Financial results Q3 FY16 Management Discussion & Analysis Unaudited December 9, 2016

Transcription

1 Financial results Q3 FY16 Management Discussion & Analysis Unaudited December 9, 2016

2 Disclaimer By reading this presentation, you are deemed to have read and accepted the statement below. This presentation has been prepared by HEMA B.V. This presentation provides information about HEMA B.V. group and its subsidiaries. Any references to HEMA shall mean HEMA B.V. group and its subsidiaries. While HEMA takes reasonable care to ensure the accuracy of the information in this presentation, it makes no representation or warranty, express or implied, of its accuracy or completeness. This presentation has not been the subject of an audit or a similar investigation. HEMA shall not be held responsible for any direct or indirect losses, damages or liabilities of whatsoever kind arising from the access to, the use of or reliance on this presentation or any of the information it contains. HEMA does not undertake any duty to update or correct such information and reserves the right to change, delete or move any of the material in this presentation at any time without notice. In addition, the information contained in this presentation should not be deemed accurate or current except as of the date of issue. HEMA does not intend to, and does not undertake any duty to, update or correct such information. This presentation may include certain statements, estimates, targets and projections provided by HEMA with respect to the anticipated future performance of HEMA. Such statements, estimates, targets and projections reflect significant assumptions and subjective judgments by HEMA s management concerning anticipated results. These assumptions and judgments may or may not prove to be correct and there can be no assurance that any estimates, targets or projections are attainable or will be realised. Accordingly, HEMA nor any of their respective directors, partners, employees or advisers nor any other person, shall give any representation or warranty as to the achievements or reasonableness of future projections, estimates or targets nor will they be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from this presentation and any such liability is expressly disclaimed. No representation or warranty, express or implied is or will be given by HEMA or its affiliates, directors, partners, employees or advisers or any other person as to the accuracy, completeness or fairness of this presentation and, so far as permitted by law and except in the case of fraud by the party concerned, no responsibility or liability whatsoever is accepted for the accuracy or sufficiency thereof or for any errors, omissions or misstatements negligent or otherwise relating thereto. This presentation contains information from other sources (like the CBS, Central Bureau of Statistics) which are not controlled or maintained by HEMA. HEMA is not responsible for the accuracy of this information. The information contained in this presentation is not intended to be and shall not be deemed to be an offer, invitation or inducement to invest in or otherwise deal in any securities of HEMA or in any other investment, nor to provide or constitute any advice or recommendation in connection with any investment decision. The release, publication or distribution of any information or documents on hema.net in jurisdictions other than the Netherlands may be restricted by law and therefore persons in a jurisdiction other than the Netherlands into which such information or documents are released, published, distributed or otherwise accessible should inform themselves about and observe any such restrictions. If you require advice, please consult your independent professional financial adviser. The copyright in this presentation belongs to HEMA. All other intellectual property rights are reserved. 2

3 Introductory remarks FY16 relates to the 52 weeks starting February 1, 2016 and ending January 29, 2017 Q3 FY16 relates to the 13 weeks starting August 1, 2016 and ending October 30, 2016 This presentation provides a management discussion and analysis of HEMA s operating results in Q3 FY16 Q3 FY16 has not been audited 3

4 Key takeaways Q3 FY16 Seventh consecutive quarter of LFL group consumer sales growth Q3 FY16 net sales were 301.2m, an increase of 2.9% on Q3 FY15 Q3 FY16 Group LFL consumer sales reported growth on growth with an increase of 0.2% versus Q3 FY15 (Q3 FY15 LFL consumer sales versus Q3 FY14 were +7.0%) Netherlands directly owned stores reported LFL consumer sales growth of 1.3% Continued gains in market share in Apparel and Household & Personal Care in the Netherlands 4

5 Key takeaways Q3 FY16 Solid gross profit & margin growth driving continued improvement in Adjusted EBITDA Q3 FY16 Gross profit of 137.4m (45.6% gross profit margin) vs. Q3 FY15 of 124.2m (42.4% gross profit margin). A significant y-o-y improvement for the period of +320bps Reported Q3 FY16 Adjusted EBITDA of 31.3m vs. Q3 FY15 of 23.5m. Improvement of +33.2% compared to prior year period Third consecutive quarter of strong Adjusted EBITDA growth LTM Adjusted EBITDA position at the end of Q3 FY16 of 102.5m 5

6 Key takeaways Q3 FY16 Continued focus on key short term business priorities has delivered good results Further productivity improvements were achieved in Dutch stores. Q3 FY16 adjusted wage quote decreased by 60bps, from 13.7% in Q3 FY15 to 13.1% in Q3 FY16 Strong focus on cash and liquidity management resulted in a solid end of Q3 FY16 cash position of 141.8m compared to 84.1m at the end of the prior year period On track to achieve further year on year reduction of total inventory by end of FY16 with a strongly improved stock quality profile 6

7 Contents 1. Key macro economic indicators in the Netherlands 2. Market developments in the Netherlands 3. Results Q3 FY16 4. Cash flow Q3 FY16 5. Strategy update 6. Q&A 7

