Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Investor Day (June 2012)
79 slides from Lagardere Sa's investor day presentation, Jun 12, 2012
Slide 1: Lagardère Services, a leader for growth
Lagardère Services, a leader for growth Investor Day Paris – June 12, 2012
Slide 2: Previous Investor Days
Previous Investor Days June 2006: strategic presentations of the four divisions and EADS January 2007: Lagardère Active June 2008: Lagardère group, “Ten years of transformation” February 2009: - Lagardère Publishing - Lagardère Services June 2010: Lagardère Publishing January 2011: Lagar
Slide 3: 4 divisions…
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Slide 4: … across the whole media value chain…
… across the whole media value chain… 4
Slide 5: … with complementary profiles
… with complementary profiles Good operating Strong cash Largest EBIT margins, thanks to contribution Countercyclical contribution (53% efficient cost control, Low capex and high effect, relying on in 2011) with high and with strong return on capital sports event calendar margins potential upside wh
Slide 6: Lagardère Services is the largest division by sales and the most international one
Lagardère Services is the largest division by sales and the most international one 5 continents 26 countries 4k sales outlets 130 airports 700 train stations Key metrics by division (2011) 80% 48% 48% 54% 25% Sales Recurring Media Staff Sales outside Sales in Emerging Operating Profit France countri
Slide 7: Travel retail ranks among top Lagardère development areas
Travel retail ranks among top Lagardère development areas Growth EXPAND Digital LS Travel Retail Sports Rights Magazines, Radio, TV, TV Production Book Publishing LS Distribution DIVEST ENHANCE VALUE Market position 7
Slide 8: 2012 guidance maintained
2012 guidance maintained Trends - The environment is still difficult in Europe, in advertising as well as household consumption, notably in France However, the Group maintains its guidance - For 2012, at constant perimeter (PMI1 and Russian radio excluded) and exchange rates, the recurring EBIT
Slide 9: Welcome to Lagardère Services
Welcome to Lagardere SERVICES
Slide 10: A new strategy led by a new management
A new strategy led by a new management Luc MANSION CFO Emmanuel Frédéric Dag Vincent Jean-Baptiste de PLACE RENAULT RASMUSSEN ROMET MORIN Frédéric COO LS Travel Retail EVP HR Chairman & CEO COO LS Travel Retail CEO LS Distribution CHEVALIER ASPAC & Communication EMEA EVP Strategy 10
Slide 11: A leader in two businesses of specialized distribution
A leader in two businesses of specialized distribution Grow and reinforce our global leadership in two segments of specialized distribution Common culture, crossed synergies, shared services 11
Slide 12: An agenda essentially focused on travel retail
An agenda essentially focused on travel retail Starting Topic Duration Speakers time LS Distribution, an asset to reinvent 9h10 20’ J.B. Morin The travel retail business, 9h30 30’ F. Chevalier an appealing niche in the retail industry External perspective on travel retail 10h00 10’ D. Davitt (The Mo
Slide 13: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 14: LS Distribution, a distribution and services company dedicated to proximity and convenience retailing
LS Distribution, a distribution and services company dedicated to proximity and convenience retailing BE CH HU SP CA US Press national distribution Press wholesale FMCG1 distribution Third-party logistics Marketing services Convenience retailing (1) Fast-moving consumer goods 14
Slide 15: A cash generator with a significant Ebitda
A cash generator with a significant Ebitda Annual total capital expenditures LS Distribution normalized1 Ebitda in LS Distribution (€ m, 2006-2011) (€ m, 2006-2011) 104 93 93 95 89 90 €94m 37 23 23 21 16 €20m -2 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 (1) Restated from exceptiona
Slide 16: LS Distribution, a leader in the proximity retail business
LS Distribution, a leader in the proximity retail business Outlets served several times a week by country and by segment (Thousands of outlets, 2011) 18.3 3.4 21.7 3.1 8.4 11.5 Independent newsstands 3.3 2.5 5.8 Chains1 1.4 0.9 0.5 Commercial and physical relation with more than 40,000 outlets (1) P
Slide 17: LS Distribution operates directly c. 1,300 proximity outlets
