Afg International Company · TADAWUL:4240
Afg International — Cenomi Retail — Q2 2023 Earnings Presentation
32 slides from Afg International's earnings presentation, Jun 30, 2023
Slide 1: Cenomi Retail Earnings Presentation Q2 23
Cenomi Retail Earnings Presentation For the quarter ended 30 June 2023 (“Q2 23”)
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Cenomi Retail. (the “Company”). By attending or by reading this presentation, you agree to be bound by the following limitations. The information contained in this presentation is for background purposes on
Slide 3: Table of Contents
Table of Contents 05 13 16 25 03 Q2 23 Earnings Presentation
Slide 4: Cenomi Retail at a glance
Cenomi Retail at a glance Net profit of SAR 169.2 Overall top line EBITDA contribution of mn benefited from declines 5.4% YoY SAR 316.6 mn optimization of retail to SAR 1.61 bn up 79.2% YoY footprint +173.6% YoY International portfolio Online sales Reduced inventory continues on upward delivered sol
Slide 5: Strategic Review
01 Cenomi Retail Strategic Review Q1 23 Earnings Presentation Q1 23 Earnings Presentation 5 05
Slide 6: Cenomi Retail strategic pillars underpinning long-term growth
CenomiStrategic Retail pillars underpinning long-term growth ▪ Exit non-strategic markets of US, and the Balkans Geography ‘Saudi First’ Strategy ▪ Double down on Saudi market and wider MENA region Evolve from apparel ▪ Defend & maintain Fashion & Accessories market leadership Category champion to m
Slide 7: Charting the course to maximized potential and profitability
Charting the course to maximized potential and profitability Focus Phase 1: Phase 2: Phase 3: Fix The House (2023-2024) Embark on Growth (2024-2026) Achieving Optimal Potential (2027+) Turnaround Growth Scale existing brands to maximum potential Rationalize brand and store portfolio Invest to scale
Slide 8: Fortifying core market presence through a 'Saudi First' strategy
Fortifying core market presence through a ‘Saudi First’ strategy KSA International Markets Doubling down on local market Exit non-strategic international markets Store optimization Enhancing portfolio by Reassessing In MENA markets, focus program which includes international presence on delivering p
Slide 9: Enhancing organizational capabilities to deliver on our strategy
Enhancing organizational capabilities to deliver on our strategy Organization • Enhancing operating model through a 360 degree overhaul of organizational structure, policies, processes, and overall governance • Raising talent calibre through senior appointments (e.g. COO, CTIO, CHRO, Head of Supply
Slide 10: Elevating organizational excellence through strategic senior appointments
Elevating organizational excellence through strategic senior appointments Sunil Nair Xavier Saez New Hire Chief Technology & Head of Supply Chain Chief Human Resources Innovation Officer Management Officer Xavier has over 20 years of international supply chain Sunil brings three decades of experienc
Slide 11: Moving towards best-in-class governance
Moving towards best-in-class governance to foster greater transparency and management control Audit • Closer collaboration with Audit Committee Related Party • Commitments from major shareholders to Committee and the Board of Directors to revamp Balances settle SAR 272 million in outstanding policie
Slide 12: Leveraging strong KSA market fundamentals to support growth
Key Brand & Store Opening Leveraging strong KSA market fundamentals to support our growth ambitions 01 Youthful demographics with 63% of population under 30 02 A booming consumer outlook 500 - 900 KSA population: 3% 2 – 3x +4 million (+12%) 250 - 300 25% Tourism: 100 MN annual visits 73% 2019 2030 K
Slide 13: Operational Overview
02 Operational Overview Q1 23 Earnings Presentation 13
Slide 14: Driving profitability through brand & store footprint optimization
Key Brand & Store Opening Driving profitability through continued brand & store footprint optimization Retail Rationalization of brand portfolio to support overall profitability ▪ 6 stores opened Q2’23 Retail ▪ 85 stores closed Divestment of non-strategic brands to establish solid foundation ▪ 79 ne
Slide 15: Tangible progress towards retail footprint optimization
Tangible progress towards retail footprint optimization Store network Saudi retail store F&B store evolution network evolution network evolution 1,684 1,668 1,676 1,047 1,052 322 318 314 325 1,659 1,042 1,030 1,560 1,002 1,465 1,389 908 835 257 250 254 322 318 314 325 250 254 257 29 14 25 9 33 41 15
Slide 16: Financial Overview
03 Financial Overview Q1 23 Earnings Presentation Q1 23 Earnings Presentation 16 16
Slide 17: Q2'23 financial performance overview
