Pandora A/s · OMXCOP:PNDORA
Pandora A/s — Pandora A/S Ord — Q3 2021 Earnings Presentation
43 slides from Pandora A/s's earnings presentation, Nov 6, 2021
Slide 1: Third Quarter Results 2021
THIRD QUARTER RESULTS 2021 INVESTOR PRESENTATION 03 NOVEMBER 2021
Slide 2: Agenda and disclaimer
AGENDA Q3 RESULTS 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q3 2021 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX DISCLAIMER This presentation contains forward-looking statements, which include estimates of financial performance and targets. These statements are not guarantees of future performance
Slide 3: Strong momentum continued in Q3
STRONG MOMENTUM CONTINUED IN Q3 SOLID REVENUE DEVELOPMENT AS EUROPE REOPENS $ Sell-out growth of 9% in Q3 11% sell-out growth vs EBIT margin of 20.2% High quality growth driven 2019 in key European by Moments and delivered markets while further decreasing the US sell-out growth remains level of prom
Slide 4: 2021 guidance upgrade
2021 GUIDANCE UPGRADE Organic growth “18-20%” EBIT margin “24-24.5%” (5-7% vs 2019) Before “23-24%” Before “16-18%” 4 Pandora Q3 2021 - Investor presentation 4 Pandora Q3 2021 - Investor presentation
Slide 5: Agenda
AGENDA Q3 RESULTS 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q3 2021 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 5 Pandora Q3 2021 - Investor presentation
Slide 6: Pandora unfolded the Phoenix strategy at the Capital Markets Day
PANDORA UNFOLDED THE PHOENIX STRATEGY AT THE CAPITAL MARKETS DAY 14 SEPTEMBER 6 Pandora Q3 2021 - Investor presentation
Slide 7: Pandora investment case: strategy built on core assets
PANDORA INVESTMENT CASE – STRATEGY IS BUILT ON PANDORAS CORE ASSETS AS ENABLERS FOR GROWTH INVESTMENT CASE PHOENIX STRATEGY – DRIVING SUSTAINABLE CORE ASSETS BEYOND PHOENIX GROWTH BY LEVERAGING CORE ASSETS 2021 2022 2023 2024 2025 2026 ENABLERS FOR GROWTH VALUE CREATION DRIVERS MORE GROWTH AVENUES •
Slide 8: Unique platform to become sustainability leader
UNIQUE PLATFORM TO BECOME SUSTAINABILITY LEADER O1 LOW-CARBON BUSINESS O2 CIRCULAR INNOVATION O3 INCLUSIVE & DIVERSITY Become carbon neutral in own Use only recycled silver and gold NEW 1/3 females in leadership by operations by 2025 in our jewellery by 2O25 2025, and full gender parity no later tha
Slide 9: Driving the core: Moments Wearing occasions
DRIVING THE CORE MOMENTS WEARING OCCASIONS • As communicated at the Capital Markets Day 14 September, a key pillar in the Phoenix strategy is to drive the core, Moments, as the number one priority • In Q3, Pandora launched Moments Wearing occasions, a collection of 7 DVs consisting of key rings and
Slide 10: Fuel with more Brilliance: global expansion confirmed
FUEL WITH MORE BRILLIANCE GLOBAL EXPANSION CONFIRMED • In May, Pandora initiated a test launch of Brilliance in the UK market • The aim is to make Brilliance a new platform next to Moments by democratising diamonds • As communicated at the Capital Markets Day, the test launch was all about getting i
Slide 11: US growth remains strong, promotional detox continues
US GROWTH REMAIN STRONG – PROMOTIONAL DETOX CONTINUES ACROSS KEY MARKETS STRONG US GROWTH US SELL-OUT GROWTH • Strong growth, fueled by stimulus packs - third quarter in a row delivering +50% sell-out growth vs 2019 Q3 2021 closed Q3 2020 closed • US Credit card data indicates Pandora continued to o
