Presentation of results for the fourth quarter and full year 2015

Transcription

1 Presentation of results for the fourth quarter and full year 2015 CEO Pål Wibe CFO Espen Eldal 12 February 2016 Norway s leading discount variety retailer The figures presented are unaudited

2 Highlights in the fourth quarter Group revenues increased 8.6% and likefor-like growth of 6.2%, outperforming market growth of 2.8% Strong performance during all three seasonal events Solid growth in Adjusted EBITDA: Up 9.7% to NOK 283 million Adjusted EBITDA margin 20.1% Reduced leverage due to strong cash flow Two new store openings during the quarter Bodø Grorud 2

3 Highlights full year 2015 Revenue Group revenues increased 8.7% to NOK million for the full year 5.4% like-for-like growth, 2.3% for market % Adjusted EBITDA rose 16.2% year-on-year to NOK 640 million Gross margin increased 1.4% points resulting from savings from sourcing initiatives and takeover of franchise stores Significant increase in net profit Reflecting reduction in interest costs following refinancing Nine new stores opened Adjusted net profit % store modernisations completed

4 Adjusted EPS and dividend Adjusted EPS (NOK)* Adjusted earnings per share of NOK 2.04 in 2015* 2,04 The Board of Directors proposes a dividend of NOK 1.40 per share, a total of NOK 234 million 1,56 Dividend corresponds to 68.5% of adjusted net profit Dividend distribution will be carried out by way of a repayment of paid in capital 1,09 0,99 Q Q FY 2015 FY 2014 * Adjusted for nonrecurring expenses. See page 21 for details. Based on 167 million shares. 4

5 Europris continues to outperform the market Overall growth performance Y-o-Y LFL growth (%) 8% % 6,2 % 6% 5,4 % 7,0 % 5% 4% 3% 2,8 % 2,3 % 2,7 % 2% 1% 0% Q Market Europris % points Europris growth rate in excess of market growth rate in the period Source: Kvarud Analyse, Europris Note: Market includes a large number of shopping centres throughout Norway as defined by Kvarud Analyse (e.g. 237 in 2015) 5

6 Modernisation almost completed 80 Chain store projects: Share of own stores in latest format: 60 12% % % New stores Relocations Modernisations 77% of own stores updated to latest store format at year end 2015 Ten projects planned for Q1 of which four franchise stores (incl. one relocation) Strong pipeline for the full year with more than 30 projects planned of which app. 10 are relocations Peak of modernisation activity reached 6

7 Solid pipeline and a wide range of prospects Total: 229 Stokmarknes 7 5 Nine new stores opened during 2015, of which two during Q4 Grorud and Bodø One new store planned in Q1 Ågotnes Giske Bodø Ottestad 8 Grorud Enebakk 15 Begby Strømsø More than 25k inhabitants per store Between 15k and 25k inhabitants per store Solid pipeline of 19 new stores and several in negotiations: Ten confirmed for 2016 Four confirmed for 2017 onwards Five waiting for municipal approval Wide range of prospects and good opportunity flow No closures planned for 2016 Pindsle 15k or fewer inhabitants per store 7

8 Q4 Christmas Gift deep dive in like-for-like growth

9 The fundamentals for continued growth are sound Germany Portugal Finland UK Switzerland Italy Spain France Sweden Norway Discount penetration is low Discount retail penetration of grocery and variety retail (%) 1 Potential upside in frequency How frequently do people shop at Europris (% of respondents) 2 50% 35% 40% 38% 15% 30% 29% 13% 13% 12% 11% 10% 8% 8% 8% 20% 20% 10% 7% 6% 0% Weekly Monthly Every 6 months Less than every 6 months Never Source: Ultima database; Euromonitor; MediaCom survey 1. Includes grocery retail and variety retail; all variety retail defined as discount. Only Coop Obs of grocery retail chains is defined as Discount for the purpose of this analysis. Euromonitor defines Rema 1000, Kiwi, Rimi and Coop Prix as Discounters. However, these have been excluded in this comparison to other geographical markets where the Discount concepts are believed to be more differentiated on e.g. price and private label penetration. Source: Ultima database & Euromonitor 2. MediaCom survey with 1,303 respondents over 15 years of age that have heard of Europris and have a store in proximity to where they live, updated autumn

