Corporate Presentation

Transcription

1 Corporate Presentation

2 Legal disclaimer This document does not constitute or form part of any purchase, sales or Exchange offer, nor is it an invitation to draw up a purchase sales or exchange offer, or advice on any stock issued by Distribuidora Internacional de Alimentación, S.A. ( DIA or the Company ). Nor shall this document or any part of it form part of any offer for sale or solicitation of any offer to buy any securities the basis of or be relied on in connection with any contract or commitment to purchase shares. DIA cautions that this document contains forward-looking statements and information relating to DIA and include, without limitation, estimates, projections or forecast relating to possible future trends and performance of DIA that are based on the beliefs of its management as well as assumptions made and information currently available to the Company. Such statements reflect the current views of the Company with respect to future events and are subject to risks, uncertainties and assumptions about the Company and its subsidiaries, including, among other things. In light of these risks, uncertainties and assumptions, the events or circumstances referred to in the forward-looking statements may not occur. None of the future projections, expectations, estimates, guidance or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates, guidance or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the presentation. These forward looking statements speak only as of the date on which they are made and the information, knowledge and views available on the date on which they are made; such knowledge, information and views may change at any time. Forward-looking statements may be identified by words such as expects, anticipates, forecasts, estimates and similar expressions. Current and future analysts, brokers and investors must operate only on the basis of their own judgment taking into account this disclaimer, as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as its considers necessary or appropriate in the circumstances and not reliance on the information contained in the presentation. In making this presentation available, DIA gives no advice and makes no recommendation to buy, shell or otherwise deal in shares in DIA or in any other securities or investments whatsoever. These analysts, brokers and investors must bear in mind that these estimates, projections and forecasts do not imply any guarantee of DIA s future performance and results, price, margins, exchange rates, or other events, which are subject to risks, uncertainties and other factors beyond DIA s control, such that the future results and the real performance could differ substantially from these forecasts, projections and estimates. The risks and uncertainties which could affect the information provided and very difficult to anticipate and predict. DIA does not assume the obligation of publicly reviewing or updating these statements in case unforeseen changes or events occur which could affect these statements. DIA provides information on these and other factors which could affect the business and the results in the documents it presents to the CNMV (Comisión Nacional de Mercado de Valores) in Spain. Accordingly, these estimates, projections and forecast must not be taken as a guarantee of future results, and the directors or managers are not responsible for any possible deviation which could arise in terms of the different factors which influence the future performance of the company. None of the Company nor any of its employees, officers, directors, advisers, representatives, agents or affiliates shall have any liability whatsoever (in negligence or otherwise, whether direct or indirect, in contract, tort or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. Certain information contained in this presentation is based on management accounts and estimates of the Company and has not been audited or reviewed by the Company s auditors. Recipients should not place undue reliance on this information. This presentation includes certain non-ifrs financial measures or expressions (gross sales under banner, comparable growth of gross sales under banner, adjusted EBITDA, adjusted EBIT, etc.) which have not been subject to a financial audit for any period. The information contained in this presentation does not constitute investment, legal, accounting, regulatory, taxation or other advice and the information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information. You are solely responsible for seeking independent professional advice in relation to the information contained herein and any action taken on the basis of the information contained herein. No responsibility or liability is accepted by any person for any of the information or for any action taken by you or any of your officers, employees, agents or associates on the basis of such information.

3 Index 01 Introduction 4 02 Key Investment Highlights 8 03 Financial review Appendix - additional information 28

4 01 Introduction

5 DIA at a glance A story of profitable growth in food retail Key facts SIZABLE AND UNIQUE BUSINESS MODEL 1. global listed proximity discounter 2. Top 20 franchisor worldwide 3 / in food retail in Europe 4 3. Loyal customer base (+75% sales through DIA card) 4. Innovation focus (+50% private label penetration 5 ) FUELLED BY INDUSTRY-LEADING FINANCIAL RESULTS 5. EUR10.3bn gross sales under banner / EUR8.7bn net sales 6. EUR628m adjusted EBITDA (7.2% margin) % ROI and 1.4x net debt / adjusted EBITDA Discounter of reference in largest markets 4,355 Continued growth profile 1 (#, m) GROSS SALES # STORES UNDER BANNER ADJUSTED EBITDA 7,420 7,810 10, Global and diversified footprint DISCOUNTERS MARKET POSITION FOOD RETAIL MARKET POSITION Source: Kantar Worldpanel, Nielsen #3 IBERIA #3 #5 EMERGING Notes 1. Excluding France, Turkey and China; 2. Ex-currency; 3. Top 100 global franchises (Franchise Direct); 4. By # of publicly published franchised stores; 5) Weight in sales of FMCG in Spain #4 #5 GROSS SALES # STORES UNDER BANNER ADJUSTED EBITDA 74% 26% ,420 51% 49% ,420 34% 2016 EUR10.3bn 66% Company-owned Franchise Iberia Emerging 81% 19% 2016 EUR628m

