Ck Hutchison Holdings Ltd · HKEX:1
Ck Hutchison — H1 2018 Earnings Presentation
79 slides from Ck Hutchison's earnings presentation, Aug 2, 2018
Slide 1: 2018 Interim Results Operations Analysis
2018 Interim Results Operations Analysis
Slide 2: Disclaimer
Disclaimer The information, statements and opinions contained in this Presentation and subsequent discussion do not constitute an offer to sell or solicitation of any offer to subscribe for or purchase any securities or other financial instruments or any advice or recommendation in respect of such s
Slide 3: Diversification assures Resilience, Innovation delivers Growth
Diversification assures Resilience Innovation delivers Growth 3
Slide 4: Agenda
Agenda Key 1H 2018 Retail Focus Q&A Strategies Results 4
Slide 5: Key Strategies
Key Strategies What are our objectives • Recurring & Predictable Growth in • Never compromising financial strength & EPS, CFPS and DPS stability How do we achieve them • Disciplined management of Revenue Growth, • Maintain A2 / A- Credit Rating Margin & Costs • Disciplined management of Capital & In
Slide 6: 1H 2018 Results Highlights
1H 2018 Results Highlights 6
Slide 7: 1H 2018 Financial Highlights
1H 2018 Financial Highlights Revenue EBITDA EBIT $224.5bn $55.4bn $35.4bn + 16% + 19% + 16% (+9% in local currencies) (+11% in local currencies) (+8% in local currencies) Reported Earnings EPS DPS $18.0bn $4.67 $0.87 + 13% + 13% + 11.5% (+5% in local currencies) Note : Revenue, EBITDA and EBIT inclu
Slide 8: EBITDA
EBITDA EBITDA Division YOY Growth HK$ bn 46.7 55.4 $55.4bn + 9% + 19% 1H 2017 1H 2018 + 19% + 15% (+11% in local currencies) + 20% + 47% 3 Group Europe HAT 3 HK * Represents contributions from Finance & Investments and Others + 14% + 35% + 6% (2) Note 1: Asia, Australia & Others includes Panama, Mex
Slide 9: Operating FCF
Operating FCF Operating FCF by Operating FCF Core Business $26.3bn 2% HK$ m + 25% 16% 19% 26,775 1% 22,843 22% 8,366 9,836 (8,741) (9,226) 40% (1,420) (1,074) 1H 2017 1H 2018 EBITDA of Subsidiaries Dividend from Asso & JVs Port & Related Services Retail Capex Investment in Asso & JVs Infrastructure
Slide 10: World's leading port network
World’s leading port network Assets: US$12.9bn Ports • 290 berths, 52 ports, 26 countries • 84.7m twenty-foot equivalent units containers handled in 2017 10
Slide 11: Ports
Ports HK$ m 160 TEUs 327 47 52 (+2) Berths 11.4 m 290 14.9 m (-1%) (-1%) 40.6m (15) (20) 6,205 133 (+1) 44 (-) 7.6 m 6.7 m (-6%) -1% 5,706 61 +3 berths (+3%) (-) 1H 2017 HPH Trust Mainland China Europe Asia, Australia Corporate costs 1H 2018 4% 11% EBITDA and Other Hong Kong and Others * & other por
Slide 12: World's largest international H&B retailer
World’s largest international H&B retailer Assets: US$27.2bn Retail • 14,432 stores in 24 markets with 12 retail brands • 130m loyalty members contributed 62% of total sales 12
Slide 13: Retail
Retail EBITDA Growth 455 Store H&B growth: +15% H&B HK$ m 162 58 2,236 3,377 number 289 212 Total Exclusives 284 7,532 sales sales 14,432 5,413 2,951 +7% 6,527 $68,474m 34% +17% of total sales 1H 2017 H&B H&B H&B H&B Other Retail 1H 2018 Loyalty Loyalty China Asia Western Eastern 5% EBITDA Europe Eu
Slide 14: Retail – Watsons China O+O Strategy
Retail – Watsons China “O + O Strategy” Highly profitable new stores Within 1 yr payback Flexible lease terms to adapt dynamic 65m Loyalty members Customer changes in store portfolio KOLs, Social Fans, Social Apps ... Connectivity Over 80% with turnover rent & over 99% with tenant only break
Slide 15: World-class infrastructure investor
World – class infrastructure investor Assets: US$42.2bn • Operations in 32 countries Infrastructure • 26,000km of water mains • 30,000km of sewers • 11,200MW power generation capacity • 471,400km of power networks • 107,000km of gas networks 15
Slide 16: Infrastructure
Infrastructure HK$ m CKI’s reported Earnings and Dividend Growth 6 NPAT 2.380 2.260 2.5 2.150 $5,942m 2.000 5,942 5 1.860 2 5,657 +5% 1.660 1.530 1H 2017 1H 2018 4 1.330 1.5 1.201 “ Excluding a few one-off items in 1H 2017, the 1.135 1.100 1H 2018 profit contribution from CKI’s underlying 3 1.000 0.
