Ceconomy Ag · XETR:CEC
Ceconomy — Investor Presentation (June 2018)
55 slides from Ceconomy's investor presentation, June 2018
Slide 1: CECONOMY AG "Equity Story"
CECONOMY AG “Equity Story“ Investor Presentation, May/June 2018
Slide 2: Disclaimer and Notes
DISCLAIMER (segmental or other) information in the consolidated financial statements of the former METRO Group and, thus, may not be fully comparable to such financial statements. Historical our business, results of operations, financial position or cash flows. There are, however, material limitatio
Slide 3: Disclaimer and Notes (cont'd)
Disclaimer and Notes (cont’d) We do not undertake any obligation to publicly update any CECONOMY operates, in part, in industries and channels for information. Neither we nor any third party shall be responsible forward-looking statements or to conform them to events or which it is difficult to obta
Slide 4: CECONOMY at a glance: Europe's largest CE platform
CECONOMY at a glance: Europe’s largest CE platform CECONOMY acts as a platform that brings together various businesses, concepts, formats and brands active in the area of Consumer Electronics. All these activities are based on a customer community monetisation business model. We are the 22.2 bn € sa
Slide 5: Why invest in CECONOMY?
Why invest in CECONOMY? #1 #2 #3 #4 CECONOMY LEADS CECONOMY IS THE CECONOMY HAS A CECONOMY HAS THE LEADER IN STRONG THE POTENTIAL TO CONSOLIDATION MULTI-CHANNEL FINANCIAL INCREASE AND AND SCALE PROFILE MARGINS AND TRANSFORMATION FREE CASH FLOW IN A DYNAMIC GENERATION RETAIL CATEGORY Investor Present
Slide 6: CECONOMY Strategy
// CECONOMY Strategy May/June 2018 // 6
Slide 7: The largest Consumer Electronics Player in Europe with #1 positions in 9 countries
The largest Consumer Electronics Player in Europe FACT BOX with #1 positions in 9 countries Market shares 13.4% 13.5% 13.2% Sweden Russia 14/15 15/16 16/17 The Netherlands 27 57 DIVERSIFIED EXPOSURE Belgium WITH 1,053 STORES & WEBSHOPS ACROSS 15 49 Germany Poland COUNTRIES IN EUROPE 28 429 86 2 27 5
Slide 8: One of the leading multi-channel players in Europe
One of the leading multi-channel players in Europe Online Sales (in € million) Pick-up rate (in % of online orders) 2,407 42% 42% 40% 1,952 1,766 FY 14/15 FY 15/16 FY 16/17 FY 14/15 FY 15/16 FY 16/17 Online Sales Share (in %) Online Visitors (in million) 1,318 10.9% 1,193 8.9% 1,013 8.1% FY 14/15 FY
Slide 9: We are multi-channel
We are multi-channel 30% of all store visitors have initially visited our webshop Full multi-channel customer journey leads to a More than 50% of conversion rate >20% online purchases started in one of our stores There is a 60% higher likelihood of selling a 63% of our web shop product if the visito
Slide 10: Multi-channel is the winning model
Multi-channel is the winning model Where do German consumers buy CE products? Sales share in Germany (in %) 5% 6% 7% 8% 10% 11% 16% 17% 17% 17% 17% 17% Multi-channel offering with increasing relevance for consumers 78% 77% 76% 74% 73% 72% 2011 2012 2013 2014 2015 2016 Online business of brick&mortar
Slide 11: The store network is an asset again and integral part of multi-channel strategy
The store network is an asset again and integral part of CECONOMY’s multi-channel and services strategy Advantages of CECONOMY’s strong physical presence // Offering customers tangible product experiences // Showroom for exclusive and high-end products offering suppliers visibility of brands // Inst
Slide 12: CECONOMY offers the full CE assortment, reflecting a truly connected world
CECONOMY offers the full CE assortment, reflecting a truly “connected world” Other2 Product Category Entertainment Computer Hardware1 Breakdown FY 16/17 6% & Accessories 10% 21% Telecommunications 19% 22% Brown Goods White Goods 22% 1 Telecommunication devices such as iPads without SIM card included
Slide 13: CECONOMY is highly relevant to its suppliers and a strategic partner of choice
CECONOMY is highly relevant to its suppliers and a strategic partner of choice Sales Share in % (CECONOMY FY 16/17) CECONOMY Supplier CECONOMY’s Weight at Vendor / Supplier1 (FY16/17) 20% Supplier 1 18% 11% Supplier 2 13% Read: CECONOMY 6% Supplier 3 29% generates 20 % of its sales with “Supplier 1”