10 and we have a clear and resilient business model Strong price perception Resilient business model Respondents agreeing with statement: offers generally low prices 2008 level indexed to LFL development in selected regions, FY ,0 % 7,6 % ,0 % 6,0 % 6,5 % 100 5,0 % 80 4,0 % 60 3,0 % 40 2,0 % 20 1,0 % 0,6 % ,0 % -1,0 % Rogaland Hordaland -0,2 % Europris Market Source: MediaCom survey with 1,303 respondents over 15 years of age that have heard of Europris and have a store in proximity to where they live, updated autumn 2015; Europris analysis Note: Rogaland includes 19 stores; Hordaland includes 20 stores 10

11 with a lot of levers to pull store modernisations is one Case study: seven latest stores that were modernised in LfL Pre modernisation 2015 LfL Post modernisation 7,0 % 6,6 % 5,4 % 4,8 % Case study stores Chain Case study stores Chain 11

12 and as other levers will become more important We will continue to focus on seasons or events to drive sales Christmas Black Friday Halloween Summer Easter And others to come There is flexibility in our wide assortment agility in the face of shifting demands Europris is on a modernisation journey of category and concept development will take time to capture full potential E-commerce/marketing and B2B still not fully exploited opportunities remain 12

13 ensuring effective execution will be key we have proven consistency across areas LfL growth: area Adj. EBITDA margin: area 8,0 % 16,0 % 7,3 % 7,0 % 14,0 % 13,7 % 13,6 % 14,5 % 6,0 % 5,0 % 5,4 % 12,0 % 10,0 % 4,0 % 4,0 % 8,0 % 3,0 % 2,0 % Market 2.3% 6,0 % 4,0 % 1,0 % 2,0 % 0,0 % City Town Rural 0,0 % City Town Rural Source: Europris analysis Definitions: City: Above inhabitants in catchment area. 53 stores in 2015; Town: Between and inhabitants in catchment area. 108 stores in 2015; Rural: Less than inhabitants in cathment area. 50 stores in

14 which is also reflected across store sizes LfL growth: store size (m 2 ) Adj. EBITDA margin: store size (m 2 ) 7,0 % 6,0 % 6,1 % 5,5 % 5,6 % 16,0 % 14,0 % 15,0 % 14,0 % 14,2 % 12,4 % 5,0 % 12,0 % 4,0 % 10,0 % 3,3 % 8,0 % 3,0 % 2,0 % Market 2.3% 6,0 % 4,0 % 1,0 % 2,0 % 0,0 % Under over ,0 % Under over 1500 Source: Europris analysis Definitions: Under 900 sqm sales space: 42 stores in 2015; Between 900 and 1,200 sqm sales space: 108 stores in 2015; Between 1,200 and 1,500 sqm sales space: 44 stores in 2015; Above 1,500 sqm sales space: 17 stores in

15 and even with nearby competition LfL growth: competitive intensity Adj. EBITDA margin: competitive intensity 7,0 % 16,0 % 6,0 % 5,6 % 6,2 % 14,0 % 13,2 % 14,2 % 14,2 % 5,0 % 12,0 % 4,0 % 4,0 % 10,0 % 8,0 % 3,0 % 2,0 % Market 2.3% 6,0 % 4,0 % 1,0 % 2,0 % 0,0 % Limited Some Significant 0,0 % Limited Some Significant Source: Europris analysis; Level of competition based on Europris assessment and available market data Definitions: Limited competition: 50 stores in 2015; Some competition: 104 stores in 2015; Significant competition: 57 stores in

16 thus leaving a profitable store base with inherent opportunity for further upside Adj. EBITDA in NOK per square meter sales space in 2015 for the 211 like-for-like stores in the Europris estate