Slide 17: One of Canada's largest integrated energy companies
One of Canada’s largest integrated energy companies Assets: US$8.1bn • 297,900boe per day Energy • Liwan natural gas fields in the South China Sea have produced gross sales volumes of more than 11.9bcm since its first gas in 2014 • 1,900km pipelines • 400mbbl per day refining & upgrading capacity 17
Slide 18: Energy
Energy Production Net Earnings Husky’s Value Proposition 297.9mboe/day C$696m -9% 41% from low cost thermal production at (compared to net loss of C$22m in 1H 2017) 2018 target C$11.32/bbl (1H 2018) earnings 1H 2017 36% 1H 2018 breakeven at C$ m 41% 696 326.7 59% 297.9 15% from fixed-price US$42WTI
Slide 19: Global mobile telecom operator
Global mobile telecom operator Assets: US$25.3bn Telecommunications • Servicing 128.3m customers in 11 countries • 4 in-market mobile consolidation deals since 2013 • Over $200bn disposal profit in less than 20 years 19
Slide 20: Telecommunications - 3 Group Europe
Telecommunications - 3 Group Europe 242 HK$ m 383 Net Customer 12,797 98 Service Revenue EBITDA 585 235 (1) $28,551m $12,797m + 7% + 14% 11,255 (-4% in local currencies) (+3% in local currencies) KPI 1H 2017 UK Italy Sweden Denmark Austria Ireland 1H 2018 Active mobile customers +22% 44.6m -1% EBITD
Slide 21: Telecommunications - HAT
Telecommunications - HAT Total Revenue EBITDA HK$ m 188 11 $4,081m $346m (132) 23 346 +7% +35% 256 Indonesia Focus HK$ m 3,658 3,388 1H 2017 Indonesia Vietnam Sri Lanka Corporate 1H 2018 Revenue costs 1H 2017 1H 2018 Active mobile customers 52.2m -19% (1) +383% EBITDA RGS ARPU YOY Change % +47% (in
Slide 22: WIND TRE 50% Acquisition
WIND TRE 50% Acquisition Strategic allocation of capital to Completion expected within 2018 underpin increased shareholder returns Full year synergy run-rate opex 58% achieved at the end of June 2018 Earnings & cash flow accretive An important building block in the Re-affirmed CKHH’s A2
Slide 23: Telecommunications – Digitalisation initiatives
Telecommunications – Digitalisation initiatives Innovations . Opportunities . Development Global Platform & Enablers supplying our network, expertise & platform to third parties Global Digital Hub for cost reductions Global Data Analytics Platform to Leverage on global partnerships (Xiaomi
Slide 24: 2018 Interim Results - Appendix
2018 Interim Results - Appendix
Slide 25: Business & Geographical Diversification
Business & Geographical Diversification Total Revenue: HK$224,507 million By Division By Geographical Location 2
Slide 26: Business & Geographical Diversification
Business & Geographical Diversification Total EBITDA: HK$55,350 million By Division By Geographical Location 3
Slide 27: Business & Geographical Diversification
Business & Geographical Diversification Total EBITDA EBITDA growth: +19% HK$ million Local currencies growth: +11% +5% +7% +12% +40% +3% +6% -100% +45% +68% +68% +6% +14% +35% 1,193 55,350 +47% 1,542 90 +20% 1,875 37 (656) 3,104 -100% +15% +9% 51,857 1,005 499 46,661 1H 2017 Ports & Retail Infrastru
Slide 28: Financial Profile
Financial Profile Liquid Assets by Type Debt Maturity Profile at 30 June 2018 – Principal Only (1) Currency Sensitivities as at 30 June 2018 Liquid Assets by Currency as at 30 June 2018 Net Debt Net debt as at 30 June 2018 (2) HK$185,482m Net debt to net total capital ratio (2) 24.1% Net debt to net
