Lagardère Services To facilitate access to everyone, everywhere, to a wide diversity of ideas and services! Corporate presentation July 2010

Transcription

1 Lagardère Services To facilitate access to everyone, everywhere, to a wide diversity of ideas and services! Corporate presentation July

2 Warning Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management's beliefs. These statements reflect such views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause future results, performance or future events to differ materially from those expressed or implied in such statements. When used in this document, words such as "anticipate", "believe", "estimate", "expect", "may", "intend" and "plan" are intended to identify forward-looking statements which address our vision of expected future business and financial performance. Such forward-looking statements include, without limitation, projections for improvements in process and operations, revenues and operating margin growth, cash flow, performance, new products and services, current and future markets for products and services and other trend projections as well as new business opportunities. These forward-looking statements are based upon a number of assumptions which are subject to uncertainty and trends that may differ materially from future results, depending on a variety of factors including without limitation: General economic and labor conditions, including in particular economic conditions in Europe and North America Legal, financial and governmental risks (including, without limitation, certain market risks) related to the businesses Certain risks related to the media industry (including, without limitation, technological risks) The cyclical nature of some of the businesses Please refer to the most recent Reference Document (Document de Référence) filed by Lagardère SCA with the French Autorité des Marchés Financiers for additional information in relation to such factors, risks and uncertainties. Lagardère SCA disclaims any intention or obligation to update or review the forward-looking statements referred to above. Consequently Lagardère SCA is not responsible for any consequences that could result from the use of any of the above statements. 2

3 Agenda Lagardère Services at a glance Lagardère Services business profile Lagardère Services strategy results Lagardère Services ambition for

4 Opening remarks Lagardère Services managed sales reach nearly 5bn. The Group operates in more than 20 countries, in three businesses in which it has leading and historical positions Lagardère Services has been operating in Travel Retail since The Group is the second largest Travel Retailer worldwide and is a truly international player operating in nearly hundred airports and hundreds of stations across four continents Lagardère Services is also active in Proximity Retail and leverages its retail expertise by developing a diversified portfolio through partnerships with leading brands In Press Distribution, in which Lagardère Services has been operating for decades, the Group has established a world leading position: it is one of the two widely international players and it holds strong positions in each country where it is active In the past years, Lagardère Services pursued a strategy along three directions, which has contributed to build a truly balanced group, relying on three profitable and highly cash-generating businesses Pursue Travel Retail development Emphasize development towards emerging countries Diversify from primary markets (i.e. readables), both in Retail and Distribution For the coming years, Lagardère Services expresses an ambitious strategy, consistent with the directions followed so far Leverage Lagardère Services position in Travel Retail: develop worldwide and across all product categories Adapt News & Convenience Retail and Press Distribution businesses to customers and partners needs Accelerate diversification towards non press / non tobacco products by developing new retail chains 4

5 Agenda Lagardère Services at a glance Lagardère Services business profile Lagardère Services Travel Retail Proximity Retail Distribution Lagardère Services strategy results Lagardère Services ambition for

7 Lagardère Services is part of Lagardère Consolidated sales ( bn, 2009) CAC40 company 7.9 billion sales c. 30 thousand employees Travel and malls retail, press distribution, operations in more than 20 countries 3.4 billion sales 3 rd largest book publisher in the World with leading positions in France, UK and Spain 2.3 billion sales 1 st magazine publisher worldwide and a major player in radio, TV and new media 1.7 billion sales Leader in management of sports marketing and audiovisual rights 0.5 billion sales 7

8 Lagardère Services managed sales reached nearly 5bn in 2009 Gap analysis between Lagardère Services consolidated and managed sales ( bn, 2009) Retail sales for all product categories JVs integrated at 100% Sales from Distribution to our Retail activities Consolidated sales Gap Managed sales 8

9 Lagardère Services is a truly international group that operates in more than 20 countries across four continents Lagardère Services managed sales breakdown by area ( bn, 2009) Worldwide presence of Lagardère Services (As of January 2010) Asia Pacific Central & Eastern Europe % 13% 100% North America 16% France 30% Western Europe 2 38% Hungary, Poland, Romania and Czech Republic 2 Belgium, Germany, Spain and Switzerland 9

