Ceconomy Ag · XETR:CEC
Ceconomy — Investor Presentation (February 2020)
50 slides from Ceconomy's investor presentation, February 2020
Slide 1: Investor Presentation February 2020
INVESTOR PRESENTATION February 2020
Slide 2: Disclaimer and Notes
DISCLAIMER (segmental or other) information in the consolidated financial statements of the former METRO Group and, thus, may not be fully comparable to such financial statements. Historical our business, results of operations, financial position or cash flows. There are, however, material limitatio
Slide 3: Disclaimer and Notes (cont'd)
Disclaimer and Notes (cont’d) We do not undertake any obligation to publicly update any CECONOMY is based on certain estimates and assumptions and presentation, warrant that the data collected, processed and forward-looking statements or to conform them to events or there can be no assurance that th
Slide 4: Agenda
Agenda 01 02 03 CECONOMY Q1 19/20 & Operations at a glance Outlook Update
Slide 5: CECONOMY at a glance
CECONOMY at a glance Date: 07 February 2020 // 5
Slide 6: CECONOMY is Europe's largest Consumer Electronics platform
CECONOMY is Europe’s largest Consumer Electronics platform Shareholder structure (based on ordinary shares1) Product category breakdown Highlights Other3 Haniel Entertainment 4% White Europe’s largest Consumer Electronics platform Free float 9% Goods 22.7% 23% 21.5 €bn of sales, c. 402 €m EBIT i
Slide 7: We have a strong set of assets and operate in an attractive market
We have a strong set of assets and operate in an attractive market Leading multi-channel player for Digital opens up new product Consumer Electronics categories Differentiated value proposition with Ageing population is increasingly Services & Solutions offering seeking technical support L
Slide 8: Our store network is an asset and integral part of our omni-channel and services strategy
Our store network is an asset and integral part of our omni-channel and services strategy Advantages of CECONOMY’s strong physical presence Offering customers tangible product experiences Showroom for exclusive and high- end products offering suppliers visibility of brands Instant in-store rep
Slide 9: Ongoing progress in the Online and Services & Solutions business
Ongoing progress in the Online and Services & Solutions business Strong Online business Increasing Services & Solutions business % of total 10.6% 12.1% 13.7% % of total 6.2% 6.9% 7.0% sales sales 2,935 1,478 1,498 2,592 1,344 2,300 Sales (€m) Sales (€m) 16/17 17/18 18/19 16/17 17/18 18/19 Growing pi
Slide 10: Our full focus is on the execution of our four strategic initiatives
Our full focus is on the execution of our four strategic initiatives DIGITAL SERVICES & CATEGORY & ORGANIZATION & GROWTH SOLUTIONS SUPPLY CHAIN COST STRUCTURE MANAGEMENT ONGOING ONGOING GRADUAL PROGRESS SHORT TERM Investor Presentation Public February 2020 // 10
Slide 11: We have accelerated our digital growth efforts
We have accelerated our digital growth efforts Consolidation of six different webshop platforms to one common IT platform Significantly improved webshop front-end in Germany and new app with improved user interface 3rd largest webshop in Germany, incl. MediaMarkt and Saturn Investor Presentation Pub
Slide 12: We have improved our Services & Solutions offering
We have improved our Services & Solutions offering Harmonized service offering at SmartBars across all stores Increasing customer demand for screen protection, ready-to-use and repairs Tendered, refined & rolled out new insurances & warranties proposition in Germany Investor Presentation Public Febr
Slide 13: Progress on the centralization of Category and Supply Chain Management
Progress on the centralization of our Category and Supply Chain Management is also steadily building Roll-out of central pricing system in Germany Go-live of category management pilot store including new systems in Spain Ramp-up of central logistics platform in Germany and in the Netherlands Investo
Slide 14: Program to reduce complexity and costs, primarily in Germany
We have launched a program to reduce complexity and costs, primarily in Germany Reorganization & Efficiency Program Completed staffing of central management team Central Functions Portfolio Streamlining of organizations at Target Status CECONOMY and MediaMarktSaturn Holding and Germany Timeframe 6 –
Slide 15: Why invest in CECONOMY?
