Year-end report 2017 Press and analyst presentation

Transcription

1 Year-end report 2017 Press and analyst presentation 8 February, 2018 Per Strömberg, CEO Sven Lindskog, CFO

2 In brief Good sales momentum in Sweden Robust underlying EBIT and cash flow Strong online growth Dark store no later than Q3 2

3 Good sales and improved underlying EBIT Net sales +3.6%, adjusted for divestment of real estate in Norway EBIT¹ +3.4%, adjusted for divestment of real estate in Norway and IKI integration costs Adjusted EBIT margin in line with financial targets MSEK Q Q Change % Net sales EBIT EBIT Margin Net sales and EBIT margin R12 27,845 26, ,172 1, % 4.4% -0.2 pp Events ICA Real Estate and Secore acquisition of properties from KPA Pension Feb 1 st Dark store to be established no later than Q3, 2018 MSEK 30,000 28,000 26,000 24,000 22,000 20,000 18,000 % Q4 Q1 Q2 Q3 Q4 Net Sales EBIT margin (R12) ¹ EBIT equals EBIT excluding items affecting comparability on all slides in this presentation. 3

4 Markets

5 Competitive markets Sweden The Baltics Pharmacy Price driven market growth Food inflation higher compared to Q3 increased prices within oils & fat, fish, dairy and fruit Continued high promotional activity, new competitors and growing online add to competitive pressure Fierce competition within non food Weaker volume growth Increased food inflation in Q4 in part tax driven Price competition fierce in all three countries Lidl expansion Weaker market growth than Q3 Traded goods continue to show the highest growth rate Continued strong online competition 5

6 ICA SWEDEN ICA Store sales estimated to be above market Store sales and market in Q4 ICA store sales growth of +3.7%, comparable stores +2.9% Sales mainly driven by increased average buy (price) Increased number of customers Price and calendar effect of +2.4% (price +2.6%, calendar -0.2%) ICA Online sales growth +53% (food online +59%, menu baskets +31%). Market growth +23% (food online +42%, menu baskets -7%) Approximately 205 ICA stores selling food online Q4 establishments: 8 new stores out of 14 in total in 2017 Sales development for ICA stores in Sweden (incl. VAT) % Food Retail Market 2.0 ICA ICA, Comparables 0.0 Inflation -2.0 Q4 Q1 Q2 Q3 Q The graph will be updated when final market data is available at the end of February 6

7 RIMI BALTIC Market share development affected by store conversions, closures and fierce competition Store sales and market in Q4 Sales development for Rimi Baltic stores Rimi store sales +1.4%, comparable sales +3.4% Estonia comparable +2.4% Latvia comparable +3.9% Lithuania comparable +2.9% Food market +6.6% Estonia +5.2% Latvia +6.3% Lithuania +7.5% Food price inflation +5.7% Q4 establishments: 2 new stores out of 6 in total in 2017 % Q4 Q1 Q2 Q3 Q Food Market Rimi retail sales Rimi comparable retail sales Market Inflation 7

8 APOTEK HJÄRTAT Continued strong online growth and overall stable market share development Store sales and market in Q4 Sales development for Apotek Hjärtat pharmacies Apotek Hjärtat sales growth +3.0%, including negative calendar effect of -0.5% Prescription +3.4% OTC -2.4% Traded goods +4.8% % Market growth of +3.2% Prescription +2.1% OTC -0.7% Traded goods +10.6% Very strong online growth, Apotek Hjärtat +67%, market growth +56% Q4 Q1 Q2 Q3 Q Pharmacy Retail Market Apotek Hjärtat Retail Sales Q4 establishments: 5 new pharmacies out of 11 in total in

9 Highlights

10 Continued strong Online sales growth in our businesses in Q4 Menu Baskets +31% ICA SWEDEN APOTEK HJÄRTAT HEMTEX Food Online +59% +53% +67% +54% Online sales growth Q vs Q

11 Dark store to be established no later than Q3, 2018 Increased volumes in ICA online business Sales SEK 1.2 billion in % growth in 2017 compared to 2016 Home delivery rate ~50% Online share of sales in active stores ~2.3% The dark store will keep 12,000 items in stock in food plus items within home and leisure Deliveries seven days a week with 2-hour slots between Voluntary add-on service to be decided by the independent retailer 11

12 The average ICA online customer Average spend online around 1,000 SEK/purchase Increased spend % compared to in-store-only customer purchase, and increased loyalty Typical customer a family with children who buys online twice per month The online customer buys more organic, healthy assortment as well as more ICA private label High customer satisfaction, 4.2 (out of 5) 92% of the customers would recommend ICA Online The typical online customer values convenience, the ability to save time, to shop any time of the day independent of location 12

13 Positive development of ICA Gruppen s sustainability work Decrease in emissions compared with 2006 * Socially audited suppliers of corporate brands in high risk-countries Quality-certified suppliers of Note corporate 1. Rolling brands 12 months -52% 98% 88% 6% (Jan-Dec *Rolling 12 months (Jan-Dec 2017) Vs. goal of 100% 2017) Vs. goal of 80% Organic assortment* of total sales Note 1. Roll2 months (-Dec 2017) *Rolling 12 months Rolling 12 months (Jan-Dec 2017) (Jan-Dec 2017) 13

14 Financials

15 Underlying EBIT better and continued strong cash-flow Net sales +3.6%, adjusted for divestment of real estate in Norway EBIT development +3.4%, adjusted for divestment of real estate in Norway and IKI integration costs Operating cash flow similar to last year, and very solid MSEK Q Q Change % Net Sales 27,845 26, EBIT ¹ 1,172 1, EBIT margin % 4.2% 4.4% -0.2 pp Cash flow ² 2,634 2, Earnings per share (SEK) ¹ EBIT Q includes costs related to the planned integration of IKI of MSEK 15 ² Cash flow from operating activities excl. ICA Bank EPS higher due to non-recurring item