10 Lagardère Services is a truly international group that operates in more than 20 countries across four continents Lagardère Services managed sales breakdown by business ( bn, %, 2009) 100% = 4.7 bn Press Distribution Travel Retail Import, distribution and wholesale of Press and related products 42% 15% 43% More than 1,900 outlets in more than 20 countries in all kinds of travel locations: airports, railways, subways, etc. Proximity Retail c. 2,000 outlets mainly located in shopping malls or high streets Full range of product categories Perfumes, cosmetics, liquor, tobacco Specialty Retail: News & Convenience (Relay), entertainment (Virgin), and numerous other concepts (Hermès, Hédiard, L Occitane, Printemps, etc.) Wide range of product categories Press & Books Tobacco Food and beverages Specialty concepts 10

11 These three businesses support each others through five synergies Provides a first-class positioning due to operations in highly valued channels (high traffic flows inducing high visibility, affluent traffic in airports, etc.) Press distribution Back office synergies when operating the three businesses in one single country Ensures the critical press supply to retail operations Delivers high volumes and thus contributes to establish a robust positioning Travel retail Proximity retail International footprint increases awareness and facilitates business development 11

13 Travel retail is a niche business with specific operational requirements that make it a unique business Worldwide retail sales breakdown by channel ($bn, 2007) 30, % 7% 8% 15% Ferries & Cruises In flight Borders Railway stations A unique retail business with operational specificities A retail business based on land grants, leading to specificities in development Essential role of the B2B relationship with the landlord, required to get the grant, to operate and finally to renew the contract Precarious commercial situation, leases being relatively short (5-year lease on average) Unique operational constraints (extreme security constraints, wide opening hours) Travel retail 38 Retail 64% Travel retail Airports Very specific customer profile Specific expectations regarding products and services for travellers in a hurry or under stress Various expectations depending on the travellers nationality and the location of the store (arrival vs departure gate) Store where travellers often come to spend time but not necessarily to buy products 13

14 We believe that the Travel Retail market will enjoy long-term positive trends in the future Travel retail market breakdown by channel ($bn, %, 2007) 100 % = $38bn OTHER (ferries, cruises, borders) Channels highly correlated with the tourism industry i.e. with the worldwide economic growth RAILWAYS Channel relatively unaffected by economic turmoil, enjoying low but highly resilient growth trends in terms of passenger traffic Positives long-term forecasts thanks to the new transportation policy encouraging ways of transportation limiting greenhouse effects such as rail (Huge investments scheduled for rail development worldwide) 15% 21% 64% AIRPORT This channel will recover along with the worldwide economy and will then enjoy strong growth as it used to Airports will need to diversify their revenues, thus creating new commercial opportunities Source: Capgemini 14

15 Lagardère Services has 150 years experience in Travel Retail Lagardère Services milestones in Travel Retail (1852-today) Louis Hachette opens the first railway bookstore in Paris Gare de Lyon 1,000 Relay outlets in 13 countries Foundation of Aelia (Saresco acquisition and merger with Aeroboutique) Partnership with Aéroports de Paris to operate Duty Free outlets First Duty Free outlet in Poland More than 1,200 Relay 17 countries First Duty Free store opened in Paris Le Bourget Acquisition of Newslink (Australia, Singapore in partnership) Gourmet outlet at Hong Kong airport Fashion outlet at Sydney airport First Duty Free outlet in the UK Entry in Hong Kong, China, Taiwan and Romania 15

16 Lagardère Services is the second largest Travel Retailer worldwide with an undisputed leadership in News & Convenience World largest Travel Retailers ( bn, 2009) Lagardère Services estimate Catering News & Convenience Duty Free & Specialty Source: companies data, Lagardère Services estimate 16

17 Lagardère services has been able to build a versatile portfolio of travel retail concepts to best answer landlords expectations LS can operate in all kinds of environments with the widest range of outlets where it sells all kinds of products category from mass-market to ultra-premium products From airports From a 20 sqm sunglasses shop From fine foods From a 2 Toblerone bar to railway to readables to a 13,800 Mouton Rothschild 1945 bottle or subway stations to 1,400 sqm multistores or fashion 17

18 Lagardère Services manages a unique portfolio of more than 100 airports across four continents Lagardère Services worldwide airport presence (As of December 2009) London Heathrow Frankfurt Düsseldorf Berlin Brussels Paris CDG Paris Orly Lisbon Barcelona Vancouver Madrid Palma de Majorca Chicago Houston Toronto Boston New York - JFK Shanghai Hongqiao Phoenix Detroit New York La Guardia Hong Kong Singapore Airports classified among the world s top 100 airports in terms of passenger volume Other airports * Source : ACI Annual Worldwide Airport Traffic Report. Annual Traffic 2009 Brisbane Sydney Melbourne 18

