Delhaize Group SA — Q2 2012 Earnings Presentation
24 slides from Delhaize Group SA's earnings presentation, Aug 22, 2012
Slide 1: 2012 Q2 and H1 Results
2012 Q2 and H1 Results August 22, 2012 Pierre-Olivier Beckers – President & Chief Executive Officer Pierre Bouchut – EVP & Chief Financial Officer
Slide 2: 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 3: Agenda
Agenda • Introduction Pierre-Olivier Beckers • Q2 and H1 2012 Financial results Pierre Bouchut • Strategy Update Pierre-Olivier Beckers • Q&A 3
Slide 4: We have set clear and actionable priorities consistent with our New Game Plan
We have set clear and actionable priorities consistent with our New Game Plan… • Increase revenue growth – Ongoing Food Lion repositioning – Price investments also at Delhaize Belgium and Hannaford – Accelerated expansion in selected markets • Fueled by increased cash flow generation – € 500 million
Slide 5: Significant progress during H1 2012
… and have already made significant progress during H1 2012… 2012 Objectives Comments • Repositioning of Food Lion 703 stores (62% of the network) repositioned. Phase 4 launched early 2013 • Improve price position Improvement on real and perceived price difference with market leader • 200 to 230 new
Slide 6: Focused on sustainable revenue growth and value creation
… and will remain focused on sustainable revenue growth and value creation • Revenue growth – Drive comparable sales growth – Selective store openings – Further price investments • Value creation – Ruthless discipline in our capital allocation Prioritize market Be selective on projects and sites Lea
Slide 7: Agenda
Agenda • Introduction Pierre-Olivier Beckers • Q2 and H1 2012 Financial Results Pierre Bouchut • Strategy Update Pierre-Olivier Beckers • Q&A 7
Slide 8: Financial results - Q2 2012
Financial results - Q2 2012 Q2 Identical Actual Rates Rates (€ in Millions) 2011 2012 Revenues 5,107 5,695 11.5% 4.2% Gross Margin 25.1% 24.3% - - Underlying Operating 209 184 (12.0%) (18.1%) Profit Underlying Operating 4.1% 3.2% - - Margin Group Share in Net 117 87 (26.1%) (28.8%) Profit 8
Slide 9: Financial results – H1 2012
Financial results – H1 2012 H1 Identical Actual Rates Rates (€ in Millions) 2011 2012 Revenues 10,151 11,173 10.1% 5.0% Gross Margin 25.3% 24.5% - - Underlying Operating 431 373 (13.3%) (17.5%) Profit Underlying Operating 4.2% 3.3% - - Margin Group Share in Net 243 84 (65.3%) (66.1%) Profit Free Cas
Slide 10: Organic revenue growth and comparable store sales growth
Organic revenue growth and comparable store sales growth Delhaize America Delhaize Belgium 0.3% 1.1% -0.7% 1.6% 2012 Q2 0.4% -0.6% 0.0% -0.7% (1) CSS Calendar Expansion Organic CSS Calendar Expansion Organic Impact growth Impact growth (1) 110 bps expansion neutralised by 110 bps negative impact fro
Slide 11: Underlying EBITDA proved resilient
(1) Underlying EBITDA proved resilient Q2 H1 2011 EBITDA 350 711 -8.3% -28.9% At Identical 2012 EBITDA 322 507 Rates 2012 Underlying 320 -7.7% 658 -7.2% EBITDA 2011 EBITDA 350 711 -2.9% -25.7% At Actual 2012 EBITDA 340 529 Rates 2012 Underlying 344 -0.7% 692 -2.5% EBITDA (1) Underlying operating pro
Slide 12: Food Lion repositioning has delivered encouraging results
Thus far, Food Lion repositioning has delivered encouraging results… Phase 1 Phase 2 Comparable stores Since 2012 2012 2012 launch(1) Q1 Q2(2) Q2(2) # transactions growth 2.0% 4.0% 2.7% 3.3% comparable sales growth 2.3% 2.9% 3.2% 3.3% • Phase 1 has cycled May 2011 launch and is continuing to deliver
Slide 13: Outperformed the rest of the Food Lion network