LS Distribution, a leader in the proximity retail business LS Distribution operates directly c. 1,300 proximity outlets A highly valuable network for a distributor Superior customer understanding for the benefit of suppliers and retailers Speed and reliability to suppliers when promoting product
Slide 18: Printed press decline will continue, a reshaped market will remain
Printed press decline will continue, a reshaped market will remain Magazines market – Single copy sales evolution in volume by country (CAGR, 2006-2010) Mean1 -5.2% -7.3% A market for printed magazines will -7.1% remain Our working assumption is that market will -5.6% be divided by two in volume
Slide 19: A reduced dependency on print
A reduced dependency on print LS Distribution non-print consolidated sales (€ m, 2006-2011) CAGR 1,804 1,738 -1% 61% -4% 71% 39% +5% 29% 2006 2011 Non Print Print Source: Lagardère Services 19
Slide 20: Reinventing LS Distribution with a two-axis strategy
Reinventing LS Distribution with a two-axis strategy Reinvent LS Distribution Participate to and Massively diversify benefit from industry into non-print reinvention businesses 20
Slide 21: Three initiatives constitute the core of the industry reinvention
Three initiatives – strongly interdependent – constitute the core of the industry reinvention Reinvent LS Distribution Set new market rules Participate to Massively diversify and benefit from industry Gain market share into non-print reinvention businesses Adapt asset base 21
Slide 22: At least three initiatives will allow to diversify LS Distribution
At least three initiatives will allow to diversify LS Distribution Reinvent LS Distribution Provide a full last- mile logistics offer Massively Participate to and Import / Distribute diversify into benefit from industry non-print Brands reinvention businesses Drive independent newsstands evolution 2
Slide 23: Lagardère Services is ready to be diluted in LS Distribution to forge alliances
Lagardère Services is ready to be diluted in LS Distribution to forge alliances Travel retail is Lagardère Services’ core focus. LS Distribution is managed as a cash-generator Strategic moves to reinforce diversification and drive market consolidation will be structured through alliances • Peers
Slide 24: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier Travel retail market: definition and sizing Trends and strategic outlooks External perspective on travel retail Dermot Davitt Coffee break All LS Travel Re
Slide 25: Travel retail is an ecosystem
Travel retail is an ecosystem Traveler Brand 25
Slide 26: Many specificities, a niche in the retail world
Many specificities, a niche in the retail world Landlord: space allocation, use clause definition Pax provider Shopping enabler: retail planning, pax Specific mindset processing, retail promotion, etc. Strong constraints associated to travel Traveler Highly specific Highly segmented op
Slide 27: Travel Retail is a multi-channel and multi-products market
From an operator perspective, Travel Retail is actually a multi-channel and multi-products market Travel retail market segmentation Others3 Stations2 Airport Duty Free & Luxury Fashion in airport (1) News, gifts, convenience, souvenirs, electronics, etc. (2) Railway and subway stations (3) Ferry, bo
Slide 28: Travel retail market size
From an operator perspective, travel retail is actually a multi-channel and multi-products market Estimates Travel retail market size (€ bn, %, 2011) = €75bn Poor data in foodservice and almost no data for 40% highways that account for Others3 the largest part of “others” €30bn, 40% 65% 55% Statio
Slide 29: The industry is exposed to several kind of unpredictable events
The industry is exposed to several kind of unpredictable events Airport retail is closely correlated with pax hence global GDP growth: however a cyclical air traffic is compensated by a very resilient rail traffic A business exposed to external events disruptive in the airport environment Expo
Slide 30: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier Travel retail market: definition and sizing Trends and strategic outlooks External perspective on travel retail Dermot Davitt Coffee break All LS Travel Re
Slide 31: A fast growing market
A fast growing market Estimates Travel retail market size and growth perspectives (€ bn, %, 2011) = €75bn Others1 €30bn, 40% Stations 40% €13bn, 17% + 65% 55% Airports €32bn, 43% + = Annual growth until 2020 (% p.a.) 60% 20% + = 0% - 2% + 2% - 4% + 35% 25% + + 4% - 8% + + > 8% (1) Incl. ferries, i
Slide 32: Reinvention of the industry benefits to the largest players
