Axfood AB · OMXSTO:AXFO
Axfood AB — Q4 2020 Earnings Presentation
48 slides from Axfood AB's earnings presentation, February 2021
Slide 1: A strong fourth quarter concludes an exceptional year
A strong fourth quarter concludes an exceptional year Year-end report 2020
Slide 2: Agenda
• Market update • Q4 2020 • FY 2020 and financial position • Update strategic agenda • Outlook 2021 • Q&A 2
Slide 3: Axfood – good and sustainable food for everyone
Axfood – good and sustainable food for everyone Annual net sales SEK 53.7 bn 11,451 employees (FTEs) Efficient sourcing and Customer reach logistics for all brands ~4.5 million customers a week and channels 310 Group-owned stores Innovative development of 133 franchise Hemköp 126 franchise Tempo pri
Slide 4: Market update
Market update 4
Slide 5: Continued strong market growth in food retail
• Strong and accelerated market growth within food retail as Continued consumers have continued to eat at home strong market • Exceptionally high online growth • Continued challenging situation for certain segments of the growth in food retail market, including for stores in central urban locations,
Slide 6: Food retail market
Food retail market Continued high market growth rate Food retail trade index, calendar adjusted (sales in stores and online) % 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 19 19 19 19 19 19 19 19 19 19 19 19
Slide 7: Food retail market online
Food retail market online Accelerated growth Food retail trade index (online sales) % 200 Food retail market 2020 Sales online 150 5% 100 95% Sales in stores 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 19 19 19 19 19 19 19 19 19 19 19 19 20 20
Slide 8: Market growth driven by Click and Collect
Food retail market online Market growth driven by Click and Collect Food retail trade index (online sales) % Home delivery Click and Collect in store (C&C) 3x 350 Sales split online segment Q4 2020 300 Click and 250 Collect Growth rate 48% 52% C&C/home delivery 200 Home 150 delivery 100 50 0 Jan 20
Slide 9: Q4 2020
Q4 2020 9
Slide 10: Growing in line with the overall market, despite Eurocash headwind
Growing in line with the overall market, despite Eurocash headwind Store sales development (including online) % Axfood store sales Q4 12 +7.4% 10 8 Food retail trade index Axfood 6 Group Market growth Q4 store sales +7.5% 4 2 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2019 2019 2019 2019 2020 2020 20
Slide 11: Outperforming online market growth
Outperforming online market growth Sales development online % Axfood online sales Q4 160 Axfood +157% 140 Group online sales 120 Food retail trade index 100 80 Market online growth Q4 +136% 60 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2019 2019 2019 2020 2020 2020 2020 Source: Axfood/HUI Research. Axfood
Slide 12: Solid growth driven by Willys
Net sales Solid growth driven by Willys • Net sales increased 4.6% during the fourth quarter +4.6% o Lower inflation rate compared to first nine months Net sales, SEK m o Growth for the Willys segment was once again higher than 13,633 13,040 the market, despite continued headwind from Eurocash 11,82
Slide 13: Higher profit driven by Dagab, improved profitability
Operating profit Higher profit driven by Dagab, improved profitability • Operating profit SEK 566 m (487) + LFL development Operating margin, % + Significantly higher operating profit for Dagab Operating profit, SEK m +16.1% − Negative result for Eurocash and certain Hemköp stores in city centres 56
Slide 14: Willys: Strong growth, continued headwind from Eurocash
Willys Strong growth, continued headwind from Eurocash • Strong sales growth of 8.5% and LFL 6.7% Operating margin, % o Positive effect from higher consumption at home Net sales, SEK m +8.5% o Higher average ticket and strong online sales for Willys’ stores 8,123 o Continued very challenging situati
Slide 15: Willys: Strengthening its position
Willys Strengthening its position Willys is attracting more consumers and earning their trust, and in 2020, for the first time, made the top 10 list of the most reputable companies in Sweden* As the first grocery chain in Sweden, Willys recently received a renewed license for the eco-label “Good Env
