Axfood AB · OMXSTO:AXFO
Axfood AB — Q4 2018 Earnings Presentation
47 slides from Axfood AB's earnings presentation, Feb 5, 2019
Slide 1: Strong fourth quarter sums up a successful 2018
Strong fourth quarter sums up a successful 2018 Klas Balkow President and CEO
Slide 2: Agenda
Agenda • Q4 and 2018 results • Financial position • Update on strategic agenda • Outlook 2019 • Q&A 2
Slide 3: Axfood – a strong Swedish food retailer
Axfood – a strong Swedish food retailer Net sales SEK 48.1 bn 10,215 employees (FTE) Customer reach >4 million customers a week 302 Group-owned stores 117 franchise Hemköp In total collaborating with 1,217 stores (incl Tempo, Handlar’n, Direkten, associated companies) 5 online brands IT: Up-to-date
Slide 4: Highlights
Highlights Outstanding Gained market performance First step share and from Willys and in automated increased Axfood warehousing profitability Snabbgross 4
Slide 5: Q4 2018
Q4 2018 Axfo od
Slide 6: Q4: Good growth based on strong LFL
Q4: Good growth based on strong LFL • Group net sales growth: 4.6% Net sales, SEK m • Strong store sales 4.7% and LFL 4.6%, 12,370 11,826 both including Hemköp franchise 10,791 11,022 9,978 Concept Total LFL Willys 6.0% 5.4% Hemköp 2.2% 2.9% Axfood Snabbgross 9.4% 10.4% Dagab 5.1% 2014 2015 2016 201
Slide 7: Q4: Gaining market share
Q4: Gaining market share 12% Axfood Group store sales 10% 8% 6% 4% 2% Retail trade index (excl alcohol) Source: SCB, preliminary 0% Source: SvDH/HUI -2% Q4 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 7
Slide 8: Q4: Increased profit and stable margin
Q4: Increased profit and stable margin • Operating profit SEK 425 m (398) ■ Operating profit, SEK m ▬ Operating margin, % + LFL development + Improved efficiency in logistics − Increased campaign level in Hemköp 448 425 401 398 − Higher marketing cost for long term positioning 372 • Operating margin
Slide 9: Full-year 2018
Full-year 2018 9
Slide 10: 2018: Strong growth
2018: Strong growth • Group net sales growth: 4.6% Net sales, SEK m 48,085 45,968 • Strong store sales 5.3% and LFL 3.7%, 42,974 41,247 both including Hemköp franchise 38,484 Segments Total LFL Willys 6.5% 4.3% Hemköp 3.0% 2.6% Axfood Snabbgross 8.6% 7.6% Dagab 3.2% 2014 2015 2016 2017 2018 10
Slide 11: Gaining market share
Gaining market share Axfood Swedish market Store sales growth 2018 Food retail index 2018 (incl. Hemköp franchise) (SvDH/HUI, incl fysical and online sale) 5.3% 3.0% 11
Slide 12: 2018: Record profit and improved margin
2018: Record profit and improved margin • Operating profit SEK 2,025 m (1,886) ■ Operating profit, SEK m ▬ Operating margin, % + LFL development + Sales mix including positive private label development 2.025 − Higher logistic costs 1.902 1.886 1.760 − Hemköp market activities in Q4 1.447 • Operating
Slide 13: Willys: Very strong development
Willys Very strong development • Strong sales growth 6.5% and LFL 4.3% ■ Net sales, SEK m • Increased marketing for long term positioning ▬ Operating margin, % • Stable store network 208 (207) 27,066 25,415 o 3 new stores 22,320 23,164 20,974 • Strong profitability 4.1 4.2 4.4 o LFL growth and good
Slide 14: Hemköp: Growth in line with market
Hemköp Growth in line with market • Solid growth net sales 3.3% ■ Net sales, SEK m ▬ Operating margin, % o Store sales growth 3.0% overall in line with market 6,171 6,199 6,403 o LFL sales growth 2.6% 5,883 5,510 • Improved efficiency in online business • Items affecting profitability 4.2 3.8 3.8 o
Slide 15: Axfood Snabbgross: Great performance
Axfood Snabbgross Great performance • Great net sales development 8.6% ■ Net sales, SEK m ▬ Operating margin, % o Continuous customer base increase 3,241 o Especially good growth in H2, strong holiday season 2,984 • LFL sales, 7.6% • Market growth 2018 (Delphi): 2.4% 3.7 3.7 o Gaining market shares
