Slide 1: Preliminary 4Q19 & 4Q19/20 Results Presentation
PRELIMINARY 4Q19 & 4Q19/20 RESULTS PRESENTATION WARSAW 4TH FEBRUARY 2020
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) was prepared by LPP SA (the “Company”) with a due care. Still, it may contain certain inconsistencies or omissions. The Presentation does not contain a complete or thorough financial analysis of the Company and does not present its standing or prospe
Slide 3: Agenda
1 . 4 Q 1 9 f i n a n cia l r e su lts 2 . 4 Q 1 9 /2 0 f i n a n cia l r e su lts 3 . O u t lo o k f o r 2 0 2 0 /2 1 GLOBAL ASPIRATIONS 3
Slide 4: On-line and off-line growth continues
On-line and off-line growth continues OFF-LINE 1,785 STORES 39 +14.3% m2 COUNTRIES +3.7% LFL +13.4% 30 COUNTRIES 25 COUNTRIES ON-LINE +46% SALES GROUP REVENUES GLOBAL ASPIRATIONS 4
Slide 5: LPP's presence in 39 countries
LPP’s presence in 39 countries 5 31 No. of 22 332 31.12.2019 YoY 23 stores 3 LPP GROUP 1,785 + 20 1 905 19 Reserved 463 -1 90 102 57 10 Cropp 369 -4 31 6 29 59 House 326 -6 5 22 Mohito 291 - 5 25 Sinsay 328 + 56 Outlets 8 - 20 3 on-line + off-line on-line off-line 1 1 2 1 GLOBAL ASPIRATIONS 5
Slide 6: LFL and e-commerce growth
LFL and e-commerce growth LFL DYNAMICS ON-LINE SALES (local currencies) (PLN m) 12.9% 14.6% 365.4 11.4% 9.2% 252.2 258.1 226.6 178.5 192.2 2.3% 146.4 130.9 150.5 3.6% 4.2% 1.3% 2.1% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 • LFLs were positive in each
Slide 7: Growth in all brands
Growth in all brands REVENUES BY BRANDS 4Q19 FLOORSPACE (PLN m) (by brands) Reserved 1,063 + 5% YoY ths m2 4Q18 4Q19 YoY Cropp 354 + 6% YoY LPP GROUP 1,091.3 1,246.9 14.3% House 314 + 8% YoY Reserved 616.7 673.5 9.2% Mohito 231 +8% YoY Cropp 134.0 150.3 12.1% House 116.2 129.9 11.7% Sinsay 376 + 60%
Slide 8: Foreign revenues exceed Polish ones
Foreign revenues exceed Polish ones REVENUES BY REGIONS 4Q19 FLOORSPACE (PLN m) (by regions) Poland 1,329 + 5% YoY ths m2 4Q18 4Q19 YoY LPP GROUP 1,091.3 1,246.9 14.3% Europe 794 + 29% YoY Poland 529.5 542.7 2.5% CIS 604 + 26% YoY Europe 279.4 374.2 33.9% CIS 275.4 321.5 16.8% ME 6 + 21% YoY ME 7.1
Slide 9: Double-digit group revenue growth
Double-digit group revenue growth GROUP REVENUES REVENUES/ M2 (PLN m) 3,000 15.9% 16.0% 20.2% 12.8% 10.4% 15.7% 8.0% 14.9% 15.2% 25% PLN (monthly) 4Q18 4Q19 YoY 2,500 20% LPP GROUP retail 676 652 -3.6% 2,000 15% 1,500 Poland 735 690 -6.2% 10% 1,000 Europe 652 624 -4.3% 500 5% CIS 583 618 6.0% 0 0% 4
Slide 10: High gross profit margin
High gross profit margin QUARTERLY GROSS PROFIT MARGIN AVERAGE QUARTERLY PLN/US$ HIGHER YOY FX FOR SS 2020 PURCHASES 65% 59.7% 59.9% 59.3% 60% 58.0% 58.7% 3.9 3.9 3.8 3.8 55% 3.7 3.8 3.8 3.6 50% 3.6 51.0% 49.6% 45% 45.1% 3.4 43.4% 40% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 4Q17 1Q18 2Q18 3Q18
Slide 11: Operating costs under control
Operating costs under control COSTS OF OWN STORES/ M2 SG&A COSTS/ M2 (IAS17) (IAS17) -4% YoY +1% YoY 216 212 212 207 207 203 300 297 295 292 294 294 201 203 198 279 277 283 61 62 58 57 59 60 61 58 58 61 60 58 57 55 53 54 52 53 94 90 96 93 93 90 88 90 87 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 4
Slide 12: 4Q19 net income growth
4Q19 net income growth 4Q18 4Q19* 4Q19* PLN m YoY IAS17 IFRS16 IAS17 Revenues 2,372.7 2,733.2 15.2% 2,733.2 • Continuation of double-digit group revenue growth Gross profit margin 59.9% 58.7% -1.2pp. 58.7% due to: on-line sales development, floorspace increase and positive LFLs. SG&A costs 921.3 1,0
