3Q 2Q 2016 RESULTS DISCUSSION

Transcription

1 3Q 2Q 2016 RESULTS DISCUSSION

2 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, crude oil and gas prices, crack spreads, 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. 2

3 3Q 2016 Highlights FURTHER IMPROVEMENT OF MARKET POSITION AND MARKET SHARES EUROCASH SALES IN POLAND GREW BY 7.6% IN 3Q AND 5.6% IN 3Q YTD INVESTMENT IN STRATEGIC PROJECTS AFFECTING EBITDA CASH FLOW REMAINS AT STABLE, LONG-TERM OPTIMUM LEVEL BEER, DAIRY AND ALCOHOL DEFLATION AFFECTING LFLs 3

4 Macroeconomic outlook Limited impact of social programs implemented by government (500+) Clothes Footwear Books and education Holidays Additional courses for children Family entertainment Food School trips Medicines Main purpose of 500+ spending 31% 29% 22% 22% 20% 17% 17% 17% 15% 0% 20% 40% -8,3% Clothes, footwear Pharmaceuticals, cosmetics Motor vehicles, motorcycles, parts Furniture, radio, TV, appliances Other retail sale in non-specialized stores Newspapers, books Food, beverages and tobacco products Retail sales dynamic, 3Q YTD 2016 YoY Others Total 4,9% 6,9% 5,3% 9,5% 8,7% 12,1% 10,4% 15,8% -10,0% -5,0% 0,0% 5,0% 10,0% 15,0% 20,0% Source: Ministry of Family, Labour and Social Policy Source: CSO, constant prices No impact on Food Retail sales observed yet 500+, means 50 PLN per 1 inhabitant in Poland 4

5 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% Eurocash gaining market share Faster growth of categories where Eurocash gains more market shares 6% 3,3% 3% 1,8% 1,7% 0,2% 0,2% 0,1% -1% -2% -2% -0,1% ALCOHOLIC CIGARETTES FOOD DAIRY BEER BEVERAGES BEVERAGES 3Q Market Change 3Q 2016 Eurocash Market Shares Dynamic 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% +1,8 +0,2 +0,2 +0,1-0,1 25,9% 27,7% ALCOHOLIC BEVERAGES 12,5% 12,7% 9,9% 10,1% 22,9% 23,0% 14,1% 14,0% FOOD DAIRY BEER BEVERAGES Q Q Q 2016 YoY Total Poland Market YoY change of sales in main categories Eurocash Market Shares in Total Poland Nielsen Food Categories Source: Own estimates based on Nielsen Total market grew by 1.7% while Eurocash sales in Poland grew by 7.6% Eurocash market shares driven by ECD, ECF and ECS EC C&C and ECA with stable value and growing volume market shares 5

6 Market & Competition Discounters slowing down Monthly Food market growth by channels (YoY) 20% 15% 10% 5% 0% -5% -10% -15% I 15 II 15 II 15 IV 15 V 15 VI 15 VII 15 VIII 15 IX 15 X 15 XI 15 XII 15 I 16 II 16 II 16 IV 16 V 16 VI 16 VII 16 VIII 16 IX 16 Hypermarkets Supermarkets Discounters Small Format 5% FMCG market growth by channels (YoY, Sep YTD 2016 ) 4,6% 7,2% 4% 3% 3,1% 3,0% 4,1% 2% 1,4% 1% 0% Small Format Hypermarkets Supermarkets Discounters Food Drug Discounters Source: Nielsen 6

7 Market & Competition Growth in discounters supported by increased no. of SKU No. of SKU in Discounters (Sep 2016 vs. Sep 2015) % +20% % -2% Other 500 Drug & Cosmetics 0 Food +8% Biedronka % Lidl Other Drug & Cosmetics Food 60% 50% 40% 30% 20% 10% 0% Share of branded products in total assortment 43% 48% 29% 27% 2015 Biedronka Lidl 2016 Source: ABR Sesta, Wiadomości Handlowe 7

8 Strong sales growth supported by increased assortment and new clients Sales development (PLN m) 3Q YoY sales growth to Franchisees % +8% ,0% 10,0% 8,0% 7,3% 10,0% ,0% 4,0% 4,7% ,0% 0 EC Group EC Group excl. Export 0,0% abc Delikatesy Centrum ECD Franchisees 3Q Q stores +6,4% LFL Fresh Project +160 stores Sales excluding export grew by +7.6% in 3Q and +5,6% in 3Q YTD Excluding add. sales from M&A sales grew by +6,8% in 3Q and 4.7% in 3Q YTD Improved position in all franchise chains 8