16 EBIT variance analysis Q4 (estimate) MSEK EBIT Q ,180 Sales Volume 115 Margin 24 Store costs -67 Other costs -33 Variance due to EBIT of divested businesses -33 Acquisition and integration related costs -15 EBIT Q ,172 16

17 ICA SWEDEN Good sales progress Net sales growth +4.0% Higher wholesale volume and new stores EBIT growing slightly + Sales Non food campaigns Lower store profit sharing Fuel hedge results Costs marginally higher, recent establishments and projects MSEK Q Q Change % Net sales 19,869 19, EBIT EBIT Margin 4.2% 4.4% -0.1 pp 17

18 RIMI BALTIC Store conversions affecting, but continued EBIT progress Net sales growth in local currency +1.4% Weak volume growth Continued high price inflation Strong EBIT development + Price and mix + Gross margin impact from converted HD stores in Estonia + Improved PL margin and campaign efficiency IKI acquisition/integration planning costs MSEK Q Q Change % Net sales 3,767 3, EBIT ¹ EBIT Margin 4.6% 4.5% 0.1 pp ¹ EBIT Q4 includes costs related to the planned integration of IKI MSEK 8 18

19 APOTEK HJÄRTAT Volume driven growth investing in e-commerce Sales growth +3.1% Volume driven growth Negative calendar effect Pharmacies divested in 2016 Slightly improved EBIT + Volume driven gross profit improvement Investing in e-commerce, digitalization and marketing MSEK Q Q Change % Net sales 3,297 3, EBIT EBIT Margin 3.2% 3.2% 0.0 pp 19

20 ICA REAL ESTATE EBIT affected by divestments Underlying net sales down Divestment of real estate in Norway -50 MSEK and to Secore -18 MSEK Net sales include 59 MSEK internal invoicing (EBIT neutral and eliminated on Group level) EBIT development Divestments of real estate in Norway and Secore Slightly higher costs + Higher income from joint ventures ICA Real Estate and Secore acquisition of properties from KPA Pension as of 1 Feb, 2018 Net investments lower than last year. Some projects pushed into 2018 MSEK Q Q Change % Net sales whereof owned properties Net Yield 6.5% 7.1% -0.6 pp EBIT EBIT Margin 15.7% 23.4% -7.7 pp Net Investments , Q4 Q1 Q2 Q3 Q

21 ICA BANK Growing income and strong EBIT recovery Net income growing Customer loans and corporate loans ICA Insurance EBIT progress + Net interest, volume driven + Net commissions Costs invested in the selling organization and related to the transformation of the operations Increased credit losses MSEK Q Q Change % Net income EBIT Business Volume 40,866 32,

22 HEMTEX Solid end to a strong year of recovery Lower sales Assortment mix Price investments Strong growth of Online sales Higher sales to Kesko in Finland MSEK Q Q Change % Net sales EBIT EBIT Margin 15.6% 15.4% 0.2 pp Improved EBIT Price and mix Gross margin temporarily affected by pricing decisions related to stronger USD up to spring Successful cost reduction programme 22

23 Very robust cash flow sustained Operating cash flow Working capital movement, progress driven by supply chain financing Lower dividend from J/V Higher tax paid Cash flow MSEK 4,000 6,018 3,200 2,400 1, MSEK 5,827 5,816 5,684 5,645 Q4 Q1 Q2 Q3 Q Cash flow from operating activities, excl. ICA Bank Cash flow R12 23

24 Net debt ratio well in line with target Net debt/ebitda ratio vs Q4 last year down by Positive operating cash flow + Divestment of real estate properties Net debt Q4 Q1 Q2 Q3 Q Net Debt Net Debt/EBITDA 24

25 In line with long-term targets Targets R12 (31 Dec 2017), % Long-term targets, % Grow faster than market Sweden¹ Baltics Pharmacy All markets EBIT margin excl. items affecting comparability ROCE Net debt/ebitda 3 0.8x <2.0x Dividend (% profit of the year) 4 53 At least 50 1 Swedish growth based on latest definitive market data Q3, 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. 4 Proposed dividend 25

26 Outlook and Summary

27 Outlook ICA Sweden Rimi Baltic Apotek Hjärtat (pharmacy) Continued focus on digitalization, convenience, price value, health & sustainability Ramp-up of Dark store no later than Q store openings 2018 with focus on large cities Close the IKI acquisition and prepare for integration New DC in Riga Test and roll-out of One Brand Strategy in Latvia 6-8 store openings in 2018 Double the assortment of traded goods online Pilot for Click & Collect, further roll-out in 120 stores during 2018 Pilot for Click & Express Continuous roll-out of personalized offers new pharmacies in 2018 ICA Real Estate ICA Bank Hemtex Norwegian and Secore divestments take down rent income by ~34 MSEK EBIT by ~20 MSEK in Q1 vs 2017 (all other things equal) ICA Gruppen ICAx ramp-up Bank transformation proceeding Develop new digital services Focus on customer loans and corporate loans Further development of ICA Insurance offerings Implementation of new strategy continues Further roll-out of new store concept Co-operation with Kesko: Hemtex24h 27

28 In brief Good sales momentum in Sweden Robust underlying EBIT and cash flow Strong online growth Dark store no later than Q3 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 February 8, 2018 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