Distribuidora Internacional de Alimentacion SA · BME:DIA
Distribuidora Internacional de Alimentacion SA — XXI Santander Iberian Conference (January 2015)
42 slides from Distribuidora Internacional de Alimentacion SA's conference presentation, January 2015
Slide 1: XXI Santander Iberian Conference
XXI SANTANDER IBERIAN CONFERENCE Amando Sánchez Falcón (Chief Corporate Officer, CCO)
Slide 2: Disclaimer
Disclaimer This document does not constitute or form part of any purchase, sales or Exchange offer, nor is it an invitation to draw up apurchase sales or exchange offer, or adviceon any stock issued by Distribuidora Internacional de Alimentacion, S.A. (“DIA” or the “Company”. Nor shall this document
Slide 3: Summary
Summary Company introduction Final overview of DIA France’s disposal, closed on 30 November Outlook: the Spanish food retail market and DIA Spain’s performance Present the two recent corporate transactions announced in Spain and explain DIA’s rationale and strategy: o A company deal, El Arbol: 451 s
Slide 4: Delivering on our goals
Delivering on our goals We said we would… …and, since 2011 we have… Focus on our core markets, where we … successfully exited Turkey in 2013 deliver profitable growth … and France in 2014 Accelerate growth in Iberia and Delivered solid organic growth in Brazil Argentina & Brazil & Argentina (~EUR730
Slide 5: Disposal of DIA France
/ Disposal of DIA France 5
Slide 6: Transaction highlights: DIA France
Transaction highlights: DIA France DIA France: 865 stores and EUR1.9bn net sales in 2013 Carrefour acquired 100% of DIA France, transaction closed 30 Nov: o Total debt reduction EUR626m o Net financial debt EUR336m o Purchase price EUR283.2m Tax credit EUR 185m (to be captured from 2014) Price excee
Slide 7: Transaction highlights: DIA France
Transaction highlights: DIA France “A surprinsingly good price” (JP Morgan) “There is no disputing DIA has negotiated a great price with deal risks largely passed to Carrefour.” (Exane-BNP) “It looks like an ideal exit for DIA” (Société Générale) “Both the market and us have been frustrated
Slide 8: DIA focusing on accelerating profitable growth in Iberia, Brazil and Argentina
DIA is today focusing on accelerating profitable growth in Iberia, Brazil and Argentina DIA gross sales under banner1 Number of DIA stores1 (EURbn) 10.7 5,630 9.7 5,274 8.0 8.9 4,933 4,639 2011 2012 2013 2014E 2011 2012 2013 2014E At constant currency (1) pro forma excluding divestments and acquisit
Slide 9: Market context: Spanish Food Retail
/ Market context: Spanish Food Retail 9
Slide 10: Spanish food retail market remains very fragmented
Spanish food retail market remains very fragmented Top 5 food retailers market share per country (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Portugal UK France Germany Belgium Spain Source: Kantar 10
Slide 11: Small regional and local chains account for 42% of the market
Small regional and local chains account for 42% of the market Spanish food retail market Small family players (%) (<0,1%) 22.0% 33.2% 9.0% Eroski stores Regional players: (1% - 0,1%) 8.3% 8.8% 1.6% 6.2% 1.9% 2.0% 3.1% 3.9% Source: Kantar, 12 months rolling P11 2014, including dry food and fresh Afte
Slide 12: 2015 should be a better year in Spain
2015 should be a better year in Spain after a perfect storm in 2014: food CPI is expected to rebound and the population decline is set to ease Spain - population Spain CPI 47 1.5% 3.6% 3.1% 3.1% 1.0% 2.4% 2.3% 0.5% 1.4% 46 1.0% 0.8% 0.0% 0.4% -0.2% -0.5% 2012 2013 2014A 2015E 45 -1.0% CPI -1.2% -1.2
Slide 13: There are signs that the market should improve in 2015
There are signs that the market should improve in 2015 Spain’s GDP growth should be above 2% next year 1 (versus 1.4% in 2014), positioning Spain among the fastest-growing economies in the eurozone in 2015. In recent months, Spain has increased flexibility in various areas (labour, real estate, ener
Slide 14: DIA Spain overview
DIA Spain overview Photo from DIA Spain 14
Slide 15: DIA has continuously gained market share in Spain
