Afg International Company · TADAWUL:4240
Afg International — Cenomi Retail — Q1 2024 Earnings Presentation
33 slides from Afg International's earnings presentation, 2024
Slide 1: Cenomi Retail Earnings Presentation Q1 2024
Cenomi Retail Earnings Presentation For the quarter ended 31 March 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 08 13 16 27 03 Q1 24 Earnings Presentation
Slide 4: Cenomi Retail at a glance
Cenomi Retail at a glance SAR 1.3 BN SAR 8.1 MN SAR 151.7 MN Revenues EBITDA Net loss 0.1% YOY 88.4% YOY -171.3% YOY SAR 268.9 MN SAR 75.0 MN 15 Weeks International Inventory Turnover Online Sales Revenue 10.4% YOY 14.6% YOY 33.9% YOY Q1 24 Earnings Presentation Q1 23 Earnings Presentation 4 04
Slide 5: The Saudi market represents a secular growth opportunity
The Saudi market represents a secular growth opportunity 01 Youthful demographics with 73% of population is working age 02 A booming consumer outlook 500 - 900 KSA population: 3% 2 – 3x +4 million (+12%) 250 - 300 25% Tourism: 100 MN annual visits 73% 2019 2030 KSA Discretionary consumer spend Poten
Slide 6: 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 7: Saudi Arabia presents an un-paralleled opportunity
Saudi Arabia presents an un-paralleled 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 8: Strategic Review
01 Cenomi Retail Strategic Review Q1 24 Earnings Presentation Q1 23 Earnings Presentation 8 08
Slide 9: 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 10: 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 Scale existing brands to maximum potential Rationalize brand and store portfolio Invest to scale e
Slide 11: 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 • Successfully exited the • Finalized the sale of 16 • Closure of 300 stores on • Average revenues per • 40+ Operational Balkans throu
Slide 12: 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 13: Operational Overview
02 Operational Overview Q1 24 Earnings Presentation 13
Slide 14: Continued focus on optimizing market, brand & store footprint
Continued focus on optimizing market, brand & store footprint Retail Market Rationalization ▪ 12 stores opened Q1’24 Retail ▪ 292 stores closed 300 underperforming stores were closed in Q1 2024 across ▪ 280 net closures KSA (retail and F&B), Egypt, Azerbaijan, Kazakhstan, and others ▪ 47 stores open
Slide 15: 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 908 1,465 257 835 823 824 303 297 1,389 1,340 1,345 98 266 267 249 1,062 254 254 562 254 76 257 251 254 14 25
Slide 16: Financial Overview
03 Financial Overview Q1 24 Earnings Presentation Q1 23 Earnings Presentation 16 16
Slide 17: Financial performance overview
Financial performance overview Financial highlights Total revenues remained stable at SAR 1.3BN • KSA retail revenue declined 2.0%, due to decrease in the footfall in the last week of Ramadan . • F&B revenue declined 7.1% to SAR 86.5MN. • Offset by a 10.4% surge in international retail revenue. SAR
Slide 18: Stable revenue amidst store closures signalling turnaround strategy
Stable revenue amidst store closures signalling turnaround strategy Revenue, SAR million LFL consolidated sales growth, % ▪ Revenue remained relatively stable amidst store closures for the ▪ The overall LFL has decreased ( 2.0% ) as a result of the current on- quarter. This indicates that the turnar
Slide 19: Champion Brands show sustained international growth momentum
Champion Brands show sustained international growth momentum LFL Saudi retail sales growth % LFL International Retail growth % ▪ Saudi retail, LFL growth marginally weakened as compared to Q1 2023 ▪ International LFL growth maintained positive momentum for the quarter as the 1.9% LFL growth in Zara
Slide 20: Leading brands sustain stable performance
Leading brands sustain stable performance Fashion & F&B Revenues (SAR Million) 1% LFL 3% LFL 10% LFL Q1'23 Q1'24 437 418 350 348 93 86 Zara Inditex F&B Q1 24 Earnings Presentation 20 20
Slide 21: 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 7.6% 6.6% 5.6% 5.6% 5.4% 88 91 77 75 64 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1 24 Earnings Presentation Q1 23 Earnings Presentation 21 21
Slide 22: 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) YOY YOY +37.8% +58.4% 2,000 2,500 1,734 1,162 1,252 1000 1,465 1,500 1,095 960 1,500 908 886 763 752 1,000 500 500 500 824 908 835 823 562 1,465 1,389 1,340 1,345
Slide 23: Revenue mix
Revenue mix Revenue by division Revenue by channel Revenue by geography 1% 7% 6% 4% 7% 7% 14% 4% 14% 20% 0% 18% 75% 73% 82% 93% 81% 94% KSA Retail Int'l Retail F&B Stores Online KSA CIS Egypt Others Q1-24 - Outer circle Q1-23 - Inner circle Q1 24 Earnings Presentation 23
Slide 24: 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, % ▪ A decrease in gross profit, which fell by 24.9% y-o-y from SAR 156.0 ▪ EBITDA decreased by 88.4%, primarily driven by a significant decline of SAR millio
Slide 25: 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, % 70 25.0% 15 15.0% 300 40.0% 20.3% 60 8.6% 200 18.5% 20.0% 10 10.0% 9 20.0% 226 2.1% 4 5.0% 5.7% 8 50 5 100 15.5% 57 -2.2% 0.0% -8.5% 9.3% 5.0% 2 - - 0
Slide 26: 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 27: Appendix
05 Appendix Q1 24 Earnings Presentation Q1 23 Earnings Presentation 27 29
Slide 28: Income statement
Income statement SAR Million Q1 2024 Q1 2023 % Change Revenue 1,329.8 1,330.8 -0.1% Cost of Revenue -1,212.6 -1,174.8 3.2% Gross Profit (Loss) 117.2 156.0 -24.9% Gross Profit Margin 8.8% 11.7% (2.9pp) Selling & Distribution Expenses -49.3 -49.7 -0.8% General & Administrative Expenses -91.4 -87.2 4.7
Slide 29: Balance sheet
Balance sheet SAR Million Mar ‘24 Dec ’23 SAR Million Mar ‘24 Dec ’23 Assets Equity & Liabilities Share Capital 1,147.7 1,147.7 Property, Plant and Equipment 1,154.8 1,150.0 Reserves ( Statutory, Foreign Currency and Fair Value) -602.2 -564.5 Right-of-Use Assets 1,896.3 2,044.7 Fair value reserve 31
Slide 30: Market context
Market context Historical vs. Future Projected Retail Spend (CAGR)14,2% 1 16,8% 9,2% 6,5% 6,4% 7,3% 8,2% 6,8% 16.8 7,1% 6,3% 4,9% 5,1% 4,6% 5,1% 5,4% 4,6% 14.2 The Saudi Retail sector has faced 1,7% 2,8% 3,9% 9.2 key headwinds but is poised for 7.1 6.5 6.4 7.3 6.3 8.2 6.8 4.9 5.1 4.6 5.1 5.4 4.6 rob
Slide 31: Consumer Trends
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 experienc
Slide 32: Cenomi Retail brand portfolio
Cenomi Retail brand portfolio Sports F&B F&B Multimedia Lifestyle Indite & Zara Beauty Q1 24 Earnings Presentation Q1 23 Earnings Presentation 32 34
Slide 33: THANK YOU
Cenomi Retail THANK YOU Contacts Investor Relations Department Email: IR.retail@cenomi.com For more information, visit Tel: +966 (11) 825 2080 https://ir.cenomiretail.com/