19 Lagardère Services know-how combined with these two portfolios concepts and airports best satisfy landlords expectations Airport segment Store concepts are adapted to airport segmentation to best satisfy partners needs and expectations Global hub (Paris CDG, New York JFK, Hong Kong, Singapore, Frankfurt, etc.) Large international (Paris ORY, Brussels, Sydney, Vancouver, Toronto, Shanghai, Madrid, Barcelona, Warsaw, etc.) Toronto, Canada Paris CDG, France Regional (Guangzhou, Nantes, Cairns, Perth, etc.) Low-cost (London LTN, Paris BVA, Chicago MDW, etc.) London LTN, UK Warsaw, Poland 19

20 Relay is a worldwide retail brand with more than 1,200 stores exclusively located in Travel locations Evolution of Relay network and milestones (# Relay stores, ) +3.4% p.a ,270 1,299 1,266 1,197 1,223 1,082 1,035 Entry in Czech Rep Entry in Romania (Prague airport) (Bucharest airport) Entry in Asia (Hong Kong airport) Entry in Taïwan (TGV) and Continental China (Shanghai airport) Entry in Middle East (Abu Dhabi)

21 As a reference in News & Convenience for travel locations, Relay is a strong asset for Lagardère Services The only worldwide brand dedicated to News & Convenience retail in travel areas Number of operating countries (#, ) # POS 1 Relay 17 1,266 R-Kiosk (Sanoma Trade) 4 1,070 K-kiosk (Valora) 3 1,430 WHSmith Narvesen 2 na Hudson (Dufry) 1 537* A strong brand awareness among landlords A strong brand awareness among landlords who consider Relay as the expert in its market A strong asset for Lagardère Services development since Relay is sometimes asked to integrate a commercial retail area Abu Dhabi Etc. Dedicated to travel retail 1 In travel locations for Relay and WHSmith, including proximity locations for K-Kiosk, Hudson et R-Kiosk * Including local brands Source: companies data 21

22 Relay is also innovative on the Internet: Relay.com is the leading digital kiosk in France Relay.com positioning Relay.com is the leading online kiosk in France It offers a wide range of dematerialized press and books to download Press with c. 500 titles (economic, sports, culture, women, etc) Books (tourism, comic books, etc) Relay has developed an unlimited offer allowing internet users to have an unlimited access to all magazines Relay.com is also operating the newsstand offer for several websites through partnerships 22

24 Lagardère Services has developed a News & Convenience proximity network, mainly located in high streets, malls and hypermarkets LS proximity retail network by location (# stores, m, 2009) Major concepts Total Office buildings Street kiosks Hospitals 208 High Street Cafeterias News & Convenience (Inmedio, local concepts), Non press concepts (Payot, other leading brands) Shopping malls News & Convenience (Inmedio, local concepts), Non press concepts (Payot, other leading brands) # stores Managed Sales 24

25 Press Shop, Naville and BDP are three local brands holding strong awareness in their home markets Local News & Convenience network by country (# stores, 2009) Local News & Convenience concepts 404 Spain (BDP) 75 Switzerland (Naville) 130 Naville Belgium (Press Shop) 199 BDP Press Shop

26 Lagardère Services launched the Inmedio concept in 1998 in Poland and has then developed it quickly in Central Europe and China Inmedio concept worldwide presence ( ) Inmedio Inmedio has become the leading concept for News & Convenience Inmedio is now present In c. 7 countries in Europe and Asia With c. 800 stores (openings in China, Serbia & Bulgaria in 2008) Located in commercial centres and high streets Step 1 (1998) Step 2 Step 3 26

27 Inmedio is the only modern and international News & Convenience brand dedicated to proximity areas Inmedio The only international proximity press dedicated to News & Convenience Number of operating countries (#, ) # POS 1 Inmedio R-kiosk (Rautakirja) 4 1,070 K-kiosk (Valora) 3 1,250 WHSmith Narvesen 2 na A brand considered as qualitative by landlords The fast development of the network demonstrates the quality of the Inmedio concept Inmedio is considered by malls operators as a blue-chip concept and increase Lagardère Services legitimacy «Inmedio is the only concept dedicated to News & Convenience which has demonstrated efficiency internationally» Immochan Commercial Director Dedicated to proximity retail 1 Excluding travel areas for Relay et WHSmith, including both travel and proximity areas for K-Kiosk, Hudson and R-Kiosk 2 Including local brands Source: companies data, interviews with malls operators 27