Slide 13: Double-digit EBIT growth in 2019
Double-digit EBIT growth in 2019 2018 2019* 2019 PLN m YoY IAS17 IFRS16 IAS17 Revenues 8,046.8 9,123.2 13.4% 9,123.2 • Double-digit group revenue growth: Gross profit margin 54.7% 53.4% -1.3pp. 53.4% • positive LFLs and floorspace increase, • on-line sales development (over PLN 1bn of revenues). SG&
Slide 14: Trade liabilities finance inventory
Trade liabilities finance inventory INVENTORY WORKING CAPITAL (PLN m) 1,766 1,748 1,776 PLN 158 m 1,573 1,474 PLN 33m 2,000 1,419 1,480 185 1,600 1,277 1,600 1,489 1,200 122 2,023 1,985 2,195 1,200 1,609 1,512 1,590 1,475 800 2,195 2,037 1,403 1,370 800 1,590 1,557 400 400 0 0 4Q17 1Q18 2Q18 3Q18 4Q
Slide 15: Net cash on the balance sheet
Net cash on the balance sheet NET DEBT AND NET DEBT/ EBITDA CAPEX (PLN m, IAS17) (PLN m) 200 -0.4x -0.3x -0.4x -0.5x -0.7x -0.5x -0.5x -0.5x 0.0 4Q18: 4Q19: -0.5x PLN 302m PLN 219m -100 150.2 58.7 -221 70.8 -400 -316 -0.5 85.9 32.0 91.8 -364 15.5 21.0 57.2 -525 -626 -596 178.1 -700 -594 151.7 160.0
Slide 16: 2019 executive summary
2019 executive summary 1 Foreign revenues exceed domestic ones. 2 Double-digit on-line sales growth. 3 Control of costs of stores. 4 Trade liabilities equalled with inventory. 5 Financial safety – net cash (IAS17). GLOBAL ASPIRATIONS 16
Slide 17: Agenda
1 . 4 Q 1 9 f i n a n cia l r e su lts 2 . 4 Q 1 9 /2 0 f i n a n cia l r e su lts 3 . O u t lo o k f o r 2 0 2 0 /2 1 GLOBAL ASPIRATIONS 17
Slide 18: Preliminary 4Q19/20 results (4 months)
Preliminary 4Q19/20 results (4 months) 4Q18/19 4Q19/20* PLN m IAS17 IFRS16 YoY Double-digit YoY sales growth in comparable 4-month quarters due to floorspace development and on-line sales. Revenues 3,063.7 3,495.2 14.1% Gross margin higher YoY despite stronger US$ Gross profit on sales 1,637.3 1,854
Slide 19: Preliminary 2019/20 results (13 months)
Preliminary 2019/20 results (13 months) 2018/19 2019/20* PLN m YoY YoY fall in gross margin IAS17 IFRS16 Double-digit YoY growth resulted, among others, due to floorspace from faster Sinsay Revenues 8,737.7 9,885.2 13.1% development, positive development and adverse LFLs and dynamic on-line weather
Slide 20: Agenda
1 . 4 Q 1 9 f i n a n cia l r e su lts 2 . 4 Q 1 9 /2 0 f i n a n cia l r e su lts 3 . O u t lo o k f o r 2 0 2 0 /2 1 GLOBAL ASPIRATIONS 20
Slide 21: Continuation of growths in 2020/21
Continuation of growths in 2020/21 Floorspace I.2020* I.2021 target YoY (ths m2) • Continuation of dynamic floorspace growths in 2020/21: 16% YoY. BY BRANDS • Entry with own stores on a new market – Northern Reserved 664.8 685.6 3% Macedonia (2H20). Cropp 147.9 170.9 16% • At the end of 2020/21 Rese
Slide 22: Further omnichannel development in 2020/21
Further omnichannel development in 2020/21 2019 2020/21 Exceeding PLN 1 bn Store inventory used for e-commerce orders based on RFID. As a result, of e-commerce revenues accelerated delivery, reduced logistics in 2019. costs and lower inventory. Personalization of communication with the customer base
Slide 23: Opportunities and risks for 2020/21
Opportunities and risks for 2020/21 Chances strong collections of all brands (positive LFL volatility and level in each brand), of US$, RUB, UAH further e-commerce and EUR, development on new growing HR costs, markets, further restrictions on adjustment of prices Sunday trade ban in to F
Slide 24: Q&A