6 Review of DIA s timeline Building an Iberian leader (80 s & 90 s) International expansion (2000 s) Developing new 2P (price & proximity) format and refocusing on core markets (2010 s) 1979 Creation of DIA by Promodès in Spain 1993 First store opened in Portugal 2001 First DIA store opened in Brazil (Sao Paulo) 2011 IPO in the Spanish Stock Exchange Rio Grande do Sul opening 2014 Exit from France El Árbol acquisition Bahia region opening 2016 DIA on Amazon Prime Now First stores in Paraguay (MFs) Opening in Rio de Janeiro 1989 New model: the DIA franchise 1997 First DIA store in Argentina 2000 Integration in Carrefour 2003 Establishment in China 2013 Exit from Turkey Minas Gerais region opening Acquisition of Schlecker Iberia 2015 Acquisition of 144 Eroski stores Launch of La Plaza banner Closing of procurement agreements (Eroski, Intermarché and Casino) 2017 Private label agreement with Eroski

7 DIA s geographical reach (December 2016) Key facts #Total Stores #Franchises Gross Sales( m) Discounter market position #3 Key facts #Total Stores #Franchises Gross Sales( m) Discounter market position 4,875 2,147 5,967 Key facts # Total Stores # Franchises Gross Sales( m) Discounter market position ,643 Key facts #Total Stores #Franchises Gross Sales( m) Discounter market position 1, ,857 Notes 1. Paraguay master franchise operations started in late 2016

8 02 Key Investment Highlights

9 Key investment highlights Leading listed discounter rightly focused on offering the most valuable attributes for today s customers: Price & Proximity Multi-banner, multi-local, customer-centric and innovative business model well-fitted to capture digital opportunities Flexible and cost-efficient operations levered by a sizeable entrepreneurial network, delivering higher stable margins and superior returns on investment Systematic delivery of organic and inorganic growth with strong outlook Experienced management team with a defined strategy and strong execution track-record

10 1 Leading listed discounter [] listed discounter worldwide, having significantly gained market share in the last few years Global discounters ranking (by # stores; 000) DIA s market share gain in its largest geographies 10,006 9,937 # % 7, % 6, % 3, % % % Source Company fillings; Lidl and Aldi based on latest info available (2014) # DIA s discounter position Top 5 players market share

11 1 rightly focused on core customer values: Price & Proximity Proximity stores as the most resilient format and expected to drive global food retail growth in the mid-term Current trends in the global food retail sector support DIA s long-term strategic positioning Mature markets Emerging markets Ageing population Higher shopping frequency Less people per home / reduced storage capacity Stagnation of personal income / value-for-money approach Unemployment remains high in certain geographies More women in the workforce Increased weight of modern distribution Rising of oil and energy costs Increase of urban population Rise of middle class Higher personnel costs Hard discounters Hypermarkets SPAIN BRAZIL ARGENTINA 7% 8% 7% 5% 6% 6% 6% 6% 6% Supermarkets 2% (1%) (2%) (8%) CAGR CAGR (2%) (6%) (9%) CAGR CAGR (3%) (1%) CAGR CAGR Department stores Convenience Source Euromonitor Convenience & Discount Hypermarkets Supermarkets

12 May-yy May-13 Nov-13 Nov-yy May-14 May-yy Nov-yy Nov-14 May-yy May-15 Dec-yy Nov-15 May-yy May-16 Nov-yy Nov-16 May-13 may-13 Nov-13 nov-13 may-14 May-14 nov-14 Nov-14 may-15 May-15 dec-15 Nov-15 may-16 May-16 nov-16 Nov-16 nov-13 Nov-13 may-14 May-14 nov-14 Nov-14 may-15 May-15 Nov-15 dec-15 may-16 May-16 nov-16 Nov-16 1 Leading price image across all geographies Price as a differentiating feature vs. competitors DIA Competitor B Competitor D Competitor A Competitor C Competitor E DIA Competitor B Competitor D Competitor F Competitor A Competitor C Competitor E Competitor G DIA Competitor B Competitor D Competitor F Competitor H Competitor A Competitor C Competitor E Competitor G Source DIA and Kantar

