Delhaize Group SA — Q2 2011 Earnings Presentation
40 slides from Delhaize Group SA's earnings presentation, Aug 5, 2011
Slide 1: Delhaize Group
DELHAIZE #a GROUP
Slide 2: Second quarter and first half 2011 earnings results
Second quarter and first half 2011 earnings results 05/08/2011 | 2
Slide 3: Forward looking statements
Forward looking statements “This presentation includes forward-looking statements within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. Forward-looking statements describe further expectations, plans, options, results or strategies. Actual outcomes and r
Slide 4: Agenda
Agenda • 2011 Second quarter results Stéfan Descheemaeker Chief Financial Officer • Strategy update Pierre-Olivier Beckers President and Chief Executive Officer • Available for questions – Geert Verellen Vice President Investor Relations and External Communications 05/08/2011 | 4
Slide 5: Q2 2011 Financial results
Q2 2011 Financial results 05/08/2011 | 5
Slide 6: Q2 2011 Financial highlights
Q2 2011 Financial highlights +3.9% +1.6% Flat Revenue Comparable Comparable growth store sales store sales at identical growth in the growth in exchange rates U.S. Belgium 4.1% +10.1% 60% Group Group share in of cost savings underlying net profit achieved midway operating at identical towards 2012 t
Slide 7: All segments contribute to Q2 revenue growth acceleration
All segments contribute to Q2 revenue growth acceleration Group revenue growth (YoY), at identical exchange rates 3.9% 1.7% 1.5% 0.8% 0.7% -0.1% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Full year: 1.0% 05/08/2011 | 7
Slide 8: Solid volume improvement results in positive U.S. comparable store sales
Solid volume improvement results in positive U.S. comparable store sales Comparable store sales evolution (YoY) Delhaize U.S.* 2011 Retail inflation 2010 Retail inflation mostly flat increasing 1.6% -0.3% -0.8% -1.8% -1.8% Supported by improving volume trends in the Southeast -3.6% Q1 2010 Q2 2010 Q
Slide 9: Delhaize Belgium comparables reflective of strong base in prior year
Delhaize Belgium comparables reflective of strong base in prior year Comparable store sales growth (YoY) – Delhaize Belgium* 5.0% 4.3% 3.8% Tough comparable base in Q2 2010 0.0% 0.0% 0.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Full year: +3.2% * Adjusted for calendar effects. 05/08/2011 | 9
Slide 10: Strong revenue growth in SEE & Asia
Strong revenue growth in SEE & Asia* Revenue growth YoY, at identical exchange rates 9.2% Greece 5.5% 5.0% 5.5% 7.8% Continued revenue growth and market share gains in Greece despite difficult Q1 2010 Q2 2010 Q3 2010 Q4 2010 4.8% environment Full year: +6.3% Revenue growth in Romania driven by R
Slide 11: Underlying operating margin impacted by delays in U.S. procurement and supply chain savings
Underlying operating margin impacted by delays in U.S. procurement and supply chain savings Underlying operating margin* Delhaize Group 6.0% 4.7% 4.8% 4.4% 4.4% 4.1% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Full year: 5.0% * See Appendix for reconciliation of operating profit to underlying op
Slide 12: U.S. operating margin impacted by delay in cost of goods sold savings
U.S. operating margin impacted by delay in cost of goods sold savings Operating margin Delhaize U.S. Gross margin decrease as 6.3% a result of: slower than anticipated 5.3% savings in category 5.1% management and supply 4.5% 4.6% chain 4.2% which did not fully offset price investments Partly off
Slide 13: Good margin performance at Delhaize Belgium
Good margin performance at Delhaize Belgium Operating margin Delhaize Belgium 5.3% 5.2% Gross margin increase thanks to: improved buying conditions 4.9% 4.9% improved logistics productivity 4.8% 4.8% VAT refund Partly offset by salary indexation Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011
Slide 14: Operational outlook 2011
Operational outlook 2011 • Expect strong revenue growth in all operating segments the second half of 2011 as a result of the many sales building initiatives that are underway • Expect an acceleration of the category management and supply chain savings that will support the U.S. operating margin • Up
Slide 15: Q2 2011 Results
Q2 2011 Results At Actual At Identical (In millions EUR) Q2 2011 Q2 2010 Rates Rates Revenues 5 107 5 329 -4.2% +3.9% Operating profit 209 227 -7.8% +0.5% Underlying operating profit* 209 233 -10.5% -2.2% Operating margin 4.1% 4.3% Underlying operating margin* 4.1% 4.4% Profit before taxes and 166 1
Slide 16: H1 2011 Results
H1 2011 Results At Actual At Identical (In millions EUR) H1 2011 H1 2010 Rates Rates Revenues 10 151 10 300 -1.4% +2.4% Operating profit 427 468 -8.6% -4.9% Underlying operating profit* 431 469 -8.2% -4.5% Operating margin 4.2% 4.5% Underlying operating margin* 4.2% 4.6% Profit before taxes and 337
Slide 17: Strategy update
2011 Second Strategy Quarter and First update Half 2011 Pierre-Olivier Earnings Beckers Release President & Chief Executive Officer 05/08/2011 | 17
Slide 18: Job markets determine consumer confidence
Job markets determine consumer confidence U.S. Job market 500 10 400 9.8 300 9.6 9.4 200 9.2 100 9 0 8.8 -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 8.6 Number-200 of jobs added Unemployment rate 8.4 -300 in June: 18 000 Source: Labor Department - numbers are seasona
Slide 19: Greek economy stumbles and unemployment rate continues to climb
Greek economy stumbles and unemployment rate continues to climb 05/08/2011 | 19
Slide 20: Intense transformation of Delhaize Group started in 2010 continues through 2011