DIA has continuously gained market share in Spain DIA Spain - market share performance 10.0% 9.5% 9.00% 9.0% 8.5% 7.83% 7.61% 8.0% 7.53% 7.5% 7.08% 7.14% 6.80% 7.0% 6.5% 6.0% Source: Kantar, Spain, market share in value (*) Accumulated up to P12 2014 15
Slide 16: DIA maintains its undisputed price leadership in the Spanish market
DIA maintains its undisputed price leadership in the Spanish market… Clear leader in price image in 2014 Increasing price gap in 2014 by circa 100bps 7.9% 7.2% 7.4% 6.2% Price gap vs Price gap vs Comp 1 Price gap vs Price gap vs Comp 1 (2013) Comp 2 Comp 2 (2014) (2013) (2014) #1 Supermarket #2 Disc
Slide 17: …while maintaining healthy operational margins
…while maintaining healthy operational margins DIA Iberia - adjusted EBITDA Improvement levers – not exhaustive % over net sales 9.6% 9.6% Costs o -30bps in energy costs savings o -20bps in real estate costs since 20111 o -50bps in logistic costs 8.9% o Around 500 franchised stores added in Iberia b
Slide 18: Despite negative LFLs DIA gained market share in Spain in 2014
Despite negative LFLs DIA gained market share in Spain in 2014 DIA Spain Market share gain (% YoY) (bps) 6.5%2 24 22 -3.6% -5.9%1 -5.3%1 FY 2014 Q4 2014 Q3 2014 Q4 2014 LFL Total sales growth Source: DIA Source: Kantar (1) Calendar-adjusted Accumulate up to P12 2014 (excluding El Arbol) (2) Includes
Slide 19: DIA is the undisputed food retail franchise platform in Spain
DIA is the undisputed food retail franchise platform in Spain DIA Spain 2014 - franchised sales DIA Spain franchised stores Q1 Q2 (%) Q3 Q4 (#) 14.0% 13.2% 1,646 11.3% 10.7% 1,457 1,310 1,187 -0.2% -2.2% -2.3% -4.1% 2011 2012 2013 2014 Source: DIA LFL Total sales growth Source: DIA DIA franchisees h
Slide 20: Initiatives to boost sales growth in 2015
DIA Spain has launched a series of initiatives to boost sales growth in 2015 Format DIA Market III in Spain innovation and New DIA Maxi model store remodelling Completion of the transformation plan from Schlecker to Clarel stores New Over 600 stores (El Arbol + Eroski stores) supermarket platform Wi
Slide 21: Acquisitions in Spain: El Arbol and Eroski stores
/ Acquisitions in Spain: El Arbol and 160 Eroski stores 21
Slide 22: El Arbol: acquisition highlights
El Arbol: acquisition highlights Company overview Transaction summary Regional supermarket chain - strong presence DIA acquired 100% of El Arbol in northwest regions of Spain For an Enterprise Value of EUR114m o #1 food retailer in Aragón and in Castilla y León o Fixed price: EUR21m o Large fresh of
Slide 23: El Arbol: company overview
El Arbol: company overview 1-5,000 m2 5,001 m2 – 15,000 m2 15,001 m2 – 30,000 m2 +30,001 m2 Location # stores Andalucía 23 Aragón & Navarra 68 Asturias & Galicia 119 Extremadura 43 Castilla La Mancha 2 Castilla León 160 La Rioja, Valencia, Murcia & Cantabria 36 TOTAL 451 23
Slide 24: Stores acquisition from Eroski: highlights
Stores acquisition from Eroski: highlights Stores overview Transaction summary 160 Eroski-Caprabo supermarket stores Asset deal : DIA is to acquire up to 160 Eroski-Caprabo supermarkets o 108 located in Madrid Enterprise Value of EUR146m (including o 20 in Castilla y León, 2 in Castilla La EUR27m of
Slide 25: Eroski stores acquisition
Eroski stores acquisition Very good location: high streets, prime locations High-performing stores Most stores in unique locations in Madrid 1-5,000 m2 5,001 m2 – 15,000 m2 64 15,001 m2 – 30,000 m2 108 +30,001 m2 Location # stores Andalucía 24 Extremadura 6 Madrid 108 Castilla La Mancha 2 1 store Ca
Slide 26: Integration considerations
/ Integration considerations 26
Slide 27: Acquisitions rationale
Acquisitions rationale Capture net sales of EUR1.1bn for a blended EV/Sales ratio of 0.2x Become #2 in Spain with a reinforced leadership in proximity stores o Gain over 1 percentage point market share to >9% (in value) o Immediate gain in volume (+28% in Spain) o Strengthen DIA’s position with key
Slide 28: DIA: #2 player in Spain's food retail market by sales
DIA: #2 player in Spain’s food retail market by sales Spain’s food retail market share Value (%) 22.0 Eroski stores 9.0 8.3 7.8 5.8 3.8 3.1 2.1 1.8 1.5 1.0 0.7 0.8 0.7 0.5 Source: Kantar, Spanish food retail market, P 12 2014, rolling twelve months 28