13 2 Multi-banner, multi-local approach Multi-format/brand strategy to meet all customers expectations Multi-banner and multi-local approach BANNER TYPE Proximity Attraction Proximity supermarket Proximity HPC store AVG. SIZE (Sqm) 400-1, OBJECTIVES Best price Frequency (market format) / basket size (maxi format) Complete assortment 2016 STORE WEIGHT 79% Best price Basket size Fresh focus 4% Best price Cross-selling with DIA 17% Notes 1. DIA operates the proximity discount format in other countries under different brands (i.e. Minipreço and Mais Perto banners in Portugal 2. Includes DIA s cash&carry stores, which represent 0.5% of the total

14 2 2P f business model focused on customer satisfaction The 2Pf formula: price and proximity with best-in-class service provided by franchisees Customers at the centre of DIA s business model resulting in tangible results on customer satisfaction Price Loyalty programme Net Promoter Score 1 (improvement from Nov-2013 to Nov-2016) +21.2pp Proximity Multiprivate label +7.1pp +5.8pp Franchise Efficiency & Innovation Continued digitalisation Multi-brand to meet customers expectations Variable remuneration at store level linked to Net Promoter Score Notes 1. Net Promoter Score (NPS) as metric for assessing customer satisfaction. Franchisee satisfaction is measured as satisfied customers less non-satisfied

15 2 DIA Club: much more than a loyalty programme Loyalty programme based on targeted marketing actions driving increased sales, average basket and frequency Targeted marketing actions bringing price advantage to card holders widely used by our customer base providing tangible benefits for DIA Dual price Customer financing (FinanDIA) FY 2016 data % 86% 76% 69% 68% Average ticket (Dia brand) On-site and On-line discount coupons 100 Dia Club APP Over 700k users in Spain Penetration (as % of sales) Active card holders (million) 2 No DIA Club member DIA Club customer In-depth customer knowledge to fine-tune targeted and cost-efficient marketing actions Significant savings for end-customer (+5% per annum) Increased bargaining power against suppliers Notes 1. In euro, indexed to no club members = Data refers to Sao Paulo

16 2 Outstanding private label proposition backed-by strong innovation Successful implementation of DIA s private label in all countries driving superior price and quality image A continued and cost-efficient innovation funnel with proven track record Selection of base products Choice and distribution of product Description of quality specifications Penetration 1 of DIA S private label vs. overall market (as a % of sales) 53% 54% 37% 35% Testing Over 3,000 panel tests per year for validation and control 39% 32% Manufacture Sourcing (selection of suppliers) Logistics Display Multi-lingual packaging 7% 5% DIA PL share (%) Market PL share (%) +44% SALES IN 2016 Latest launches Finished products Systematic quality control at DIA warehouse labs Additional controls in external laboratories Notes 1. Weight in Fast Moving Consumer Good sales

17 2 DIA poised for digital transformation New measures have been implemented with a strong focus on improving operations for the 3 main pillars of the Company: customers, stores and local partners Digital transformation Store management Customers Franchisees Store management: price, checks, offers Inventory: stock control, generation of files Logistic/Transport service: daily monitoring of service frequency and fleet Shopping list Access to digitalised discount coupons Monthly expense control Digital loyalty card +3,000 Click&Collect points Franchisee App Smart tracking of deliveries Direct contact line with Regional Centres > EUR120m sales in Spain in 2020 (x6 vs 2016) Greater streamlining of tasks and improved quality of procedures + 9 pp improvement in franchise satisfaction 1 Notes 1. Source Nielsen (Measured as satisfied less non-satisfied)

18 3 Franchise model: a fundamental pillar of the business Unique franchise proposition supporting a flexible and efficient operation Well balanced store mix % of owned and franchised stores by segment 5,498 44% Top 20 franchisor worldwide 1 / in food retail in Europe 2 Top franchise ranking by geography and years of experience in the country 56% 1,922 65% 35% Over 37 years retail and 27 franchising track-record Over 19 years retail and 15 franchising track-record % Owned % Franchised Over 23 years retail and 20 franchising track-record Over 15 years retail and 14 franchising track-record 34% 34% 2010 Continued increase of the franchising activity 40% 40% Weight of franchises (# stores) 3 52% 44% 44% 42% % 42% 60% 47% 61% 49% leading to a sustainable business model in the long run Profitable capillarity Day-to-day management flexibility Efficient management of operational expenses Reduced personnel expenses Higher control of shrinkage Lower rotation of personnel vs. owned stores Higher commitment / top service Better knowledge of customers DIA banner stores Total stores Notes 1. Top 100 global franchises (Franchise Direct); 2. By # of publicly published franchised stores; 3. Excludes China)

