Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q2 2020 Earnings Presentation
41 slides from Axfood Ab's earnings presentation, 2020
Slide 1: Continued growth in a turbulent time
Continued growth in a turbulent time Klas Balkow President and CEO Interim Report Q2 2020
Slide 2: Agenda
• Market update • Q2 2020 • Financial position • Outlook 2020 • Q&A 2
Slide 3: Axfood – good and sustainable food for everyone
Axfood – good and sustainable food for everyone R12M net sales SEK 52.4 bn 10,785 employees (FTEs) Efficient sourcing and Customer reach logistics for all brands >4 million customers a week and channels 306 Group-owned stores Innovative development of 132 franchise Hemköp 126 franchise Tempo private
Slide 4: Strong and sustainable growth
Axfood 20 years Strong and sustainable growth Net sales development by year SEK m CAGR 3% CAGR 5% 55,000 52,407 50,000 45,000 41,247 40,000 35,000 30,230 30,000 25,000 20,000 15,000 10,000 5,000 0 2000 2005 2010 2015 R12M to June 2020 4
Slide 5: Market update
Market update 5
Slide 6: Strong market growth in food retail
Strong • Strong market growth within food retail and accelerated online sales as consumers have opted market to eat at home, but consequently weak demand in restaurant market growth in • Challenging situation for certain segments of the food retail food retail market, including for stores in central
Slide 7: Food retail market
Food retail market High market growth rate Food retail trade index (sales in stores and online) Boost from % hoarding 14 Boost from Easter Boost from Easter Boost from 12 leap day 10 8 6 4 2 0 -2 -4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan F
Slide 8: Food retail market online
Food retail market online Accelerated growth for the market Food retail trade index (online sales) % 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 18 18 18 18 18 18 18 18 18 18
Slide 9: Q2 2020
Q2 2020 9
Slide 10: Growth in a turbulent time
• Strong achievement despite challenges within Growth in a certain parts of the organization turbulent • High rate of growth for the Willys chain • Accelerated e-commerce growth time • Continued progress for a sustainable future 10
Slide 11: Growth despite headwinds
Sales Growth despite headwinds • Net sales increased 4.1% for the second quarter +4.1% o Growth above market for Willys segment despite Eurocash Net sales, SEK m headwind 13,570 13,038 o Solid growth for Hemköp in total, sales for Group-owned stores 11,925 12,221 hampered by weak sales in certain ci
Slide 12: Growing faster than the overall market
Growing faster than the overall market Store sales development (including online) % Axfood Q2 store sales 12 +8.3% 10 8 Axfood Group store sales Food retail trade index 6 Market growth in Q2 +8.1% 4 2 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2018 2019 2019 2019 2019 2020 2020 Source: Axfood/HUI Research 12
Slide 13: Outperforming online market growth
Outperforming online market growth Total sales development online % Axfood Q2 online sales 140 Axfood +128% Group online 120 sales 100 Food retail trade index 80 Q2 market online growth 60 +114% 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 2019 2019 2019 2019 2020 2020 Source: Axfood/HUI Research. Axfood began reporti
Slide 14: Stable profit
Operating profit Stable profit • Operating profit SEK 605 m (601) Operating margin, % + LFL development Operating profit, SEK m +0.7% + Higher operating profit for Dagab − Lower operating profit for Axfood Snabbgross and Eurocash 601 605 − Costs related to higher e-com volumes 545 − Costs related to
Slide 15: Willys: Strong growth despite challenges for Eurocash
Willys Strong growth despite challenges for Eurocash • Strong sales growth of 8.7% and LFL 7.2% Operating margin, % o Accelerated growth for Willys’ stores, positive effect from higher +8.7% consumption at home Net sales, SEK m o Higher average ticket and strong online sales for Willys’ stores 8,068
