Tokmanni Group Oyj · OMXHEX:TOKMAN
Tokmanni Group Oyj — FY2016 Earnings Presentation
30 slides from Tokmanni Group Oyj's earnings presentation, Feb 8, 2017
Slide 1: Q4 and Full Year 2016
Q4 and Full Year 2016 CEO Heikki Väänänen and CFO Sixten Hjort
Slide 2: 2016 Highlight - Revenue grew and profitability improved
2016 Highlight - Revenue grew and profitability improved • Revenue grew in line with our expectations 2.7% • With the exception of Q3, Like-for-Like (LFL) revenue grew all year. Full Year 2016 LFL remained at the previous year’s level, -0.1%. • The number of baskets increased from 43.3 million to 44
Slide 3: Dividend proposal above dividend policy enabled by strong cash flow
Dividend proposal above dividend policy enabled by strong cash flow and good financial position For the financial period ending December 31st 2016 the Board of Directors proposes to pay • dividend according to the company dividend policy 0.41 euro per share • an extraordinary dividend of 0.10 euro p
Slide 4: Finnish economic uncertainty continued to affect the retail market
The uncertainty of the Finnish economy continued to affect the Finnish retail market • Competition remained fierce and particularly department stores suffered, Anttila went bankrupted • The liberalization of opening hours reshuffled market structures in 2016 – benefitted larger stores and hypermarke
Slide 5: For the full year 2016 the retail market recovered slightly
For the full year 2016 the retail market recovered slightly compared to previous years Sales development% 4,0 3,0 3,0 2,9 2,7 2,0 1,1 0,0 -0,1 -0,3 0,0 -0,6 -0,8 -2,0 -1,4 -1,7 -2,9 -4,0 -4,7 -6,0 -5,6 -6,3 -8,0 2013 2014 2015 2016 Non-grocery market Total market Tokmanni Total sales Tokmanni LFL So
Slide 6: The market turbulence continued throughout the year 2016
The market turbulence continued throughout the year 2016 Sales development% 8,0 6,0 6,0 5,4 5,4 4,5 4,0 3,3 2,9 2,5 2,8 2,0 -0,4 0,8 0,0 0,3 -0,7 -2,0 -1,5 -3,2 -4,0 -6,0 -8,0 -7,1 -8,1 -10,0 Q1/16 Q2/16 Q3/16 Q4/16 Non-grocery market Total market Tokmanni Total sales Tokmanni LFL Source: PTY and To
Slide 7: In 2016 we opened 7 new and relocated stores
In 2016 we opened 7 new and relocated stores 2016 Tokmanni opened 6 new stores and relocated 1 store. 1 store size reduction was made. • At the end of 2016 Tokmanni had 162 (156) stores • During the fourth quarter 2016, Tokmanni opened four new stores in store space released by Anttila • In 2016 Tok
Slide 8: Financial development
Financial development
Slide 9: Revenue grew
Revenue grew Anttila’s clearance sale affected Like-for-Like growth Revenue M€ 850,0 +2,7% 775,8 • Q4 Revenue +2.8%, LFL growth +0.8% 800,0 755,3 • FY16 Revenue +2,7%, LFL revenue at last 750,0 700,0 year’s level -0.1%. 650,0 • The development was impacted by the third 600,0 quarter market turbulenc
Slide 10: Gross profit improved
Gross profit improved Adj. gross profit M€ 300,0 Gross profit improved in accordance 250,0 258,1 267,9 with strategy: 200,0 +4.0%% • efficiency improvements in sourcing 150,0 • increased imports 100,0 • better campaign management 50,0 80,5 83,5 • sales mix 0,0 1-12/15 1-12/16 Q4/15 Q4/16 Adjusted Gr
Slide 11: Improving sourcing efficiency through the Shanghai office
Tokmanni has focused on improving the sourcing efficiency and sourcing through its Shanghai office which has had positive impact on margins Direct import share of sales% Private Label share of PLNL products has grown Direct import Out of which through Shanghai Private PLNL*-products Labels 34% 10 12
Slide 12: Adjusted operating cost share of revenue decreased
Adjusted operating cost share of revenue decreased • Tight cost control continues, adjusted operating costs’ share of revenue decreased from 27.0% to 26.9% • Increase in operating costs was primarily due to new stores and extended opening hours Opex 2015 New stores and Extended Marketing Real estate
Slide 13: Improved gross profit and tight cost control support adj. EBITDA
Improved gross profit and tight cost control support profitability (adj. EBITDA) development M€ 70,0 Profitability improved 60,0 62,8 • Efficiency improvements in sourcing 58,5 50,0 • Increase in Private Label share 40,0 • Increased use of Shanghai office 30,0 26,4 27,3 • Improved campaign managemen
Slide 14: Capital expenditure at lower level than last year
Capital expenditure at lower level than last year • 2016 capex EUR 7.4* million (9.0) • Capital expenditure for 2017 is expected to be higher than previous years, due to the selling space increase of at least 22,000 square meters • Opening a new medium sized store requires approximately 200€/square
Slide 15: Improved result and working capital led to strong cash flow