9 3Q 2016 sales per distribution formats Market share growth in core business EC Serwis * % Cigarettes +6.3% in 3Q and +6.1% in 3Q YTD Sales impacted by top-ups transfer to PayUp Cash&Carry EC Distribution Delikatesy Centrum * EC Alkohole Inmedio EC Food Service % +5% excluding export +7% +7% excluding export +7% +5% LFL at -3.6% 3Q and -2.9% YTD, impact of new openings and deflation in alcohol, beer, dairy & fresh Franchisees +10%, discontinued exports Wholesale LFL +6.4% 3Q, and +4.6% YTD Retail LFL +2.0% in 3Q and +1.3% YTD Sales improvement mainly to independent and HoReCa Sales growth in main categories, Growing no. of clients and avg. ticket Sales driven by Key Accounts, YoY change in sales by distribution formats (PLN m) * incl. sales to Rogala 3Q Q

10 C&C LFL dynamics Cannibalization and price deflation still impacting LFL 15% 10% LFL Cash&Carry Deflation: Cannibalization: 12% 10% C&C volume growth (YoY 3Q YTD, hl) 10,5% 5% 0% -5% -10% 1,3% 2,5% 0,7% Q ,9% 0,0% Q2 Q3 Q4 Q ,7% -1.6% -2,2% Q2 Q3 Q4 Q % -1,3% Q2 Q3-5,0% -4,0% -3,6% 8% 6% 4% 2% 0% 1,4% 3,7% Beer 3Q YTD Stores <100sqm (Market) 3,5% Alcohol Cash & Carry Deflation and cannibalization affecting C&C sales and profitability Strong volume and market share growth in key categories Fast expansion of abc chain supporting sales growth New stores improving sales/cost efficiency, on-track to reach average profitability Strategic review of recent openings in progress with objective to limit cannibalization effect on profitability 10

11 Delikatesy Centrum LFL dynamics LFL accelerating driven by fresh project 15% 10% LFL Delikatesy Centrum 2,6% -3,9% 2,1% -0,3% 2,7% 4,4% 6,4% 5% 0% -5% Q Q2 Q3 Q4 Q Q2 Q3 0,6% -1,2% 1,4% -0,4% 1,2% 0,8% 2,0% Delikatesy Centrum wholesale LFL Delikatesy Centrum retail LFL +6.4% +2.0% Wholesale LFL +6.4% in 3Q and +4.6% YTD Retail LFL +2.0% in 3Q and +1.34% YTD New price policy and fresh project 11

12 Expansion Strong expansion of abc and ECD Franchise, closures still affecting DC No. of stores q q 3q 4q 1q q 3q abc Delikatesy Centrum ECD Franchisees C&C without openings, as improvement in cost structure as a strategic goal for next quarters abc expansion at record level DC expansion affected by termination of tests with Orlen and closures of stores by 1 franchisee 21 openings and 41 closures in 3Q 2016 appx. 10 net openings expected in 2016 ECD Franchise chains with healthy growth driven by Lewiatan and Groszek expansion 12

13 Delikatesy Centrum as the most recommended retail chain in Poland NPS 80% % 40% 20% 0% -20% -40% 59% 54% 53% -18% -14% -28% 39% 46% 39% 38% 41% 37% 32% 35% 28% 20% 23% 18% 13% -18% -26% -24% -24% -28% -28% -24% -37% -32% -35% -48% -53% -59% -60% -80% Detractors Promoters Promoters Retail chains recommendation index Detractors Net Promoter Score (NPS) Source: GfK Polonia Delikatesy Centrum with the highest NPS value on the market Q. How likely is it that you would recommend the chain to a friend or colleague? (0 to 10 scale) 13

14 3Q 2016 Financial summary Sales growth by 7.6% excluding export PLN m 3Q Q 2016 % of Sales 3Q 2015 % of Sales 3Q 2016 Y/Y Change Net sales ,0% Gross profit ,7% 9,9% 7,4% EBITDA ,5% 2,1% -8,8% EBIT ,8% 1,4% -17,0% Profit before tax ,6% 1,3% -13,9% Net profit ,3% 1,1% -15,3% Gross Margin growth by 0.3 p.p. and 0.1 p.p. ex M&A EBITDA hit by higher costs: Fresh + New Projects (-5 m) Effects of C&C expansion Deflation Net profit with positive impact of lower net financial costs 14

15 3Q YTD 2016 Financial summary Sales growth by 5.6% excluding export PLN m 3Q YTD Q YTD 2016 % of Sales 3Q YTD 2015 % of Sales 3Q YTD 2016 Y/Y Change Net sales ,9% Gross profit ,6% 10,0% 8,1% EBITDA ,9% 1,8% -3,5% EBIT ,2% 1,0% -12,3% Profit before tax ,0% 0,9% -4,0% Net profit ,8% 0,7% -3,8% Profitability negatively affected by: Additional costs of Fresh + New Projects (PLN 11m) Effects of C&C expansion cannibalization and lower efficiency Deflation combined with increasing labor costs

