Axfood AB · OMXSTO:AXFO
Axfood AB — FY2019 Earnings Presentation
46 slides from Axfood AB's earnings presentation, Feb 6, 2020
Slide 1: A successful 2019 – Year-End Report 2019
A successful 2019 Klas Balkow President and CEO Year-End Report 2019
Slide 2: Agenda
Agenda • Q4 2019 • FY 2019 and financial position • Update on strategic agenda • Outlook 2020 • Q&A
Slide 3: Axfood – a leading Swedish food retailer
Axfood – a leading Swedish food retailer Net sales SEK 50.7 bn 10,854 employees (FTE) Efficient sourcing and Customer reach logistics for all brands >4 million customers a week and channels 304 Group-owned stores Innovative development of 129 franchise Hemköp private label products Collaborating wit
Slide 4: Axfood
9 O N DN OG Axfood
Slide 5: Growth across all food concepts
Q4 sales Growth across all food concepts • Net sales increased 5.4% for the fourth quarter o Willys continued to deliver strong growth and again Net sales, SEK m +5.4% outperformed the market 13,040 12,370 o Total Hemköp growing faster than the market driven 11,826 10,791 11,022 by strong franchise
Slide 6: Growing faster than the overall market
Growing faster than the overall market Axfood store Store sales development (including online) % sales growth 8 Q4 2019 7 Axfood Group 6.2% 6 store sales 5 Market growth 4 Food retail trade index Q4 2019 3 2 3.7% 1 0 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2019 2019 2019 2019 Source: Axfood//HUI Research 6
Slide 7: Outperforming online market growth
Outperforming online market growth Axfood online Total sales development online % growth 40 Q4 2019 35 Axfood 31% 30 Group online 25 Market online 20 Food retail growth trade index 15 Q4 2019 10 17.2% 5 0 Q1 Q2 Q3 Q4 2019 2019 2019 2019 Source: Axfood//HUI Research 7
Slide 8: Higher profit and stable margin ex. IFRS 16
Q4 operating profit Higher profit and stable margin ex. IFRS 16 • Operating profit SEK 487 m (425), including Operating margin, % +14.6% a positive IFRS 16 effect of SEK 45 m Operating profit, SEK m 487 + LFL development 448 − Costs related to Stockholm dark store implementation 425 401 398 − Invest
Slide 9: Willys: Another strong quarter
Q4 Willys Another strong quarter • Strong sales growth of 6.5% and LFL 5.1% Operating margin, % +6.5% o Increase in customer base, higher average ticket, Net sales, SEK m and strong online sales 7,488 7,033 • Store base of 213 stores in total (208) 6,633 5,808 5,978 4.2 o As of year-end, online in 7
Slide 10: Highlights Willys
Highlights Willys Positive development for Continued expansion Strong Christmas sales, Willys Hemma and Eurocash of e-commerce donations of Christmas food to relief organizations 10
Slide 11: Hemköp: Higher profitability
Q4 Hemköp Higher profitability • Total store sales growth 5.7% increased at faster rate than market driven by franchise sales, LFL sales growth of 2.5% Operating margin, % -0.9% Net sales, SEK m o Group owned -1.1% and LFL 1.7% 1,638 1,667 1,652 1,586 1,599 o Franchise 11.4% and LFL 3.1% • Total sto
Slide 12: Highlights Hemköp
Highlights Hemköp Simone Margulies new Expansion of e-commerce New marketing and Managing Director to Hemköp franchise communication platform Hemköpskedjan AB 12
Slide 13: Axfood Snabbgross: Continued positive developments
Q4 Axfood Snabbgross Continued positive developments • Strong sales growth of 6.2% and LFL 6.2% Operating margin, % +6.2% o Continued market share gains Net sales, SEK m 845 • Store base of 24 stores in total (24) 795 727 • Operating profit SEK 34 m (25), including 4.0 a positive IFRS 16 effect of S
Slide 14: Dagab: Efficiency in wholesale business
Q4 Dagab Efficiency in wholesale business • Solid net sales growth 5.3% Operating margin, % +5.3% o Sales growth from strong performance in Willys, Net sales, SEK m Hemköp franchise and Axfood Snabbgross 11,657 11,066 10,389 10,527 10,131 • Operating profit SEK 152 m (170), including a positive IFRS
