1H 2018 Results Presentation

Transcription

1 1H 2018 Results Presentation

2 Agenda of the presentation 1. Executive Summary 2. Summary of Eurocash parts (segments) 3. Market overview 4. Eurocash Financials 2

3 1. Executive summary WHOLESALE - STRONG GROWTH with sales +5,3% and EBITDA +12,8% YoY in 1H 2018 RETAIL 187 MILA STORES ACQUIRED Integration work in progress. 149 EKO stores under Delikatesy Centrum brand STRONG CASH FLOW GENERATION at 1.6x LTM EBITDA PROJECT FRESH CLOSE TO BREAK EVEN with 301m PLN sales in 1H 2018 (+82m PLN) NET DEBT UNDER CONTROL at 1.9x EBITDA, despite M&A and dividend payment (-450m pln) STRONG IMPROVEMENT IN WHOLESALE, PREPARING GROUND FOR RETAIL 3

4 2. Wholesale Segment back on growth track with Cash&Carry turnaround 1H 2018 Sales evolution (PLN m) 1H 2018 EBITDA evolution (PLN m) % +270m +5.3% m -0.5% 142,8 142,1-0.7m +12.8% +18.1m 160,2 1,81% 1,74% 1,87% 1H H H H H H 2018 EBITDA EBITDA margin % Strong performance improvement in 1H 2018 with sales +5.3%, EBITDA +12.8% and EBIT +21.7% YoY. Gross margin stabilized at flat level with further potential to improve. Cost pressure covered by improved efficiency. CC LFL +2.7% in 2Q and +2.2% in 1H 2018 YoY. Best result in last 17 quarters. ECD with +10% sales increase in 1H YoY. ECS already stabilized, +5.1% sales increase in 1H YoY. 4

5 2. Wholesale sales dynamics Wholesale segment supported by increased competitiveness of its clients Wholesale sales evolution (1H 2018 YoY) 3,6% 2,6% C&C LFL 2,7% Wholesale Cash&Carry 2,1% 5,3% 1,3% 0,7% 0,0% -1,3% 0,3% 1,5% 0,3% -0,4% Tobacco & Impulse Distribution 5,1% 10,0% -4,9% -2,2% -2,7% -3,5% -4,0% -3,6% -4,6% -5,2% Alcohol Food Service -0,8% 12,2% 4Q'13 1Q 2Q 3Q 4Q'14 1Q 2Q 3Q 4Q'15 1Q 2Q 3Q 4Q'16 1Q 2Q 3Q 4Q'17 1Q 2Q C&C LFL in 2Q 18 at +2.69% and 2.16% in 1H best performance in last 17 quarters. Tobacco with stable 5% sales growth in 1H 18. Business already stabilized. ECD sales driven by franchisees (Lewiatan, PSD, Euro Sklep, Groszek) and gas stations. 5

6 2. Retail increased asset base, ongoing integration 149 EKO stores under Delikatesy Centrum brand. Mila integration planning started 1H 2018 Sales evolution (PLN m) % +506m % incl. Mila +7.4% +123m pro forma ,0 1H 2018 EBITDA evolution (PLN m) +37.6% 74,3-27.9% -21m +20m 4,72% 4,50% 53,6 3,02% EKO integration EKO + Mila consolidation 1H H H 2018 Sales increase driven by M&A. June 2018 Mila sales at m PLN. 1H H H 2018 EBITDA EBITDA margin % 5Y plan +900 openings sustained. Half of 2019 own stores expansion already addressed with small chains M&A. Retail strategy sustained needs to play as complimentary to franchisees, wholesale clients and the Group. Delikatesy Centrum LFL in 1H 2018 LFL + 4.5% in wholesale and +0.9% in retail. 2Q 2018: +0.9% in wholesale and -1.8% in retail (Easter effect). 6

7 2. Projects investments (at EBITDA level) into future growth Fresh Project close to break even 1H 2018 Sales evolution (PLN m) +91m 338 1H 2018 EBITDA evolution (PLN m) 1H H H m ,4-11m -10,7% +0.2m -7,8% 1H H H ,1% -26,4-26,2 EBITDA EBITDA margin % Fresh Project with 302m PLN sales in 1H 2018 (+82m) close to break even in 2Q Most relevant for Delikatesy Centrum positioning and competitiveness. Duży Ben & Kontigo moved into proven for many years franchise system. 7