Why invest in CECONOMY? #1 #2 #3 #4 CECONOMY IS THE CECONOMY HAS A CECONOMY HAS CECONOMY HAS LEADER IN STRONG THE POTENTIAL TO THE POTENTIAL TO MULTI-CHANNEL FINANCIAL PROFILE INCREASE LEAD THE RETAIL AND SCALE MARGINS AND CONSOLIDATION FREE CASH FLOW AND GENERATION TRANSFORMATION IN THE FUTURE Inve
Slide 16: Q1 19/20 & Outlook
Q1 19/20 & Outlook Date: 07 February 2020 // 16
Slide 17: CECONOMY's Q1 19/20 in a nutshell
CECONOMY’s Q1 19/20 in a nutshell Successful Black Friday period, both in-store and Christmas business impacted by pull-forward effects online due to increasing importance of Black Friday Adverse macro conditions and intense competition Solid growth rates in Online and Services & Solutions in Southe
Slide 18: In Q1 we built the foundation for a sound financial year 19/20
In Q1 we built the foundation for a sound financial year 19/20 –0.5% 289 €m Sales change yoy Adj. EBIT1,2 adjusted for fx-effects and excl. associates3 portfolio changes +20 €m vs. PY Note: 1 Adjusted EBIT before non-recurring earnings effects in connection with the reorganization and efficiency pro
Slide 19: We continued the success of last year and built again a profitable Black Friday
We continued the success of last year and built again a profitable Black Friday Centrally prepared and orchestrated New MediaMarkt web platform handling campaign concepts for entire group supported double traffic, improved delivery performance by professional toolkit and improved availability of off
Slide 20: Solid double-digit sales growth in-store and online during Black Friday
After an already strong prior year, we generated solid double-digit sales growth rates in-store and online +1,000k +15% +2% More items sold during 5-day Black More online shoppers visited our More customers visited our stores Friday period vs. PY websites vs. PY vs. PY Note: Figures for 5-day Black
Slide 21: Attractive bundles increased attachment rates during Black Friday
Attractive bundles increased attachment rates during Black Friday, driving smartphone, computer hardware and GSM accessories sales Countries were well prepared to meet high stationary and online traffic (e.g. partly pre-configurated Ready-To-Use items) Ready-To-Use Ready-To-Use notebooks Screen Many
Slide 22: Fx- and portfolio adjusted sales nearly on prior-year's level
Fx- and portfolio adjusted sales1 nearly on prior-year’s level (excl. iBood) Q1 Total sales fx- and portfolio adj.1 Q1 Highlights (in €m) –0.5% –0.8% Fx- and portfolio adjusted1 sales excl. iBood nearly on PY’s level (–0.2%) 6,879 6,821 DACH: Germany with strong Black Friday, but offset by softe
Slide 23: Online and Services & Solutions are the key growth drivers
Online and Services & Solutions are the key growth drivers Q1 Online sales1 Q1 Highlights (in €m) +4.3% Online1 growth +5.9% excl. iBood 1,000 1,043 "Black Friday" campaigns with particularly positive effect on online business 14.7% in % of sales 15.4% Online business impacted by high comps Q1
Slide 24: Solid operational EBIT improvement driven by Services & Solutions and cost savings
Solid operational EBIT improvement mainly driven by Services & Solutions and cost savings Q1 Gross margin1,2 (in % of sales) OPEX1,2,3 (in % of sales) Q1 Highlights –0.1%p. –0.5%p. Gross margin with trend improvement, cost savings in PEX and indirect spend 18.4% 18.3% 15.3% 14.8% DACH: Strong pe
Slide 25: Reported EBIT benefited from one-time effect related to Greek transaction
Reported EBIT benefited predominantly from positive one-time effect related to Greek transaction Q1 Adj. EBIT1,2 excl. associates to reported EBIT (in €m) 319 -1 30 289 − Operational result Greece − Regular Fnac + Transaction- Darty D&A related effect component Greece − Expected trailing restructuri
Slide 26: EPS improvement driven by higher earnings and lower tax rate