28 Lagardère Services is leveraging its retail expertise by developing a diversified portfolio through partnerships with leading brands Lagardère Services partnerships strategy (2009) Specialized Branded Retail Costa Coffee - Coffee Empik Café - Coffee Chez Jean - Convenience Nature & Découvertes - Nature & Discovery Paul Bakery and sandwiches La Cure Gourmande - Cookies These modern concepts with common operational characteristics (surface, average basket, etc.) create a portfolio which is answering malls operators expectations 28

30 Press distribution is the mandatory connection between publishers and retailers From publishers to readers Press industry value chain Publisher A Publisher B Publisher C Press distribution Wholesaler X Press wholesalers: Reliable and cost-effective distribution of press, monitoring of retail network National distributor: Sales promotion, relationship with publishers, monitoring of wholesalers Wholesaler Y Retailer a Retailer b Retailer c Retailer d Retailer e Retailer f Readers 30

31 Our group has established leading positions in most countries where present Lagardère Services competition position by country (As of January 2010) Managed sales = 2bn Presence in 10 countries Strong leader Challenger 31

32 In press distribution, Lagardère Services has a world leading position as one of the two widely international players World Press Distributors sales Distributors above 1bn sales ( bn, 2009) Number of countries Lagardère Services estimate Countries / Areas 1 1 Japan Japan France 1 / Africa Europe / North America UK 1 UK 1 USA 1 UK Including French DOM TOMs 32

33 Lagardère Services holds a unique position in press distribution Lagardère Services competitive positioning 2009 Lagardère Services is the most international player in press distribution A strong network to share best practices and guarantee operational excellence A large and specialized network of press importers A very strong position where present In press distribution, size matters - Cost efficiency - Relationship with partners Lagardère Services has a proven ability to establish fruitful collaboration with publishers and retailers Automation of processes leads to an improvement of profitability 33

34 Diversification has become significant within Lagardère Services press wholesale companies Weight of non press within Lagardère Services Distribution subsidiaries (% in value, ) Naville 1 (Switzerland) AMP (Belgium) Lapker (Hungary) SGEL (Spain) 18% 14% 19% 15% 22% 20% 20% 17% 22% Total Lagardère Services % (vs 16% in 2007) 63% 66% 68% Major non-press products Books, phone cards, chocolate, confectionary, tobacco, DVDs, gadgets, Western Union Books, phone cards, home delivery for mail order, photo printouts, DVDs, gadgets Books, phone cards, confectionary, tobacco, DVDs, scratch cards, gifts Books, phone cards, DVDs, CDs, gadgets Books distribution lines (Switzerland) 1 Including subsidiary dedicated to books 34

36 In the past years, Lagardère Services pursued a strategy along three directions Managed sales growth by direction (CAGR, ) Weight within Lagardère Services (%, 2009) Develop emerging countries (Central Europe, Asia-Pacific) 10% 16% Diversify from primary markets (readables) 7% 46% Pursue Travel Retail development (both Relay and duty free) 6% 43% 1% Total Lagardère Services 1 1 Excluding Virgin 36

37 This strategy contributed to build a balanced and profitable group Lagardère Services 1 managed sales breakdown by business ( bn, ) Lagardère Services 2 RESOP ( m, 2009) Lagardère Services 2 RESOP margin 3 (%, 2009) CAGR (%, 04-09) Proximity Retail Travel Retail (14%) 1.5 (33%) (15%) 2.0 (43%) +0.8% +2.3% +6.3% % Distribution 2.4 (53%) 2.0 (42%) -3.9% Excluding Virgin, JVs at 100% 2 Excluding Virgin, 2004 retreated for comparison purposes using Net Equity method for companies in proportional method 3 In % of consolidated sales 37

39 Lagardère Services strategy for the coming years will pursue three directions 1. Reinforce leadership in Travel Retail: develop all product segments and in particular duty free 2. Build the future of Lagardère Services by continuously adapting News & Convenience Retail and Press Distribution businesses to customers and partners needs 3. Accelerate diversification towards non press / non tobacco products by developing new retail chains 39

40 Innovation will be a strong tool to continuously adapt Lagardère Services activities to customers and partners needs In retail, innovation is key to Lagardère Services to adapt its activities to customers and partners needs Improve existing network: within Lagardère Services network, innovation is a way to best answer customers expectations, thanks to new technologies and innovative tools Expand its concepts portfolio and its network: Lagardère Services is developing a diversified portfolio through partnerships with leading brands, not only to diversify and expand its network, but overall to best answer customers and landlords needs In Press Distribution, innovation is a tool to improve efficiency La Cure Gourmande store, opened by Relay France in Paris, in the Opera neighborhood Press distribution line (AMP) after automation of processes 40