Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Investor Day (February 2004)
41 slides from Lagardere Sa's investor day presentation, Feb 2, 2004
Slide 1: Hachette Distribution Services Investor Day
Hachette Distribution Services INVESTOR DAY PARIS FEBRUARY 2, 2004
Slide 2: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ■ Strategic orientations for 2004 - 2007 2
Slide 3: Overview of HDS (I)
Overview of HDS (I) ➔ HDS is a 4,5 B€ company active in press distribution and retail ■ Retail is now half of HDS’ sales, and growing faster than distribution ■ HDS is truly international (2/3 sales outside France) ■ More than 13 000 people in 19 countries ➔ Since 1999, HDS growth of sales is over 1
Slide 4: Overview of HDS (II)
Overview of HDS (II) ➔ HDS has 2 main activities : Retail and Press Distribution ➔ HDS is tightly linked to printed media industry ■ Press-driven activities provide 80% of HDS’s EBIT ■ Diversification is under way ➔ HDS is the retail arm of Lagardère Group ■ Retail network is extended over 14 countr
Slide 5: 3 segments in Retail
3 segments in Retail ➔ Travel retail: press and specialty stores in travel locations ➔ Newsstands : press stores in high street and shopping mall ➔ Media entertainment products: high street and shopping mall retailing of books, music and video 5
Slide 6: 2 segments in Press Distribution
2 segments in Press Distribution Publisher A Publisher B Publisher C National distributor: sales promotion, relationship with publishers, monitoring of wholesalers Press wholesalers: reliable and cost-effective distribution of press, monitoring of retail network Wholesaler X Wholesaler Z 6
Slide 7: HDS has shown strong growth
HDS has shown strong growth 1999 2000 2001 2002 Annual Growth (1) Sales (B €) 2,96 3,30 3,85 4,46 14,6% Operating 48 61 81 88 22,4% income (M€) (1) : 1/3 of this growth of sales has been external 7
Slide 8: Retail is growing faster than Distribution
Retail is growing faster than Distribution 3.3 B€ 4,5 B€ 100% 90% Distribution: 80% + 11% p.a. 55% 50% 70% 60% 50% 11% 40% 12% 3% 9% Retail: 30% +23% p.a. 20% 30% 30% 10% 0% 2000 2002 Travel retail Media entertainment Newsstands Distribution 8
Slide 9: 68% of HDS sales are made outside France
68% of HDS sales are made outside France Belgium: 14% France : 32% Hungary: 5% Australia / Iberia: 11% Singapore / North America: China: 0,3% 26 % Other Europe: 3% Switzerland: 9% 9
Slide 10: HDS is a people business
HDS is a people business ➔ Over 13 000 employees in 19 countries ■ 9 000 employees in retail ■ 4 000 employees in distribution ➔ HDS businesses are labor-intensive ■ Labor cost in retail is 43 % of gross margin, and 53 % in distribution ➔ A multi-cultural organization ■ 70% of people are outside Fra
Slide 11: Product mix evolution shows adaptation of HDS to market needs
Product mix evolution shows adaptation of HDS to market needs 2000 sales mix 2002 sales mix Music & Video Book 5% 8% Other (1) Book 26% 7% Other (1) 34% Press Press 54% 66% 11 (1) « Other » includes confectionary, phone cards, perfume & tobacco, …
Slide 12: HDS Retail activities are concentrated in France and in travel locations (2002)
HDS Retail activities are concentrated in France and in travel locations (2002) HDS Retail Sales HDS Travel Retail Sales 100% 100% Non- 27% 90% 90% Press 26% Other 35% Stores 80% Other 80% 36% Other Non 36% 70% 57% 70% travel 60% 60% Rail Subway 50% 50% 40% 40% 74% 71% 65% 64% 64% 30% 30% France Pre
Slide 13: HDS operates several brands under license
HDS operates several brands under license 13
Slide 14: HDS has developed a large portfolio of own banners
HDS has developed a large portfolio of own banners 14
Slide 15: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ● Travel retail ● Retail of media entertainment products ● Newsstands ● Distribution (national & wholesale) ■ Strategic orientations for 2004 - 2007 15
Slide 16: Travel Retail is a core activity of HDS
Travel Retail is a core activity of HDS Strengths Weaknesses ➔ Strong traffic growth anticipated in the ➔ More than 70% of travel retail activity long term is in France and in News & Gifts ➔ Very strong positions ➔ No positions in Food & Beverage ■ France n°1 ■ World n° 1 in News & Gifts ➔ Large ban
Slide 17: HDS is one of world top 5 travel retailers
HDS is one of world top 5 travel retailers 2002 Sales(M€) 3500 3000 Food & Beverage Travel Retail Specialty Travel Retail 2500 N&G Travel Retail 2000 1500 1000 500 0 r i ll S S a DF ce n io as P as DF HD gr an El SS an ic -W de to em er Nu s/ Au Al Am A s in pa BA He DF m Co 17 Source : annual repor
Slide 18: Relay: in 80 airports all over the world
Relay: in 80 airports all over the world Frankfurt Airport Toronto Airport Paris CDG Airport TimesNewslink - Singapore Airport 18
Slide 19: Relay has initiated territory extension
Relay has initiated territory extension + Books + + Toys Food Products + 0 Gifts-Souvenirs Relay Relay umbrella Relay+ other banner Music Luggage + + 19
Slide 20: Relay is already an umbrella brand
Relay is already an umbrella brand 20
Slide 21: Virgin in Travel Retail
Virgin in Travel Retail Lyon (Train station) Paris (CDG Airport) Virgin Newark 21
Slide 22: Other Travel Retail specialty concepts (I)
Other Travel Retail specialty concepts (I) 22
Slide 23: Other Travel Retail specialty concepts (II)
Other Travel Retail specialty concepts (II) 23