EPS improvement mainly driven by higher earnings and lower tax rate €m Q1 2018/19 Q1 2019/20 Change Q1 Highlights EBITDA 291 509 218 Reported EBITDA includes c. 138 €m IFRS 16 effect EBIT 234 319 84 Reported EBIT includes c. 2 €m IFRS 16 effect Net financial result 1 9 8 Reported earnings in C
Slide 27: Adjusted Free Cash Flow below prior-year's level
Adjusted Free Cash Flow below prior-year’s level mainly due to restructuring-related cash outflows and higher cash taxes Q1 2019/20: Free Cash Flow (in €m) Q1 Highlights 1,119 1,421 Change in NWC improved slightly due to -29 1,272 -105 -74 higher increase in trade payables, mainly -149 resulting f
Slide 28: Outlook for FY 19/20 confirmed
Outlook for FY 19/20 confirmed Adjusted for portfolio changes Excluding non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019 FY 19/20 thereof IFRS 16 incl. IFRS 16 effect Fx-adjusted sales Slight increase EBIT (excl. associates) 4
Slide 29: Operations Update
Operations Update Date: 07 February 2020 // 29
Slide 30: In 2018/19 we prepared for sustainable success
In 2018/19 we prepared for sustainable success 1 Leadership team established and new critical competencies on-boarded 2 Leaner organization and a more competitive cost structure, especially in Germany 3 Faster decision-making processes due to clearer responsibilities 4 Clear focus on consistently tr
Slide 31: 2019/20: Ongoing implementation of the strategic initiatives
2019/20: Ongoing implementation of the strategic initiatives CUSTOMER-CENTRIC OMNI-CHANNEL BUSINESS MODEL DIGITAL SERVICES & CATEGORY & ORGANIZATION & GROWTH SOLUTIONS SUPPLY CHAIN COST STRUCTURE MANAGEMENT Improve online/omni-channel Reduce overall costs, Improve attachment rates, Deploy Category M
Slide 32: Digital Growth: Ongoing improvements of our platforms
Digital Growth: Ongoing improvements of our platforms enabling a better omni-channel customer journey State of the art platform for faster responsiveness and New webshop improved customer experience; go-live in Germany in platform November ’19 and roll-out in other countries to follow Digitizing our
Slide 33: Services & Solutions: Focus on best-in-class attachment rates
Services & Solutions: Focus on achieving best-in-class attachment rates in all countries Insurances & Further ramp-up and roll-out of standardized customer Warranties proposition to strengthen customer relationships Group-wide full utilization of SmartBars potential with SmartBars harmonized offerin
Slide 34: Centralization of procurement volumes on track
Centralization of procurement volumes on track; pricing and category management with gradual progress Ramp-up of central negotiated purchasing in 2019 in Germany Current focus (in % of purchasing volume) 100% Ramp-up of centrally negotiated procurement volume in Germany, Spain, Italy and the Nethe
Slide 35: Logistics will build on centralization and national distribution centres
Logistics will build on centralization and national distribution centres Transforming our supply chain into Central platform established Percentage of supply replenished via centralized an omni-channel logistics network … distribution (non-2MH) Central platform pilot ES Central platform planned … ba
Slide 36: Summary: Focus, Execute
Summary FOCUS EXECUTE FIXING TRANSFORMING THE BASICS THE BUSINESS Laying the Changing into a foundation for a customer-centric sustainable future business model We focus on our omni-channel business model and want to be customers’ first choice Investor Presentation Public February 2020 // 36
Slide 37: Strategy Update, March 2020
26 MARCH 2020 10 AM – 2 PM STRATEGY UPDATE CECONOMY HQ DÜSSELDORF
Slide 38: Back-up
Back-up Date: 07 February 2020 // 38
Slide 39: Sales & number of stores by country
