Afg International Company · TADAWUL:4240
Afg International — Fawaz Abdulaziz Alhokair — 9M-FY22 Earnings Presentation
41 slides from Afg International's earnings presentation, February 2022
Slide 1: Earnings Presentation | 9M-FY22
Earnings Presentation | 9M-FY22 As at 31 December 2021 Fawaz Abdulaziz Alhokair Co. | Saudi Exchange: 4240
Slide 2: Management review 9M-FY22
Management review 9M-FY22
Slide 3: Alhokair at a Glance – Q3 FY22
Alhokair at a Glance – Q3 FY22 Third sequential profitable quarter with net profit of SAR 16.0 mn underpinned by consistent revenue growth; 9M-FY22 top line at SAR 4.5 bn exceeding pre-pandemic levels 1,684 471k 11 10,645 72% Key Total Number of Stores Gross Floor Area, sqm Countries Employees Saudi
Slide 4: Our operational upgrade strategy
Our operational upgrade strategy Portfolio optimization 01 02 Operational excellence Optimize store network Ongoing FY22 IT, finance and other optimization initiatives Exit weak/non-performing markets FY22 FY22 Revamp inventory & supply chain management Expand portfolio – unique brand experience FY2
Slide 5: Differentiated brand portfolio; diverse revenues
Differentiated brand portfolio; diverse revenues Our Brand Portfolio Is Our Competitive Advantage & Transformation Driver to a Lifestyle Destination Targeting most consumer Diversifying Successful relationship Evolving brand mix 85 brands* segments through economy and fast fashion F&B offering with
Slide 6: Retail: Key brand & store openings
Retail: Key brand & store openings 9M-FY22 new ▪ 88% of 9M-FY22 total gross capex ▪ 22 stores opened Q3-FY22 brand store on 11 STAR existing brands Aleph, Lefties, Zara, Pull & Bear, Retail ▪ 30 stores closed openings LC Waikiki and new brands like ▪ Net 8 closures Decathlon 9M-FY22 ▪ 63 stores open
Slide 7: F&B: At the core of our upgrade strategy
F&B: At the core of our upgrade strategy The F&B segment turnaround is gaining momentum with major expansions in FY22 and FY23 based on 3 strategic revenue growth pillars 01 Expand store network of existing ▪ Q3-FY22: Opened 19 stores, closed 9 for a net of 10 new stores ▪ 9M-FY22: Opened 39, closed
Slide 8: Omnichannel transition
Omnichannel transition Ongoing integration of our brands on Vogacloset & new Monobrand platforms rollout in KSA and abroad Vogacloset Monobrand Platforms KSA International 14 5 ▪ 51 Alhokair fashion brands are now live ▪ Total stock on hand of Q3 - FY22 ▪ Decathlon KSA – KSA 126.7K units ▪ Launched
Slide 9: Financial review Q3/9M-FY22
Financial review Q3/9M-FY22
Slide 10: At-a-glance
At-a-glance Q3-FY22 SAR 1,466 mn SAR 245 mn SAR 102 mn SAR 16 mn Revenue Gross Profit EBITDA* Net Profit 8.6% vs Q3-FY21 55.3% vs Q3-FY21 936.4% vs Q3-FY21 Q3-FY21 SAR -128.1 mn 9M-FY22 SAR 4,528 mn SAR 809 mn SAR 369 mn SAR 83 mn Revenue Gross Profit EBITDA* Net Profit 46.1% vs 9M-FY21 9M-FY21 SAR
Slide 11: Top line surpass pre-pandemic levels
Top line surpass pre-pandemic levels Revenues, SAR million LFL consolidated sales growth, % Sales +9% Y-o-Y and exceed pre-pandemic levels despite Improving LFL growth performance. Q3 partially clouded by softened demand in December on renewed Covid worries. Omicron. Up until end-November, LFL growt
Slide 12: Strategic delivery drives sustainable profitability
Strategic delivery drives sustainable profitability Gross Profit (SAR million) – GPM (%) EBITDA (SAR million) – EBITDA Margin (%) 12.7% 20.0% 8.5% 17.1% 16.7% 6.9% 11.7% 258 157 232 245 0.7% 163 116 102 10 Q3-FY20 Q3-FY21 Q2-FY22 Q3-FY22 Q3-FY20 Q3-FY21 Q2-FY22 Q3-FY22 ▪ Gross profit and GPM exceed
Slide 13: Balance sheet optimization