Slide 16: Dagab: Stable profitability
Dagab Stable profitability • Good net sales growth, 3.2% ■ Net sales, SEK m ▬ Operating margin, % o Strong sales in Axfood’s food concepts 41,128 42,456 o Weaker growth in B2B business, mainly due to 39,091 Mathem in comparables • Stable profitability despite 1.7 1.7 1.6 o Increased fuel costs o Cha
Slide 17: Urban Deli
Urban Deli • Increased ownership from 50% to 90.7% • Mix of restaurant, bar, market hall and grocery store • 5 stores in Greater Stockholm • Innovative private label • Closer collaboration with Axfood o Develop private label o Assortment offer through Hemköp 17
Slide 18: Financial position
Financial position Anders Lexmon Chief Financial Officer 18
Slide 19: Strong operating cash flow
Strong operating cash flow SEK m 2018 2017 Change Cash and cash equivalents, 1 Jan 1,376 1,726 -350 Operating cash flow before changes 2,771 2,594 177 in working capital and paid tax Paid tax -434 -382 -52 Changes in working capital 365 322 43 Net investing activities -992 -1,500 508 Debt — -97 97 S
Slide 20: Increasing investments in wholesale
Increasing investments in whole sale SEK m 1,934 1,021 764 643 580 Acquisition Other IT Wholesale Retail 2014 2015 2016 2017 2018 Capex 2018, excluding acquisitions: SEK 905 m 20
Slide 21: Improved net working capital
Improved net working capital Decreased net working capital Further focus on most important items NWC, SEK m NWC as % of sales Index 0 0% 120 % of sales Accounts payable -7.3% 110 -500 -1% 100 4.9% Inventories -1,000 -2% 90 Accounts receivable 2.1% -1,500 -3% 80 2014 2015 2016 2017 2018 2014 2015 201
Slide 22: Strong financial position
Strong financial position Net debt (+)/receivable (-), SEK m 43.0% Equity ratio 41.9% 39.1% 39.0% 37.0% -524 -871 -1047 -1249 -1449 2014 2015 2016 2017 2018 22
Slide 23: Maintained return on capital employed
Maintained return on capital employed Capital employed ROCE 6,000 60% 5,000 50% 4,000 40% 3,000 30% 2,000 20% 1,000 10% 0 0% 2014 2015 2016 2017 2018 23
Slide 24: Balance sheet effects from IFRS 16
Balance sheet effects from IFRS 16 • Modified retrospective approach • Additional approx. SEK 6 bn in total assets SEK m Statement of financial position, Group 31 Dec 2018 Change 1 Jan 2019 Right-of-use assets – 5.9 5.9 Other assets 12.2 -0.1 12.1 Total assets 12.2 5.8 18.0 Total shareholder' equity
Slide 25: Estimate effect on key ratios
Estimate effect on key ratios 31 Dec 2018 1 Jan 2019 • Equity ratio,% 37.0 22.9 • Net debt, SEK bn -1.0 5.2 2019 • EBITDA + • EBIT + • Profit for the period + • ROCE - • Cash flow from operating/ +/- financing activities net 0 25
Slide 26: Update on strategic agenda
Update on strategic agenda Klas Balkow 26
Slide 27: Axfood's strategic areas
Customer offer Customer meeting Expansion Supply chain Work approach Our people Sustainability Axfood’s strategic areas
Slide 28: Customer offer
Customer offer Priorities 2019 Develop and Strengthen price Increase efficiency Develop complete strengthen the perception within and synergies in meal solutions assortment of good private label purchasing and sustainable food
Slide 29: Customer meeting
Customer meeting Priorities 2019 Strengthen the digital Roll out updated Develop and strengthen customer meeting concepts customer program for increased relevance
Slide 30: Expansion
Expansion Priorities 2019 Establish 5-10 Expand online Establish presence in new stores online pharmacy market
Slide 31: Apohem
Apohem • Full scale online pharmacy as of January 2019 Going forward • Expand assortment • Build up awareness • Promote Apohem through Axfood’s channels • New Managing Director, Gustav Hasselgren, as of March 31
