January-September 2016 Business Review CEO Heikki Väänänen & CFO Sixten Hjort

Transcription

1 January-September 2016 Business Review CEO Heikki Väänänen & CFO Sixten Hjort

2 Q3 Highlights: profitability improved, net sales at last year s level, negotiations about Anttila store space proceeding Profitability improved Gross margin improvement: more efficient sourcing, increase in direct imports and better campaign management Cost management Revenue at last year s level Like-for-Like revenue decrease due to the bankruptcy clearance sale of department store Anttila and the exceptionally warm autumn which postponed the autumn season affecting particularly clothing sales Four new stores to be opened in 2016 in store space released by Anttila Discussions on-going for approximately ten additional Anttila stores, with the target to open several additional new stores in store space released by Anttila in 2017 The market disruption created by Anttila is temporary and we maintain our full-year guidance unchanged 2

3 Turbulent markets clearance sale can be seen in non-grocery market Q3 sales development The sales of department stores and hypermarket chains increased by 4.5% in the third quarter of 2016 and 2.2% during the January-September 2016 period. The non-grocery market grew 6.0% during the third quarter and 1.2% in January-September 2016 period. The strong growth in the Q3 was mainly attributable to Anttila s clearance sale. Price competition has remained strong, especially in the grocery retail market. The liberalization of opening hours has had a slight positive effect on larger store sales Source: Finnish Grocery Trade Association s FTGA TOKMANNI - January-September 2016 Business Review

4 Store network development 2016 Tokmanni had 158 stores at the end of September 2016 During the third quarter 2016, Tokmanni opened a new store in Ruoholahti in Helsinki and its Kirkkonummi store moved to new and bigger premises. Tokmanni has agreed to open four new stores in store space released by Anttila. In 2016, Tokmanni s selling space will increase by approximately 8,000 square meters, slightly below the 2016 target. The number includes the selling space reduction of the Tammisto store, -2,500 square meters During 2017, Tokmanni plans to open approximately ten new or relocated stores, corresponding to approximately 20,000 square meters additional selling space. Furthermore, Tokmanni is in negotiations regarding approximately ten potential new stores with the target to open several new stores in 2017 in store space released by Anttila. These stores would bring a good addition to Tokmanni s 2017 new store plan and would speed up the plan to grow the store network to approximately 200 stores. 4

5 Q3 revenue at last year s level- - year to date 2.7% growth Revenue M 600,0 550,0 500,0 450,0 400,0 350,0 300,0 250,0 200,0 150,0 100,0 50,0 0, % -0.2% 537, % -3.2% /15 1-9/16 Q3/15 Q3/16 Like-for-Like revenue New store revenue Q3 revenue at last year s level: According to Tokmanni s calculations, Anttila s bankruptcy clearance sales impacted sales by approx. -2% The exceptionally warm autumn postponed the autumn season affecting particularly clothing sales by more than -1%. The price competition in groceries remained strong TOKMANNI - January-September 2016 Business Review

6 Adjusted gross profit improved thanks to continuous development of sourcing and better campaign management Adj. gross profit M Adj. gross margin (%) 200,0 180,0 160,0 140,0 120,0 100,0 80,0 60,0 40,0 20,0 0,0 177,6 184,4 +4.0%% 63,2 64,8 1-9/15 1-9/16 Q3/15 Q3/ % Adjusted gross profit 34.3% 33.6% 34.7% In accordance with company strategy gross profit improved: more efficient sourcing increase in direct imports better campaign management The impact of the EUR- USD hedges on the January-September margin comparison is +0.3 percentage points in favor of TOKMANNI - January-September 2016 Business Review

7 Q3 adjusted opex increased slightly due to new stores and extended opening hours Tight cost control continues Opex increase mainly attributable to Opex 1-9/2015 New stores and renovations Extended opening hours This graph is illustrative only Marketing expenses Property, rents, administration and other expenses Opex 1-9/2016 new stores extended opening hours Operating expenses were impacted positively by lower marketing expenses. Marketing expenses higher in Q2/15 due to marketing brand harmonization. Full-year marketing expenses are expected to be at last year s level in relative terms. Tokmanni has renegotiated some of its rental agreements, which has a sustainable positive effect on operating expenses TOKMANNI - January-September 2016 Business Review

8 Impoved gross margin and tight cost control support profitability development Adjusted EBITDA M 40,0 35,0 30,0 25,0 20,0 15,0 32,1 35,5 17,3 18,1 Improved profitability: efficient ramp-up of new stores more efficient sourcing increase in direct imports better campaign management cost management 10,0 5,0 0,0 1-9/15 1-9/16 Q3/15 Q3/16 Adj. EBITDA Adjusted EBITDA margin. (%) 6.1% 6.6% 9.2% 9.7% TOKMANNI - January-September 2016 Business Review