Intense transformation of Delhaize Group started in 2010 continues through 2011 New Game Plan • New strategy for years to come • One vision, one set of common values • Fundamental changes to our organizational structure Prepared our Group for the opportunities of 2011 05/08/2011 | 20
Slide 21: Growth
Growth Portfolio growth Value leadership Differentiation 05/08/2011 | 21
Slide 22: Bottom Dollar Food expands in high-potential markets
Bottom Dollar Food expands in high-potential markets Growth Philadelphia 19 stores currently and plans to open more Pittsburgh 14 new stores planned, opening early 2012 Transactions increase as we continue to drive trial Number of items and basket size performing very well. - “no-frills” shopping
Slide 23: Food Lion brand repositioning: going back to basics
Food Lion brand repositioning: going back to basics Growth 2011 2012 May 4, 2011 - - PHASE ONE PHASE TWO Roll-out in the rest of the Evaluation of brand network, to be Launch of 200 stores in 2 strategy work on price, substantially completed by representative markets, shopping experience and end 201
Slide 24: Food Lion: before and after
PRICE SIMPLE Private brand Price tags Shopping aisles Food Lion: before and after Growth 05/08/2011 | 24
Slide 25: Food Lion Phase One: first results to date
Food Lion Phase One: Growth first results to date Increase in transactions Further price Strong investments comparable store sales Increase in basket size 05/08/2011 | 25
Slide 26: Combination of Delta Maxi with Alfa Beta and Mega Image creates engine for growth
Combination of Delta Maxi with Alfa Beta and Mega Image creates engine for growth Growth Approximately 450 800 stores Romania DM stores (21.5m) combined end of 2010 Bosnia and Serbia Herzegovina (7.4m) (3.8m) Bulgaria Montenegro (7.6m) DM Present in (0.6m) Combined presence in 5 EUR 20 million EBITD
Slide 27: Delta Maxi: one of the biggest transactions by Belgian listed companies in last 5 years
Delta Maxi: one of the biggest transactions done by Belgian Stock listed companies in last 5 years Growth Transaction value in millions EUR - 38 400 EUR in mln Breakwater Resources 4 500 4 500 - Oglebay Norton - Absolut Bank Bittner Pharma Anheusher Bush - 2 500 Schwarz Rhodia DenizBank - ECS - 932
Slide 28: Greece: crisis offers opportunities for Alfa Beta
Greece: crisis offers opportunities for Alfa Beta Growth Monthly evolution of sales in Greek food retail market in real terms* and market share evolution Alfa Beta** 130 130 Alfa Beta 125 125 continues to 120 120 gain market Greek food retail sales share (**) in a 115 115 struggling drop 10.2% in Ma
Slide 29: Price investments at Delhaize Belgium
Price investments at Delhaize Belgium Value Evolution of prices between Q2 2010 and Q2 2011 5.1% 1.9% 2.0% 0.2% -0.2% -1.1% -2.0% Inflatie op hoogste peil in drie jaar Consumptieprijzen 3.75% hoger dan in juli 2010 -5.6% De Tijd, June 29th 2011 Fruits Meat Bread Milk Retail Inflation Delhaize Belgiu
Slide 30: Price investments at Delhaize America
Price investments at Delhaize America Value Difference between cost inflation and retail inflation in Q2 2011 Bakery 2.1% Dairy 1.5% Produce (fruits and 0.8% vegetables) Meat 0.7% Cost inflation significantly higher than retail inflation at Delhaize America 05/08/2011 | 30
Slide 31: Delhaize America shoppers: both cautious and optimistic
Delhaize America shoppers: Differentiation both cautious and optimistic On the one hand ... ...On the other hand • Chicken sales growing faster than • After slow growth in 2009, natural red meat and organic sales grew much faster • Private brand soda sales increasing in 2010 and YTD 2011 faster than
Slide 32: Private brand as a powerful engine in the U.S.
Private brand as a powerful Differentiation engine in the U.S. 40% Target 35% Private brand sales as % of revenues 35% 30% 2013 25% 27% 20% 2010 New value line MyEssentials in the U.S. 450 products in store at the end of Q2 2011 05/08/2011 | 32
Slide 33: Initiatives to drive sales and meeting changing consumer needs
Initiatives to drive sales and Differentiation meeting changing consumer needs • order online – pickup in store • 77 stores end of Q2 • Target of 100 stores for 2011 confirmed Hannaford To Go launched in April 2011 – on line ordering, curbside pick-up Kids Range for Delhaize Belgium. Packaging and n
Slide 34: Efficiency
Efficiency Generate cost savings Invest in innovation and lower prices Drive sales momentum and create sales leverage 05/08/2011 | 34
Slide 35: New Game Plan savings dynamics
New Game Plan savings dynamics Efficiency Where from Where to EUR 300 million or 60% of gross annual savings target realized More than half of these New savings were re-invested Savings are fuel for the Game in price decreases many New Game Plan Plan sales building initiatives savings An important p
Slide 36: Sustainability
Sustainability 05/08/2011 | 36
Slide 37: Online CR report available on www.delhaizegroup.com
Online CR report available on www.delhaizegroup.com 05/08/2011 | 37
Slide 38: Appendix
Appendix • Underlying operating profit 05/08/2011 | 38
Slide 39: Underlying operating profit reconciliation
Underlying operating profit reconciliation (in millions of EUR) Q2 2011 Q2 2010 2011 / 2010 At At At Actual At Actual At Actual Identical Identical Rates Rates Rates Rates Rates Operating Profit (as reported) 209 228 227 -7.8% 0.5% Operating Margin 4.1% 4.1% 4.3% Add/(subtract): Fixed assets impairm
Slide 40: Thank you
determination | integrity | courage | humility | humor Thank you DELHAIZE #a GROUP osios/2011 | 40