Prezentacja programu PowerPoint - grupaeurocash.pl · 5Y plan +900 openings sustained. Half of 2019 own stores expansion already addressed with small chains M&A. Retail strategy sustained

1H 2018

Results Presentation

2

Agenda of the presentation

1.Executive Summary

2.Summary of Eurocash parts (segments)

3.Market overview

4.Eurocash Financials

3

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

1. Executive summary

STRONG IMPROVEMENT IN WHOLESALE, PREPARING GROUND FOR RETAIL

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)

2. Wholesale Segment – back on growth track with Cash&Carry turnaround

4

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.

7 885 8 155 8 590

1H 2016 1H 2017 1H 2018

+475m

+5.3%

+270m

+3.4%

1H 2018 Sales evolution (PLN m)

+18.1m

+12.8%

-0.7m

-0.5%

1H 2018 EBITDA evolution (PLN m)

142,8 142,1 160,2

1,81% 1,74% 1,87%

1H 2016 1H 2017 1H 2018

EBITDA EBITDA margin %

2. Wholesale sales dynamics Wholesale segment supported by increased competitiveness of its clients

5

C&C LFL in 2Q 18 at +2.69% and 2.16% in 1H 2018 - 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.

Wholesale sales evolution (1H 2018 YoY)

12,2%

-0,8%

10,0%

5,1%

2,1%

5,3%

Food Service

Alcohol

Distribution

Tobacco & Impulse

Cash&Carry

Wholesale

2,7%

1,5%

-0,4% 0,3% 0,3%

-4,6% -5,2%

-3,6%

-1,3%

-4,0% -3,5%

-2,2% -2,7%

0,0%

-4,9%

0,7%

2,6%

1,3%

3,6%

2Q1Q4Q'173Q2Q1Q4Q'163Q2Q1Q4Q'153Q2Q1Q4Q'143Q2Q1Q4Q'13

C&C LFL

1 142

1 649 1 771

1H 2016 1H 2017 1H 2018

54,0

74,3

53,6

4,72% 4,50%

3,02%

1H 2016 1H 2017 1H 2018


2. Retail – increased asset base, ongoing integration 149 EKO stores under Delikatesy Centrum brand. Mila integration planning started

6

Sales increase driven by M&A. June 2018 Mila sales at 120.4 m PLN.

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).

+123m

+7.4%

+506m

+44.3%


-21m

-27.9%

+20m

+37.6%


EKO integration

EKO + Mila consolidation

2 361 pro forma

+43% incl. Mila

102

247

338

1H 2016 1H 2017 1H 2018

-15,4

-26,4 -26,2 -15,1%

-10,7%

-7,8%

1H 2016 1H 2017 1H 2018


2. Projects – investments (at EBITDA level) into future growth Fresh Project close to break even

7

Fresh Project with 302m PLN sales in 1H 2018 (+82m) close to break even in 2Q 2018.

Duży Ben & Kontigo – moved into proven for many years franchise system.

+91m

+145m


+0.2m -11m


Most relevant for Delikatesy Centrum positioning and competitiveness.

3. Polish market – potential for proximity stores development There is a space for new selling area in the market

8

Criteria for selection of grocery stores for the 10 most popular chains (%)

Sales area (m2) per capita 2017

0,67

0,72

0,75

0,98

0,99

1,01

1,03

1,04

1,04

1,05

1,09

1,13

1,13

1,13

1,18

1,20

1,27

1,30

1,43

1,44

1,47

1,50

1,59

1,66

1,67

Turkey

Romania

Bulgaria

Poland

Portugal

Slovakia

Hungary

Czech Rep.

Italy

Latvia

United Kingdom

Croatia

Lithuania

Spain

Estonia

France

Sweden

Norway

Denmark

Germany

Luxembourg

Switzerland

Netherlands

Austria

Belgium

2%

3%

3%

3%

4%

5%

5%

7%

12%

12%

12%

27%

41%

69%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Offer new products

Attractive loyalty program

Do not overwhelm the surface / number of products

The Polish origin of this store

A lot of Polish products

Interesting / inspiring products

Attractive products of the brand of a store

Shopping is fast

Attractive promotions / discounts

They always have what I come for

Other: high quality products

A wide range of products

Affordable prices

Close to my home

Poland - country with one of the lowest selling area per one person in Europe

Proximity the most valued for Polish consumers

32,7% 33,6%

10,1% 9,6%

15,9% 15,5%

41,26% 41,30%

YTD 2017 YTD 2018

Small Format Supermarkets 300-2500

Hypermarkets +2500 Discounters

8,8%

-1,0%

-5,6%

3,8% 2,5%

11,0%

-1,9%

12,9%

Small Supermarkets 100-300

Convenience 40-100 Small Grocers -40 Specialized & Others

YTD 2017 YTD 2018

8,3%

-0,7%

2,8%

0,7%

7,3%

-0,4%

1,2%

5,7%

Discounters Hypermarkets2500+

Supermarkets300-2500

Small Format

YTD 2017 YTD 2018

3. Food market growth Small Format stores accelerating growth, Large Format with declining dynamics

9

Food market growth by channels

(YTD July 2018, YoY)

Food market growth by small format channels


Source: Nielsen

Small Format increasing sales by 5.7% vs. food market growth of 4.9% in YTD July 2018.