Slide 16: Hemköp: Stable growth despite challenges at central urban locations
Hemköp Stable growth despite challenges at central urban locations • Total store sales growth 5.3%, LFL sales growth of 5.2% Operating margin, % o Group owned 0.1% and LFL 2.7% Net sales, SEK m +0.2% o Total sales for Group-owned stores negatively impacted by 1,667 1,599 1,638 1,652 1,656 conversion
Slide 17: Hemköp: Improving loyalty and rolling out e-commerce
Hemköp Improving loyalty and rolling out e-commerce Successful launch of new loyalty programme, Klubb Hemköp Continued high pace in the roll-out of e-commerce, number of stores offering sales online more than doubled in 2020 17
Slide 18: Snabbgross: Lower sales, but higher market shares in a weak market
Snabbgross Lower sales, but higher market shares in a weak market • Sales decline of -6.3% and LFL -8.8% Operating margin, % o Gradual acceleration of decline, however outperformance Net sales, SEK m -6.3% of weak market where the situation deteriorated on a 845 sequential basis compared to the thir
Slide 19: Snabbgross: Successful launch of Snabbgross Club
Snabbgross Successful launch of Snabbgross Club In late November, the all new membership- based Snabbgross Club B2C store concept was inaugurated with the opening of a store in Stockholm Snabbgross Club offers consumers to shop for the same food products as restaurants and cafés, a unique and attrac
Slide 20: Dagab: Increase in sales, significantly higher operating profit
Dagab Increase in sales, significantly higher operating profit • Net sales growth of 5.6% Operating margin, % o Strong sales to Willys and Hemköp Net sales, SEK m +5.6% o Positive development for Mat.se o Negative impact from lower sales to Eurocash and service trade 12,310 11,657 11,066 o Sales dec
Slide 21: Sustainability: Recent highlights
Sustainability Recent highlights 0 Klubb Hemköp New loyalty programme rewards sustainable choices Target of net-zero CO2e emissions by 2030 #1 28.3% 28.3% Sustainability-labelled products In recent sustainability Living wages Project in Punjab, Pakistan, new payment as % of total sales in 2020, up S
Slide 22: Financial position
Financial position Anders Lexmon Chief Financial Officer 22
Slide 23: A year of solid growth
Full year net sales A year of solid growth • Net sales increased 5.8% during 2020 +5.8% o Overall growth driven by strong performance for Willys Net sales, SEK m o Franchise sales drove Hemköp’s sales growth 53,696 50,740 Snabbgross’ sales negatively impacted by weak restaurant 48,085 o 45,968 marke
Slide 24: Higher profit and margin
Full year operating profit Higher profit and margin • Operating profit SEK 2,510 m (2,288) Operating margin, % + LFL development Operating profit, SEK m +9.7% + Improved efficiencies and productivity in logistics − Negative impact on businesses with exposure to the restaurant 2,510 market, cross-bor
Slide 25: Strong operating cash flow
Strong operating cash flow SEK m FY 2020 FY 2019 Operating profit 2,510 2,288 Non-cash items 2,304 2,160 Net interests -108 -118 Paid tax -370 -477 SEK 4.9 bn Working capital 515 -298 Operating cash flow 4,851 3,555 Investing activities -1,080 -1,386 Amortization of debt -1,515 -1,419 Share repurcha
Slide 26: Investments (ex. IFRS 16)
Investments (ex. IFRS 16) Acquisition Other IT Wholesale Retail SEK m 2,000 1,934 1,481 SEK 1,000 1,021 1,031 1,031 mn 764 Total investments 580 in 2020 500 0 2015 2016 2017 2018 2019 2020 26
Slide 27: Improved net working capital
Improved net working capital NWC as % of sales NWC, SEK m -2.0% -2.3% -3.4% -2.6% -3.0% -979 -919 -3.4% -1,236 -1,513 NWC as % of sales -1,800 2016 2017 2018 2019 2020 27
Slide 28: Financial position
Financial position Net debt (ex. IFRS 16), SEK m 6,047 Net debt, SEK m Net debt/EBITDA 1.0x Net debt/EBITDA 5,449 5,454 5,218 5,185 5,082 5,131 4,577 24.3% 1.2 1.2 1.1 1.1 1.0 116 Equity ratio -315 -404 -377 -259 -478 -350 -1,047 -1,131 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 30 Sep.