…and has outperformed the rest of the Food Lion network 2012 Q2(1) Transactions x Items per Transaction = Sales Volume Growth +2.7% -1.2% +1.5% +3.3% +0.6% +3.9% -2.3% -4.5% -6.7% Phase 1 (166 stores) Phase 2 (268 stores) Rest of Network (693 stores) (1) Adjusted for the timing of the 4th of July 13
Slide 14: In the U.S., price investments have impacted our profitability
In the U.S., price investments have impacted our profitability Underlying Operating Margin Q2 2011 4.3% • Significant price investments at both Food Lion and Hannaford (120 bps Q2 2012 3.3% impact for Delhaize America) in Q2 H1 2011 4.5% • SG&A increased as a percentage of revenues due to investment
Slide 15: … and in Belgium
… and in Belgium Underlying Operating Margin Q2 2011 4.8% • Gross margin impacted by price investments (140 bps Q2 2012 3.8% impact) • The increase in SG&A is due to the automatic indexation of H1 2011 4.9% salaries and advertising H1 2012 4.2% expenses 15
Slide 16: SEE&A: continued strong growth even excluding Maxi
SEE&A: continued strong growth even excluding Maxi Underlying Operating Margin Q2 2011 3.4% • Romania, Greece, Serbia and Bulgaria all gained market share (1) Q2 2012 2.9% 3.5% • Despite a difficult environment in Greece, Alfa Beta continues to improve profitability H1 2011 2.8% • Over 200 bps of un
Slide 17: Net debt rose by €121m due to dividend, FX and capex
(1) Net debt rose by €121m due to dividend, FX and capex (€ in Millions) Sources and uses of cash 2,768 2,647 30 359 447 179 1 2011 Net Debt OCF Dividend Capex Translation H1 Net Debt Impact and Other (1) Net debt was impacted by an unfavorable conversion effect of debt in foreign currency of approx
Slide 18: Agenda
Agenda • Introduction Pierre-Olivier Beckers • Q2 and H1 2012 Financial results Pierre Bouchut • Strategy Update Pierre-Olivier Beckers • Q&A 18
Slide 19: Strategy update
Strategy update • Food Lion repositioning • Targeted price investments Revenue • Strengthening our brand equity Growth • Accelerate organic growth in selected markets • Ruthless discipline in our capital allocation • Focus on cash flow generation Value Creation • On track to generate € 500 million f
Slide 20: Drive sustainable revenue growth
Drive sustainable revenue growth… • Food Lion repositioning • Targeted price investments Revenue • Strengthening our brand equity Growth • Accelerate organic growth in selected markets • Ruthless discipline in our capital allocation • Focus on cash flow generation Value Creation • On track to genera
Slide 21: While creating shareholder value
While creating shareholder value • Food Lion repositioning • Targeted price investments Revenue • Strengthening our brand equity Growth • Accelerate organic growth in selected markets • Ruthless discipline in our capital allocation • Focus on cash flow generation Value Creation • On track to generat
Slide 22: Demands that we sharpen our focus
Demands that we sharpen our focus • Food Lion repositioning • Targeted price investments Revenue • Strengthening our brand equity Growth • Accelerate organic growth in selected markets • Ruthless discipline in our capital allocation • Focus on cash flow generation Value Creation • On track to genera
Slide 23: Conclusion
Conclusion • In 2012, initiatives have produced good results • Investment at Food Lion paying off • Growth initiatives will continue to impact underlying operating profit – Decline in operating profit coupled with challenging environment calls for redoubling efforts and sharpening focus • Confirmati
Slide 24: Agenda
Agenda • Introduction Pierre-Olivier Beckers • Q2 and H1 2012 Financial results Pierre Bouchut • Strategy Update Pierre-Olivier Beckers • Q&A 24