Slide 14: We are solutions: a full range of Services & Solutions
We are solutions: a full range of Services & Solutions FACT BOX Services & Solutions Sales along the customer journey (in € million) 1,301 1,379 994 (Pre-)Buy Set-up & Use Repair 14/15 15/16 16/17 Consumer credit and Personalised products Refurbishment leasing Customer advisory & In-warran
Slide 15: We are customer-centric: >14.5 million loyal members
We are customer-centric: >14.5 million loyal members in our customer programmes >14.5m 25% members in our customer programmes of all sales in Germany are generated by across all countries German MediaMarkt Club members 3.8m customer program members in >600k Saturn Card holders in just 4 months Germa
Slide 16: CECONOMY Q2/H1 2017/18
// CECONOMY Q2/H1 2017/18 May/June 2018 // 16
Slide 17: Majority of Q1 EBITDA decline has been recovered in Q2
Majority of Q1 EBITDA decline has been recovered in Q2, supported by anticipated non-recurring effects (€m) (€m) +58 (€m) -0.2% +185 +0.8% +56 5,258 fx-adjusted 5,249 38 97 40 -1,362 -19 -1,547 Q2 16/17 Q2 17/18 Q2 16/17 Q2 17/18 Q2 16/17 Q2 17/18 Q2 16/17 Q2 17/18 Sales EBITDA* EBIT* Change in Net
Slide 18: MediaMarktSaturn and Fnac Darty start European Retail Alliance
MediaMarktSaturn and Fnac Darty start “European Retail Alliance” Partnerships Private Label Innovation Insights Sourcing // Establish a joint strategic supplier // Creation of a single private label // Cooperation in relation to the // Gain insights from CRM data, partnership management on an sourci
Slide 19: Group sales growth driven by Turkey and Italy
Group sales growth driven by Turkey and Italy Total and LfL Sales (fx-adjusted, yoy change) Total LfL Highlights 0.8% 0.3% // Negative impact from absence of the Saturn VAT campaign in the previous year partly offset by early Easter business in current year // Adjusted for both effects, fx-adjusted
Slide 20: Core online sales grew +11%, in total accounting for 12% of sales
Core online sales grew +11%, in total accounting for 12% of sales Online Sales (in €m) Highlights +5% +13% +11% 639 2,522 611 excl. pure player 2,239 // Online generated sales of MediaMarkt and Saturn increased by +11% yoy (or 5% incl. pure player) // Online now accounts for 12.2% of total sales vs.
Slide 21: Strong growth of Services & Solutions sales
Strong growth of Services & Solutions sales Services & Solutions Sales (in €m) Highlights +15% +10% 334 1,443 292 1,316 // Services & Solutions sales up +15% yoy, driven by all categories, incl. insurances, financing, extended warranties, telco contracts and repair services // Services & Solutions n
Slide 22: Sustained growth in the number of members of our customer programmes
Sustained growth in the number of members of our customer programmes Members in Customer Programmes MM Club Saturn Card* Highlights in Germany (in k) +693 +845 +777 +662 5,343 // German MediaMarkt Club with sustained growth in 4,650 3,805 the number of members, counting 4.1m in March 3,028 2,366 3,6
Slide 23: Continued reduction in average store size
Continued reduction in average store size Number of stores Q1 17/18 Q2 17/18 Highlights Incl. 85 Incl. 98 Shop-in-Shops Shop-in-Shops 105 -1 1,147 -10 // Selective store expansion continued with 7 openings 1,053 97 -11 (excl. Shop-in-Shops) 8 // Out of this, 5 stores opened in Turkey and 1 store eac
Slide 24: Majority of Q1 EBITDA decline has been recovered in Q2, including non-recurring effects
Majority of Q1 EBITDA decline has been recovered in Q2, including anticipated non-recurring effects EBITDA & EBIT excl. Fnac Darty (in €m) EBITDA EBIT Highlights +36 +37 76 18 // Broadly stable gross margin at 20.0% (+0.1%p.) 40 // Support from anticipated non-recurring effects such as the absence o
Slide 25: EPS impacted by impairment of METRO AG stake
EPS impacted by impairment of METRO AG stake, despite positive EBIT development EURm Q2 2016/17 Q2 2017/18 Change Highlights EBITDA 40 97 56 EBITDA excl. Fnac Darty 40 76 36 EBITDA excl. Fnac Darty margin 0.8% 1.4% 0.7%p. Includes our share of Fnac Darty’s H2 2017 net income in the amount of €21m EB
Slide 26: Higher NWC outflow in H1 2017/18 weighed on Free Cash Flow