Slide 15: Highlights Dagab
Highlights Dagab Learnings from implemen- Sustainable transports, Agreement signed for tation of first dark store 50% of heavy trucks can now automation of new highly be run on fossil-free fuels automated logistics centre 15
Slide 16: Update highly automated logistics center
Update highly automated logistics center Agreement signed with Five-year revolving credit Important agreements Witron for automation facility of SEK 3.5 bn to now in place for the solution, investment secure financing and to continued progress of the amounts to EUR 240 m act as the company's constru
Slide 17: Financial position
Financial position Anders Lexmon Chief Financial Officer 17
Slide 18: A year of solid growth
FY sales A year of solid growth • Net sales increased 5.5% for the full year, surpassing SEK 50 bn Net sales, SEK m +5.5% o Willys the main contributor but growth coming from 50,740 all food concepts 45,968 48,085 42,974 o Franchise sales drove Hemköp sales growth 41,247 o Strong performance by Axfo
Slide 19: Record profit, stable margin
FY operating profit Record profit, stable margin • Operating profit SEK 2,288 m (2,025), including a Operating margin, % positive IFRS 16 effect of SEK 174 m. Operating profit Operating profit, SEK m +13.0% excluding IFRS 16 effect up 4.4%. 2,288 + LFL development 2,025 + Improved gross margin acros
Slide 20: Strong operating cash flow
Strong operating cash flow SEK m 2019 2018 Change Cash and cash equivalents, 1 Jan 1,571 1,376 195 Operating cash flow before changes 4,330 2,771 1,559 in working capital and paid tax Paid tax -477 -434 -43 Changes in working capital -298 365 -663 Net investing activities -1,386 -992 -394 Amortizati
Slide 21: Increased investments in line with plan (excl. IFRS 16)
Increased investments in line with plan (excl. IFRS 16) Acquisition Other IT Wholesale Retail SEK m 2 000 1 934 1 481 1 021 1 000 764 580 500 0 2015 2016 2017 2018 2019 21
Slide 22: Improved net working capital
Improved net working capital NWC as % of sales NWC, SEK m Accounts receivable Inventories Accounts payable Index % of sales 120 115 7.5% 110 -2,0% -2,0% -2,3% 105 -2,6% -3,0% 100 4.9% -840 -919 95 -979 2.1% 90 -1,236 85 -1,516 80 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 22
Slide 23: Equity ratio above target
Equity ratio above target Equity ratio Net debt (+)/receivable (-), SEK m 43,0% 39,1% 39,0% 37,0% 5 131 24,6% -377 -871 -1,047 -1,249 -1,449 2015 2016 2017 2018 2019 2019 excl. IFRS 16 23
Slide 24: Return on capital employed impacted by IFRS
Return on capital employed impacted by IFRS 16 Return on capital employed, % (ROCE) Capital employed, SEK m 10,178 39,5% 39,4% 40,4% 36,5% 30,1% 5,035 4,616 5,006 5,052 2015 2016 2017 2018 2019 24
Slide 25: Update on strategic agenda
Update on strategic agenda Klas Balkow 25
Slide 26: Axfood's mission
Axfood’s mission: Axfood enables a better day where everyone can enjoy affordable, good and sustainable food. 26
Slide 27: Strategic focus areas
Strategic focus areas Customer Customer Expansion Supply chain Work approach Our people offering meeting We will grow in new and We will be a driver of We will develop an We will attract, recruit We will offer our existing markets by sustainable product innovative, customer- and develop the Through
Slide 28: Strategic focus areas: Sustainability and community engagement
Strategic focus areas Sustainability and community engagement 28
Slide 29: Sustainability highlights 2019
Sustainability highlights 2019 Carbon footprint labeling Axfood’s list of banned at Mat.se, data available Adoption of plastics policy chemicals now for ~3,000 products in to cut use of plastics standard for the industry the assortment Continued reduction in Implemented Axfood’s warehouses food wast