Slide 29: Financial Profile
Financial Profile Operating FCF by division HK$ million EBITDA – Co & Subsid 4,420 6,137 6,094 - 8,212 654 346 912 26,775 EBITDA – Asso. & JVs 1,785 1,395 12,851 5,877 4,585 36 - 2,046 28,575 Dividends from Asso. & JVs 1,135 918 7,092 185 - - - 506 9,836 Capex 1,285 1,142 2,502 - 2,789 282 1,157 69
Slide 30: Ports and Related Services
Ports and Related Services 1H 2018 (1) 1H 2017 (1) % Change in % Change HK$ million HK$ million local currencies Total Revenue 17,591 16,195 +9% +5% EBITDA 6,205 5,706 +9% +5% EBIT 3,864 3,623 +7% +3% Throughput 40.6 million TEU 41.1 million TEU -1% N/A (1) (1) Throughput (million TEU) TOTAL REVENUE
Slide 31: Retail
Retail 1H 2018 1H 2017 % Change in % Change HK$ million HK$ million local currencies Total Revenue 83,874 73,557 +14% +6% EBITDA 7,532 6,527 +15% +7% EBIT 5,992 5,232 +15% +6% Store Numbers 14,432 13,507 +7% N/A S tore Num bers Net S tore Ad d ition s 1H 2018 1H 2017 % C h an g e 1H 2018 H&B China 3
Slide 32: Retail
Retail Comparable Stores Total Revenue Total EBITDA Sales Growth (%) H&B H&B H&B Total Retail HK$9.7b Total Retail HK$947m Total Retail +2.3% Other retail Other retail Other retail HK$0.6b HK$58m +4.5% HK$ million TOTAL REVENUE EBITDA COMPARABLE STORE SALES GROWTH % (1) % Local Ccy EBITDA EBITDA % L
Slide 33: Infrastructure and Energy
Infrastructure 1H 2018 1H 2017 % Change in % Change HK$ million HK$ million local currencies Total Revenue 34,225 25,918 +32% +24% EBITDA 18,945 15,841 +20% +12% EBIT 13,242 11,949 +11% +4% In reported currency, total revenue, EBITDA and EBIT increased compared to 1H 2017, mainly due to contributi
Slide 34: Telecommunications – 3 Group Europe
Telecommunications – 3 Group Europe Results by Operations UK (1) Sweden Denmark Austria Ireland (1) Italy 3 Group Europe In million GBP EURO SEK DKK EURO EURO HK$ 1H 2018 1H 2017 1H 2018 1H 2017 Wind Tre Wind Tre 1H 2018 1H 2017 1H 2018 1H 2017 1H 2018 1H 2017 1H 2018 1H 2017 1H 2018 1H 2017 (50%) (
Slide 35: Telecommunications – 3 Group Europe
Telecommunications – 3 Group Europe Customer Base – Mobile business Total Registered Customers Total Active Customers (1) as at 30 June 2018 as at 30 June 2018 Denmark Denmark Ireland 3% Austria Ireland Austria 6% 6% 5% 3% Sweden UK 7% UK Sweden 4% 23% 4% 25% Italy Italy 55% 59% % Change against Con
Slide 36: Telecommunications – 3 Group Europe
Telecommunications – 3 Group Europe Key Business Indicators – Mobile Businesses 3 GROUP UK Italy Sweden Denmark Austria Ireland EUROPE AVERAGE (5 ) Contract £17.70 €14.89 SEK223.27 DKK143.21 €19.29 €20.23 €19.06 12-month Trailing Non-Contract £5.22 €11.29 SEK120.51 DKK89.06 €10.98 €15.65 €10.39 (1)
Slide 37: Telecommunications – HTHKH & HAT
Telecommunications – HTHKH & HAT HTHKH 1H 2018 1H 2017 % Change HK$ million HK$ million Total Revenue 4,021 5,069 -21% - Mobile operation – service 1,843 1,929 -4% - Mobile operation – hardware 2,178 1,173 +86% - Discontinued Fixed operation ˗ 1,967 -100% EBITDA 690 1,309 -47% - Mobile operation 690
Slide 38: Digital Transformation
DIGITAL TRANSFORMATION KNSHOP | “Watson's 's Wine ri A member of CK Hutchison Holdings
Slide 39: World's Largest International Health & Beauty Retailer
WORLD’S LARGEST INTERNATIONAL HEALTH & BEAUTY RETAILER
Slide 40: Retail Brands, Markets, Stores
12 RETAIL BRANDS 24 MARKETS 14,300+ RETAIL STORES 4,000 CITIES
Slide 41: World's Largest International Health & Beauty Retailer
WORLD’S LARGEST INTERNATIONAL HEALTH & BEAUTY RETAILER WE REACH 24 MARKETS 2.4B No.1 in 15 Markets POTENTIAL POPULATION 32% OF WORLD POPULATION Health and Beauty Health and Beauty Health and Beauty Health and Beauty China Asia Western Europe Eastern Europe Other Retail Mainland China Hong Kong Alban
Slide 42: We Focus on High Growth Categories
WE FOCUS ON HIGH GROWTH CATEGORIES SKINCARE HEALTH & WELLBEING COSMETICS PERSONAL CARE
Slide 43: Speed of Expansion
WE ARE NOT JUST BUILDING PHYSICAL STORES, SPEED OF EXPANSION BUT CUSTOMER CONNECTIVITY. 1NEW STORE EVERY 7HOURS
Slide 44: Loyalty Member Engagement
LOYALTY MEMBER ENGAGEMENT The world’s largest active 130 M + retail loyalty member base LOYALTY MEMBERS EQUIVALENT TO10 TH POPULATED COUNTRY ON EARTH
Slide 45: Normal in Retail
NORMAL in RETAIL MORE Science . Precision . Collaboration PRODUCTS Traditional Retailer CUSTOMERS A.S. Watson CUSTOMER EXPERIENCE Merchandising O+O Experience Marketing Excellent Service Supply Chain Stories Customer Insights Digital Analytics Social Listening Data Management Technology Transactions
Slide 46: Customer Connectivity in China
CUSTOMER CONNECTIVITY IN CHINA Social App Loyalty Programme 15M 65M Downloads Paid Membership 65% repeat 80+% Sales KOL Contacts 3300+ Participation Other 1300+ STORES Ideas Beauty Coming soon... Social Media Advisor Fans Community 55M 10M 100M Exposure
Slide 47: ASW Digital Transformation Since 2012
ASW DIGITAL TRANSFORMATION SINCE 2012 Technology Investment, Strategic Realignment & Cultural Change 2010 2012 2015 2016 2017 2018 2020 Launch first Build Customer Strategy Technology Infrastructure 2012-2016 Establish eLab Launch Build Accelerate Build to drive digital DARE • Data Management • O+O
Slide 48: Our DARE Customer Strategy
OUR DARE CUSTOMER STRATEGY Technology Enabled Customer Centric Approach DIFFERENT ANYWHERE RELATIONSHIP EXPERIENCE
Slide 49: 20 Different Store Formats
STORE FORMATS OVER 20 DIFFERENT STORE FORMATS
Slide 50: Customer Service
CUSTOMER SERVICE 130,000+ CUSTOMER SERVICE ADVISORS
Slide 51: Health & Baby
HEALTH & BABY 3,800+ HEALTH PROFESSIONALS
Slide 52: A.S. Watson Group
ASS Watson Group
Slide 53: Colorlab Specialised Services
MORE EXPERIENCES & COLORLAB SPECIALISED SERVICES
Slide 54: Rossmann New Small Store Format
NEW SMALL STORE FORMAT ROSSMANN AN O+O TEST STORE IN POLAND
Slide 55: Exclusives
EXCLUSIVES $30 + BILLION EXCLUSIVES ANNUAL SALES 34% OF TOTAL SALES Bird's Nest Skin Advanced Aa Kode
Slide 56: Exclusive Brands
B. Skincare BE Creative Make Up B. Makeup Kruidvat ONLY YOU
Slide 57: Experiences Outside of Stores
EXPERIENCES OUTSIDE OF STORES GLOBAL HEALTH CAMPAIGN #GetActive Reached 60M+ customers online & offline
Slide 58: Technology Investment $1,000M
TECHNOLOGY INVESTMENT $1,000 M INVESTMENT TO ACCELERATE DIGITAL TRANSFORMATION 2012 - 2020
Slide 59: Digital Experience