19 3 Integrated and cost-efficient business model Fully integrated and cost-effective supply chain based on our proprietary IT infrastructure resulting in recurrent industry-leading productivity and return on investment Efficient and integrated supply chain EBITDA per employee (k ) 1 Strong franchise platform Return on investment 2016 (%) 1,2 Strict capital allocation process Supplier Streamlined, fully integrated retail capabilities % Warehouse Proprietary management system +44% +750bps Transport Owned Store / Franchise End-to-end scope Average peers Average peers % Notes 1. DIA based on 2016 figures; Peers data based on 2015 figures; employees on a FTE basis 2. ROI as EBITDAR / Avg. invested capital; Avg. invested capital = Avg total assets exc cash + Avg D&A Avg account payables Avg accrued liabilities + x5 Rent adjustment 3. Carrefour, Casino, Jeronimo Martins,, Metro, Morrison, Sainsbury, Sonae and Tesco

20 3 Efficient store portfolio management Active store portfolio management to adapt to evolving customer requirements Disciplined and smart capex allocation Rental flexibility Refurbishment plans Active Store Portfolio Management Continued rent negotiation 90% Lease-hold Significant lessor atomisation Contract flexibility < 1 year commitment on average 7.0% rental per square meter reduction in period Continued effort towards sustainability +1,400 transfers from COCO to COFO stores since 2011 Active store network optimisation Active network right-sizing +2,650 openings and +1,300 closures cumulated since 2011 Notes 1. Includes rental costs related to property and equipment and revenue from lease agreements; Rents / AVG sqm Company owned company operated + company owned franchise operated

21 4 Superior, resilient and consistent financial profile Stores (#) Gross sales under banner evolution (EURm) 4,355 4,617 6,102 6,938 7,337 7,420 7,810 8,587 9,096 9,199 10,306 10, Adjusted EBITDA (EURm) Net debt & leverage 2 evolution (EURm) x 1.2x 1.1x x x 1, x Notes 1. Ex-currency 2. Defined as Net debt / Adjusted EBITDA

22 4 Solid track record of integrating value enhancing acquisitions Recent acquisitions not only have helped to diversify the group but also improved core DIA business Effective capital allocation at low multiples with tangible results and further uplift potential Acquisition of the Iberian operations of Feb 2013 EV of EUR69m Proximity HPC specialist 1,129 COCO stores Remodelling capex of c.eur30m Transaction multiples 2.2x 0.19x EV/Sales EV/ EBITDA Key synergies Cross-selling Private label development Sourcing in HPC categories Current % of Integration Acquisition of Dec 2014 EV of EUR125m Iberian supermarket chain with large fresh offer (+50%) 451 stores Remodelling capex of c.eur50m EUR500m tax shield 0.19x EV/Sales Negative ebitda nm EV/ EBITDA Key synergies Sourcing, logistics and other opex Price positioning Tax shield New fresh categories Current % of Integration Acquisition of 144 stores in Iberia from Apr 2015 EV of EUR135m 144 proximity supermarkets (mainly in Madrid) Remodelling capex of c.eur25m 0.27x EV/Sales nm EV/ EBITDA Key synergies Sourcing and logistics In-Store efficiency Current % of Integration

23 4 Additional avenues of growth going forward Review of selected profitability enhancement and top-line growth opportunities Product enhancement and cost optimisation Significant white-space in core markets and M&A opportunities Development of recently-signed supplier alliances Significant white-space and master franchise opportunities Remarkable consolidation potential Sourcing agreements Private label agreement with Continued efficiency programs In-store inventory optimisation Active management of store portfolio (i.e. rents, etc) Non-stop digitalisation Energy saving programmes/plans Latam platform already in place Macro conditions with positive prospects Food retail market expected to register healthy growth rates (+6.0% in Brazil and +6.4% in Argentina) Modern distribution <50% share vs. c.80% in Western Europe Lower penetration of convenience and discounters (c.20% vs. c.30% in Western Europe) Further growth potential through masterfranchise agreements with local experienced entrepreneurs implying limited capex >1,100 stores by 2020 >1,500 stores by 2020 Room for further capillarity in Iberia supported by recovering LFLs TOP 5 players in Spain <50% market share Significant market share gain potential in Portugal Source Company information, Kantar