Q2’23 financial performance overview Q2 2023 Financial highlights Revenues experienced a 5.4% YoY decline with increase in the international revenues growing 10.1% and Saudi revenues decreasing 7.6%. SAR 1,613.4 MN SAR 316.6 MN SAR 169.2 million net profit in Q2 23, Revenue EBITDA compared to 61.9 m
Slide 18: Top line softens on the back of store rationalization efforts
Top line softens on the back of store rationalization efforts Revenue, SAR million LFL consolidated sales growth, % ▪ Retail sales continues to dominate the revenue pool contributing almost ▪ Recorded a drop in LFL consolidated sales as a result of weakened 94% of the total sales mix performance in
Slide 19: Saudi LFL weakens due to tail brands
Saudi LFL weakens due to tail brands while Zara, Inditex and international remain strong LFL Saudi retail sales growth % LFL International Retail growth % ▪ LFL has weakened in Q2 2023 as a result of a drop in top-line, however ▪ International LFL growth maintained positive momentum, and Brand Champ
Slide 20: Consistent growth in online revenues
Consistent growth in online revenues with almost 36% increase in H1 2023 Online revenues, SAR MN E-commerce, % of total retail sales 93 91 88 84 6.3% 6.2% 5.6% 4.9% 55 48 48 3.7% 3.5% 3.4% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q1 23 Earnings Presentation
Slide 21: Store rationalization driving efficiency with sales per sqm 10% higher
Store rationalization driving efficiency with sales per sqm 10% higher Sales per SQM Sales per SQM (exc. F&B & Online) (exc. Online) 12,814 12,605 12,573 12,318 12,175 11,899 11,732 11,790 11,749 11,658 11,722 11,468 446 451 442 439 423 408 479 484 485 465 448 433 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
Slide 22: Online and international experience growth as part of revenue mix
Online and international experience growth as a part of revenue mix Revenue by division Revenue by channel Revenue by geography 2% 6% 6% 3% 11% 7% 5% 1%4% 18% 13% 16% 78… 82% 76% 95% 84% 94% KSA Retail Int'l Retail F&B Stores Online KSA CIS Egypt Others Q2-23 - Outer circle Q2-22 - Inner circle Q1 2
Slide 23: Elevated margins driven by improved cost of revenue
Elevated margins driven by improved cost of revenue and positive operating environment Gross Profit, SAR MN – GPM, % EBITDA, SAR MN – EBITDA Margin, % ▪ An increase in gross profit, which grew by 21.4% y-o-y from SAR 271.1 ▪ EBITDA soared 79.2% to SAR 316.6 million. This was driven in part by millio
Slide 24: Focus on inventory optimization yielding robust results
Focus on inventory optimization yielding robust results Inventory balance (SAR MN) Inventory efficiency ratios ▪ Inventory shrunk significantly as a part of optimization efforts to ▪ This quarter, inventory was reduced on hand to 18 weeks, down from 21 weeks in the previous quarter. enhance liquidit
Slide 25: Appendix
04 Appendix Q1 23 Earnings Presentation Q1 23 Earnings Presentation 25 25
Slide 26: Income Statement
Income Statement SAR Million Q2 2023 Q2 2022 % Change Revenue 1,613.4 1,705.6 -5.4% Cost of Revenue (1,284.3) (1,434.6) 10.5% Gross Profit (Loss) 329.2 271.1 21.4% Gross Profit Margin 20% 16% 4.5pp Selling & Distribution Expenses (51.9) (44.1) -17.7% General & Administrative Expenses (78.8) (85.4) 7
Slide 27: Balance sheet
Balance sheet SAR Million June ‘23 Dec ‘22 % Change SAR Million June ‘23 Dec ‘22 % Change Equity & Liabilities Share Capital 1,148 1,148 0% Assets Reserves ( Statutory, Foreign Currency and Property, Plant and Equipment (554) (524) 1,420 1,324 7% Fair Value) -6% Right-of-Use Assets 2,194 2,347 -7% F
Slide 28: Cenomi Retail Brand Portfolio
Cenomi Retail Brand Portfolio Q1 23 Earnings Presentation 28 28
Slide 29: Market Context
Market Context Historical vs. Future Projected Retail Spend (CAGR) 16,8% 14,2% 16.8 14.2 9,2% 6,5% 6,4% 8,2% 6,8% 7,3% 7,1% 4,9% 5,1% 4,6% 5,1% 5,4% 4,6% 6,3% 8.2 9.2 The Saudi Retail sector has faced 7.1 1,7% 4.9 6.5 2,8% 6.4 3,9% 5.1 4.6 5.1 7.3 5.4 4.6 6.3 6.8 3.9 key headwinds over the past five
Slide 30: Unparalleled Opportunity
Unparalleled Opportunity The birth of The New Saudi Consumer presents unique growth prospects Birth of the New Saudi Consumer KSA Retail Spend Overview (2022-2027, in SAR MN) Market Size Market Size CAGR Category Shift to lifestyle categories: 2022 2027 2022-2027 More demand for F&B, Groceries 179,2
Slide 31: Consumer Trends
Consumer Trends: Consumer Trends: Moving forward, Cenomi Retail will need to cater to new consumer trends with significant implications for the future of the industry. Increasing digital / Scale digital e-commerce channels & adoption reinvent role of stores Shift towards Re-mix portfolio to experien
Slide 32: THANK YOU
Cenomi Retail THANK YOU Contacts Investor Relations Department Email: IR.retail@cenomi.com For more information, visit Tel: +966 (11) 825 2080 https://ir.cenomiretail.com/