DIGITAL EXPERIENCE
Slide 60: Digital StyleMe Virtual Makeup
DIGITAL StyleMe Virtual Makeup
Slide 61: Digital Self Checkout / Scan & Go Modules
DIGITAL Self Checkout / Scan & Go Modules
Slide 62: Digital Self Checkout / Scan & Go Module
DIGITAL Self Checkout / Scan & Go Module
Slide 63: Digital Self Checkout RFID Module
DIGITAL Self Checkout RFID Module
Slide 64: Connect: Social Media Followers and Website Visits
CONNECT 80M+ SOCIAL MEDIA FOLLOWERS 600M+ WEBSITE VISIT PER YEAR ‘WE LISTEN TO THEM ON SOCIAL”
Slide 65: Relationship
LS. RELATIONSHIP wl A'S. Watson Group
Slide 66: Data Science Build Competitive Advantages
DATA SCIENCE Build Competitive Advantages From transaction to INTERACTION using Data Science
Slide 67: Using Data Science for Decision Making and Customer Engagement
USING DATA SCIENCE FOR DECISION MAKING AND CUSTOMER ENGAGEMENT STORE STRATEGY 130 +M CUSTOMER DATA STORE PERFORMANCE MARKETING STRATEGY ASSORTMENT SPACE COMPANY DATA MARKET DATA PLANNING PLANNING IT & DATA SECURITY GOVERNANCE
Slide 68: More O+O Shoppers Bring Us More Business
MORE O+O SHOPPERS BRING US MORE BUSINESS Customer Spend 2-3x More Visit Frequency 2x More Stronger customer Loyalty
Slide 69: O+O Shoppers Bring Us More Business
O+O SHOPPERS BRING US MORE BUSINESS UK | x2.5 Netherlands | x2.3 China | x2.5 Belgium | x2.0 Taiwan | x2.5 Ukraine | x3.2 Hong Kong | x3.1 Thailand | x2.4 Malaysia | x2.7 Singapore | x2.0
Slide 70: Click & Collect Shoppers Buy More
MORE 20-30% CLICK & COLLECT SHOPPERS BUY MORE CLICK & COLLECT Here is your order ready for pick up … do you want to try this new product ? Click & Collect 15-50% Buy More
Slide 71: O+O Shoppers Bring Us More Business
O+O SHOPPERS BRING US MORE BUSINESS Original C&C Online Health Skincare Sun Care Skin Care Hair Care Oral Care Fragrances Baby Cosmetics Additional Purchase In Store
Slide 72: Unique O+O Matrix Retail Model
UNIQUE O+O MATRIX RETAIL MODEL ENABLED BY DIGITAL TRANSFORMATION Receive Goods Receive Goods IN STORE AT HOME Store Store to Door Select • 14,000+ stores for shoppers to • 14,000+ stores for shoppers to experience and select experience and select Goods • 24 markets in Asia & Europe, • Order in store
Slide 73: In-Store Video Analytics Technology
IN-STORE VIDEO ANALYTICS TECHNOLOGY TO OPTIMISE SPACE PLANNING & IN-STORE EXPERIENCE FOR BETTER CONVERSION 36
Slide 74: Visualized Reporting
Visualized Reporting Enables easy and instant access to data and insights to support decision making v
Slide 75: Digital Tools for Management & Store Teams
DIGITAL TOOLS FOR MANAGEMENT & STORE TEAMS AS PART OF THE DIGITAL TRANSFORMATION
Slide 76: Staff Social App
ADDED NEW SOCIAL ROLE FOR STAFF SOCIAL APP IN-STORE BEAUTY ADVISORS 100M Exposure in 9 months
Slide 77: Transforming People Strategy
TRANSFORMING PEOPLE STRATEGY AS PART OF THE DIGITAL TRANSFORMATION 70% 70% Gen Y/Z Customers Gen Y/Z Store Staff
Slide 78: Building Customer Connectivity Through O+O Integrated Platform
BEFORE DIGITAL TRANSFORMATION… WITH DIGITAL TRANSFORMATION… WE BUILT A NETWORK OF STORES WE ARE BUILDING CUSTOMER CONNECTIVITY THROUGH O+O INTEGRATED PLATFORM
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CK Hutchison Holdings — H1 2018 Earnings Presentation on 6ix