8 1. Key macro economic indicators in the Netherlands 8

9 Key macro economic indicators Source: CBS, Central Bureau of Statistics, and other independent third parties Positive consumer confidence and declining unemployment trends continue The US dollar has strengthened recently towards the 1.06 level ( /$) 9

10 2. Market developments in the Netherlands 10

11 Softer Q3 retail spending non-food Q vs Q (Jul-Sep) Sales - 0.6% Volume - 1.3% Price + 0.7% Source: CBS, Central Bureau of Statistics, Note the CBS figures shown above represent a make-up of the total retail market in the Netherlands and as such include a number of categories that are less relevant to HEMA (e.g. Consumer electronics, drugstores and DIY) 11

12 Retail spending food meaningfully up in Q3 Retail spending on Food picked up again in Q after a slow down in Q Q vs Q (Jul-Sep) Sales +2.4% Volume +1.5% Price +0.9% Source: CBS, Central Bureau of Statistics, 12

13 HEMA performs in line with market HEMA slightly outperformed the market in Apparel and Household Goods & Personal Care, but trended marginally below the total market for the last 3 months on the back of lower food sales Whilst HEMA continued to strongly outperform the market in catering, a focus on reducing shrinkage and substantially less promotional activities compared to the prior year period led to a reduction in market share within Food Market HEMA Sales growth (y-o-y, indexed ) Source: third party information as of September Services not included given lack of market information. Food includes out of home 13

14 3. Results Q3 FY16 14

15 Headline financials Q3 FY16 klik om foto toe te voegen * EBITDA and Adjusted EBITDA are non-gaap measures. Refer to the interim financial report Q3 FY16 for the definitions Strong year on year performance for the period and year to date mainly driven by increased sales, gross profit and lower operating expenses LTM EBITDA strongly improving to 86.4m LTM Adjusted EBITDA improving to 102.6m 15

16 Bridge EBITDA to Adjusted EBITDA Q3 FY16 klik om foto toe te voegen Excluding the VAB provision, total non recurring items are 2.1m lower compared to prior year period 16

17 Adjusted EBITDA bridge Q3 FY15 to Q3FY (1.4) (2.2) klik om foto toe te voegen Gross margin % improvement is the main driver behind improved Adjusted EBITDA 17

18 Continued strong gross profit margin improvement klik om foto toe te voegen Gross profit improvement driven by higher sales and stronger gross margin on the back of better intake margin, favourable sales mix and reduced shrinkage 18

19 Like for like consumer sales klik om foto toe te voegen Positive group LFL consumer sales, however growth was negatively affected across Europe by unseasonably warm weather for a 6 week period Overall retail market in Belgium and France remained soft in the period 19

20 Q3 FY16 operating expenses klik om foto toe te voegen Excluding the VAB provision, operating expenses increased with 2.3m primarily driven by increased marketing investments to support the HEMA 90 years campaign The impact from an increase in the net store count of 21 from 690 stores at the end of Q3 FY15 to 711 at the end of Q3FY16 was largely offset by cost savings across the business 20

21 Positive operating result in Q3 FY16 klik om foto toe te voegen On the back of a strongly improved operating result, a small net loss is reported for Q3 which reflects a significant improvement compared to the prior year period 21

22 4. Cash flow Q3 FY16 22

23 Cash flow from operations Q3 FY16 klik om foto toe te voegen The positive cash flow from operating activities in Q3 FY16 was driven by a solid operating performance and a very positive movement in working capital helped by an early Q3 cut-off date (last day of the month is when several taxes are paid and is after closing for Q3 FY16) Adjusting for the early cut-off date, the positive movement in working capital would still have been 29.9m Compared to Q3FY15 increased intake in of fresh inventory ahead of the Saint Nicolas and Christmas trading 23

24 Net cash flow Q3 FY16 klik om foto toe te voegen Total positive net cash inflow in Q3 FY16 was primarily driven by operating activities Catch up in CAPEX in Q3 FY16 24

25 Cash available end of Q3 FY16 klik om foto toe te voegen Strong operational performance and solid cash management led to an increase in cash of 70.8m compared to the end of the prior year period and 57.6m compared to year end FY15 25

26 Capital structure end of Q3 FY16 klik om foto toe te voegen Net debt decreased by 69.2m compared to the end of the same quarter last year and 58.2m compared to year end FY15 26

27 FY16 Focus on track Building on momentum from 2015 Gross profit gains from pricing and procurement initiatives Store productivity improving Continued improvements in product availability Accelerating e-commerce growth klik om foto toe te voegen Further international expansion 27

28 5. Strategy Update 28

29 Three pillar strategy update revitalise Benelux HEMA Worlds pilots stores in the Netherlands & Belgium imminent launch of loyalty program stock reduction program on track grow e-commerce redesign has led to growth in sales re-platforming being planned accelerate international newly opened stores trading well healthy expansion pipeline enablers operating model review investment in systems

30 15 International stores opened in FY16 30

31 Investor event We would like to invite you to a HEMA investor day in the spring of 2017 During this event we will present our Annual Financial Statements for FY16 Various members of the management board will provide an update on our key strategic initiatives The event will be held in Amsterdam, the Netherlands Further information and a formal invitation will be shared in due course klik om foto toe te voegen 31

32 6. Q&A 32

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