Tokmanni Group Oyj · OMXHEX:TOKMAN
Tokmanni Group Oyj — Q4 2018 and FY2018 Earnings Presentation
29 slides from Tokmanni Group Oyj's earnings presentation, Feb 8, 2019
Slide 1: Q4/2018 and 2018
Q4/2018 and 2018 Mika Rautiainen, CEO Markku Pirskanen, CFO
Slide 2: Main focus in 2018: Improving customer confidence
Main focus in 2018: IMPROVING CUSTOMER CONFIDENCE YEAR OF POSITIVE TURNAROUND 2
Slide 3: Q4/18: growth continued, non-recurring expense burdened good profitability
Q4/18: growth continued, non-recurring expense burdened good profitability • Revenue grew by 8.0% (4.4%) • Like-for-like revenue grew by 4.7% (-1.0%) • Acquisition of nine Ale-Makasiini stores • Recall of the decoration lights impacted gross profit by about EUR -1.4 million • Comparable gross profit
Slide 4: Summary of 2018
Summary of 2018 • Sharpening strategy • Renewing management and organization • Strengthening customer confidence • Cheap prices, wider product range, renewed departments, marketing • All Tokmanni's employees involved in building customer confidence • Implementing a strong investment plan • Store net
Slide 5: Tokmanni's like-for-like customer visits development
Tokmanni’s like-for-like customer visits development 3.0% 0.2% -0.1% -0.4% -1.0% -1.4% 2013 2014 2015 2016 2017 2018 5 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 6: Revenue
Revenue Revenue development Like-for-like revenue development 9.3% 5.6% 3.0% 3.0% 2.9% 2.7% 2.7% 0.0% -0.3% -0.1% -0.6% -1.3% 2013 2014 2015 2016 2017 2018 6 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 7: 2018: revenue grew +9.3%, comparable EBIT +19.7%
2018: revenue grew +9.3%, comparable EBIT +19.7% • Revenue grew by 9.3% (2.7%) • Like-for-like revenue grew by 5.6% (-1.3%) • Comparable gross margin totalled EUR 295.0 million (268.1) and comparable gross margin 33.9% (33.7%) • Comparable EBITDA amounted EUR 63.3 million (55.0), 7.3% of revenue (6.
Slide 8: Tokmanni's and non-grocery market development
Tokmanni’s and non-grocery market development Sales development% 12,0 10,9 11,0 8,0 7,8 8,0 4,5 4,0 4,4 1,9 0,0 1,1 1,4 1,6 -1,1 -4,0 -1,9 -2,9 -8,0 -7,4 -9,0 -12,0 -11,0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Tokmanni Non-grocery market Source: FGTA FGTA STATISTICS DOESN’T INCLUDE ONLINE R
Slide 9: Tokmanni competitive advantages
Tokmanni competitive 1. Low prices advantages 4. Lean and efficient operation model 2. Inspiring and wide 3. Nationwide store network assortment combined with an online store 9 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 10: Financial development
FINANCIAL DEVELOPMENT 10
Slide 11: Tokmanni's operations are subject to seasonality
Tokmanni’s operations are subject to seasonality The last quarter of the year is generally the strongest Comparable Revenue EBITDA, M€ M€ 35,0 300,0 30,0 28,6 28,2 27,3 250,0 25,0 200,0 20,0 18,1 18,2 15,2 16,2 16,0 15,0 150,0 11,6 10,0 100,0 5,0 2,2 0,8 50,0 0,0 - 1,5 - 5,0 0,0 Q1/16 Q2/16 Q3/16 Q4
Slide 12: Revenue development
Revenue development +9.3% +2.7% 900 800 870,4 700 775,8 796,5 600 500 +4.4% +8.0% 400 300 200 238,1 248,5 268,4 100 0 Q4/16 Q4/17 Q4/18 2016 2017 2018 Like-for-like revenue development, % Q4/16 Q4/17 Q4/18 2016 2017 2018 +0.8 -1.0 +4.7 -0.1 -1.3 +5.6 12 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 13: Comparable gross profit
Comparable gross profit +0.1% +10.1% 350 300 295,0 250 267,9 268,1 200 +3.1% +7.2% 150 100 83,5 86,1 92,3 50 0 Q4/16 Q4/17 Q4/18 2016 2017 2018 Comparable gross margin, % Q4/16 Q4/17 Q4/18 2016 2017 2018 35.1 34.6 34.4 34.5 33.7 33.9 13 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 14: Development of Private Labels and direct imports
Development of Private Labels and direct imports Brand category sales mix Import share of sales, % Private label and other Import through Shanghai 32% (32%) Other direct import 9,3 10,3 11,1 9,6 Branded products 68% (68%) 12,5 13,6 14,1 10,8 2015 2016 2017 2018 2015 2016 2017 2018 14 8.2.2019 TOKMAN
Slide 15: Comparable operating expenses
Comparable operating expenses +8.6% +4.1% 250 235,7 200 208,5 217,0 150 +2.6% +11.1% 100 50 65,2 57,2 58,7 0 Q4/16 Q4/17 Q4/18 2016 2017 2018 Comparable operating expenses, % Q4/16 Q4/17 Q4/18 2016 2017 2018 24.0 23.6 24.3 26.9 27.2 27.1 15 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 16: Comparable EBITDA
