Q3 report 2017 Press and analyst presentation

Transcription

1 Q3 report 2017 Press and analyst presentation 10 November, 2017 Per Strömberg, CEO Sven Lindskog, CFO

2 In brief Stable EBIT development Strong online growth Intense focus on new ventures 2

3 Stable earnings performance high growth in e-commerce ¹ EBIT equals EBIT excluding non-recurring items on all slides in this presentation. Net sales +2.8%, adjusted for divestment of real estate in Norway EBIT¹ +3.3%, adjusted for divestment of real estate in Norway and IKI integration costs In line with financial targets Events Lithuanian Competition Authority approved the acquisition of IKI under the condition of divesting 17 stores ICA 100 several central and local activities and initiatives Maria Lundberg new CIO of ICA Gruppen and member of the management team as of 1 st of January, 2018 MSEK Q Q Change % Net sales EBIT EBIT Margin Net sales and EBIT margin R12 MSEK 28,000 26,000 24,000 22,000 20,000 18, Q3 Q4 Q1 Q2 Q ,428 25, ,380 1, % 5.3% -0.1 pp % Net Sales EBIT margin (R12) 3

4 Markets

5 Competitive markets Sweden The Baltics Pharmacy Price driven market growth Food inflation higher compared to Q2 increased prices within oils & fat, coffee, fruit, fish and dairy Continued high promotional activity, new competitors and growing online add to competitive pressure Weaker volume growth Increased food inflation in Q3 Price competition fierce, especially in Lithuania Lidl expansion Market growth same as Q3 last year including negative calendar impact Traded goods continue to show the highest growth rate Strong online competition 5

6 ICA SWEDEN Store sales in Sweden better than the market Store sales and market in Q3 Sales development for ICA stores in Sweden (incl. VAT) ICA store sales growth of +3.1%, comparable stores +2.4% Sales mainly driven by increased average buy (price) Increased number of customers (ICA Maxi) Market growth, +2.6% Price and calendar effect of +2.2% (price +2.5%, calendar -0.3%) % Food Retail Market ICA ICA, Comparables Inflation ICA Online sales growth +52% (food online +59%, menu baskets +24%). Market growth +21% (food online +38%, menu baskets -7%) Approximately 200 ICA stores selling food online YTD Q3: 6 new stores out of planned this year -2.0 Q3 Q4 Q1 Q2 Q

7 RIMI BALTIC Market share performance impacted by store conversions, closures and Lidl entry Store sales and market in Q3 Sales development for Rimi Baltic stores Rimi store sales +0.9%, comparable sales +5.0% Estonia comparable -5.0%, affected by conversions Latvia comparable +4.3% Lithuania comparable +0.8%, affected by Lidl market entry Food market +6.3% Estonia 5.2% Latvia +7.4% Lithuania +6.1% Food price inflation +5.8% % Q3 Q4 Q1 Q2 Q Food Market Rimi retail sales Rimi comparable retail sales Market Inflation YTD Q3: 4 new stores out of 7-8 planned this year 7

8 APOTEK HJÄRTAT Adjusted sales growth in line with market Store sales and market in Q3 Sales development for Apotek Hjärtat stores Apotek Hjärtat sales growth +3.8% Negative calendar effect -0.6% 5 pharmacies less than Q Adjusted sales growth +4.6% % Market growth of +4.4% Prescription (volume) +3.2% OTC +1.9% Traded goods +11.6% Very strong online growth, Apotek Hjärtat +79%, market growth +59% YTD Q3: 6 new pharmacies out of 11 planned this year Q3 Q4 Q1 Q2 Q Pharmacy Retail Market Apotek Hjärtat Retail Sales 8

9 Very strong Online sales growth in our businesses in Q3 +52% +79% +52% Online sales growth Q vs Q

10 Highlights

11 Increased digital initiatives Digital Eco Systems Digital Innovation Hub CRM and focus on personalization

12 Continued strong focus on sustainability within the Group Less plastic bags June Aug -2,000,000 ICA Bank Corporate Green Loans & Green Leasing offered to retailers Decrease in emissions compared with % Note 1. Rolling 12 months (Oct 2016 Sep 2017) 12

13 Financials

14 EBIT margin level sustained despite divestment Net sales +2.8%, adjusted for divestment of real estate in Norway Positive gross profit development EBIT development +3.3%, adjusted for divestment of real estate in Norway and IKI integration costs Costs higher driven by growth projects MSEK Q Q Change % Net Sales 26,428 25, EBIT ¹ 1,380 1, EBIT margin % 5.2% 5.3% -0.1 pp Cash flow ² 854 1, Earnings per share (SEK) ¹ EBIT Q includes costs related to the planned integration of IKI of MSEK 11 ² Cash flow from operating activities excl. ICA Bank Operating cash flow affected by negative calendar impact EPS higher corporate tax rate reduction in Latvia 14

15 EBIT variance analysis Q3 (estimate) MSEK EBIT Q ,376 Sales Volume 25 Margin 155 Store costs -85 Other costs -50 Variance due to EBIT of divested businesses -30 Acquisition and integration related costs -11 EBIT Q ,380 15

16 ICA SWEDEN EBIT margin impacted by growth projects and lower store profit sharing Net sales growth +2.9% Mainly price driven Higher wholesale volume EBIT slightly lower + Gross profit higher + Price inflation + Positive impact from fuel hedges + Currency effects + Increased PL share of sales Investing in growth projects Lower store profit sharing MSEK Q Q Change % Net sales 19,133 18, EBIT 1,004 1, EBIT Margin 5.2% 5.5% -0.2 pp 16