Slide 16: Difficult situation for Eurocash
Difficult situation for Eurocash • Seven stores in cross-border trade towards Norway. ‒ Retail area 1,200–3,200 sq. m., more than 10,000 items. ‒ Overwhelming majority of customers are from Norway. ‒ Significant seasonal effects, Easter and Summer important. • Stores still open, majority of employee
Slide 17: Hemköp: Continued solid growth
Hemköp Continued solid growth • Total store sales growth 7.6%, LFL sales growth of 4.3% Operating margin, % o Group owned -1.7% and LFL 2.0%, significant negative impact from weak performance in certain city centre-based stores Net sales, SEK m -1.4% o Franchise 14.9% and LFL 6.1% 1,563 1,608 1,614
Slide 18: Difficult situation for stores in central urban locations
Hemköp Difficult situation for stores in central urban locations Development of the flow of people in Share of number of Hemköp stores Swedish city centres compared to year ago* in “flow locations”** 9% Group-owned Hemköp franchise 6% Hemköp stores stores 18% 51% -24% -40% Jan Feb Mar Apr 2020 2020
Slide 19: Strong growth for Tempo
Hemköp Strong growth for Tempo Total store sales 126 14% Franchise stores ~2 bn Annual sales ~4,500 Q2 Q2 Number of items 2019 2020 Tempo is a mini-mart format of 126 retailer-owned stores. The retail area ranges between 300 to 500 sq. m. and the stores hold approximately 4,500 items. Stores are mos
Slide 20: Axfood Snabbgross: Challenging quarter, gradual improvement
Axfood Snabbgross Challenging quarter, gradual improvement • Sales decline of -7.1% and LFL -8.3% Operating margin, % o Lower sales due to market weakness -7.1% Net sales, SEK m o Improvement in June mainly due to easing of 924 restrictions and favorable weather conditions 866 859 789 o Better perfo
Slide 21: Axfood Snabbgross for all
Axfood Snabbgross for all • Axfood Snabbgross has temporarily opened up half of its stores to consumers. ‒ Provides consumers with an additional place to shop groceries in during the Covid-19 pandemic. Requires permits to operate retail operations. ‒ Opportunity to mitigate negative effects on the b
Slide 22: Dagab: Higher sales and operating profit
Dagab Higher sales and operating profit • Net sales growth of 5.6% o Strong sales to Willys and Hemköp Operating margin, % Net sales, SEK m +5.6% o Negative impact from lower sales to Eurocash, Axfood Snabbgross and service trade 12,152 11,509 o Negative sales growth for Urban Deli 10,677 10,786 9,8
Slide 23: Accelerated online growth, new customers
Online Accelerated online growth, new customers Online sales Breakdown of online Share of online orders to consumers (MSEK) sales growth* by age group* 128% Q1 Q2 734 2020 2020 Existing 46% customers 4% 23% New 322 54% customers 77% 96% Age≤70 Age>70 Q2 Q2 Online Growth Online 2019 2020 sales sales
Slide 24: Online: Improved offering
Online Improved offering Co-delivery of grocery and Willys continues to expand, new solutions Accelerated online expansion pharmacy products at Mat.se to increase availability for consumers for Hemköp, increased capacity 24
Slide 25: Sustainability highlights
Sustainability highlights Continued efforts to reduce This coming autumn, Garant Continued food innovation, use of plastics, measures taken will be the first brand in Sweden including three new vegetarian during the period will contribute to offer eggs from free-range unique ready-made meal to a red
Slide 26: Financial position
Financial position Anders Lexmon Chief Financial Officer 26
Slide 27: Sales and operating profit growth
Sales and operating profit growth Net sales, SEK m Operating margin, % Operating profit, SEK m +6.7% +5.7% 26,636 24,969 1,148 22,564 23,665 1,086 21,206 980 6.7% 902 884 4.3 4.1 4.4 4.3 3.9 Net sales growth H1’16* H1’17 H1’18 H1’19 H1’20 H1’16 H1’17 H1’18 H1’19 H1’20 * Pro forma 27