Reinvention of the industry benefits to the largest players Market is changing deeply 32
Slide 33: Consolidation is under way but is far from being achieved
Consolidation is under way but is far from being achieved Five largest players market share in travel retail – Foodservice excluded (€ bn, %, 2005, 2011) Winning tenders and performing some Top 5 acquisitions is mandatory as well Rest of the market 45 Both routes are equally appealing financiall
Slide 34: Emerging countries heavily contribute to growth worldwide
Emerging countries heavily contribute to growth worldwide, driving industry’s globalization Increase1 in total air traffic Sales Per Pax for BRIC destinations between 2006 and 2011 (As a multiple of the SPP of the remaining pax, 2011) (€ bn, %, 2006-2011) Paris Duty Free 5,5x Prague Rest Duty Free 7
Slide 35: Sophistication is a growing expectation in the industry
Sophistication is a growing expectation in the industry Travelers Landlords Brands Amsterdam Schiphol mobile app London Heathrow Terminal 5 “Airports are special places. I “I must define a unique value “Stations give me a unique expect new products, I want proposition to differentiate place to showc
Slide 36: Convergence requires the ability to bundle multiple concepts
Convergence requires the ability to bundle multiple concepts on a given location LS Travel Retail doesn’t believe that market will evolve towards a small bunch of master retailers, each operating alone in a given airport However retailers will more and more bundle multiple categories in their of
Slide 37: Industry deeply reshaped by 2020: more attractive for largest players
Industry deeply reshaped by 2020: more attractive for largest players Fewer and fewer Economies of pure players scale will fuel consolidation Consumer trend towards hybrid Emergence of concepts M&A between large players Change will accelerate for the benefit of the largest Race for relativ
Slide 38: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 39: Dermot Davitt
Dermot Davitt Deputy Publisher, The Moodie Report www.TheMoodieReport.com
Slide 40: Forecast annual traffic growth by route 2010-2030
Forecast annual traffic growth by route 2010-2030: Asia Pacific leads the way Within Asia Pacific 7.0% Within North America 2.3% Within Europe 4.0% Within Latin America 6.7% Within China 7.5% Europe to 5.9% Asia Pacific North America to 5.4% Latin America Europe to 4.8% Latin America Africa to Europ
Slide 41: Power of the Chinese travelling spend
Power of the Chinese travelling spend Incheon Sales Contribution of Duty free by nationality (%) Average spend by PAX ($) 116 88 70 42 15% 11% 62% 12% Others % of PAX (28%) (11%) (53%) (8%) Source: IIAC www.TheMoodieReport.com
Slide 42: Key themes and influences…
Key themes and influences… • A highly fragmented industry…but changing • The key players growing through acquisition and extending their control of the major concessions www.TheMoodieReport.com
Slide 43: Key themes and influences…
Key themes and influences… • Competition, consumers and the concession model • The commercial challenge at airports • Long-term thinking trumps short-term interest…though not always… • Airports seek a more direct role through JV or owned retail www.TheMoodieReport.com
Slide 44: Key themes and influences…
Key themes and influences… • New travel patterns & trends • Changing expectations of the travel retail environment • Category winners and losers www.TheMoodieReport.com
Slide 45: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 46: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 47: LS Travel Retail accounts for €2.0bn consolidated sales
LS Travel Retail accounts for €2.0bn consolidated sales Sales breakdown (€ m, 2011) 3,724 3,724 Distribution 1,041 1,041 Distribution Integrated 696 retail Retail 2,683 Travel 1,986 Retail Current reporting New reporting Source: Lagardère Services 47
Slide 48: Sales reached €2.3bn in economic terms
Sales reached €2.3bn in economic terms LS Travel Retail sales reconciliation (€ m, 2011) Travel retail Financial markets benchmark benchmark 140 2,267 140 2,127 1,986 IFRS LS share of JVs1 Proportional 100% of JVs1 Sales@100% (1) SDA and Relay@ADP (JV with Aéroport de Paris), Aéroport de Lyon, Dutyf
Slide 49: LS Travel Retail contributes to half of Lagardère Services Ebitda
LS Travel Retail contributes to half of Lagardère Services Ebitda Lagardère Services profitability breakdown and reconciliation Financial markets (€ m, 2011) benchmark 188 174 14 10 59 90 105 48% 98 52% Recurring Depreciation Other Operating LS share of Operating Ebit before and costs1 Ebitda JVs2 E
