERFORMANCE 2007 BOLDNESS Increase of profitability, having achieved record profits for the year 156.2 EBITDA NET 214.9 excluding +5% PROFIT +34% value created GROUP 160.3 on Investment 57.60% SHARE properties (M.€ (M.€) (M.€ (M.€) 149 55.80% 2006(R) 2007 2006(R)
Slide 23: Shopping centre corporate developments 2007
2007 GROUP RESULTS – SHOPPING CENTRE CORPORATE DEVELOPMENTS 2007 Acquisition of Shopping Centre “Modelo de Albufeira” and “Continente Portimão”; Acquisition of a site in Larissa, in Greece, for development of centre to be open in 2008; Acquisition of Shopping Centre River Plaza Mall, in Romania; Acq
Slide 24: Telecommunications performance 2007
2007 GROUP RESULTS – TELECOMMUNICATIONS PERFORMANCE 2007 BOLDNESS Solid growth and improved profitability, reflecting the ability to identify and focus on growth opportunities across its markets 893 162 157 TURNOVER EBITDA +9% +3% (M.€ (M.€) 822 (M.€ (M.€) 19.1% 18.1% 2006(R) 2007 2006(R) 2007 MOBIL
Slide 25: Telecommunications corporate developments 2007
2007 GROUP RESULTS – TELECOMMUNICATIONS CORPORATE DEVELOPMENTS 2007 Strengthen growth in Direct Access and dilution of fixed costs; Opportunity to up-sell: Indirect to Direct; Low-end 2Play to higher value offers; IPTV; Acquisition of Oni’ Oni’s Oni’s Direct services grow by 45% to 448.6K services;
Slide 26: Sonae performance 2007: turnover and EBITDA
2007 GROUP RESULTS – SONAE PERFORMANCE 2007 BOLDNESS Turnover and Operational Cash Flow improved across all our business units… 4,627.7 TURNOVER 4,240.1 +9% TURNOVER 3,385 (M.€ (M.€) BY 3,091 BUSINESS (M.€ (M.€) 2006 2007 822 893 259 280 Retail Shopping Telco 2006(R) 2007 706 299 EBITDA 15.2% EBITDA
Slide 27: Sonae performance 2007: net debt and capex
2007 GROUP RESULTS – SONAE PERFORMANCE 2007 BOLDNESS Investment for growth accelerated and leverage increased… 2,621 1702 NET DEBT NET DEBT (M.€ (M.€) +39% BY 1,893 BUSINESS (M.€ (M.€) 1,082 962 2006 2007 377 338 310 Retail Shopping Telco 2006(R) 2007 1,571 972 CAPEX CAPEX BY (M.€ (M.€) BUSINESS (M.
Slide 28: Comfortable consolidated financial structure
2007 GROUP RESULTS – SONAE PERFORMANCE 2007 BOLDNESS …notwithstanding, consolidated financial structure is comfortable 7.7 7 6.7 6.1 6.2 5.6 5.4 5.3 4.9 INTEREST COVER 3.7 3.6 3.6 3.4 3.1 3.2 2.9 2.7 Without 1.9 Carrefour NET DEBT acquisition TO EBITDA 2.8 at 31 December 2007 2006 1Q06 2Q06 3Q06 200
Slide 29: Capacity to deliver superior shareholder value
2007 GROUP RESULTS – SONAE PERFORMANCE 2007 BOLDNESS 2007 results endorsed our capacity to deliver superior shareholder value RETURN CAGR ON EQUITY RETURN (%) (%) SONAE SGPS PSI 20 TR 20% 1 +0.8pp 22.0% 43% 21.2% 21% 5 51% 6% Years 10 9% 11% 15 25% 2006 2007 10% 21 20% # 28
Slide 30: Outlook for 2008
Outlook for 2008
Slide 31: Outlook for 2008 – Continue to focus on growth
OUTLOOK FOR 2008 – CONTINUE TO FOCUS ON GROWTH AT ALL ITS BUSINESSES Focus on profitable growth • Continue to push for a strong pace of organic growth; • Increase sales area by circa 60,000 m2; • Be attentive to possible acquisition opportunities; RETAIL • Initiate the internationalization process,
Slide 32: Outlook for 2008 – Retail
OUTLOOK FOR 2008 – RETAIL Maintain strong organic growth and store refurbishment SALES AREA • 2008: Above 10% CAGR in sales area. TURNOVER • 2008: Above 20% turnover increase. EBITDA • 2008: Sustain recurrent EBITDA margin; • 2008: Total CAPEX of 300 Million euros; CAPEX • 2008-2010: Total Capex of
Slide 33: Outlook for 2008 – Shopping centres
OUTLOOK FOR 2008 – SHOPPING CENTRES Continue developing project pipeline and looking for value adding opportunities Yields at historically low levels and scope for valuation gains more limited; YIELDS Operating performance of well-located, well-designed, well-managed shopping centres will remain str
Slide 34: Outlook for 2008 – Telecommunications
OUTLOOK FOR 2008 – TELECOMMUNICATIONS Improve customer management and lead innovation ACCELERATE GROWTH AND • Increase mobile brand presence/investment INCREASE • Further develop substitution, integrated and convergent offers / market approach MARKET SHARE SUPERIOR • Accelerate investments in Networ
Slide 35: Appendix: Macroeconomic environment
Appendix: Macroeconomic environment
Slide 36: Macroeconomic environment – Portuguese indicators
MACROECONOMIC ENVIRONMENT – PORTUGUESE INDICATORS Over the next two years, Portugal is expected to maintain the growth rhythm achieved in 2007. The IMF downgraded its growth forecast for the US, the Euro Area and the World economy indicating that the present decelerating moment will have worldwide i
Slide 37: Macroeconomic environment – Portuguese inflation
MACROECONOMIC ENVIRONMENT – PORTUGUESE INFLATION In the period, Food and non-alcoholic beverages inflation reveals a tendency to converge with Total inflation. Although it is not revealed in the statistics, pressure on the demand side for food and energy has been rising, specially due to China susta
Slide 38: Portuguese coincident indicators of growth and private consumption
MACROECONOMIC ENVIRONMENT – PORTUGUESE COINCIDENT INDICATORS OF GROWTH AND PRIVATE CONSUMPTION Just after the US sub-prime crisis detonation by late July, private consumption started to decrease. The economic activity took longer to react to the financial markets turmoil, but it just reverted its po
Slide 39: Macroeconomic environment – Glossary
MACROECONOMIC ENVIRONMENT – GLOSSARY Euro Area Consumer Confidence Indicator (Eurostat (Eurostat), ), is a short-term statistics based on a consumer survey that (Eurostat), includes questions about respondents’ perception about their financial situation over the next 12 months, general economic situ
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