Balance sheet optimization Aggressive inventory management and working capital optimization to improve liquidity and increase efficiency Inventory balance (SAR million) Inventory efficiency ratios 40% 2,029 37% -46% 1,656 1,263 1,257 1,168 1,099 24% 23% 22% 24.3 25.6 18.2 18.1 17.3 Q3-FY20 Q4-FY20 Q
Slide 14: Balance Sheet Actions
Balance Sheet Actions Capital alternation to restructure capital and further strengthen financial position 1. 2. 3. 4. 5. Share Capital of SAR 2.1 Board recommends Capital increase by bn with accumulated capital decrease Capital reduction way of a SAR 1.0 bn Capital alteration file losses of SAR 969
Slide 15: Debt management in focus
Debt management in focus Actively addressing our capital structure to boost liquidity position and operational / strategic flexibility Summarized credit metrics YTD % SAR million Mar’21 Dec’21 change 9M-FY22 financial SAR 186 million of charges down 27% debt paid down YTD Total Interest-Bearing Debt
Slide 16: Key takeaways
Key takeaways 1. Sustained profitability despite renewed Covid worries and non-recurring expenses 2. Significant top-line recovery, sales surpass pre- pandemic levels 3. Ongoing Inventory optimization with 17 weeks on hand 4. Operational Upgrade Strategy on track; Ramping up our Digitization and Tra
Slide 17: Thank you
Thank you Investor Relations investors.relations@fahretail.com
Slide 18: Financial Statements
Financial Statements
Slide 19: Income Statement Q3-FY22 and 9M-FY22
Income Statement Q3-FY22 and 9M-FY22 SAR Million Q3-FY21 Q3-FY22 Change y-o-y 9M-FY21 9M-FY22 Change y-o-y Revenue 1,350 1,466 8.6% 3,100 4,528 46.1% Cost of Revenue (1,192) (1,222) 2.5% (3,134) (3,719) 18.7% Gross Profit 157 245 55.3% (33.4) 809.5 - Gross Profit Margin 11.7% 16.7% 5.0 -1.1% 17.9% 1
Slide 20: Balance Sheet Q3-FY22
Balance Sheet Q3-FY22 SAR Million 31 December 2021 31 March 2021 Change Assets Property, Plant and Equipment 1,338 1327 1% Right-of-Use Assets 3,182 3,402 -6% Goodwill and Intangible Assets 1,140 1,111 3% Investment Property 2 2 0% Equity-accounted investees 3 3 -3% Other investments 372 300 24% Rec
Slide 21: Segmental Information
Segmental Information
Slide 22: Revenue breakdown
Revenue breakdown Revenue by division Revenue by channel Revenue by geography 9% 4% 9% 5% 20% 12% 13% 80% 88% 3% 4% 6% 4% 79% 71% 4% 95% 96% Q3-FY22 - Outer circle Q3-FY22 - Outer circle Q3-FY22 - Outer circle Q3-FY21 - Inner circle Q3-FY21 - Inner circle Q3-FY21 - Inner circle KSA CIS Egypt Others
Slide 23: LFL Revenue Growth
LFL Revenue Growth Saudi retail International retail Saudi LFL revenues down 8.6% vs. pre pandemic levels due to LFL improvement due to gradual removal of Covid-19 restrictions. Covid-19 restrictions during the quarter. Target low single digit LFL growth. Q3-FY20 Q4-FY20 Q1-FY21 Q2-FY21 Q3-FY21 Q4-F
Slide 24: Store base rationalization slowing down
Store base rationalization slowing down Return to parent slide Store network evolution Gross Floor Area, SQM vs Sales Density, SAR Net store openings of 2 stores in Q3-FY22, mainly driven by F&B store Annualized 9M-FY22 revenue per sqm (+58% yoy) on an upward openings. trajectory as we continue to g
Slide 25: Saudi Arabia remains core market, key focus
Saudi Arabia remains core market, key focus Saudi retail store network evolution Gross Floor Area, SQM vs Sales Density, SAR Annualized 9M-FY22 KSA revenue per sqm up +53% yoy and +3.4 % compared to 9M-FY20 13,211 13,656 1,202 1,171 17 22 12 13 8 15 8,907 -22 (29) -44 1,120 -48 1,089 -50 348 -59 336
Slide 26: Rapid growth in online sales
