Axfood Ab · OMXSTO:AXFO
Axfood Ab — Q4 2017 Earnings Presentation
42 slides from Axfood Ab's earnings presentation, 2018
Slide 1: 2017: Stable earnings with investments in the future
2017: Stable earnings with investments in the future Klas Balkow, President and CEO
Slide 2: Agenda
Agenda • Q4 and 2017 results • Financial position • Strategic steps • Outlook 2018 • Q&A 2
Slide 3: Axfood – a strong Swedish food retailer
Axfood – a strong Swedish food retailer Net sales SEK 46.0 bn 9,903 employees (FTE) Strong supply-chain company Customer reach for all brands > 4 million customers a week 274 Group-owned stores 120 franchise Hemköp • Purchasing and product 24 Axfood Snabbgross development In total collaborating with
Slide 4: Highlights 2017
Highlights 2017 Investments Strong overall Stable profit for future sales growth, in line with growth gaining market forecast share 4
Slide 5: Axfood Q4 2017
Axfood Q4 2017 5
Slide 6: Q4: Strong LFL and overall growth
Q4: Strong LFL and overall growth • Net sales growth +7.3% – Like-for-like (LFL) store sales +3.6% 1) Net sales, SEK m • Strong growth in all segments 11,826 Concept Overall LFL 10,791 11,022 9,978 9,550 Willys 11.0% 4.3% Hemköp 3.9% 2.5% Group-owned 2.0% 1.1% Franchise 5.6% 3.8% Axfood Närlivs 3.7%
Slide 7: Q4: Stable margins
Q4: Stable margins • Operating profit SEK 398 m (401) + LFL development − Online business ■ Operating profit, SEK m − Store expansion Axfood Närlivs ▬ Operating margin, % − One off: restructuring costs and last year’s pension contribution • Operating margin 3.4% (3.6) 448 401 398 372 • Stable underl
Slide 8: Axfood full-year 2017
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Slide 9: 2017: Strong growth in all segments
2017: Strong growth in all segments • Net sales growth +7.0% – Like-for-like (LFL) store sales +3.8% 1) Net sales, SEK m • Strong growth in all segments 45,968 42,974 Concept Overall LFL 41,247 37,522 38,484 Willys 9.7% 4.3% Hemköp 4.6% 3.1% Group-owned 0.0% 2.1% Franchise 8.9% 3.9% Axfood Närlivs 3
Slide 10: Another year outperforming the market
Another year outperforming the market • Store sales (including Hemköp franchise) 2017, +7.9% • Preliminary market growth 2017, 2.3% (source: HUI/SCB) % 10.0 8.0 6.0 4.0 2.0 0.0 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 -2.0 Axfood Group net sales Retail trade index (excl alcohol) 1
Slide 11: 2017: Stable profit in line with forecast
2017: Stable profit in line with forecast • Operating profit SEK 1,886 m (1,902) + LFL development − Online business ■ Operating profit, SEK m − Expansion of Axfood Närlivs and Hemköp ▬ Operating margin, % − Refurbishment of Hemköp stores 1,902 1,886 1,760 1,447 • Operating margin 4.1% (4.4) 1,302 •
Slide 12: Willys – very strong performance
Net sales Willys – very strong performance +9.7% • LFL sales, 4.3% ‒ More customers and higher average ticket value ‒ >2 million Willys Plus customers ■ Net sales, SEK m ▬ Operating margin, % • Willys 5.0% growth excluding Eurocash 25.415 22.320 23.164 • Maintained profitability despite strong onlin
Slide 13: Hemköp – strengthened market position
Net sales Store sales Group-owned Hemköp – strengthened market position Hemköp total 0.3% +4.6% • LFL growth Hemköp total, 3,1% ‒ More customers and higher average ticket value ■ Net sales, SEK m ‒ >1 million in customer program ▬ Operating margin, % 6.171 6.189 • Store network of total 187 stores 5
Slide 14: Hemköp’s profitability 2017 affected by long-term investments