Improved result and more efficient working capital management led to strong cash flow • Cash flow from operating activities almost doubled EUR 62.5 million (35.0) • Voluntary prepayment of loan of EUR 25.0 million in November • Cash and cash equivalents at the end of the year 2016 totaled EUR 57.6 m
Slide 16: Strong balance sheet, net debt/adj. EBITDA 1.85
Strong balance sheet, net debt/adj. EBITDA 1.85 ASSETS 31.12.2016 31.12.2015 EQUITY AND LIABILITIES 31.12.2016 31.12.2015 NON-CURRENT ASSETS Equity attributable to the equity holders of the parent Property, plant and equipment company 90.7 92.7 Goodwill Share capital 0.1 0.0 128.6 128.6 Other intang
Slide 17: 2017 Outlook
2017 Outlook TOKMANNI
Slide 18: Market outlook
Market outlook • During 2016 the Finnish economy has seen slight recovery which has been primarily based on the growth of private consumption • The Finnish Finance Ministry predicts that GDP will grow by 0.9% in 2017 and 1.0% in 2018 • The growth of private consumption will temporarily slowdown in 2
Slide 19: Tokmanni's outlook for 2017: good growth, profitability improves
Tokmanni’s outlook for 2017: good growth, profitability improves • Tokmanni’s expects good revenue growth for 2017 based on the revenue from new stores opened in 2016 and 2017 and low single digit Like-for Like revenue growth • Profitability (adjusted EBITDA%) is expected to improve from the previou
Slide 20: Financial targets and dividend policy
Financial targets and dividend policy Long-term financial targets Historical performance 2014 2015 2016 1. Like-for-Like Tokmanni Group’s long-term target is to achieve low single Low single digit like-for-like net sales growth assuming current market Tokmanni -0,3% -0,6% -0,1% revenue digit conditi
Slide 21: TOKMANNI Year 2016 and Q4/16
21 8.2.2017 TOKMANNI Year 2016 and Q4/16
Slide 22: Appendix
Tokmanni’s 2016 Financial Statements, Corporate Responsibility report and Corporate Governance Statement will be published during week 8 after on the Group’s webpage ir.tokmanni.fi. IR Contact information: Head of IR Joséphine Mickwitz Josephine.mickwitz@tokmanni.fi Tel: +358 400 784 889 Appendix ir
Slide 23: Revenue and profitability are subject to seasonality
Tokmanni’s revenue and profitability are subject to seasonality 30,0 300,0 27,3 26,4 25,0 250,0 24,4 20,0 200,0 18,1 17,3 17,3 15,0 15,2 150,0 13,5 12,9 10,0 100,0 5,0 50,0 2,0 1,8 2,2 0,0 0,0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/2016 Q3/2016 Q4/2016 Revenue Adj. EBITDA 23 8.2.20
Slide 24: Key figures
Key figures 10-12/2016 10-12/2015 Change% 1-12/2016 1-12/2015 Change% Revenue, MEUR 238.1 231.7 2.8% 775.8 755.3 2.7% Like-for-like revenue development, % 0.8 -0.1 Number of baskets, M 12.8 12.4 3.5% 44.7 43.3 3.4% Gross profit, MEUR 84.2 80.8 4.2% 268.4 257.5 4.2% Gross margin, % 35.3 34.9 34.6 34.
Slide 25: Adjustments affecting comparability
Adjustments affecting comparability MEUR 10-12/2016 10-12/2015 1-12/2016 1-12/2015 Gross profit 84.2 80.8 268.4 257.5 Changes in fair value of currency derivatives -0.7 -0.3 -0.5 0.6 Adjusted Gross Profit 83.5 80.5 267.9 258.1 Operating expenses -56.8 -56.0 -207.4 -207.7 Changes in fair value of ele
Slide 26: In 2017 we will open at least 11 new stores
In 2017 we will open a least 11 new stores In addition negotiations regarding Anttila store space continue Store Schedule Selling space change m2 Närpiö New Q1 2 250 Kotka Relocation Q1 340 Ylöjärvi Relocation Q1 1 606 Parkano New Q2 1 950 Helsinki New Q2 1 800 Haapajärvi New Spring 1 700 Haukipudas
Slide 27: CFO Sixten Hjort to retire from the company
CFO Sixten Hjort to retire from the company • Tokmanni’s Deputy CEO and CFO M.Sc.(Econ.) Sixten Hjort (61) has announced that he will retire from the company by the end of June • Successor recruitment process initiated immediately 27 8.2.2017 TOKMANNI Year 2016 and Q4/16
Slide 28: New members in the Executive Group
New members in the Executive Group • M.Sc.(Econ.) Mathias Kivikoski Mathias Kivikoski Hanna Nikoskelainen (43) has been appointed Sales Director and member of the Executive Group as of January 16th 2017 • M.Sc. (Econ.) Hanna Nikoskelainen (38) has been appointed Business Development Director and mem
Slide 29: Our strategy in a nutshell
Our strategy in a nutshell 29 8.2.2017 TOKMANNI Year 2016 and Q4/16
Slide 30: Tokmanni has developed into a leading modern general discounter
Tokmanni has developed from regional individual chains to a leading modern general discounter 2004 – 2008 2009 – 2011 1970s – 2003 Aggressive growth Reorganisation and 2012 – 2015 Entrepreneur-driven through market integration of Creation of a modern discount retailer discount retailer consolidation