Slide 12: China and Australia drag down group in Q3
CHINA AND AUSTRALIA DRAG DOWN GROUP IN Q3 FOLLOWING COVID-19 Sell-out growth Q3 2021 closed Q3 2020 closed YoY vs YoY vs stores due to stores due to Q3 2021 2020 2019 COVID-19* COVID-19* China -35% -45% 0%** 0% Australia -31% -22% 49% 13% *Average closures throughout the quarter **80% of Chinese sto
Slide 13: Overall strong third quarter, strong rebound in Europe
OVERALL STRONG THIRD QUARTER – STRONG REBOUND IN EUROPE KEY MARKETS OPEN UP IN EUROPE Sell-out growth • Pandora saw a strong rebound in key European markets Q3 2021 closed Q3 2020 closed and delivered positive sell-out growth vs 2019 of 11% as YoY vs YoY vs stores due to stores due to stores was ful
Slide 14: Maintaining leading brand position
MAINTAINING LEADING BRAND POSITION GLOBAL UNAIDED AWARENESS1 GLOBAL SHARE OF SEARCH – GOOGLE2 -16% 37% 34% 34% 33% 31% 31% -16% Pandora Avg. Global competitor* 13% 12% 11% Number of Key Markets where Pandora is #1 Q3 Q3 Q3 Q3 Q3 Q3 Q3 2019 Q3 2020 Q3 2021 2019 2020 2021 2019 2020 2021 5/7 5/7 5/7 *
Slide 15: Q3 2021 digital results
Q3 2021 DIGITAL RESULTS - DIGITAL INVESTMENTS CONTINUE TO GENERATE STRONG RESULTS 94% (2% VS 2020) 2% (+50% VS 2019) 95% ONLINE REVENUE NEARLY STRONG ONLINE OF CONCEPT STORES IN DOUBLES VS 2019 CONVERSION RATE KEY MARKETS* HAVE CLICK AND COLLECT *During Q3, Pandora has rolled out Click and Collect i
Slide 16: COVID-19 in Thailand: production running through Q3
COVID-19 IN THAILAND – PRODUCTION WAS RUNNING THROUGH Q3 – PRECAUTIONARY MEASURES CONTINUES • The challenging COVID-19 situation in Thailand required significant mitigating actions during the quarter and associated costs • Production volumes are impacted but not materially • To keep employees in Tha
Slide 17: Agenda
AGENDA Q3 RESULTS 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q3 2021 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 17 Pandora Q3 2021 - Investor presentation
Slide 18: Key financial highlights
KEY FINANCIAL HIGHLIGHTS SOLID REVENUE GROWTH AND EBIT MARGIN TOPLINE Q3 2021 Q3 2020 Q3 2019 COMMENTARY Revenue, DKK million 4,728 4,070 4,415 • Momentum continued in Q3 driven by Organic growth 14% -5% -14% strong performance across US and key European markets Organic growth vs 2019 9% n/a n/a Sel
Slide 19: Revenue bridges
REVENUE BRIDGES SELL-OUT VS Q3 2019 IS THE CLEANEST COMPARISON COMMENTARY Q3 GROWTH COMPOSITION VS Q3 2019 The revenue bridges continue to be impacted by %-p growth (approximately) 10% 9% 1% COVID-19 DKK million 2% -3% 4,728 vs 2019 • “Normalisation of sell-in” includes the impact of 9% the commerci
Slide 20: Strong EBIT margin
STRONG EBIT MARGIN EBIT MARGIN ON PAR WITH Q3 2019 DESPITE HIGHER SILVER PRICES COMMENTARY %-p development (approximately) • Operating leverage continues to be strong and was fueled by further promo detox 20.2% -1.8% -0.8% • In Q3 2021, there is significantly less 0,8% government support and rent co
Slide 21: Agenda
AGENDA Q3 RESULTS 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q3 2021 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 21 Pandora Q3 2021 - Investor presentation