Slide 29: Return on capital employed: Impacted by IFRS 16
Return on capital employed Impacted by IFRS 16 ROCE Capital employed, SEK m 10,674 40.4% 9,825 10,178 10,149 9,531 9,567 9,526 9,648 24.2% 30.6% 30.9% 30.6% 30.1% 24.7% 24.5% 24.5% 24.2% 5,052 Return on capital employed 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 31 Mar. 30 Jun. 30 Sep. 31 Dec. 2018 201
Slide 30: Update strategic agenda
Update strategic agenda Klas Balkow President and CEO 30
Slide 31: Strategic focus areas
Strategic focus areas Customer Customer Expansion Supply chain Work approach Our people offering meeting We will grow in new and We will be a driver of We will develop an We will attract, recruit We will offer our existing markets by sustainable product innovative, customer- and develop the Through
Slide 32: Customer offering
Customer offering We will offer our customers an attractive, efficient, wide and affordable assortment. Priorities 2021 Develop and Develop the strengthen the Develop new Strengthen the offering with assortment of customer pricing positioning respect to sector affordable, good and offerings converge
Slide 33: Customer meeting
Customer meeting Through our brands and formats we will meet our customers’ varying needs – no matter where, when and how the customer meets us. Priorities 2021 Develop the customer meeting Strengthen the Strengthen Modernize store with respect to digital customer Hemköp’s market sustainability base
Slide 34: Expansion
Expansion We will grow in new and existing markets by establishing stores and developing new segments, categories and services. Priorities 2021 Accelerate pace Establish and Expand Expand of establishment develop store network e-commerce for Willys Hemma Snabbgross Club 34
Slide 35: Supply chain
Supply chain We will be a driver of sustainable product supply with high efficiency and quality across the entire chain. Priorities 2021 Develop and Continued Increase efficiency increase efficiency development of Develop long term in dark stores for in transports for logistics centre in logistics s
Slide 36: Work approach
Work approach We will develop an innovative, customer-oriented and dynamic organization in which efficiency and cost control are in focus. Priorities 2021 Future-proof Enable efficiency Increase degree Lower costs processes and and change of data-driven through increased solutions for price, through
Slide 37: Our people
Our people We will attract, recruit and develop the industry’s best employees. Priorities 2021 Develop our Develop our Develop Strengthen culture leadership competence sustainable working life 37
Slide 38: Outlook 2021
Outlook 2021 38
Slide 39: Looking ahead
Looking ahead • Still exceptional time due to Covid-19 • Uncertainty with the pandemic also in 2021 • High comps in 2021 for the food retail market 39
Slide 40: Outlook 2021
Outlook 2021 • Planned capital expenditures in 2021 of SEK 1,800−1,900 m ‒ Excluding acquisitions and leasehold ‒ Including SEK 585 m investment in automation solution for the new logistics centre in Bålsta, in accordance with payment plan ‒ Including SEK 115 m investment in land in connection with
Slide 41: Dividend
Dividend • The dividend policy sets the goal that the shareholder dividend shall be at least 50 Ordinary dividend as % of profit percent of profit after tax. The dividend amount is to be paid on two occasions. 100 94 92 85 82 81 • The Board proposes an increased ordinary 73 71 70 80 77 dividend per
Slide 42: A strong fourth quarter and an eventful year
A strong fourth quarter and an eventful year • Strong growth driven by Willys • Higher profit and profitability • High activity level in the organization Summary • Strong financial position 42
Slide 43: Q&A
Q&A 43
Slide 44: Axfood key ratios
Axfood Key ratios Q4 Q4 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg Net sales, SEK m 53,696 50,740 Net sales 13,633 13,040 4.6% 53,696 50,740 5.8% 48,085 45,968 42,974 Change in like- 6.2% 4.3% 1.9 6.9% 5.0% 1.9 4.7 for-like sales 4.4 4.5 4.1 4.2 Operating profit 566 487 16.1% 2,510 2,288
Slide 45: Willys key ratios
Willys Key ratios Q4 Q4 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg Net sales, SEK m 31,793 Net sales 8,123 7,488 8.5% 31,793 29,029 9.5% 29,029 27,066 25,415 Change in like- 23,164 6.7% 5.1% 1.6 7,9% 6,2% 1.7 4.9 4.9 for-like sales 4.2 4.4 Operating profit 339 312 8.5% 1,551 1,429 8.5% 4.
Slide 46: Hemköp key ratios
Hemköp Key ratios Q4 Q4 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg Net sales, SEK m 6,403 6,378 6,354 Net sales 1,656 1,652 0.2% 6,354 6,378 -0.4% 6,171 6,199 Change in like- 2.7% 1.7% 1.0 2.8% 1.3% 1.5 for-like sales* 3.8 3.8 3.6 Operating profit 53 65 -18.4% 229 243 -6.0% 3.5 4.2 Operat
Slide 47: Snabbgross key ratios
Snabbgross Key ratios Q4 Q4 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg Net sales, SEK m 3,443 3,417 3,241 Net sales 791 845 -6.3% 3,417 3,443 -0.7% 2,984 Change in like- -8.8% 6.2% -15.0 -2.2% 6.4% -8.6 4.8 for-like sales 4.4 3.7 3.7 Operating profit 28 34 -17.6% 150 167 -9.8% Operating 3
Slide 48: Dagab key ratios
Dagab Key ratios Q4 Q4 Operating margin, % SEK m 2020 2019 Chg 2020 2019 Chg Net sales, SEK m 48,091 44,895 Net sales 12,310 11,657 5.6% 48,091 44,895 7.1% 41,128 42,456 39,091 1.7 1.7 1.7 1.6 1.5 Operating profit 230 152 51.9% 829 678 22.3% Operating 1.9% 1.3% 0.6 1.7% 1.5% 0.2 margin Delivery 2016