Rapid growth in online sales Online revenues, SAR million E-commerce, % of total retail sales 82 5.1% 5.6% 4.4% 4.1% 4.1% 63 3.7% 3.9% 55 55 3.2% 34 38 0.8% 12 Q3-FY20 Q1-FY21 Q2-FY21 Q3-FY21 Q4-FY21 Q2-FY22 Q3-FY22 Q2-FY21 Q3-FY21 Q4-FY21 Q1-FY22 Q2-FY22 Q3-FY21 Ecommerce normalizes: ▪ Online sales
Slide 27: F&B segment poised for recovery and growth
F&B segment poised for recovery and growth Total number of transactions (million) F&B store network evolution 17% 3.3 3.3 3.3 322 3.1 2.7 2.8 5% 5% 314 2% 312 19 15 13 0% 8 8 7 304 4 -3 303 -4 -5 303 -5 -4 300 -9 -17 -17% Q2-FY21 Q3-FY21 Q4-FY21 Q1-FY22 Q2-FY22 Q3-FY22 Q1-FY21 Q2-FY21 Q3-FY21 Q4-FY2
Slide 28: Supplementary Information
Supplementary Information
Slide 29: Alhokair Footprint
Alhokair Footprint Return to parent slide US operations not represented in the graph Fawaz Abdulaziz Alhokair Co. 9M-FY22 Results Presentation 29
Slide 30: Alhokair Brand Portfolio – 85 Brands
Alhokair Brand Portfolio – 85 Brands* Return to parent slide Fawaz Abdulaziz Alhokair Co. 9M-FY22 Results Presentation 30
Slide 31: Intensive balance sheet restructuring
Intensive balance sheet restructuring Return to parent slide Alhokair continues to rationalize inventory balances. Shrinkage and ageing provisions to be in line with guidance of c.1-2% of sales. Phase Target Income statement impact Q4-FY2020 Asset impairments SAR 239.4 million Q1-FY2021 Q4-FY2020 Ma
Slide 32: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 33: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 34: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 35: Strengthening our corporate governance
Strengthening our corporate governance An ongoing governance and leadership journey Board of Directors Executive management ▪ Refreshed board with a healthy balance of skills & experience ▪ Strong executive team delivering on a clear strategy ▪ Four independent NEDs appointed in August 2020 ▪ Recent
Slide 36: Our vision
Our vision Our vision is to be the leading lifestyle retailer of choice in Saudi Arabia and our selected strategic markets 01 02 03 04 Expand scale and reach to become franchisor of .Expand portfolio, modernize network and improve Improve omnichannel capabilities by Develop effective and efficient o
Slide 37: Our market
Our market The Saudi retail and F&B sectors enjoy strong fundamentals underpinned by favourable demographics, evolving lifestyles and low e-commerce penetration Supportive Growing F&B Retail growth driven Supportive demographics sector by e-commerce infrastructure 62% of Saudis between 6% p.a. growt
Slide 38: Vogacloset: value accretive for Alhokair
Vogacloset: value accretive for Alhokair Strengthening our omnichannel experience to extend our leadership position Transition to lifestyle retailer E-commerce arm Positive financial impact ▪ Omnichannel offering ▪ Proven leadership ▪ Profitable player ▪ Mitigate risk, gain market share ▪ Additional
Slide 39: Vogacloset: an enriched, integrated ecosystem
Vogacloset: an enriched, integrated ecosystem BACK-END FRONT-END POST SALES MERCHANDISING SYSTEM UNMATCHED CUSTOMER SERVICE Data driven sorting and recommendation engine Vogacloset AlHokair Brands Tenant Bilingual CRM Brands Brands Free returns BACK-BONE OPERATING picked up by SYSTEM A unique omnich
Slide 40: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Fawaz Abdulaziz Alhokair Co. (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 backgrou
Slide 41: Thank you
Thank you Investor Relations investors.relations@fahretail.com
Fawaz Abdulaziz Alhokair — 9M-FY22 Earnings Presentation on 6ix