Slide 22: 2021 organic growth guidance
2021 ORGANIC GROWTH GUIDANCE UPGRADED 1 NOVEMBER FROM 16-18% TO 18-20% GUIDANCE ASSUMPTIONS 2021 • The updated guidance is based on the assumption that 5% of the stores will be temporarily closed or severely impacted in Q4 by COVID-19 (unchanged). Organic growth Guidance DKK billion Furthermore, the
Slide 23: 2021 EBIT margin guidance
2021 EBIT MARGIN GUIDANCE UPGRADED 1 NOVEMBER FROM 23-24% TO 24-24.5% GUIDANCE ASSUMPTIONS 2021 • Pandora increases the EBIT margin guidance EBIT margin driven by higher topline and thereby operating leverage %-points approximations • The unusual strong growth in the US - which is 1.0% highly margin
Slide 24: Implied guidance for Q4 2021
IMPLIED GUIDANCE FOR Q4 2021 Organic growth vs 2019 COMMENTARY • Compared to a COVID-19 clean base in 2019, Pandora expects 2-7% organic growth in Q4 (-1% to 4% vs 2020) 6% 5-7% • Q4 remains subject to elevated uncertainty 2-7% due to US performance as well as COVID-19 developments, as reflected by
Slide 25: Pandora will continue cash distribution for 2021
PANDORA WILL CONTINUE CASH DISTRIBUTION FOR 2021 STRONG LIQUIDITY CASH DISTRIBUTION COMMENTARY & LOW LEVERAGE QUARTERLY SPLIT, DKK BILLION • Pandora announced a DKK 3 billion increase of the share buyback programme in Completed In progress Confirmed connection with the Capital Markets Day 2021 AVAIL
Slide 26: Closing remarks
CLOSING REMARKS
Slide 27: Closing remarks
CLOSING REMARKS Strong performance and Sequential global roll out of Online trading and Guidance upgraded on profitability in Q3 2021 Brilliance from 2022 competencies keeps 1 November strengthening 27 Pandora Q3 2021 - Investor presentation
Slide 28: Q&A
Q&A 28 Pandora Q3 2021 - Investor presentation
Slide 29: Appendix
APPENDIX 29 Pandora Q3 2021 - Investor presentation
Slide 30: COVID-19 continues to impact performance
COVID-19 CONTINUES TO IMPACT PERFORMANCE - NET POSITIVE IMPACT OF COVID-19 AND US • Sell-out growth vs 2019 ended at 9% and continues to be impacted by two opposing COVID-19 factors: Net impact of lost revenue 1. Lost revenue from temporarily closed physical stores – due to COVID-19* partially offse
Slide 31: Pandora consumers are across generations
PANDORA CONSUMERS ARE ACROSS GENERATIONS Age distribution of our consumers who have purchased Pandora within the last 12 months 18 65 31% 25% 25% 19% 18-24 25-34 35-44 45-65* Source: Pandora Brand Tracker 2020 (n=2508) Note: Markets include IT, ES, FR, UK, DE, RU, CA, CN, AU *Age range stops at 54 i
Slide 32: Revenue development by channel
REVENUE DEVELOPMENT BY CHANNEL Pandora owned1 retail 3,096 2,799 4% 14% 6% 10% 9% 65% - of which concept stores 2,057 1,836 6% -7% 11% 44% - of which online stores 873 841 2% 94% 2% 18% - of which other points of sale 166 122 32% 1% 32% 4% Wholesale 1,451 1,113 7% 0% 35% 13% 30% 31% - of which conce
Slide 33: Revenue development by global business unit
REVENUE DEVELOPMENT BY GLOBAL BUSINESS UNIT 1 Moments and Collabs 3,325 2,848 6% 11% 70% 10,299 7,960 27% 6% 72% hereof Moments 2,948 2,440 8% 9% 62% 9,190 7,006 28% 3% 64% hereof Collabs 377 408 -13% 22% 8% 1,109 954 23% 40% 8% Style and Upstream Innovation 1,403 1,222 0% 2% 30% 4,085 3,158 23% -4%