Slide 32: Supply chain
Supply chain Priorities 2019 Implement common Start the development Increase efficiency dark store for online of automated in logistics orders warehouse for store and online picking
Slide 33: Started first automated warehouse
Started first automated warehouse 33
Slide 34: Highly automated warehouse 2023
Highly automated warehouse 2023 High capacity utilization in Stockholm today Planned automated warehousing and picking • Combining both store and online picking • Increase efficiency End-phase of negotiations with few suppliers and land owners Store picking E-Commerce picking Article s in Indicative
Slide 35: Work approach
Work approach Priorities 2019 Implement work Increase efficiency Increase the degree of approach supporting by robotization and data driven analysis the digital develop- automation and decisions ment
Slide 36: Our people
Our people Priorities 2019 Develop our Increase diversity Secure competence Increase work culture in management attendance rate positions
Slide 37: Outlook 2019
Outlook 2019 37
Slide 38: Axfood's strategic targets
Axfood’s strategic targets Financial Sustainability Employee • Grow more than the market • Climate neutral 2020 • Even gender balance in (own operations) management positions • Long-term operating margin of at least 4% • Sustainability certified goods • At least 20% managers with share of total net
Slide 39: Financial guidance
Financial guidance • Planned capex 2019 SEK 1,500−1,600 m excluding acquisitions and leasehold (including approx. SEK 600 m investment in automation for future logistic solution) 39
Slide 40: Dividend proposal to AGM 2019
Dividend proposal to AGM 2019 • Policy: shareholder dividend of at least 50% of profit after tax Ordinary dividend as % of profit • The Board suggests an ordinary 100 94 dividend of SEK 7,00 per share 80 81 85 77 73 o corresponding to 94% of profit 71 70 after tax 2010 2011 2012 2013 2014 2015 2016
Slide 41: Summary
• Strong sales growth o Especially in Axfood Snabbgross and Willys o Gaining market share Summary • Record profit • Strong financial position • Exciting plans for the future 41
Slide 42: Q&A
Q&A 42
Slide 43: Axfood
Axfood ■ Operating profit, SEK m Key ratios Q4 Q4 ▬ Operating margin, % SEK m 2018 2017 Change 2018 2017 Change 48,085 Net sales 12,370 11,826 4.6% 48,085 45,968 4.6% 45,968 41,247 42,974 Change in like- 38,484 4.7% 3.6% 1.1 3.7% 3.8% -0.1 for-like sales 4.3 4.4 4.1 4.2 3.8 Operating profit 425 398
Slide 44: Willys
Willys ■ Operating profit, SEK m Key ratios Q4 Q4 ▬ Operating margin, % SEKm 2018 2017 Change 2018 2017 Change Net sales 7,033 6,633 6.0% 27,066 25,415 6.5% 27,066 25,415 22,320 23,164 Change in like- 20,974 5.4% 4.3% 1.1 4.3% 4.3% 0.0 for-like sales 4.2 4.4 4.1 4.0 4.0 Operating profit 264 242 9.3%
Slide 45: Hemköp
Hemköp ■ Operating profit, SEK m Key ratios Q4 Q4 ▬ Operating margin, % SEKm 2018 2017 Change 2018 2017 Change 6,403 Net sales 1,667 1,638 1.8% 6,403 6,199 3.3% 6,171 6,199 5,883 5,510 Change in like- 2.0% 1.1% 0.9 1.1% 2.1% -1.0 for-like sales 4.2 Operating profit 38 58 -34.8% 227 234 -2.8% 3.6 3.8
Slide 46: Axfood Snabbgross
Axfood Snabbgross ■ Operating profit, SEK m Key ratios Q4 Q4 ▬ Operating margin, % SEKm 2018 2017 Change 2018 2017) Change 3,241 Net sales 795 727 9.4% 3,241 2,984 8.6% 2,984 Operating profit 25 14 79.0% 121 110 9.9% 3.7 3.7 Operating 3.1% 1.9% 1.2 3.7% 3.7% 0.0 margin Number 24 24 0 of stores 2014
Slide 47: Dagab
Dagab ■ Operating profit, SEK m Key ratios Q4 Q4 ▬ Operating margin, % SEKm 2018 2017 Change 2018 2017 Change 41,128 42,456 Net sales 11,066 10,527 5.1% 42,456 41,128 3.2% 39,091 Operating profit 170 143 18.3% 685 699 -2.0% 1.7 1.7 1.6 Operating 1.5% 1.4% 0.2 1.6% 1.7% -0.1 margin Delivery 96.1 96.9