24 5 Experienced management team supported by an industry-leading Board DIA s governing bodies as an example of the highest corporate governance standards Key management Independent/External Directors of the Board NAME YEARS AT DIA YEARS OF INDUSTRY EXP. NAME SELECTED PROFESSIONAL EXPERIENCE Ricardo Currás CEO Ana María Llopis Non-Executive Chairwoman Worked at P&G and Schweppes Founder and CEO of Openbank and Director at British American Tobacco Amando Sánchez Chief Services Officer & Portugal Executive Diego Cavestany Chief Executive New Business DIA Spain Officer Faustino Dominguez Chief Executive DIA Banner Spain Officer Richard Golding First Vice Chairman Mariano Martín Second Vice Chairman Julián Díaz Board member Antonio Urcelay Board member Marketing manager at Cadbury Schweppes, Chairman & CEO of RJR Nabisco and Parques Reunidos Worked at P&G for 33 years Currently board member of Zinkia Entertainment CEO at Dufry AG Worked at TNT Leisure and Aldeasa Worked at P&G, Ahold, Digsa, CEO of Toys R Us Currently board member of Pascual Antonio Coto Executive Manager for Latin America and Partnerships Juan Cubillo Business & Merchandise Executive Manager Juan María Nin Board member Angela Spindler Board member Borja de la Cierva Board member General Manager of Santander, CEO of Sabadell and VP and CEO of Caixabank Current Board member of Société Générale Worked at Cadbury, Coca Cola Schweppes, Debenhams and The Original Factory Shop Currently board member of Brown Group Former CFO at Inditex and El Corte Inglés Purchase Manager Javier Lacalle Chief Resources Officer & China Executive María Garaña Board member Worked at Bain, CEO of Microsoft Iberia and VP for EMEA of Microsoft Business solutions

25 03 Financial review

26 Flexible and efficient capital structure Growing shareholder remuneration Annualised TSR 1 Sustainable shareholder returns Our efficient capital structure allows us to maintain a growing dividend policy, well above the industry average % 6% 1% DIA IBEX 35 BEFOODR % of underlying EPS pay-out c.eur1bn of total remuneration to shareholders since 2011 Notes 1. Annualised Total Shareholders Return from 5th July 2011 to 16th June Bloomberg Europe 500 Food Retailers Index

27 Best-in-class financial metrics DIA enjoys industry leading returns on investment and above average remuneration levels while maintaining a more conservative approach towards leverage than its peers 2016 Return on Investment (ROI) (%) Leverage (Net debt / Adjusted EBITDA) 2016 Expected dividend yield 2 (%) +750bps 19.4% 1.9x (0.5x) +1.2% 4.1% 11.9% 1.4x 2.9% INDUSTRY AVERAGE 3 DIA INDUSTRY AVERAGE 3 DIA INDUSTRY AVERAGE 3 DIA Notes 1. Return on Investment defined as EBITDAR/Average Invested Capital. Average Invested Capital defined as Equity + Net debt + 5x Rent adjustment + Accumulated D&A 2. Dividend yield based on current share price (as of April 24th 2017) and includes potential share buy backs already communicated to the market 3. Market average defined as the average for Carrefour, Casino, Jeronimo Martins, Metro, Morrisons, Sainsbury, Sonae and Tesco

28 04 Appendix Additional information

29 Definition of Alternative Performance Measures (APM) Gross sales under banner: total turnover value obtained in stores, including indirect taxes (sales receipt value) in all the company s stores, both owned and franchised. Net sales: sum of the net sales generated in our integrated stores and sales to franchises. LFL sales growth under banner: growth rate of gross sales under banner at constant currency of the stores that have been operating for more than thirteen months under the same business conditions. Adjusted EBITDA: operating profit after adding back non-recurring costs, impairments, reestimation of useful life and gains/losses arisen on the disposal of assets and depreciation and amortization of fixed assets. Adjusted EBIT: operating profit after adding back nonrecurring costs, impairment and re-estimation of useful life and gains/losses arisen on the disposal of assets. Underlying net profit: net income calculated on net profit attributable to the parent company, excluding nonrecurring items (restructuring costs, impairment and reestimation of useful life, gain/losses on disposal of assets, tax litigations, exceptional financial expenses and equity derivatives), discontinued operations and the corresponding tax impact. Underlying EPS: fraction of the company s profit calculated as underlying net profit divided by the weighted average number of shares. Cash From Operations (CFO): adjusted EBITDA less non-recurring cash items less capex on an organic basis.

30 Corporate Presentation