Verkkokauppa.com Oyj · OMXHEX:VERK
Verkkokauppa.com Oyj — Q3 2014 Earnings Presentation
33 slides from Verkkokauppa.com Oyj's earnings presentation, November 2015
Slide 1: Verkkokauppa.com Oyj Q3/2014 November Roadshow
Verkkokauppa.com Oyj Q3/2014 November Roadshow, Samuli Seppälä, CEO TODAY’S STORE FRONT RETAIL IS GOING ONLINE. COME ALONG.
Slide 2: Verkkokauppa.com
Verkkokauppa.com • Verkkokauppa.com Oyj (NASDAQ:VERK) is Finland’s largest, most known and most visited online retailer that offers over 50 000 different items from 22 main categories at probably always cheaper prices. • Products sold through three megastores and over 2500 pickup locations including
Slide 3: Uniquely Positioned for Consumer Channel Shift and 2nd Wave of E-commerce
Verkkokauppa.com - Uniquely Positioned for Consumer Channel Shift and 2nd Wave of E-commerce €? Verkkokauppa.com believes that its lower cost structure compared to other traditional retailers, inexpensive prices, position as the best-known Finnish online retail brand* and own IT-system are strengths
Slide 4: Northern Europe 2013 Key B2C E-commerce Data at a Glance
Northern Europe 2013 Key B2C E-commerce data Northern Europe 2013 Key B2C E-commerce Data of Goods and Services at a Glance 100% 32.2 million Iceland Finland people live in Northern Europe € 33.2 bn 100%90% 29.2 million 90% people use the Internet Norway 58% Turnover E-commerce Estonia 18.7 million
Slide 5: Strong sales growth - investing in future growth
Verkkokauppa.com Oyj Q3 sales +19.3% Strong sales growth - investing in future growth while retail and more product categories are going online
Slide 6: Verkkokauppa.com Oyj Q3 sales +19.3%
Verkkokauppa.com Oyj Q3 sales +19.3% • Revenue was 68.0 (57.0) million euros, growth +19% • Gross profit was 9.9 million (8.8) million euros, growth +13% • EBITDA was 1.89 (1.95) million euros, declined -3% • Operating profit was 1.6 (1.7) million euros, declined -5% • Operating profit was 2.4% of n
Slide 7: Verkkokauppa.com's Q3/2014 key ratios
Verkkokauppa.com’s Q3/2014 Key ratios 7-9/2014 7-9/2013 1-9/2014 1-9/2013 1-12/2013 Revenue, € thousands 67,984 57,008 189,163 162,868 238,013 EBITDA, € thousands 1,888 1,946 5,443 4,005 7,526 EBITDA, % 2.8% 3.4% 2.9% 2.5% 3.2% Operating profit, € thousands 1,642 1,729 4,734 3,344 6,640 Operating pr
Slide 8: Main sales growth drivers Q3 +19%
Verkkokauppa.com Q3/2014 main sales growth drivers Q3 +19% Price according with Capital efficiency enabled by the leanest LOW PRICES slogan - regardless operating model “Probably always cheaper” of sales channel WIDEST BEST 24 H ASSORTMENT AVAILABILITY Finland’s best source for Customer lifetime val
Slide 9: Main sales growth drivers Q3 +19% and revenue by quarter
Verkkokauppa.com Q3/2014 main sales growth drivers Q3 +19% • Digitalization / retail going online • Phones, computers, consoles Revenue • Bolder, growth oriented pricing • 22 years of experience and visibility • NASDAQ First North -publicity • Brand marketing increased 57.1 mEUR 48.8 mEUR 57.0 mEUR
Slide 10: Verkkokauppa.com's Q3/2014 fixed costs
Verkkokauppa.com’s Q3/2014 fixed costs • Fixed costs (other costs + personnel costs) increased +17% being 11.8% of revenue (12.1%) • Company has hired new personnel for planning of new product categories and consumer financing services. • Brand marketing has been increased. • IT-development resource
Slide 11: Sales margin and fixed costs
Verkkokauppa.com’s sales margin and fixed costs 30 29.2% 25 25.2% Sales margin% Fixes costs% of sales 20 15 EBITDA EBITDA 16.7% EBITDA 2.0% EBITDA 15.7% 3.2% 3.9% 15.5% 14.6% 2.8% 10 12.6% 12.9% 13.6% 11.8% 5 0 Retail in Finland Verkkokauppa.com Verkkokauppa.com Verkkokauppa.com Verkkokauppa.com 201
Slide 12: Retailer/etailer sales margin and fixed costs comparison
Retailer/etailer sales margin and fixed costs comparison 30 Sales margin% Fixes costs% of sales 25 20 15 EBITDA 15.7% 3.2% 19.3% 40.2% 33.9% 17.1% 38.9% 28.7% 10 12.6% 26.8% 13.4% 26.2% 15.3% 5 0 Verkkokauppa.com Large US Large Swedish Large UK WG Department Store Discount Chain 2013 etailer 2013 et
Slide 13: Yes, but the foreign competition..