8 3. Polish market potential for proximity stores development There is a space for new selling area in the market Belgium Austria Netherlands Switzerland Luxembourg Germany Denmark Norway Sweden France Estonia Spain Lithuania Croatia United Kingdom Latvia Italy Czech Rep. Hungary Slovakia Portugal Poland Bulgaria Romania Turkey Sales area (m2) per capita ,75 0,72 0,67 1,67 1,66 1,59 1,50 1,47 1,44 1,43 1,30 1,27 1,20 1,18 1,13 1,13 1,13 1,09 1,05 1,04 1,04 1,03 1,01 0,99 0,98 Criteria for selection of grocery stores for the 10 most popular chains (%) Close to my home Affordable prices A wide range of products Other: high quality products They always have what I come for Attractive promotions / discounts Shopping is fast Attractive products of the brand of a store Interesting / inspiring products A lot of Polish products The Polish origin of this store Do not overwhelm the surface / number of products Attractive loyalty program Offer new products 4% 3% 3% 3% 2% 7% 5% 5% 12% 12% 12% 27% 41% 69% 0% 10% 20% 30% 40% 50% 60% 70% 80% Poland - country with one of the lowest selling area per one person in Europe Proximity the most valued for Polish consumers 8

9 3. Food market growth Small Format stores accelerating growth, Large Format with declining dynamics Food market growth by channels (YTD July 2018, YoY) Value change +1,5bn -0,03bn +0,12bn +1,6bn Food market growth by small format channels (YTD July 2018, YoY) Food market share evolution (YTD July 2018, YoY) 8,3% 7,3% Discounters -0,7% -0,4% Hypermarkets ,8% 1,2% Supermarkets ,7% 5,7% Small Format +0,2bn +1,1bn -0,1bn +0,4bn 8,8% 2,5% Small Supermarkets ,0% 11,0% -5,6% -1,9% 3,8% 12,9% Convenience Small Grocers -40 Specialized & Others YTD 2017 YTD ,26% 41,30% 15,9% 15,5% 10,1% 9,6% 32,7% 33,6% YTD 2017 YTD 2018 YTD 2017 YTD 2018 Small Format Supermarkets Hypermarkets Discounters Small Format increasing sales by 5.7% vs. food market growth of 4.9% in YTD July Small Format stores and discounters gaining market share in cost of super- and hypermarkets Source: Nielsen 9

10 3. Inflation Small Format stores sales growth accelerated although without support of inflation % Inflation YoY in Poland Food inflation by categories 6% 5% 4% 3% 2% 1% 0% 5,6% 4,6% 3,9% 3,4% 3,4% 2,0% 2,2% 1,8% 1,9% 1,5% 1,7% 3,2% 2,2% 2,0% 1,7% 1,8% 1,1% 0,8% 1,0% 0,9% 1,1% 1Q2017 2Q 3Q 4Q 1Q2018 2Q July 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% Large format categories 11,9% 7,8% 6,7% 3,6% 2,7% 3,4% Small format categories 2,2% 2,7% 1,2% 1,0% 0,9% Food average 1,5% -2,8% CPI CPI - food & non-alcoholic beverages CPI - alcoholic beverages & tobacco Source: GUS 2018 (I-VII) Eurocash inflation much below the market: wholesale prices in Delikatesy Centrum: +0.1%, retail prices +1.2% in 1H 2018 YoY 10

11 4. 1H 2018 financial summary Strong sales increase driven by wholesale segment PLN m 1H H 2018 % of Sales 1H 2017 % of Sales 1H 2018 Y/Y Change Net sales % Sales driven mainly by wholesale segment (+435m PLN) and consolidation of Mila (+120m PLN). Gross profit % 11.9% 9% EBITDA (excl. Projects, normalized*) % 1.7% 1% EBITDA normalized* % 1.5% 1% One-off costs* EBITDA reported* % 1.5% 261% EBIT normalized* % 0.6% -6% Profit before tax normalized* % 0.4% -11% Net profit % 0.2% -46% * 2018 results normalized by costs of Mila M&A, 2017 by add. VAT tax payment Gross Margin stabilized after 1H Increase by 0.22 p.p. YoY driven by retail segment and consolidation of Mila. Normalized EBITDA increase by 1%, driven by wholesale segment, and off-set by EKO stores remodeling. Depreciation driven by retail segment. Net Profit affected by increased effective tax rate due to changes in law. 11