16 Investment in strategic growth projects driving costs Development of New Projects and Fresh Project PLN -11 m EBITDA YoY ,4-5,1-1,6-4,0 3q q q q 2016 New Projects Fresh Project Sales EBITDA ,8-19,8-3,9-10,0 3q YTD q YTD q YTD q YTD 2016 New Projects Fresh Project Fresh Project investment in quality and prices to strengthen Delikatesy Centrum market position Costs of New Projects development of innovative retail formats: 1minute abc on wheels Duży Ben Kontigo Faktoria Win 16

17 Cash Flow Operational CF at the level of EBITDA % 538 Operational Cash Flow vs. EBITDA % 197% 206% 194% % 90% % 200% 150% 100% 50% 0% -50% Cash conversion cycle (12) (16) (15) (13) (10) (18) (19) (20) (21) (20) (19) (67) (72) (67) (72) (59) (65) (62) (66) (70) (69) (64) % 1Q '15 2Q 3Q 4Q 1Q Q 3Q LTM EBITDA (PLN m) LTM Operational Cash Flow (PLN m) LTM OCF / LTM EBITDA -80 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Receivables Stock Cash conversion Liabilities Q2 Q3 OCF in 3Q at 106% EBITDA level Maintained efficient inventory rotation - 18 days in 3Q 2016 Cash conversion at long- term optimum level *LTM Last Twelve Month

18 Net Debt vs. EBITDA , ,5 2, , , ,66 0,50 0,50 0,37 1Q'15 2Q 3Q 4Q'15 1Q'16 2Q 3Q LTM EBITDA (PLN m) NET DEBT (PLN m) NET DEBT / EBITDA 1,5 1,0 0,5 0,0 Net Debt* vs. 12M EBITDA in 3Q 2016 Net Debt / EBITDA at level of 0.5x in 3Q 2016 *NET DEBT - the sum of long and short term loans, borrowings and financial liabilities less cash and cash equivalents 18

19 Main changes in law SUNDAY BAN Ban for trade on Sundays, potentially small entrepreneurs allowed EC Franchisees support the idea but not in current project of law RETAIL TAX New project of interim retail tax: app. 1,2% for every retailer in 2017 official project yet to be presented Previous version of retail tax under investigation of EU CONTRACTUAL ADVANTAGES Potential of NET-NET price implementation Changes in promotional settlements with suppliers E-RECEIPT No paper bills, all trade evidenced by centralized IT systems Need to exchange fiscal cash registers ALCOHOL LICENSES Potential limits / additional zones for alcohol licenses in big cities 19

20 3Q 2016 Financial Summary P&L PLN m 3Q Q 2015 Y/Y Change 3Q YTD Q YTD 2015 Y/Y Change Sales revenues (traded goods, materials) % % Gross profit on sales % % Gross profitability on sales (%) 9,9% 9,7% 0,22p.p. 10,0% 9,6% 0,39p.p. EBITDA % % (EBITDA margin %) 2,1% 2,5% -0,32p.p. 1,8% 1,9% -0,13p.p. EBIT % % (EBIT margin %) 1,4% 1,8% -0,37p.p. 1,0% 1,2% -0,18p.p. Net Income % % (Net profitability %) 1,1% 1,3% -0,26p.p. 0,7% 0,8% -0,06p.p.

21 3Q 2016 Financial Summary Cash Flow PLN m 3Q Q Q YTD Q YTD 2016 Net operating cash flow 271,0 130,4 831,0 273,0 Net profit (loss) before tax 88,1 75,9 148,3 142,3 Depreciation 37,4 42,2 111,1 123,1 Change in working capital 140,1 8,7 543,0 (11,5) Other 5,3 3,3 27,8 17,9 Net investment cash flow (27,5) (31,8) (110,9) (167,3) Net financial cash flow (245,2) (142,4) (728,8) (109,2) Total cash flow (1,7) (43,8) (8,8) (3,5)

22 3Q 2016 Financial Summary Balance Sheet PLN m 30 SEP DEC 2015 Change [%] Change Non-current assets ,8% 19 Current assets ,1% 413 Inventories ,5% 169 Trade receivables ,8% 181 Cash and cash equivalents ,1% -4 Total Assets ,6% 432 Equity ,7% -54 Liabilities ,6% 486 Long-term financial debt ,1% -3 Short-term financial debt ,0% 56 Trade payables ,0% 386 Total equity and liabilities ,6% 432

23 For more information please contact: Jan Domański Investor Relations & M&A Director Mobile: