Afg International Company · TADAWUL:4240
Afg International — Cenomi Retail — HSBC GCC Exchanges Conference 2024
33 slides from Afg International's conference presentation, Jun 10, 2024
Slide 1: Cenomi Retail - HSBC GCC Exchanges Conference
Cenomi Retail HSBC GCC Exchanges Conference June 10-13, 2024
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Cenomi Retail. (the “Company”). By attending or by reading this presentation, you agree to be bound by the following limitations. The information contained in this presentation is for background purposes on
Slide 3: Table of Contents
Table of Contents Topics Page No Cenomi Retail Macro Overview 5 Cenomi Retail Strategic Overview 9 Operational Overview 16 Financial Overview 18 Appendix 30 Investor Presentation 3 May 2024
Slide 4: About Cenomi Retail
About Cenomi Retail Company Overview Founded in 1990 by Fawaz, Salman, and Abdulmajeed Alhokair, Cenomi Retail is the leading franchise retailer in the KSA and the sole listed business of its kind in the Middle East. Cenomi Retail operates nearly 1,062 outlets in 9 countries, across 326 shopping mal
Slide 5: Macro Overview
01 Cenomi Retail Macro Overview Investor Presentation Investor Presentation 55 MayMay 20242024
Slide 6: The Saudi market represents a secular growth opportunity
The Saudi market represents a secular growth opportunity 01 Youthful demographics with 73% of population are working age 02 A booming consumer outlook 500 - 900 KSA population: 3% 2 – 3x +4 MN (+12%) 250 - 300 25% Tourism: 100 MN annual visits 73% 2019 2030 KSA Discretionary consumer spend Potential
Slide 7: KSA consumer spending trends continue to go strong
KSA consumer spending trends continue to go strong POS Transactions* - KSA Market POS Transactions* - Select Sectors (SAR Million) (SAR Million) +8% vs FY23 +10% +13% +15% +6% -4% +13% 660,618 +10% 613,957 Q1'23 167,199 +8% 559,135 148,539 Q1'24 473,258 +32% 357,298 26,822 23,119 23,727 21,077 12,47
Slide 8: Saudi Arabia presents an unparalleled opportunity
Saudi Arabia presents an unparalleled opportunity The birth of The New Saudi consumer presents unique growth prospects Shifting consumer behaviour KSA Retail Spend Overview (2022-2027, in SAR MN) Market Size Market Size CAGR Category 2022 2027 2022-2027 Groceries 179,216 226,429 4.8% F&B 99,769 137,
Slide 9: Strategic Overview
01 Cenomi Retail Strategic Overview Investor InvestorPresentation Presentation 99 2024 May 2024
Slide 10: Transforming portfolio, expanding brand champions and enhancing operational efficiency
Transforming portfolio, expanding brand champions and enhancing operational efficiency ▪ Exited the Balkans, exiting Morocco and the US is in process and rationalized Geography ‘Saudi First’ Strategy Egypt operations ▪ Double down on Saudi market and wider MENA region Evolve from apparel ▪ Defend &
Slide 11: Continuing our path to enhanced potential and profitability
Continuing our path to enhanced potential and profitability Focus Phase 1: Phase 2: Phase 3: Fix The House (2023-2024) Embark on Growth (2024-2026) Achieving Optimal Potential (2026+) Turnaround Growth Invest to scale existing brands across Scale existing brands to maximum potential Rationalize bran
Slide 12: Our turnaround strategy is steadily advancing across all fronts
Our turnaround strategy is steadily advancing across all fronts Market Brand Store Operational Governance Rationalization Rationalization Rationalization Enhancement • Exited the Balkans • Finalized the sale of 16 • Closure of 300 stores on • Average revenues per • 40+ Operational brands with capita
Slide 13: Rolled out a full-fledged program to deliver best in class governance and controls
Rolled out a full-fledged program to deliver best in class governance and controls Topic Achieved so far Currently progressing in • Developed new simplified plug & play model to establish consistent • Operationalize the design by introducing the new organizational Cenomi Retail Way of Operating mode
Slide 14: Consumer trends
Consumer trends Moving forward, Cenomi Retail will need to cater to new consumer trends with significant implications for the future of the industry. Increasing digital / Scale digital e-commerce channels & adoption reinvent role of stores Shift towards Re-mix portfolio to experiences & new experien
Slide 15: Operational and Turnaround Strategy
Cenomi Retail brand portfolio - vision Approval granted for Strategic Sale of 24 Non-Essential Brands to Generate 650 Million SAR in Revenue, Focusing on Tier 1 Brands Impact Brand rationalization strategy so far… Operational and Turnaround Strategy SPA signed with Al-Othaim Fashion Company (1/3): S
Slide 16: Operational Overview
02 Operational Overview Investor InvestorPresentation Presentation 16 16 2024 May 2024
Slide 17: Network evolution displays clear progress in store optimization
Network evolution displays clear progress in store optimization Store network Saudi retail store F&B store International store evolution network evolution network evolution network evolution Commentary 1,684 322 315 Brand and store rationalization : 1,047 1,002 308 1,560 Q1 24 , we continued the por
Slide 18: Financial Overview
03 Financial Overview Investor Presentation Investor Presentation 18 18 May 2024 May 2024
Slide 19: CR stock performance and diversified shareholder mix
CR stock performance and diversified shareholder mix 2.00 CR vs Broader Indices Commentary 1.50 • ISIN Code: SA000A0LB2R6 • Average 3-year daily volume traded: 1.00 • 833k 0.50 • Average 3-year daily value traded: • SAR 20.3m 0.00 • 52-week average: 1/31/2021 5/31/2021 9/30/2021 1/31/2022 5/31/2022
Slide 20: Stable revenue amidst store closures signalling turnaround strategy
Stable revenue amidst store closures signalling turnaround strategy Revenue, SAR MN LFL consolidated sales growth, % ▪ Recorded a relatively flat revenue performance as a result of the decline ▪ Weak LFL growth due to implementation of the turnaround strategy and in F&B and KSA retail sales, largely
Slide 21: Champion Brands show sustained international growth momentum
Champion Brands show sustained international growth momentum LFL Saudi retail sales growth % LFL International Retail growth % ▪ Strong post-covid recovery seen in 2021. ▪ Strong post-covid recovery seen in 2021 and continued positive ▪ However, like-for-like growth weakened post 2021 primarily due
Slide 22: Online channel continues to maintain a consistent presence in the revenue mix
Online channel continues to maintain a consistent presence in the revenue mix Online revenues, SAR MN E-commerce, % of total retail sales ▪ E-commerce sales has been a success with sustained growth across ▪ Diversification of revenue streams into digitisation and e-commerce 2021-23 and Q1’24. post-c
Slide 23: Underlying sales efficiency showing progress as the turnaround strategy is implemented
Underlying sales efficiency showing progress as the turnaround strategy is implemented Revenue Per Store (Group) Revenue per Store (KSA) ▪ Revenue per store is enhanced across group level due to brand ▪ KSA and International performance continues to deliver proving divesting and strategy implementat
Slide 24: Revenue mix
Revenue mix Revenue by division Revenue by channel Revenue by geography ▪ Enhanced revenue mix through ▪ Diversified into enabling e-commerce sales ▪ Expansion of international portfolio along diversification into F&B segments. given the shift in consumer behaviour. with targeting KSA as a core mark
Slide 25: Business transformation is evident in the YoY decline of gross profit and EBITDA
Business transformation is evident in the YoY decline of gross profit and EBITDA Gross Profit, SAR MN – GPM, % EBITDA, SAR MN – EBITDA Margin, % ▪ Margin compression seen due to a higher cost base and a relatively ▪ Strong post-covid recovery. flat top line. ▪ Recent EBITDA decline driven by non-rec
Slide 26: EBITDA Performance across segments
EBITDA Performance across segments EBITDA KSA, SAR MN – EBITDA Margin, % EBITDA Intl, SAR MN – EBITDA Margin, % EBITDA F&B, SAR MN – EBITDA Margin, % ▪ Recovery in 2021-22 due to lower cost base and pent-up ▪ Healthy EBITDA margin for international operations in the fashion ▪ Expansion into F&B yiel
Slide 27: Ongoing inventory enhancements drive turnover improvement
Ongoing inventory enhancements drive turnover improvement Inventory balance (SAR MN) Inventory efficiency ratios ▪ Inventory continues to shrink as a part of optimization efforts to ▪ Inventory on hand improved to 15 weeks thanks to ongoing enhance liquidity and efficiency enhancements in purchasing
Slide 28: Profitability analysis
Profitability analysis Return on Equity Return on Assets 5.0% 1.3% 100.0% 4.1% 29.1% 0.4% 0.0% 0.0% -100.0% -17.3% -200.0% -5.0% -2.8% -300.0% -10.0% -400.0% -500.0% -15.0% -600.0% -20.0% -17.2% -653.4% -700.0% 2021 2022 2023 Q1'24 2021 2022 2023 Q1'24 Return on Invested Capital Return on Capital Em
Slide 29: Liquidity & leverage
Liquidity & leverage FCF (SARmn) Net debt to EBITDA Liquidity levels ▪ Free Cash Flow increased by 71% in the Full Year 2023 ▪ Net debt decreased by 17% in the Full Year 2023 versus 2022. ▪ Cash and cash equivalents increased by 21% in the Full Year 2023 versus 2022. Operational cash flow remains st
Slide 30: Appendix
05 Appendix Investor InvestorPresentation Presentation 30 30 2024 May 2024
Slide 31: Cenomi Retail brand portfolio – Current
Cenomi Retail brand portfolio – Current Sports F&B F&B Multimedia Lifestyle Inditex & Zara Beauty Investor Presentation 31 May 2024
Slide 32: Moving towards best-in-class governance to foster greater transparency and management control
Moving towards best-in-class governance to foster greater transparency and management control • Closer collaboration with Audit Committee and the Board of Directors to revamp Board of Directors Audit policies and processes to support addressing previously recognized gaps Committee • Chairman (Non-Ex
Slide 33: Thank You
Cenomi Retail THANK YOU Contacts Sarah Moussa Director of Investor Relations For more information, visit Email: IR.retail@cenomi.com https://ir.cenomiretail.com/ Your Desk: 00 966 11 414 6707