Hemköp’s profitability 2017 affected by long-term investments • Refurbishment program ‒ Hemköp City ‒ 11 stores (3) • New establishments ‒ 5 stores (–) • Online ‒ 19 (8) stores in 9 cities (2) ‒ ~1/3 of Group-owned stores 14
Slide 15: Axfood Närlivs – good growth and solid profit
Net sales Axfood Närlivs – good growth and solid profit +3.5% • Good sales growth in Axfood Snabbgross ‒ 2 new stores (2nd store Gothenburg in Q4) ■ Net sales, SEK m 1) • Underlying profit in line with last year SEK 189 M (202) ▬ Operating margin, % 1 + Sales growth 2,734 2,884 2,984 1 - Restructuri
Slide 16: Dagab – strong growth and contribution
Net sales Dagab – strong growth and contribution +5.2% • Good growth due to strong store chain develop- ment, acquired businesses and B2B sales • Stable profit margin ■ Net sales, SEK m 1) ▬ Operating margin, % + strong sales performance within Group 45 44 43 41.139 42 41 39.091 40 39 + higher effic
Slide 17: Financial position
Financial position Anders Lexmon Chief Financial Officer
Slide 18: Strong cash flow handling large investment activities
Strong cash flow handling large investment activities 2017 2016 Cash and cash equivalents, 31 Dec 2016/15 1,726 1,933 Operating cash flow before changes 2,594 2,572 in working capital and paid tax Paid tax -382 -327 Changes in working capital 322 -4 Investing activities -1,500 -559 Amortization of d
Slide 19: Net working capital affected by acquisitions
Net working capital affected by acquisitions Released around SEK 700 m in NWC since 2012 Contributions from all important items SEK m NWC NWC as % of sales Index Accounts receivable Inventories Accounts payable 0 0.0% 120 115 -0.5% % of sales 110 -6.9% -500 105 -1.0% 100 2.2% -1.5% 95 -1,000 4.9% 90
Slide 20: High investments for future growth
High investments for future growth 1,934 SEK m 932 806 764 643 580 Acquisition Other IT Wholesale Retail 2012 2013 2014 2015 2016 2017 20
Slide 21: Sustainable investment level over time
Sustainable investment level over time SEK m Depreciation Investments excl acquisitions Depreciation in % of sales 1,000 4% 900 800 3% 700 600 500 2% 400 300 1% 200 100 0 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 21
Slide 22: Balance sheet effects of acquisitions 2017
Balance sheet effects of acquisitions 2017 2017 Amount in SEK m Goodwill 807 Other intangible assets 156 Property, plant and equipment 143 Other non-current assets 44 Current assets -633 Total assets 517 Shareholders’ equity 193 Non-current liabilities 108 Current liabilities 216 Total shareholders’
Slide 23: Strong financial position
Strong financial position SEK m Net debt/receivable Equity ratio 1,500 50.0 40.0 1,000 30.0 500 20.0 0 10.0 -500 0.0 2012 2013 2014 2015 2016 2017 23
Slide 24: Maintained return on capital employed
Maintained return on capital employed Capital employed ROCE 6,000 60% 5,000 50% 4,000 40% 3,000 30% 2,000 20% 1,000 10% 0 0% 2012 2013 2014 2015 2016 2017 24
Slide 25: Strategic steps
Strategic steps Klas Balkow President and CEO
Slide 26: The strategic elements to enable a leading position in good and sustainable food
The strategic elements to enable a leading position in good and sustainable food VISION Axfood will be the leader in good and sustainable food MISSION Axfood contributes to better everyday life where everyone can enjoy affordable, good and sustainable food BUSINESS CONCEPT A family of successful and
Slide 27: Growth – high on the agenda
Growth – high on the agenda Growth Efficiency Customer Customer Supply Work Our Expansion offer meeting chain approach people Sustainability 27