Small Format stores and discounters gaining market share in cost of super- and hypermarkets

Value change

+1,5bn -0,03bn +0,12bn +1,6bn

+0,2bn +1,1bn -0,1bn +0,4bn

Food market share evolution


2,0% 1,8% 1,9% 2,2%

1,5% 1,7% 2,0%

3,4% 3,4%

4,6%

5,6%

3,9%

3,2% 2,2%

1,1% 0,8% 1,0% 0,9% 1,1%

1,7% 1,8%

0%

1%

2%

3%

4%

5%

6%

1Q2017 2Q 3Q 4Q 1Q2018 2Q July

CPI CPI - food & non-alcoholic beverages CPI - alcoholic beverages & tobacco

11,9%

6,7% 7,8%

3,6% 2,7%

3,4% 2,2% 2,7%

1,2% 1,0% 0,9% 1,5%

-2,8% -4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2018 (I-VII)

% Inflation YoY in Poland

Source: GUS

Large format categories Small format categories

3. Inflation Small Format stores sales growth accelerated although without support of inflation

10

Eurocash inflation much below the market:

wholesale prices in Delikatesy Centrum: +0.1%, retail prices +1.2% in 1H 2018 YoY

Food average

Food inflation by categories

PLN m 1H 2017 1H 2018 % of Sales

1H 2017

% of Sales

1H 2018 Y/Y Change

Net sales 10 118 10 776 7%

Gross profit 1 186 1 288 11.7% 11.9% 9%

EBITDA (excl. Projects, normalized*)

184 186 1.8% 1.7% 1%

EBITDA normalized* 158 160 1.6% 1.5% 1%

One-off costs* -114 -3

EBITDA reported* 43 157 0.4% 1.5% 261%

EBIT normalized* 68 64 0.7% 0.6% -6%

Profit before tax normalized* 51 45 0.5% 0.4% -11%

Net profit 38 21 0.4% 0.2% -46%

11

Sales driven mainly by wholesale segment

(+435m PLN) and consolidation of Mila

(+120m PLN).

Gross Margin stabilized after 1H 2018.

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.

4. 1H 2018 financial summary Strong sales increase driven by wholesale segment

* 2018 results normalized by costs of Mila M&A, 2017 by add. VAT tax payment

12

4. EBITDA* performance by segments

1H 2018 EBITDA by segments

-20.7m +18.2m +0.2m

C&C increasing LFL and profitability EKO integration – short-term impact

on profitability

DC own stores above expectations

DC Franchise improvement of

profitability, focus on Fresh Project

Tobacco impacting 1H results but

already stabilized with high potential

for growth in next quarters

Fresh Project improving results,

close to break even,

positive EBITDA in 2H 18 expected

Costs improvement

+4.1m +1.9m

EC Distribution 10% sales increase

STRONG FOCUS ON:

• WHOLESALE OPTIMIZATION

• RETAIL INTEGRATION

• COSTS CONTROL

142,1

74,3

-26,4 -32,1

157,8 160,2

53,6

-26,2 -27,9

159,6

Wholesale Retail Projects Others Eurocash Group

1H 2017 1H 2018


-30.9m incl. one-off costs (Mila acquisition fees)

31 31 28 30 30 27

25 23 21 24 24 24

( 21) ( 21) ( 22) ( 27) ( 23) ( 25)

( 76) ( 75) ( 71) ( 81) ( 77) ( 76)

-100

-80

-60

-40

-20

0

20

40

Q1 2017 Q2 Q3 Q4 Q1 2018 Q2

Receivables Stock Cash conversion Liabilities

13

4. Cash Flow LTM Operating CF at 168% EBITDA

Strong cash generation sustained in 1H 2018.

Strong improvement of receivables rotation in wholesale segment

Cash conversion cycle (restated after IFRS 15)

PLN m 1H 2017 1H 2018

Net operating cash flow 171 186

Net profit (loss) before tax (64) 42

Depreciation 90 96

Change in working capital 141 63

Other 4 (15)

Net investment cash flow (204) (378)

Net financial cash flow 25 138

Total cash flow 8 (54)

2Q 2017 2Q 2018

256 240

(48) 59

45 49

243 150

15 (18)

(65) (338)

(175) (251)

15 (349)

431 441 419 361 363 360 584 486 464 370 468 684

1,36

1,10 1,11 1,02

1,29

1,90

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

2,0

0

100

200

300

400

500

600

700

800

1Q'17 2Q 3Q 4Q 1Q'18 2Q

LTM EBITDA (PLN m) NET DEBT (PLN m) NET DEBT / EBITDA

4. Net debt vs. normalized** LTM EBITDA

14

Net Debt increase by 214m PLN despite payment of dividend (102m) and

Mila acquisition (350m) in 2Q 2018.

*NET DEBT - the sum of long and short term loans, borrowings and financial liabilities less cash and cash equivalents

Net Debt* vs. 12M EBITDA in 2Q 2018

Strong Cash Flow sustained

**Adjusted for one-off item – 114 m PLN potential VAT liability payment done in Aug 2017

0,93x

335 excl. M&A

Summary of the presentation

15

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.

Disclaimer

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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.

FOR MORE INFORMATION

PLEASE CONTACT:

17

Cezary Giza

Investor Relations Director

[email protected]

mobile: +48 693 930 415

PLN m 2Q 2017 2Q 2018 % of Sales

2Q 2017

% of Sales

2Q 2018 Y/Y Change

Net sales 5 467 5 775 6%

Gross profit 655 706 12.0% 12.2% 8%

EBITDA (excluding Projects, normalized)

131 132 2.4% 2.3% 1%

EBITDA normalized* 120 120 2.2% 2.1% 0%

One-off costs* 114 3

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%

Net profit 52,6 39,0 1.0% 0.7% -26%

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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.

APPENDIX: 2Q 2018 FINANCIAL SUMMARY

Strong sales increase driven by wholesale segment


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Prezentacja programu PowerPoint - grupaeurocash.pl · 5Y plan +900 openings sustained. Half of 2019 own stores expansion already addressed with small chains M&A. Retail strategy sustained