Slide 34: Store network development
STORE NETWORK DEVELOPMENT Other points of sale (retail) 279 257 232 22 47 Other points of sale (wholesale) 3,256 3,274 3,655 -18 -399 Other points of sale (third-party) 570 564 576 6 -6 Other points of sale, total 4,105 4,095 4,463 10 -358 US 386 389 401 -3 -15 186 7 33 China 219 216 236 3 -17 203 1
Slide 35: Key markets revenue and sell-out growth overview
KEY MARKETS REVENUE AND SELL-OUT GROWTH OVERVIEW US 1,342 901 29% 59% 47% 51% 28% China 233 350 -35% -45% -37% -37% 5% UK 637 617 -5% 12% -3% -2% 13% Italy 527 484 7% 10% 9% 9% 11% Australia 170 225 -31% -22% -25% -25% 4% France 221 222 -9% -6% 0% 0% 5% Germany 280 233 5% 30% 20% 20% 6% Total top-7
Slide 36: Income statement
Revenue 3 4,728 4,070 14,383 11,118 19,009 Cost of sales -1,158 -888 -3,402 -2,693 -4,634 Gross profit 3,571 3,183 10,981 8,425 14,375 Sales, distribution and marketing expenses -2,170 -2,094 -6,404 -6,095 -9,155 Administrative expenses -444 -621 -1,416 -1,857 -2,536 Operating profit 957 467 3,161 4
Slide 37: Working capital and cash management
WORKING CAPITAL AND CASH MANAGEMENT DKK million Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Inventory 3,197 2,557 2,373 1,949 2,619 2,250 - Share of revenue (last 12 months) 14.4% 11.8% 12.3% 10.3% 13.7% 11.6% Trade receivables 801 691 602 870 607 602 - Share of revenue (last 12 months) 3.6% 3.2
Slide 38: Hedging policy and raw materials share of production costs
HEDGING POLICY AND RAW MATERIALS SHARE OF PRODUCTION COSTS Commodity hedging policy is to hedge Raw material share of cost of goods sold at least 70% of future 12 months use in production For illustrative purposes Other Other raw materials Gold Silver Hedged Realised 100% 70% to 100% 51% 58% 59% 54%
Slide 39: Sustainability approach
SUSTAINABILITY APPROACH 1) LOW-CARBON BUSINESS We believe high-quality jewellery, As the world's largest jewellery maker, we are determined to reduce our superior business performance and climate footprint and help set an example for the wider industry. high ethical standards go hand in hand, and we
Slide 40: Circular innovation and inclusive and fair culture
2) CIRCULAR INNOVATION 3) INCLUSIVE & FAIR CULTURE Partnering with UNICEF to empower young people From 60%1 recycled in Pandora and UNICEF have partnered to support the most >99% 2020 to 100% in 2025 vulnerable children, especially By 2025, 100% of products will girls, around the world to lead of al
Slide 41: Key ESG ratings
KEY ESG RATINGS | PANDORA PERFORMANCE RATING PERFORMANCE Methodology note, low score = good 12/100 – Pandora ranked 10th (out of 177 companies) in Textiles & Apparel sector Methodology note, AAA = top score Top “AAA” rating – 6th straight year Methodology note, A = top score C rating – Top 20% of In
Slide 42: Investor relations contact details
INVESTOR RELATIONS CONTACT DETAILS Investor Relations team Share information ADR information Trading symbol PNDORA ADR trading symbol PANDY John Bäckman Identification Sponsored level 1 VP, Investor Relations, Tax & Treasury DK0060252690 Programme type number/ISIN programme (J.P. Morgan) +45 5356 69
Slide 43: C) PANDORA ‘ri
Ad NY C) PANDORA ‘ri