Higher NWC outflow in H1 2017/18 weighed on Free Cash Flow H1 2017/18: Free Cash Flow (in €m) Highlights 411 Incl. temporary improvement of trade payables Incl. reversal of non- cash relevant Fnac Darty profit contribution // NWC in Q2 supported by temporary improvement of -132 -73 114 trade payable
Slide 27: Sales-target dependent supplier contributions account for only about 5% of margin
Sales-target dependent supplier contributions account for only about 5% of the group’s combined front and back margin Front Margin and Back Margin Split 1 Comments 100% 100% 4% 5% Variable purchase conditions (back margin) // The vast majority of our gross profit relates to either 14% 14% straight f
Slide 28: Outlook
Outlook The outlook is adjusted for currency effects and portfolio changes. FY 2016/171 FY 2017/18 Confirmed €m Total 1 Salessales 22,155 Slight increase 2 ✓ EBITDA (excl. Fnac Darty) 704 At least mid single-digit % growth ✓ EBIT (excl. Fnac Darty) 471 At least mid single-digit % growth ✓ Fnac Darty
Slide 29: Building blocks for Q3 and Q4 2017/18
Building blocks for Q3 and Q4 2017/18 Illustrative EBIT (excl. Fnac Darty) At least mid-single digit % growth + Phasing effect Italy + Fifa World Cup + Improvements in + Improvements in Italy Italy + Restructuring Shift of December + No VAT campaign entities (RU, SE, + Restructuring sales into mor
Slide 30: CECONOMY Targets, Value Drivers & Enablers
// CECONOMY Targets, Value Drivers & Enablers May/June 2018 // 30
Slide 31: CECONOMY is well progressing in the different change phases in the CE space
CECONOMY is well progressing in the different change phases in the Consumer Electronics space Rationalisation Active management of country, brand and store portfolio, competitive cost base Digitalisation Digitalisation has changed customer behaviour, impacted retail processes and has created new bus
Slide 32: CECONOMY's plans show a clear and strong value creation potential
CECONOMY’s plans show a clear and strong value creation potential #1 #2 #4 #5 Category Value #3 Online, Services & Customer Selective driver Management, Mobile, Solutions Data / CRM Expansion Pricing, Supply Store Chain Enabler #6 #7 #8 Portfolio Competitive Cost Base Net Working Capital #9 Digital
Slide 33: What we plan to do in FY 2017/18
What we plan to do in FY 2017/18 Further develop Leader of consolidation store/online/mobile in the European CE sector experience Roll-out service Improve performance in “smartbars” and Russia and Sweden “@ home services” Milestones in FY 2017/18 Introduce multi-level Reach more than logistics conce
Slide 34: Key initiatives to further grow online/mobile/store
Key initiatives to further grow online/mobile/store // Expansion of online CE assortment from currently c. 350k SKUs to 1m SKUs Assortment // Dropshipment initiatives to increase assortment without capital locked Online Sales1 (% of total sales) // Taking advantage of our high traffic we include mor
Slide 35: Increased services penetration will also drive sales and margin targets
Increased services penetration will also drive CECONOMY’s sales and margin targets // Full roll-out of in-store service and repair “smart bars” until the end of 2018 In-store services (642 already in place) // Additional services to be added: e.g. trade in, personalisation of products Services & Sol
Slide 36: CECONOMY also continues selective store expansion
CECONOMY also continues selective store expansion contributing to the overall sales growth target Number of stores (at period end) Formats and measures 1,053 1,023 // Roll-out especially of smaller store formats such as proximity 1,007 986 and shop-in-shop concepts // Focus on smaller formats leads
Slide 37: Ongoing portfolio improvement is well on track
Ongoing portfolio improvement is well on track; we are committed to find strategic answers for Russia and Sweden until end of 2018 redcoon Turkey Russia Sweden // Restructuring of redcoon // Succeeded in turning // Initiated cost savings and // Initiated cost savings completed around Turkey margin m
Slide 38: New category management initiatives aim at the right range and assortment