LPP O (aii PHDUSEBRANLCOM )
Slide 25: Back-up
B a c k -up GLOBAL ASPIRATIONS 25
Slide 26: Network development
Network development Floorspace (ths m2) 31.12.2017 31.03.2018 30.06.2018 30.09.2018 31.12.2018 31.03.2019 30.06.2019 30.09.2019 31.12.2019 Reserved 562.3 561.0 582.2 584.9 616.7 609.7 631.6 643.1 673.5 Poland 266.8 264.9 264.7 259.3 273.3 263.3 266.2 270.4 275.2 Europe 160.8 162.2 178.1 182.3 191.7
Slide 27: End-2019 network development details
End-2019 network development details Floorspace (ths m2) 31.12.2018 31.12.2019 Nominal growth YoY growth No. of STORES 31.12.2018 31.12.2019 Nominal growth YoY growth Reserved 616.7 673.5 56.8 9% Reserved 464 463 -1 0% Poland 273.3 275.2 1.9 1% Poland 216 205 -11 -5% Europe 191.7 227.6 35.9 19% Euro
Slide 28: Changes in group 4Q19 floorspace
Changes in group 4Q19 floorspace CHANGE IN FLOORSPACE BY BRANDS CHANGE IN FLOORSPACE BY REGIONS (ths m2) (ths m2) +29.5 0 1,246.9 1,246.9 +36.4 +6.8 +2.1 +35.6 -4.1 1,168.0 +13.0 +30.4 +8.2 1,168.0 +78.9 ths m2 +78.9 ths m2 3Q19 Reserved Cropp House Mohito Sinsay Outlets 4Q19 3Q19 Poland Europe CIS
Slide 29: 4Q19 revenue and COGS split
4Q19 revenue and COGS split 4Q19 REVENUES BY REGIONS TOP5 REVENUES BY COUNTRIES IN 4Q19 (PLN m) (PLN m) ME CIS 0% Poland 1,329 22% Russia 447 Poland 49% Czech Rep. 150 Europe 29% Ukraine 148 4Q19 PURCHASES BY REGION Romania 123 (PLN m) Poland Other 2% 1% Turkey 6% China 32% Poland remains our most i
Slide 30: 2019 revenue and COGS split
2019 revenue and COGS split 2019 REVENUES BY REGIONS TOP5 REVENUES BY COUNTRIES IN 2019 (PLN m) (PLN m) ME CIS 0% Poland 4,419 24% Russia 1,660 Poland 49% Ukraine 470 Europe 27% Czech Rep. 462 2019 PURCHASES BY REGION Romania 376 (PLN m) Poland Other Turkey 3% 2% 7% China 36% Poland remains our most
Slide 31: Costs of stores and HQs
Costs of stores and HQs SG&A COSTS SG&A COSTS (PLN m, IFRS16 since 1Q19) (PLN m) 3,889 3,532 343 1167 311 234 252 263 262 233 280 977 +19% YoY 200 +7% YoY 639 660 641 669 693 720 2,555 2,722 628 620 636 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 2018 IAS17 2019 IFRS16 Costs of stores HQ & e-commer
Slide 32: IFRS16 impact in 4Q19
IFRS16 impact in 4Q19 IFRS16 adjustments 4Q19 4Q19 IFRS16 IAS17 rentals D&A interest FX differences tax Revenues 2,733.2 2,733.2 Gross profit 1,604.3 1,604.3 % gross profit margin 58.7% 58.7% SG&A costs 1, 062.8 140.9 -148.7 1,055.0 Other operating line -54.2 -54.2 EBIT 487.4 -140.9 148.7 495.1 Net
Slide 33: IFRS16 impact in 2019
IFRS16 impact in 2019 IFRS16 adjustments 2019 2019 IFRS16 IAS17 rentals D&A interest FX differences tax Revenues 9,123.2 9,123.2 Gross profit 4,874.4 4,874.4 % gross profit margin 53.4% 53.4% SG&A costs 3,889.4 563.4 -588.4 3,864.5 Other operating line -105.0 -105.0 EBIT 880.1 -563.4 588.4 905.1 Net
Slide 34: Glossary
Glossary Poland Retail sales in Poland and other sales of LPP SA. CEE Region including: Czech Republic, Slovakia, Hungary. Baltic Region including: Lithuania, Latvia, Estonia. CIS Region including: Russia, Ukraine, Belarus and from 2018 also Kazakhstan. SEE Region including: Bulgaria, Romania, Croat
Slide 35: Contact details
GDAŃSK HQs LPP SA Łąkowa 39/44 80-769 Gdańsk, Poland Tel. +48 58 76 96 900 Fax.+48 58 76 96 909 Email: lpp@lppsa.com DISTRIBUTION CENTRE LPP SA Tczewska 2 83-000 Pruszcz Gdański, Poland CONTACT FOR INVESTORS Email: LPP.investor.relations@lppsa.com CONTACT FOR MEDIA Email: media@lppsa.com CRACOW BRAN