Slide 50: Organic growth as main past development path
Organic growth as main past development path Sales@100% growth breakdown by nature (€ m, 2006-2011) 2,267 580 135 207 Tenders won +46% 1,552 373 Existing contracts 4/5 1/5 of total growth of total growth 2006 Organic growth Acquisitions 2011 Source: Lagardère Services 50
Slide 51: A robust growth profile fueled with a moderated flow of investments
A robust growth profile fueled with a moderated flow of investments Annual consolidated sales@100% Annual total capital expenditures growth incl. acquisitions in LS Travel Retail (€ m, 2006-2011) (€ m, 2006-2011) 2,267 82 84 +8% 68 62 €65m 46 48 1,552 2006 2007 2008 2009 2010 2011 2006 2007 2008 200
Slide 52: An international player operating across all territories and all channels
An international player operating across all territories and all channels LS Travel Retail sales@100% breakdown by geography and channel (€ bn, %, 2011) 100% = €2.3bn Others1 €0.5bn, 21% 15% 20% 35% Stations €0.5bn, 24% 30% 15% 77% Airports 55% 50% €1.3bn, 55% Western Europe Emerging Americas (1) In
Slide 53: A balanced mix of products
A balanced mix of products LS Travel Retail sales@100% breakdown by product (€ bn, %, 2011) Perfume Other1 & Cosmetics 15% 15% Print 16% €2.3bn Wine, Liquor 31% & Tobacco 18% Food 5% & Beverage (1) Gifts, souvenirs, electronics, gourmet food, lottery, phone cards, etc. Fashion Source: Lagardère Serv
Slide 54: A solid portfolio of contracts combined with a healthy balance sheet
A solid portfolio of contracts combined with a healthy balance sheet Sales@100% breakdown by contract Simplified balance sheet for maturity LS Travel Retail – proportional view (€ bn, %, 2011) Below 1 year (€ m, %, 2011) 8% 382 382 Net tangible 41% Above 48% assets €2.3bn 64% Equity 6 years 44% 2 to
Slide 55: Third player worldwide in the race for consolidation
Third player worldwide in the race for consolidation Largest travel retail operators by sales Estimates (€ bn, 2011) 1.8 0.2 3.8 5.8 2.8 0.9 1.3 0.1 2.3 1.5 0.7 2.2 2.2 0.2 1.8 2.0 2.0 1.9 Duty Free & Luxury Retail 1.5 Travel essentials1 1.1 Foodservice (1) News, gifts, convenience, souvenirs, elect
Slide 56: Truly global with operations in 26 countries and more than 130 airports
Beyond size, we are truly global with operations in 26 countries and more than 130 airports worldwide Lagardère Services retail operations (As of June 2012) Airports classified among the world’s top 100 airports in terms of passenger volume Other airports Source: ACI Annual Worldwide Airport Traffic
Slide 57: Investing in excellence and innovation…
Investing in excellence and innovation… Lonely Planet – Sydney Airport So Chocolate – Singapore Airport 57
Slide 58: … pays off since our operations win awards throughout the World
… pays off since our operations win awards throughout the World Glasgow Airport Discover Glasgow Singapore Airport Hong Kong Best News, Gifts and The Fashion Gallery Electronic store “Best New Shop Opening DFNI in Asia/Pacific” DFNI 2011 Frankfurt Airport Virgin Hong-Kong Shop stars 2011 for 2010 LS
Slide 59: Growth supported by our ability to bundle various retail concepts
Growth supported by our ability to bundle various retail concepts Singapore Airport Xi’an Airport From Souvenirs to Luxury Fashion From Souvenirs to Luxury Fashion Paris CDG Airport Frankfurt Main Station From Duty Free to Specialty From Travel essentials to a Food court 59
Slide 60: A rich portfolio of concepts to operate across the segments in travel retail
A rich portfolio of concepts to operate across the segments in travel retail Duty Free & Travel Foodservice Luxury essentials LS Travel Retail brands Franchised brands 60
Slide 61: A know-how to manage complex transformations through JVs with landlords
A know-how to manage complex transformations through JVs with landlords Structure of the JV for duty free retail in Parisian airports The primary mission of travel retailers is to maximize the value from the flow of travelers provided by the airport. Delivering this mission requires a close alignm
Slide 62: A bold claim… delivered to landlords
A bold claim… delivered to landlords LFL1 SPP growth after takeover/ renovation (%) Regional airport 45% France Capital airport Central Europe 30% Asian hub 24% European hub 22% Regional airport UK 18% (1) Like-For-Like Source: Lagardère Services 62