Comparable EBITDA -12.5% +15.1% 70 60 63,3 62,8 50 55,0 -1.3% +4.8% 40 30 27,3 28,6 28,2 20 10 0 Q4/16 Q4/17 Q4/18 2016 2017 2018 Comparable EBITDA, % Q4/16 Q4/17 Q4/18 2016 2017 2018 11.5 11.5 10.5 8.1 6.9 7.3 16 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 17: Comparable EBIT
Comparable EBIT -14.9% +19.7% 60,0 50,0 47,7 48,6 40,0 -2.6% +6.1% 40,6 30,0 20,0 23,6 25,0 24,4 10,0 0,0 Q4/16 Q4/17 Q4/18 2016 2017 2018 Comparable EBIT, % Q4/16 Q4/17 Q4/18 2016 2017 2018 9.9 10.1 9.1 6.1 5.1 5.6 17 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 18: Inventories
Inventories 250 186 190 • The increase was primarily due to growth 185 in the store network and partly to the 200 controlled addition of stock keeping units to 180 the assortment. 175 150 175 • The inventories were also increased by the 170 inventories of the acquired Ale-Makasiini 100 stores by EUR
Slide 19: Balance sheet and financial position
Balance sheet and financial position Cash flow from operating activities 70 • At the end of December 2018, Tokmanni’s 60 interest-bearing debt totalled EUR 173.0 62,5 million (176.6) 50 • The ratio of net debt to comparable 40 44,9 EBITDA (rolling 12 months) was 2.1 (2.4) 30 • The company’s cash and
Slide 20: Estimated impact of IFRS 16 standard
Estimated impact of IFRS 16 standard • IFRS 16 is adopted as of 1 January 2019 • As a result of the adoption of the standard, leases are transferred to the balance sheet as a liability and assets • Introduction of the standard is estimated to impact in Tokmanni's balance sheet, result and key figure
Slide 21: Net capital expenditure
Net capital expenditure 25 • Capital expenditure in 2018 increased due to, in particular, the expansion of the store network 20 and the business acquisition, renovations of 19,8 grocery stores and other stores and the 15 development of digital services • Net capital expenditure includes goodwill of
Slide 22: Personnel
Personnel 4000 • Out of Tokmanni’s total personnel, 3500 86.4% (86.0%) worked at the stores, 3558 6.0% (6.4%) at warehouses and 3000 3224 3255 7.6% (7.6%) in support functions 2500 • Tokmanni’s bonus schemes amounted to 2000 about EUR 2 million 1500 • Personnel expenses totalled EUR 106.9 1000 milli
Slide 23: Main focus in 2019: Improving profitability
Main focus in 2019: IMPROVING PROFITABILITY 23 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 24: Long-term goal is comparable EBIT margin about 9%
Long-term goal is comparable EBIT margin about 9% About 9% 1.0% - 2.0% 1.0% - 1.5% 6.1% EBIT-% 2018* Operating expenses Gross margin EBIT-% target improvement potential improvement potential * IFRS 16 impact of 0.5% has been taken into account 24 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 25: Tokmanni's year 2019
Tokmanni’s year 2019 • Reducing the share of fixed costs • Strengthening supply chain and reducing real estate rentals and maintenance costs • Enhancing operations of stores • Increasing the gross margin • Increasing direct import and sales of own brands • Increasing batch sales • Improving product
Slide 26: Outlook for 2019
Outlook for 2019 • Tokmanni expects the Finnish retail market to grow slightly in 2019. Discount retail stores, specialty discount stores and online stores are expected to continue strengthening their positions. • Tokmanni expects good revenue growth for 2019, based on the revenue from the new store
Slide 27: Tokmanni's updated long-term financial targets
Tokmanni’s updated long-term financial targets • Tokmanni’s goal is to continue to reinforce its position as the leading general discount retailer in Finland by making the most out of its key competitive advantages, which are its low perceived price image, wide and attractive assortment and good sho
Slide 28: TOKMANNI Q4/2018 and 2018
28 8.2.2019 TOKMANNI Q4/2018 and 2018
Slide 29: IR contact
January-March 2019 Business review is published in 25 April 2019 IR contact: Maarit Mikkonen [email protected] tel: +358 40 562 2282 [email protected] 29 8.2.2019 TOKMANNI Q4/2018 and 2018
Tokmanni Group — Q4 2018 and FY2018 Earnings Presentation on 6ix