17 RIMI BALTIC Strong EBIT development, store conversions impact sales Net sales growth in local currency +1.0% Price/mix driven growth, negative volume growth Impacted by conversion and closing of HD stores in Estonia Strong EBIT improvement + Price inflation + Gross margin impact from converted HD stores in Estonia + Improved PL margin IKI acquisition/integration planning costs MSEK Q Q Change % Net sales 3,413 3, EBIT ¹ EBIT Margin 4.7% 4.0% 0.8 pp ¹ EBIT Q3 includes costs related to the planned integration of IKI MSEK 9 17

18 APOTEK HJÄRTAT Gross profit growth re-invested Sales growth +2.9% Volume driven growth Negative calendar effect Pharmacies divested in 2016 EBIT in line with last year + Volume and improved gross margin Investing in network refurbishments and new pharmacies Investing in E-commerce, digitalization and Minutkliniken (health care center) MSEK Q Q Change % Net sales 3,108 3, EBIT EBIT Margin 4.2% 4.3% -0.1 pp 18

19 ICA REAL ESTATE EBIT reduced due to divestments Underlying net sales down Divestment of real estate in Norway -50 MSEK and Secore -18 MSEK Net sales include 48 MSEK internal invoicing (EBIT neutral and eliminated on Group level) EBIT development Divestments of real estate in Norway and Secore + Higher income from joint ventures + Lower costs Good and stable development of wholly owned Swedish real estate properties Updated market valuation, SEK 12.6 billion. BV SEK 9.8 billion MSEK Q Q Change % Net sales whereof owned properties Net Yield 6.6% 7.1% -0.5 pp EBIT EBIT Margin 19.9% 23.9% -4.0 pp Net Investments Q3 Q4 Q1 Q2 Q

20 ICA BANK Positive EBIT trend Net income growing approximately +10% on comparable basis¹ Customer loans and corporate loans ICA Insurance EBIT progress + Net interest, volume driven + Net commission Costs related to the transformation of the operations Improved, yet negative result in ICA Insurance MSEK Q Q Change % Net income EBIT Business Volume 38,049 31, Due to change in accounting for reinsurance costs in ICA Insurance, income was adjusted in Q by -34 MSEK. 20

21 HEMTEX Positive Q3 EBIT Net sales in line with last year Lower average prices Store visitors and average buy increasing Positive development of Online sales Higher sales to Kesko in Finland MSEK Q Q Change % Net sales EBIT EBIT Margin 2.4% -0.4% 2.8 pp Improved EBIT Price/mix + Slight increase in gross margin lower share of sales at reduced prices + Cost reduction programme 21

22 Underlying Cash flow progress sustained Operating cash flow Cash flow Working capital movement affected by calendar Lower dividend from J/V MSEK 4,000 3,200 5,684 5,645 6,018 MSEK 5,827 2,400 1, ,041 Q3 Q4 Q1 Q2 Q Cash flow from operating activities, excl. ICA Bank Cash flow R12 22

23 Net debt/ebitda in line with financial targets Net debt/ebitda ratio vs Q3 last year down by Positive operating cash flow + Divestment of real estate properties Net debt Q3 Q4 Q1 Q2 Q Net Debt Net Debt/EBITDA 23

24 In line with long-term targets Targets R12 (30 Sep 2017), % Long-term targets, % Grow faster than market Sweden¹ Baltics Pharmacy All markets EBIT margin excl. non-recurring items ROCE Net debt/ebitda 3 1.1x <2.0x Dividend (% profit of the year) 62 At least 50 1 Swedish growth based on latest definitive market data Q2, Excluding ICA Bank 3 Interest-bearing liabilities excluding pensions and ICA Bank minus cash and cash equivalents in relation to EBITDA, operating income before depreciation and impairment. 24

25 Outlook and Summary

26 Outlook ICA Sweden Rimi Baltic Apotek Hjärtat (pharmacy) Continued focus on digitalization, convenience, price value, health & sustainability Strong focus on online growth store openings 2017 with focus on large cities Close the IKI acquisition and prepare for integration Finalize conversion of Säästumarket to Rimi in Estonia 7-8 store openings in 2017 Continued strong focus on the E-commerce business Continuous launch of private label OTC brand ABECE Increased focus on sustainability 11 new pharmacies in 2017 ICA Real Estate ICA Bank Hemtex Norwegian and Secore divestments take down rent income by ~ 50 MSEK and EBIT by ~ 33 MSEK in Q4 vs last year (all other things equal) ICA Gruppen ICAx ramp-up Bank transformation proceeding Develop new digital services Focus on customer loans and mortgages Continued roll-out of ICA Bank Corporate, for e.g. leasing ICA Insurance ramp-up continues Implementation of new strategy continues Prepare for roll-out of new store concept Co-operation with Kesko; Hemtex24h 26

27 Summary Stable EBIT development Strong online growth Intense focus on new ventures 27

28 Save the date ICA Gruppen Capital Markets Day 14 December, 2017 in Stockholm 28

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30 Disclaimer This information is such that ICA Gruppen AB is obligated to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication November 10, 2017 at 7.00 CET. This report contains forward-looking statements that reflect the Board of Directors and management s current views with respect to certain future events and potential financial performance. Although the Board of Directors and the management believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, (i) changes in economic, market and competitive conditions, (ii) success of business and operating initiatives, (iii) changes in the regulatory environment and other government actions, (iv) fluctuations in exchange rates and (v) business risk management. This report does not imply that the Company has undertaken to revise these forward-looking statements, beyond what is required under the company s registration contract with Nasdaq Stockholm, if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 30