Slide 63: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 64: Roundtable – External guests
Roundtable – External guests François RUBICHON Horst MUTSCH Olivier BENAMOU Deputy CEO, Head of Global Travel Retail Aéroports de Paris Letting/Marketing/ServiceStore, Managing Director, DB Station&Service AG L’Oréal Consumer Products 64
Slide 65: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 66: LS Travel Retail will accelerate its development and improve its operational margin
LS Travel Retail will accelerate its development and improve its operational margin LS Travel Retail sales and Ebitda margin evolution – Proportional view (2011-2016) Sales Ebitda margin +10% +0.5 pt to +1.0 pt per annum over the period 66
Slide 67: Building future growth on a strong foundation
Building future growth on a strong foundation ROCEs -Proportional view (€ m, %, 2011) Capital ROCE ROCE employed after tax1 before tax2 237 18% 41% -65 ∞ ∞ 1653 48%3 105%3 (1) Recurring EBIT before associates after tax / Capital Employed including Goodwill (2) EBITDA / Capital Employed including Goo
Slide 68: A high ambition in travel retail
A high ambition in travel retail Consolidation Convergence Globalization Sophistication Become a leading Reach Reach player in Deliver, measure #2 worldwide Top 5 3 continents and communicate in TR including worldwide (with a special focus on on excellence large acquisitions in each segment Europe,
Slide 69: An ambitious plan in Duty Free & Luxury
An ambitious plan in Duty Free & Luxury Current Target LS Travel Retail Strategic LS Travel Retail position initiatives position Market LS initiatives requirements Relative size to Grow by acquisitions One of the five Consolidation Large player, negotiate with suppliers and through tenders largest p
Slide 70: An entry in Foodservice
An entry in Foodservice Current Target LS Travel Retail Strategic LS Travel Retail position initiatives position Market LS initiatives requirements Few strong local Increasingly global to Grow essentially sign top brands and to through tenders, local One of the positions, Consolidation negotiate wit
Slide 71: A preserved and undisputed leadership in Travel essentials
A preserved and undisputed leadership in Travel essentials Current Target LS Travel Retail Strategic LS Travel Retail position initiatives position Market LS initiatives requirements Local market share Grow essentially Undisputed Consolidation more important than Undisputed through tenders global ma
Slide 72: Caveat
Caveat The ambition provided in the following slides is valid at current market conditions. A major disruption in the global economy and / or a significant change in the competitive environment and / or unfavorable changes in passenger traffic and / or unfavorable changes in taxation and restricti
Slide 73: Distribution will remain a cash-generator and will be reinvented through alliances
Distribution will remain a cash-generator and will be reinvented through alliances 73
Slide 74: LS Travel Retail will accelerate its development and improve its operational margin
LS Travel Retail will accelerate its development and improve its operational margin LS Travel Retail sales and Ebitda margin evolution – Proportional view (2011-2016) Sales Ebitda margin +10% +0.5 pt to +1.0 pt per annum over the period 2/3 by organic growth Favorable mix evolution 1/3 through
Slide 75: Agenda
Agenda LS Distribution, an asset to reinvent Jean-Baptiste Morin The travel retail business, an appealing niche in retail Frédéric Chevalier External perspective on travel retail Dermot Davitt Coffee break All LS Travel Retail, a global and leading player Luc Mansion + Vincent Romet Testimonials fro
Slide 76: Appendices
Appendices
Slide 77: Each stakeholder plays a critical role to monetize the flow of travelers
Each stakeholder plays a critical role to monetize the flow of travelers Influence on monetization by stakeholder Landlord Retailer Brand Pax x Stop ratio Travel (#shoppers/#pax) retail = sales x Transformation ratio (#buyers/#shoppers) x Average basket Low High 77
Slide 78: Healthy long-term underlying trends
Healthy long-term underlying trends Air traffic correlated with global economic Pax growth and globalization Rail traffic boosted by rising urbanization x Stop ratio Retail-addict landlords (#shoppers/#pax) Travel x retail = sales Transformation Increased sophistication in retail for better
Slide 79: END OF THE DOCUMENT
lagardere SERVICES END OF THE DOCUMENT