Slide 24: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ● Travel retail ● Retail of media entertainment products ● Newsstands ● Distribution (national & wholesale) ■ Strategic orientations for 2004 - 2007 24
Slide 25: HDS is a challenger in French retail of media entertainment products
HDS is a challenger in French retail of media entertainment products Strengths Weaknesses ➔ Uncertainties in the market ➔ Network has reached critical mass ■ Music performing poorly ■ 32 stores in France for Virgin ■ Question mark on multimedia ■ 11 in France for Le Furet du Nord ➔ Very competitive
Slide 26: Music is less than one third of media entertainment product mix (2002)
Music is less than one third of media entertainment product mix (2002) Media Entertainment Product Mix 430 M€ sales Others Multi- 9% Music Media 10% 28% Video Books 17% 36% 26
Slide 27: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ● Travel retail ● Retail of media entertainment products ● Newsstands ● Distribution (national & wholesale) ■ Strategic orientations for 2004 - 2007 27
Slide 28: HDS has reached a strong position in high street newsstands
HDS has reached a strong position in high street newsstands Strengths Weaknesses ➔ Presence of HDS either with travel retail ➔ Low market share in some countries or with distribution in many attractive ➔ No strong international brand countries ➔ Efficient, modern store concept Opportunities Threats
Slide 29: Local newsstands banners
Local newsstands banners Budapest Madrid Warsaw 29
Slide 30: International development of high street press stores
International development of high street press stores #press stores ➔ 43 % of HDS press stores are outside travel locations high street ➔ 800 kiosks in central Europe are not shown below 250 200 150 100 50 0 Belgium Spain Switzerland North Poland Hungary Czech Romania America Republic Order of count
Slide 31: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ● Travel retail ● Retail of media entertainment products ● Newsstands ● Distribution (national & wholesale) ■ Strategic orientations for 2004 - 2007 31
Slide 32: Where present, HDS has a leading position in Press Distribution and Wholesale
Where present, HDS has a leading position in Press Distribution and Wholesale Strengths Weaknesses ➔ Very strong position in countries ➔ Labor-intensive industry with little where active automation perspective ■ Belgium, Switzerland, Hungary ➔ Flat press market and strong market ■ USA, Spain share i
Slide 33: Most Press Distribution companies are only local
Most Press Distribution companies are only local Distribution Geographic Comments Sales presence Very large, integrated player. Tohan 4,3 B€ Japan Active in magazine and books Very large, integrated player. Nippan 4,0 B€ Japan Active in magazine and books France, plus some NMPP 2,9 B€ African countr
Slide 34: Agenda
Agenda ■ Presentation of Hachette Distribution Services (HDS) ■ Strategic positioning by segment ■ Strategic orientations for 2004 - 2007 34
Slide 35: HDS Mission Statement
HDS Mission Statement Hachette Distribution Services (HDS) is a company dedicated to marketing media products and convenience services to its customers all over the world Our mission is to facilitate access to the diversity of ideas and cultures 35
Slide 36: HDS Values
HDS Values ➔ Innovation: to anticipate consumer trends, we are constantly striving to innovate with the continual introduction of new concepts and services ➔ Initiative: in their daily work, our team members must foster a keen sense of initiative and responsibility in order to provide top-quality se
Slide 37: A vision for HDS
A vision for HDS ➔ HDS vision is to : ■ Consolidate our strategic position in press distribution ■ Be recognized as an innovative high street retailer of media products and convenience services ■ Strengthen our leading travel retailer position 37
Slide 38: Consolidate our strategic position in Press Distribution
Consolidate our strategic position in Press Distribution ➔ National distribution: grow market share and focus on core business ■ Attract new titles through added value services ➔ Wholesale: maintain operational excellence and continue diversification ■ Maintain competitiveness through continuous cha
Slide 39: Be recognized as an innovative high street retailer of media products and convenience services
Be recognized as an innovative high street retailer of media products and convenience services ➔ Selectively develop press retail in high street ■ Focus on most profitable locations and local synergies ■ Innovate with distinctive concepts ➔ Consolidate current media entertainment retail network ■ In
Slide 40: Strengthen our leading Travel Retailer position
Strengthen our leading Travel Retailer position ➔ Relay: develop network worldwide while strengthening image ■ Develop network where present and open new countries ■ Continue concept evolution ■ Strengthen image and awareness ➔ Specialty Travel Retail: develop actively ■ Enhance portfolio of brands
Slide 41: Conclusion: HDS Vision
Conclusion: HDS Vision ➔ Consolidate our strategic position in press distribution ➔ Be recognized as an innovative high street retailer of media products and convenience services ➔ Strengthen our leading travel retailer position Innovation Initiative Professionalism Team spirit Ethics 41