Yes, but the foreign competition.. • Amazon, Zalando, CDON, Thomann, eBay, DealExtreme, Lekmer .. - most of the large international etailers are already in Finland! • Our very competitive cost level compared any other retailer or etailer - Q3/2014 fixed costs was 11.8% of revenue (12.1%) • Over 50 0
Slide 14: Verkkokauppa.com's revenue development
Verkkokauppa.com’s revenue development 139.5 153.6 173.1 191.8 224.5 238.0 57.1 48.8 57.0 75.1 60.6 60.6 68.0 mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR mEUR 1992 .... 2008 2009 2010 2011 2012 2013 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14
Slide 15: GfK Demand Projector forecasts for Finland
GfK Demand Projector GfK forecasts steady sales in forecasts for Finland consumer electronics in Finland. TVs Mobile Phones Cameras PCs and tablets Source: GfK
Slide 16: Overview of Online B2C E-commerce Europe Sales Growth
Overview Ecommerce of Online Europe Sales B2C Growth% E-commerce S Overview Ov • Finland’s lower Countries Russia 2010 29.7% 2011 29.2% 2012 32.7% 2013 50.5% 2014(f) 16.1% e-Commerce growth/ Ukraine 88.1% 45.3% 47.1% 48.0% 21.6% share% offers more Turkey Romania N/A 30.7% 57.4 % 41.2% 35.9% 33.3% 35
Slide 17: e-Commerce Turn Over
Sweden, Denmark, Norway and Finland are the more mature markets in Northern Europe, and the growth rates of these four markets are expected to level off as of 2014. e-Commerce Turn Over and Growth Northern Europe Northern Europe’s e-‐commerce market is expected to grow the least of all European regi
Slide 18: Logistics developments
Logistics developments • Special focus on developing logistics for the needs of future growth. • New feature of picking from store shelves for mail order customers now in place (in certain cases). • Planning direct deliveries from factories, importers, farms and producers to end customers. • Logisti
Slide 19: New categories planned for introduction in 2015
New categories planned for introduction in 2015 • ”Probably always cheaper prices”, efficients logistics and leading low fixed costs base are the foundation for our plans for introducing new product categories during 2015. • New food and drink and do-it-yourself (hardware store) purchasing teams hav
Slide 20: Industry average product margins
Sales margin% Industry average product margins Fixes costs% of sales • A-Brand Finnish Coffee -5% 30 • Protein Bars 30% 25 29.2% • Spices / Salt / Pepper 50% 25.2% 20 • Tablet Computer 10% 15 EBITDA • Mobile Phone 5% 15.7% 3.2% 10 • Television 15% 12.6% 5 • A-brand Washing Machine 25% 0 • Private La
Slide 21: New product categories
4 New product categories Strictly private and confidential Verkkokauppa.com has continuously expanded into new categories – consistent track record of approx. 1pp market share gain per category per year Verkkokauppa.com’s multichannel platform enables it to offer an ever widening assortment …over ti
Slide 22: Online Grocery Business
Online Grocery Business • Where are the profits? • Why so high fixed costs%? • Why the average product price is so low? • Your prices are not very competitive?
Slide 23: Online Grocery Business margin comparison
Sales margin% Online Grocery Business Fixes costs% of sales 22.0% (storekeeper) K-Citymarket 30 53.8% 34.0% 31.2% 11.2% 25 30.3% (storekeeper) + K-Citymarket 20 15 23.0% + 19.9% EBITDA 17.6% (wholesale-part) Ruokakesko Oy 15.7% 3.2% 16.0% 10 (wholesale-part) Ruokakesko Oy 12.6% 12.6% 9.6% 5 0 Verkko
Slide 24: Bigger packs, bigger savings, every day
Bigger packs Bigger savings Every day
Slide 25: Direct from the farm with bigger savings
Direct from the farm With bigger savings
Slide 26: Mobile and tablet friendly website
Mobile and tablet friendly website Beta version of new mobile friendlier website now launched at m.verkkokauppa.com (or m.verk.com) Ecommerce Europe: ”One in ten Finnish consumers have shopped using mobile device.”
Slide 27: Near future projects
Near future projects • Company keeps on developing services, where we focus on increasing traffic to our website (+ mobile website). • There’re lot of visitors who are not (yet) buying online, but only searching for product information and doing price comparisions. Lot of used products are also sold
Slide 28: Medium-term targets
Medium-term targets The company retains its existing targets: • The company strives to grow faster than its operating market and targets an annual revenue growth of over 10 per cent in the medium-term. • The company’s objective is to improve its EBITDA margin in the medium-term compared to the level
Slide 29: Christmas sales chocolate calendar
Verkkokauppa.com’s Christmas sales was launched with our very own 30-door “+20% better November Chocolate Calendar” on 1.11. 0,10
Slide 30: Samuli Seppälä's ownership
Samuli Seppälä’s ownership 49.9%
Slide 31: Why invest to Verkkokauppa.com?
Why invest to Verkkokauppa.com? • Verkkokauppa.com is profitable and operates much lower fixed costs compared to other e-tailers and especially traditional retailers. • Verkkokauppa.com is Finland’s most known and largest online retailer, that is listed at NASDAQ. Company sees multitude of opportuni
Slide 32: Upcoming events and contacts
Q&A Upcoming events: • Financial year 2014 release on Friday 13 February 2015 • Q1/2015 Friday 24 April 2015 • Q2/2015 Friday 7 August 2015 • Q3/2015 October 23 2015 • Company Releases mailing list in English - www.verkkokauppa. com/fi/investors/company-releases#investors-subscription Contacts: • Sa
Slide 33: Thank you!
Thank you! TODAY’S STORE FRONT RETAIL IS GOING ONLINE. COME ALONG.