Slide 28: Priorities within customer offer
Priorities within customer offer Customer offer Good and Private Prepared dinner Value sustainable food label solutions 28
Slide 29: Priorities within customer meeting
Priorities within customer meeting Customer meeting Refurbishment Customer Omnichannel of stores programme 29
Slide 30: Priorities in expansion
Priorities in expansion Expansion Open 4-8 new stores 2018 Acquisitions and start-ups Store openings Online reach 30
Slide 31: Priorities within supply chain
Priorities within supply chain Supply-chain Automatization Dark stores Online distribution 31
Slide 32: Outlook 2018
Outlook 2018 Klas Balkow President and CEO
Slide 33: Structural changes as of January 2018
Structural changes as of January 2018 Willys Hemköp Axfood Snabbgross Dagab DD DD DD DD BA External businesses: Axfood Närlivs Axfood Snabbgross DD • Adding business to • Adding business of 145 Tempo stores >200 Handlar’n and B2B:s profit 33
Slide 34: Financial guidance
Financial guidance • New long-term target ‒ Grow more than the market • Long-term target of an operating margin of at least 4% • Equity ratio of at least 25% during all quarters • Planned capex 2018, excluding acquisitions: SEK 900−1,000 m 34
Slide 35: Dividend proposal to AGM 2018
Dividend proposal to AGM 2018 • Policy: shareholder dividend of at least 50% of profit after tax • The Board suggests an ordinary dividend of SEK 7,00 per share The dividend corresponds to 85 percent of the profit after tax Ordinary dividend as % of profit 100 81 85 80 77 73 71 70 2010 2011 2012 201
Slide 36: Summary
Summary • Successful and expansive year ‒ Strong growth, both overall and LFL ‒ High investment pace • Solid profitability ‒ Profit in line with forecast • Strong financial position • Clear agenda for future profitable growth 36
Slide 37: Questions & answers
Questions & answers Klas Balkow, President and CEO Anders Lexmon, CFO
Slide 38: Axfood 2017
Axfood 2017 Key ratios ■ Net sales, SEK m SEK m Q4 2017 Q4 20161) Change 2017 20161) Change ▬ Operating margin, % 1) 11.826 Net sales1) 11,826 11,022 7.3% 45,968 42,974 7.0% 1.00 10.791 11.022 9.978 0.90 9.550 Change in like-for-like 0.80 3.6% 1.3% 2.3 3.8% 2.0% 1.8 0.70 sales 0.60 0.50 Operating pr
Slide 39: Willys 2017
Willys 2017 Key ratios ■ Net sales, SEK m SEKm Q4 2017 Q4 2016 Change 2017 2016 Change ▬ Operating margin, % 6.633 5.978 Net sales 6,633 5,978 11.0% 25,415 23,164 9.7% 5.808 5.209 5.416 Change in like-for-like 4.3% 1.1% 3.2 4.3% 1.4% 2.9 sales 4.4 Operating profit 233 205 13.7% 1,020 922 10.6% 4.0 3
Slide 40: Hemköp 2017
Hemköp 2017 Key ratios ■ Net sales, SEK m SEKm Q4 2017 Q4 2016 Change 2017 2016 Change ▬ Operating margin, % 1.635 1.586 1.599 Net sales 1,635 1,599 2.3% 6,189 6,171 0.3% 1.438 1.454 65.0 55.0 Change in like-for-like 1.1% 2.3% -1.2 2.1% 4.0% -1.9 sales 45.0 3.8 3.9 Operating profit 49 62 -21.0% 196
Slide 41: Axfood Närlivs 2017
Axfood Närlivs 2017 Key ratios ■ Net sales, SEK m ▬ Operating margin, % 1) SEKm Q4 2017 Q4 2016 Change 2017 2016 Change 150 Net sales 727 701 3.7% 2,984 2,884 3.5% 727 130 688 701 110 90 Operating profit 21 45 -53,3% 189 202 -6.4% 7.0 70 6.4 50 Operating margin 2.9% 6.4% -3.5 6.3% 7.0% -0.7 2.9 30 1
Slide 42: Dagab 2017
Dagab 2017 Key ratios ■ Net sales, SEK m SEKm Q4 2017 Q4 20161) Change 2017 20161) Change ▬ Operating margin, % 1) Net sales 10,530 10,131 3.9% 41,139 39,091 5.2% 12 11 10.131 10.530 10 Distributed sales 8,165 8,045 1.5% 31,986 30,815 3.8% 9 8 7 6 Operating profit 154 146 5.5% 697 670 4.0% 5 1.4 1.5