New category management initiatives aim offering the right range and assortment at the right price Preparation Implementation Results // Change of organizational structure by // Category management pilots have been // Aligning brand and price structure to centralizing purchasing activities on a star
Slide 39: Introducing multi-level logistics concepts
Introducing multi-level logistics concepts with central warehouses, cross- docking platforms and regional delivery hubs Central warehouses Regional delivery hubs Online warehouses (Parcel factory) // Pilot central warehouses introduced // Regional warehouses especially for // Expansion of eCommerce
Slide 40: Dropshipment
Case study: Germany Centralisation of supply chain processes from predominantly direct store delivery to a more central and regional structure Product flows and logistics locations: Today Product flows and logistics locations: Target picture INDUSTRY INDUSTRY Central Regional warehouse warehouses Pa
Slide 41: End-to-end supply chain set-up including centralisation of procurement
Case study: Germany End-to-end supply chain set-up including centralisation of procurement and systems infrastructure offers great value potential Optimisation levers Roadmap to achieve target picture // Solution based on 3 interlinked pillars (procurement, 1 Product availability 1 logistics infrast
Slide 42: CECONOMY's overall mid-term ambitions
CECONOMY’s overall mid-term ambitions CORE METRICS 2015/16 2016/17 MID-TERM COMMENTARY AMBITIONS // Moderate market growth expected Sales1 €21.9bn €22.2bn > 3% CAGR // // Further increase in market shares in core markets Online, mobile, multi-channel, CRM and Services & (1.5% yoy) (1.4% yoy) Solutio
Slide 43: Impressions
// Impressions May/June 2018 // 43
Slide 44: Smart Bars
Smart Bars Investor Presentation Public May/June 2018 // 44
Slide 45: In-store experience areas
In-store experience areas Investor Presentation Public May/June 2018 // 45
Slide 46: Pick-up points for online orders
Pick-up points for online orders Investor Presentation Public May/June 2018 // 46
Slide 47: Digital shelf labels
Digital shelf labels Investor Presentation Public May/June 2018 // 47
Slide 48: Back Up
// Back Up May/June 2018 // 48
Slide 49: Sales & store network per 30 September 2017
Sales & store network per 30 September 2017 Sales (€m) Number of Stores FY 2015/16 FY 2016/17 FY 2015/16 Openings Closures FY 2016/17 Germany 10,273 10,556 424 5 - 429 Austria 1,139 1,169 49 1 - 50 Switzerland 674 635 28 - -1 27 Hungary 272 302 22 2 - 24 DACH 12,358 12,662 523 8 -1 530 Belgium 681 6
Slide 50: Store network per 31 March 2018
Store network per 31 March 2018 Openings Closures 31/12/2017 Q2 2017/18 Q2 2017/18 30/03/2018 Austria 52 52 Belgium 29 29 Germany 431 1 -1 431 Greece 12 12 Hungary 24 24 Italy 116 116 Luxembourg 2 2 Netherlands 49 49 Poland 87 1 -3 85 Shop-in- Portugal 10 Shop 10 Russia 141 1 -6 136 Spain 84 84 Swed
Slide 51: Net Working Capital
Net Working Capital €m 30/09/2016 31/03/2017 Change 30/09/2017 31/03/2018 Change Inventories 2,393 2,956 563 2,553 2,972 419 Trade receivables 324 307 -17 498 517 19 Receivables due from suppliers1 1,212 1,184 -28 1,246 1,183 -63 Receivables from credit cards 28 24 -4 68 65 -3 Advance payments on in
Slide 52: Fnac Darty consolidation
Fnac Darty consolidation FNAC H2 2017 FNAC H1 2018 FNAC H2 2018 4/6 CEC Q4 16/17 CEC Q1 17/18 CEC Q2 17/18 CEC Q3 17/18 CEC Q4 17/18 CEC Q1 18/19 30.06. 01.09. 30.09. 31.12. 31.03. 30.06. 30.09. 31.12. 2017 2017 2017 2017 2018 2018 2018 2018 // Our 24.33% stake in Fnac Darty is accounted for as “Inv
Slide 53: Deep-dive: Back Margin Accounting Method for Variable Purchase Conditions
Deep-dive: Back Margin Accounting Method for Variable Purchase Conditions Step 3: Settlement of payables & Step 1: Purchase of inventory Step 2: Sale of goods receivables Assets (EURm) Liabilities (EURm) Assets (EURm) Liabilities (EURm) Assets (EURm) Liabilities (EURm) Cash Equity Cash Equity Cash E
Slide 54: Upcoming events
Upcoming events Q3/9M 2017/18 Results Tuesday, 14 August 2018 Q4/FY 2017/18 Trading Statement Thursday, 25 October 2018 FY 2017/18 Results Wednesday, 19 December 2018 Investor Presentation Public May/June 2018 // 54
Slide 55: Date: 22/05/2018
Date: 22/05/2018 // 55