17 Financial review

18 Gross margin development Gross margin was 45.9% in Q vs. 47.2% in Q Gross margin Timing difference in store stocktaking between 2014 (Q4) and 2015 (Q3) accounts for margin reduction Positive effect from stocktaking in 2014 was NOK 25.4 million Excluding effects from stocktaking, the gross margin was up by 0.2%-points 40% 43% 42% 45% 41% 44% 47% 46% 43% 44% Gross profit increased 12.3% for the full year Margin increase of 1.4%-points Significant savings from sourcing initiatives Positive impact from takeover of franchise stores Currency fluctuations handled well Q1 Q2 Q3 Q4 FY

19 OPEX development OPEX* in % of revenue was 25.7% in Q vs. 27.3% in Q OPEX in % of revenue Positive impact from timing difference in marketing costs OPEX** was up by 10.5% for the full year Increase influenced by takeover of franchise stores 36% 36% 29% 29% 30% 33% 27% 26% 30% 31% Q1 Q2 Q3 Q4 FY * Adjusted for nonrecurring expenses of NOK 6.8 milllion in 2014 ** Adjusted for nonrecurring expenses of NOK 36.7 milllion in 2015, mainly related to the IPO; adjusted for nonrecurring expenses of NOK 10.5 million in

20 Adjusted EBITDA development Adjusted EBITDA* margin of 20.1% in Q vs. 19.9% in Q Adjusted EBITDA margin Strong revenue development and positive impact from timing differences in marketing costs 20% 20% Adjusted EBITDA** increased 16.2% from last year to NOK 640 million Positive impact from revenue growth Improved gross margin on the back of savings from sourcing initiatives and takeover of franchise stores 7% 14% 15% 11% 11% 13% 14% 4% Q1 Q2 Q3 Q4 FY * Adjusted for nonrecurring expenses of NOK 6.8 milllion in 2014 ** Adjusted for nonrecurring expenses of NOK 36.7 milllion in 2015, mainly related to the IPO; adjusted for nonrecurring expenses of NOK 10.5 million in

21 Profit and loss account Q Revenue growth of 8.6% Gross margin in Q adversely impacted by timing difference in stocktaking Net financial expenses impacted by reduced interest costs in Q Q expenses influenced by positive impact from currency hedging Adjusted net profit up 9.7% FY 2015, preliminary Revenue grew 8.7% during 2015, driven by nine new stores and 5.4% LFL growth Strong growth in gross margin IPO related costs of NOK 30 million and refinancing costs of NOK 57 million in 2015 Adjusted net profit up 31.2% Adjusted EPS of NOK 2.04 Amounts in NOK million Q Q FY 2015 FY 2014 Total operating income Operating profit Net financial income (exp.) Profit before tax Income tax expense Profit for the period Nonrecurring items IPO cost and refinancing Other nonrecurring items Total nonrecurring items Profit before tax, adjusted Tax on nonrecurring items 27% Income tax expense Adjusted net profit Adjusted EPS (NOK) Based on 167 million shares

22 Cash flow and working capital Strong cash flow of NOK 202 million for the year Stable operational cash flow for the full year Increase in income tax paid Rise in net working capital Working capital increase mainly inventory related Opening of net nine new stores and takeover of four franchise stores Value of goods purchased in foreign currencies increased Positive impact from refinancing during spring 2015 No repayment of loans in 2015 Reduced interest expenses Cash flow, NOK million FY 2015 FY 2014 Cash from operating activities Cash used in investing activities Cash (used in)/from financing activities Net change in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at end of period Change in working capital, NOK million FY 2015 FY 2014 Inventory Accounts receivables and other short-term receivables Accounts payable and other short-term liabilities Change in working capital

23 Summary and outlook Europris continues to outperform the market and delivered a strong end to a good year in 2015 The group is well positioned to benefit from continued discount sector growth Resilient business model that shows relative strength in Rogaland and Hordaland Truly mixed assortment provides competitive flexibility and a large addressable market Nonstop growth focus Strong focus on concept and category development Healthy pipeline of new stores: expect >10 net new stores in

24 Q & A

25 Presentation of results for first quarter 2016 See you Friday 13 May