Slide 29: DIA becomes #1 retailer in several regions
DIA becomes #1 retailer in several regions DIA ‘s store selling area in mainland Spain (%) From… To… 8% 10% 22% 14% 11% 9% 11% 9% 13% 13% 13% 13% 14% 10% 10% 30% 10% 27% 12% 19% 15% 6% 15% 6% 17% 28% 10% 10% 13% 14% #1 retailer in the region #2 retailer in the region #3 retailer in the region Source
Slide 30: A new supermarket platform of over 600 stores and EUR1.1bn sales
A new supermarket platform of over 600 stores and EUR1.1bn sales DIA supermarket platform Iberia Eroski stores Iberia 3,721 DIA Footprint 1 451 stores 160 stores 5,575 stores 1,243 Schlecker/Clarel DIA DIA El Arbol Supermarket Formats Schlecker/Clarel Schlecker/Clarel (~700sqm) (~800sqm) El Arbol Ne
Slide 31: Capturing relevant know-how in key perishable offer such as fish and meat
Capturing relevant know-how in key perishable offer such as fish and meat 31
Slide 32: Enhanced commercial proposition to drive sales growth
Enhanced commercial proposition to drive sales growth Lower prices DIA Private Label brands 6.8% price decrease (average) Strong Private Label brands Integrated promotion calendar, including Wide range of products DIA Private label Better prices Large and high-quality fresh offer Loyalty card Mainta
Slide 33: El Arbol should bring significant volume of synergies
El Arbol should bring significant volume of synergies Sourcing and procurement Integration Distribution and logistics >EUR30m on a FY basis synergies SG&A Format optimization (share of PL, price positioning, …) EUR380m of tax losses El Arbol tax losses carry forward to be potentially offset by Taxes
Slide 34: El Arbol integration calendar
El Arbol integration calendar Integration plan defined early in the process Management team highly committed to ensure fast integration and capture of synergies A dedicated project team led by Spain’s Executive Committee deployed to ensure control, coordinate execution and monitor the capture of syn
Slide 35: Eroski stores to be EBITDA-accretive from year one
Eroski stores to be EBITDA-accretive from year one Eroski/Caprabo stores will be purchased and consolidated under El Arbol as DIA supermarket platform Target EBITDA of 5% is in line with profitability level of the best-performing supermarket formats in Spain The implementation of DIA’s efficient ope
Slide 36: Eroski stores - integration calendar
Eroski stores - integration calendar Rolling out the “usual” DIA integration process Benefiting from El Arbol: commercial value proposition, operational synergies Store migration by “batch” to avoid bottlenecks due to the number of stores (160): ~4 months overall Incorporation of dedicated resources
Slide 37: A track record of successful integration
A track record of successful integration Fully integrated in March 1998 Minipreço 2x DIA Portugal network (year 1998) Became the most profitable business unit in DIA, and amongst Portuguese food retailers 183 stores acquired in 2007 Plus Heavy loss-making pre acquisition (year 2007) Fully integrated
Slide 38: Conclusions
/ Conclusions 38
Slide 39: DIA - new portfolio of formats
DIA - new portfolio of formats DIA Located in the centres or on the outskirts Offer the best prices in catchment area Surface: 400 – 1,000 sqm Our objective: to be the Clarel proximity specialist with El Arbol best prices in food, fresh, and HPC Offer household cleaning and beauty products Supermark
Slide 40: New DIA group profile
New DIA group profile 2011 2014(E) 2017(F) Net sales by geography Iberia 25% 35% 43% 51% 57% Emerging markets 24% 65% France Stores by operating model1 Company- 39% 46% 40% operated 61% 54% 60% Franchise (1) Excluding France, Schlecker/Clarel and El Arbol E= Expected F= Forecast Ideal mix of growth
Slide 41: Final conclusions
Final conclusions DIA has successfully rationalised its geographical footprint, and is now focusing on profitable growth in Iberia, Brazil and Argentina In 2014, DIA continued to gain market share, improve its price image and maintain its operating margins In 2015, the Spanish food retail market sho
Slide 42: Slide 42