Slide 28: Strong operating cash flow
Strong operating cash flow SEK m H1 2020 H1 2019 Operating profit 1,148 1,086 Non-cash items 1,142 1,073 Net interests -63 -59 SEK 2.2 bn Paid tax -225 -246 Working capital 192 -49 Operating cash flow 2,194 1,805 Investing activities -517 -398 Amortization of debt -754 -716 Operating cash flow Share
Slide 29: Investments (ex. IFRS 16)
Investments (ex. IFRS 16) Acquisition Other IT Wholesale Retail SEK m SEK m 497 494 2 000 1 934 500 1 1 481 450 10 SEK 494 mn 400 147 164 350 1 021 62 37 1 000 300 764 250 Total investments 200 500 580 150 292 in H1 2020 278 100 50 0 0 2015 2016 2017 2018 2019 6M 6M 2019 2020 29
Slide 30: Improved net working capital
Improved net working capital NWC as % of sales NWC, SEK m -2.0% -2.3% -3.1% -2.6% -3.0% -3.1% -979 -919 -1,236 -1,513 NWC as % of sales -1,626 2016 2017 2018 2019 R12M to June 2020 30
Slide 31: Financial position
Financial position Net debt (ex. IFRS 16), SEK m 6,047 Net debt, SEK m Net debt/EBITDA 1.1x Net debt/EBITDA 5,449 5,454 5,218 5,082 5,131 19.5% 1.2 1.2 1.1 116 Equity ratio -315 -404 -377 -259 -478 -1,047 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 2018 2019 2019 2019 2019 2020 2020 31
Slide 32: Return on capital employed
Return on capital employed Impacted by IFRS 16 ROCE Capital employed, SEK m 40.4% 9,825 10,178 9,531 9,567 9,526 9,648 24.5% 30.6% 30.9% 30.6% 30.1% 24.7% 24.5% 5,052 Return on capital employed 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 2018 2019 2019 2019 2019 2020 2020 32
Slide 33: Outlook 2020
Outlook 2020 33
Slide 34: Outlook 2020 (unchanged)
Outlook 2020 (unchanged) • Planned capital expenditures in 2020 of SEK 900−1,000 m ‒ Excluding acquisitions and leasehold ‒ No investment during 2020 in automation for the new logistics centre in accordance with payment plan • Plans to establish 5-10 new stores 34
Slide 35: Summary: Growth in a turbulent time
Growth in a turbulent time • Strong achievement despite challenges within certain parts of the organization • Strong growth supported the Willys chain, continued outperformance of the market, accelerated online growth • Increased profit, slightly lower profitability Summary • High activity level in
Slide 36: Q&A
Q&A XX Axfood 20 years Axfo od
Slide 37: Axfood key ratios
Axfood Key ratios Q2 Q2 H1 H1 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m Net sales 13,570 13,038 4.1% 26,636 24,969 6,7% 50,740 26,636 24,969 23,665 Change in like- 22,564 6.3% 6.3% 0.0 7,8% 5,2% 2,6 5.0% 21,206 for-like sales 4.3 4.4 4.3 3.9 4.1 Operating 605 601 0.
Slide 38: Willys key ratios
Willys Key ratios Q2 Q2 H1 H1 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 15,809 14,283 Net sales 8,068 7,423 8.7% 15,809 14,283 10.7% 29,029 13,331 12,365 11,466 Change in like- 7.2% 7.9% -0.7 9,1% 6.4% 2.7 6,2% 4.6 4.7 for-like sales 3.9 4.1 Operating profit 390 368
Slide 39: Hemköp key ratios
Hemköp Key ratios Q2 Q2 H1 H1 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m Net sales 1,591 1,614 -1.4% 3,216 3,212 0.1% 6,378 3,108 3,215 3,212 3,216 3,091 Change in like- 2.0% 1.8% 0.2 3.3% 1.4% 1.9 1.3% for-like sales* 4.2 3.9 Operating profit 53 52 1.7% 114 111 2.3%
Slide 40: Axfood Snabbgross key ratios
Axfood Snabbgross Key ratios Q2 Q2 H1 H1 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 1,654 1,636 Net sales 859 924 -7.1% 1,636 1,654 -1.1% 3,443 1,540 1,444 4.5 Operating profit 34 57 -39.2% 58 74 -22.1% 167 3.4 3.3 3.5 Operating 4.0% 6.1% -2.1 3.5% 4.5% -1.0 4.8% mar
Slide 41: Dagab key ratios
Dagab Key ratios Q2 Q2 H1 H1 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg 2019 Net sales, SEK m 23,787 22,086 Net sales 12,152 11,509 5.6% 23,787 22,086 7.7% 44,895 20,423 20,899 19,206 1.7 1.7 1.7 1.6 Operating profit 189 179 5.4% 353 344 2.6% 678 1.5 Operating 1.6% 1.6% 0.0 1.5% 1.6% -0.1