12 4. EBITDA* performance by segments 1H 2018 EBITDA by segments +18.2m -20.7m +0.2m +4.1m +1.9m 142,1 160,2 157,8 159,6 74,3 53,6-26,4-26,2-32,1-27,9 Wholesale Retail Projects Others Eurocash Group 1H H m incl. one-off costs (Mila acquisition fees) C&C increasing LFL and profitability EKO integration short-term impact on profitability Fresh Project improving results, close to break even, Costs improvement STRONG FOCUS ON: WHOLESALE OPTIMIZATION EC Distribution 10% sales increase DC own stores above expectations positive EBITDA in 2H 18 expected RETAIL INTEGRATION Tobacco impacting 1H results but already stabilized with high potential for growth in next quarters DC Franchise improvement of profitability, focus on Fresh Project COSTS CONTROL * 2018 results normalized by costs of Mila M&A, 2017 by add. VAT tax payment 12

13 4. Cash Flow LTM Operating CF at 168% EBITDA Cash conversion cycle (restated after IFRS 15) PLN m 1H H 2018 Net operating cash flow Net profit (loss) before tax (64) 42 2Q Q (48) Depreciation Change in working capital ( 21) ( 21) ( 22) ( 27) ( 23) ( 25) Other 4 (15) Net investment cash flow (204) (378) 15 (18) (65) (338) ( 76) ( 75) ( 71) ( 81) ( 77) ( 76) Net financial cash flow Total cash flow 8 (54) (175) (251) 15 (349) -100 Q Q2 Q3 Q4 Q Q2 Receivables Stock Cash conversion Liabilities Strong cash generation sustained in 1H Strong improvement of receivables rotation in wholesale segment 13

14 4. Net debt vs. normalized** LTM EBITDA Strong Cash Flow sustained Net Debt* vs. 12M EBITDA in 2Q ,36 1,10 1, Q'17 2Q 3Q 4Q 1Q'18 2Q 1,02 1,29 LTM EBITDA (PLN m) NET DEBT (PLN m) NET DEBT / EBITDA 1,90 0,93x 335 excl. M&A 2,0 1,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 Net Debt increase by 214m PLN despite payment of dividend (102m) and Mila acquisition (350m) in 2Q *NET DEBT - the sum of long and short term loans, borrowings and financial liabilities less cash and cash equivalents **Adjusted for one-off item 114 m PLN potential VAT liability payment done in Aug

15 Summary of the presentation Wholesale strong performance supported by sales growth and profitability improvement. Retail under reorganization. Asset base increased. Projects Fresh Project crucial for Retail close to break even. Strong Cash Generation sustained -> Net Debt under control. Improved operations and costs control. Space for further corrections. 15

16 Disclaimer This presentation and the associated slides and discussion contain forward-looking statements. These statements are naturally subject to uncertainty and changes in circumstances. Those forward-looking statements may include, but are not limited to, those regarding capital employed, capital expenditure, cash flows, costs, savings, debt, demand, depreciation, disposals, dividends, earnings, efficiency, gearing, growth, improvements, investments, margins, performance, prices, production, productivity, profits, reserves, returns, sales, share buy backs, special and exceptional items, strategy, synergies, tax rates, trends, value, volumes, and the effects of Eurocash S.A. merger and acquisition activities. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to developments in government regulations, foreign exchange rates, oil and gas prices, political stability, economic growth and the completion of ongoing transactions. Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, you are cautioned not to place undue reliance on any of the forward looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which speak only as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as maybe required under applicable securities laws. Statements and data contained in this presentation and the associated slides and discussions, which relate to the performance of Eurocash S.A. in this and future years, represent plans, targets or projections. 16

17 FOR MORE INFORMATION PLEASE CONTACT: Cezary Giza Investor Relations Director mobile:

18 APPENDIX: 2Q 2018 FINANCIAL SUMMARY Strong sales increase driven by wholesale segment PLN m 2Q Q 2018 % of Sales 2Q 2017 % of Sales 2Q 2018 Y/Y Change Net sales % Gross profit % 12.2% 8% EBITDA (excluding Projects, normalized) % 2.3% 1% EBITDA normalized* % 2.1% 0% One-off costs* EBITDA reported* 5,9 117,0 0.1% 2.0% 1894% EBIT normalized* 74,8 70,6 1.4% 1.2% -6% Profit before tax normalized* 66,7 62,0 1.2% 1.1% -7% Sales driven mainly by wholesale segment (+166m PLN), and consolidation of Mila (+120m PLN). Gross Margin increase by 0.24 p.p. YoY - stable in wholesale segment, driven by Mila. EBITDA driven by wholesale segment, and off-set by EKO stores remodeling. Depreciation driven by retail segment. Net Profit affected by increased effective tax rate due to changes in law. Net profit 52,6 39,0 1.0% 0.7% -26% * 2018 results normalized by costs of Mila M&A, 2017 by add. VAT tax payment 18