9 New finance structure reflected in Q3 financial costs Q3 financial costs reflect Tokmanni s current finance structure Net debt/ebitda Decreased to 2.5. Target is <2 7-9/ / / / /2015 Net financial costs, MEUR -1,5-5,3-13,8-15,8-20,9 Capital expenditure, MEUR 2,4-3,9 5,3 3,9 9,0 Net debt / adjusted EBITDA 2,5 3,4 2,5 3,4 2,7 Net cash from operating activities, MEUR 6,7-1,7 15,0-7,0 35,0 Average nr. of shares during the period (1 000) Earnings Per Share, EUR 0,18 0,27 0,18 0,05 0,67 Personnel at the end of the quarter In the third quarter of 2015 the construction projects financed by Tokmanni were sold which affected capital expenditure by EUR -6,6 million. Strong cash flow 9

10 Market outlook Tokmanni expects the weak economic conditions to continue or to improve slightly in Competition expected to remain high in the Finnish retail market in The Anttila bankruptcy has disrupted the market during the third quarter but the effects will be smaller in the fourth quarter when the majority of the Anttila stores have been closed. In the longer term, Anttila s market pullout creates opportunities for companies like Tokmanni both with regards to new store space, and benefits from the redistribution of Anttila s customer base. 10

11 TOKMANNI S SHORT TERM OUTLOOK UNCHANGED : Tokmanni estimates its revenue to grow based on the revenue from new and relocated stores opened in 2015 and 2016, and on revenue of like-for-like stores, which is expected to remain at the level of the previous year. 11

12 Appendix 12

13 Adjustments affecting comparability Adjustments affecting comparability MEUR 7-9/ / / / /2015 Gross profit 64,7 63,3 184,2 176,8 257,5 Changes in fair value of currency derivatives 0,1-0,1 0,2 0,8 0,6 Adjusted gross profit 64,8 63,2 184,4 177,6 258,1 Operating expenses -47,1-48,0-150,6-151,7-207,7 Changes in fair value of electricity derivatives -0,5 0,3-0,7 0,5 0,3 Brand harmonization costs - 0,8-2,9 3,5 IPO costs* ,2 Adjusted operating expenses -47,6-46,9-151,3-148,3-203,7 EBITDA 18,4 16,4 36,0 27,9 53,9 Operating profit (EBIT) 14,8 12,8 24,6 16,9 39,1 Changes in fair value of currency derivatives 0,1-0,1 0,2 0,8 0,6 Changes in fair value of electricity derivatives -0,5 0,3-0,7 0,5 0,3 Brand harmonization costs - 0,8-2,9 3,5 IPO costs* ,2 Adjusted EBITDA 18,1 17,3 35,5 32,1 58,5 Adjusted operating profit (adj. EBIT) 14,4 13,7 24,1 21,2 43,7 *as of January 1st 2016, IPO costs are recorded in the balance sheet 13

14 Tokmanni s revenue and profitability are subject to seasonality 30,0 250,0 25,0 24,4 26,4 200,0 20,0 17,3 17,5 18,1 150,0 15,0 13,5 12,9 15,2 100,0 10,0 5,0 50,0 0,0 2,0 1,8 2,2 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/2016 Q3/2016 0,0 Revenue Adj. EBITDA TOKMANNI - January-September 2016 Business Review

15 Financial targets and dividend policy Long-term financial targets Historical performance 1. Like-for-Like Tokmanni Group s long-term target is to achieve low single digit like-for-like net sales growth assuming current market conditions Low single digit Tokmanni 0.0% (0.3%) (0.6%) Market (0.9%) (2.9%) (1.7%) Non-grocery market (4.7%) (6.3%) (5.6%) 2. New stores Tokmanni Group s target is to, on average, expand by approx. 12,000 square meters of new store space annually, consisting of c. 5 net new stores, expansions and relocations c. 5 p.a. 12,000 sqm New stores Closed stores Relocations Sqm Adjusted EBITDA margin (%) Tokmanni Group s long-term target is to progressively expand to an adjusted EBITDA margin of approximately 10% driven by improving gross margin levels and stable operating expenses in relative terms Progressively reaching ~10% Tokmanni 7.9% 7.8% 7.7% 4. Net Debt / Adjusted EBITDA Tokmanni Group intends to maintain an efficient long-term capital structure, defined as net debt in relation to adjusted EBITDA of below 2.0x <2x ND/ adj. EBITDA 3.0x 2.7x 5. Dividend policy Tokmanni targets a dividend payout ratio of approximately 70 percent of the net result of Tokmanni subject to capital structure, financial condition, general economic and business conditions and future prospects c. 70% 15