Slide 30: Strategic focus areas
Strategic focus areas Customer Customer Expansion Supply chain Work approach Our people offering meeting Culture and core values Sustainability and community engagement 30
Slide 31: Customer offering
Customer offering Priorities 2020 Develop and strengthen Strengthen Develop offerings Develop new the assortment pricing with regards to customer of good and positioning meal solutions offerings sustainable food 31
Slide 32: Customer meeting
Customer meeting Priorities 2020 Develop and Optimize store Strengthen the strengthen Increase impact network and roll digital customer customer program of sustainable out updated meeting for increased alternatives concepts relevance 32
Slide 33: Expansion
Expansion Priorities 2020 Increase pace Expand store Expand of expansion network online for Willys Hemma 33
Slide 34: Supply chain
Supply chain Priorities 2020 Increase Develop automated Evaluate new efficiency for warehouse and business models common dark new transport system for last mile store for online for store and online deliveries orders picking 34
Slide 35: Work approach
Work approach Priorities 2020 Improve Increase Increase processes and the degree efficiency system support for of data driven through digital Axfood’s core analyses and workflows processes decisions 35
Slide 36: Our people
Our people Priorities 2020 Ensuring Increase Develop our competence diversity in Increase work culture and our renewal and senior attendance rate leadership competence positions succession 36
Slide 37: Outlook 2020
Outlook 2020 37
Slide 38: Outlook 2020
Outlook 2020 • 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 38
Slide 39: Dividend
Dividend • Dividend policy that at least 50% of profit after tax to be paid out in dividends Ordinary dividend as % of profit • The dividend policy has been revised and 100 94 the dividend will now be paid on two 92 81 85 80 separate occasions 73 71 70 77 • The Board proposes an increased ordinary d
Slide 40: Summary
Summary Higher profit Continued and stable strong margin growth (ex. IFRS 16) Strong Investments financial for the future position 40
Slide 41: Q&A
Q&A XX Axfood 20 years Axfo od
Slide 42: Axfood key ratios
Axfood Key ratios Q4 Q4 Operating margin, % +5.5% SEK m 2019 2018 Change 2019 2018 Change Net sales, SEK m 50,740 Net sales 13,040 12,370 5.4% 50,740 48,085 5.5% 48,085 45,968 41,247 42,974 Change in like- 4.3% 4.7% -0.4 5.0% 3.7% 1.3 for-like sales 4.4 4.5 4.1 4.2 Operating profit 487 425 14.6% 2,2
Slide 43: Willys key ratios
Willys Key ratios Q4 Q4 Operating margin, % +7.3% SEK m 2019 2018 Change 2019 2018 Change Net sales, SEK m 29,029 27,066 Net sales 7,488 7,033 6.5% 29,029 27,066 7.3% 25,415 22,320 23,164 Change in like- 5,1% 5.4% -0.3 6,2% 4.3% 1.9 4.9 for-like sales 4.2 4.4 Operating profit 312 264 18.3% 1,429 1,1
Slide 44: Hemköp key ratios
Hemköp Key ratios Q4 Q4 Operating margin, % SEK m 2019 2018 Change 2019 2018 Change -0.4% Net sales, SEK m 6,403 6,378 Net sales 1,652 1,667 -0.9% 6,378 6,403 -0.4% 6,171 6,199 5,883 Change in like- 1.7% 2.0% -0.3 1.3% 1.1% -0.2 for-like sales 3.8 3.8 Operating profit 65 38 71.2% 243 227 7.1% 3.5 4.
Slide 45: Axfood Snabbgross key ratios
Axfood Snabbgross Key ratios Q4 Q4 +6.2% SEK m 2019 2018 Change 2019 2018 Change Operating margin, % Net sales, SEK m 3,443 3,241 2,984 Net sales 845 795 6.2% 3,443 3,241 6.2% 4.8 Operating profit 34 25 37.9% 167 121 37.8% 3.7 3.7 Operating 4.0% 3.1% 0.9 4.8% 3.7% 1.1 margin Number 2015 2016 2017 20
Slide 46: Dagab key ratios
Dagab Key ratios Q4 Q4 +5.7% Operating margin, % SEK m 2019 2018 Change 2019 2018 Change Net sales, SEK m 44,895 41,128 42,456 39,091 Net sales 11,657 11,066 5.3% 44,895 42,456 5.7% 1.7 1.7 1.6 1.5 Operating profit 152 170 -10.7% 678 685 -1.1% Operating 1.3% 1.5% -0.2 1.5% 1.6% -0.1 margin Delivery