Sales & number of stores by country Sales (€m) Number of Stores FY 17/18 FY 18/19 30/09/2018 Openings Closures 30/09/2019 Germany 10,340 10,472 432 2 –3 431 Austria 1,161 1,150 52 – – 52 Switzerland 569 578 27 – –1 26 Hungary 340 364 24 8 – 32 DACH 12,410 12,565 535 10 –4 541 Belgium 701 697 29 – –2
Slide 40: Store network as of 31 December 2019
Store network as of 31 December 2019 30/09/2019 Openings Closures 31/12/2019 Highlights Germany 431 – –2 429 Austria 52 – – 52 Selective expansion with 1 store opening in the Switzerland 26 – – 26 Netherlands Hungary 32 – – 32 DACH 541 – –2 539 Belgium 27 – – 27 2 store closures in Germany Greec
Slide 41: Net Working Capital
Net Working Capital1 €m 30/09/2018 31/12/2018 Change 30/09/2019 31/12/2019 Change Inventories 2,480 3,229 749 2,548 3,348 801 Trade receivables and other receivables 610 579 –32 455 543 87 Receivables due from suppliers 1,241 1,789 549 1,295 1,851 556 Trade payables and other payables –5,745 –8,136
Slide 42: New simplified NWC definition
New simplified NWC definition as of Q1 2019/20 with all items easily readable from balance sheet positions Old NWC definition New NWC definition Inventories Inventories Receivables due from suppliers Receivables due from suppliers Assets Trade receivables Trade receivables and other receivables Rece
Slide 43: Comparison of new vs old NWC definitions
Comparison of new vs old NWC definitions €m 30/09/2018 30/09/2019 Inventories 2,480 2,548 NWC becomes easily readable Trade receivables and similar claims 613 417 from balance sheet positions Receivables due from suppliers 1,239 1,295 Receivables from credit cards 71 51 Advance payments on invento
Slide 44: IFRS 16 effects on EBITDA and EBIT in Q1 19/20
IFRS 16 effects on EBITDA and EBIT in Q1 19/20 Adjusted EBITDA1,2 Adjusted EBITDA1,2 IFRS 16 effect including IFRS 16 €m Q1 18/19 Q1 19/20 Q1 19/20 DACH 228 356 80 Western/Southern Europe 87 111 44 Eastern Europe 20 23 12 Others3 –11 –11 2 Total 325 479 138 Adjusted EBIT1,2 Adjusted EBIT1,2 IFRS 16
Slide 45: IFRS 16 applied as of 1 October 2019 - estimated P&L impact
IFRS 16 applied as of 1 October 2019 - estimated P&L impact in FY 19/20 ESTIMATED EFFECT 1 Leasing expenses Decrease by 525-565 €m as leasing expenses are recognized as D&A and interest cost EBITDA Increase by 525-565 €m equalling the amount of leasing expenses D&A Increase by 515-555 €m due to depr
Slide 46: IFRS 16 - estimated balance sheet and cash flow impact
IFRS 16 applied as of 1 October 2019 - estimated balance sheet and cash flow impact in FY 19/20 ESTIMATED EFFECT 1 Assets Increase by around 2.3 €bn due to recognition of lease contracts as rights of use assets Liabilities Increase by around 2.4 €bn due to recognition of lease contracts as lease lia
Slide 47: Fnac Darty consolidation
Fnac Darty consolidation FNAC H1 2020 FNAC H2 2020 FNAC H1 2021 FNAC H2 2019 CEC Q2 19/20 CEC Q3 19/20 CEC Q4 19/20 CEC Q1 20/21 CEC Q2 20/21 CEC Q3 20/21 31.12. 31.03. 30.06. 30.09. 31.12. 31.03. 30.06. 2019 2020 2020 2020 2020 2021 2021 Our c.24% stake in Fnac Darty is accounted for as “Investme
Slide 48: Store director model through 10% share ownership
Store director model as an effective form of incentivisation through 10% share ownership Store 10 % share 90 % share Store director Country organisation 10 % profit share paid as dividends Profit Share 100 % profit booked in EBITDA “Chief Customer Officer” Employment Can force resignation of non-per
Slide 49: Financial calendar and events
Financial calendar and events Financial calendar Annual General Meeting 12 February 2020 Capital Markets Day 26 March 2020 Q2/H1 2019/20 results 14 May 2020 Q3/9M 2019/20 results 13 August 2020 Q4/FY 2019/20 trading statement 23 October 2020 FY 2019/20 results 15 December 2020 Upcoming events Roadsh
Slide 50: February 2020
February 2020 // 50