Luis Reis Chief Corporate Center Officer

Transcription

1 1 Luis Reis Chief Corporate Center Officer

2 AGENDA 2

3 INSIDE SONAE WILL... Allow you to interact with Sonae's Top Managers and get a better knowledge about our retail formats Overview presentation Guided visit to Gaia Shopping Continente (Hyper) Worten (Consumer Electronics) Guided d visit it to Modelo Modelo (Super) Modalfa (Fashion) Presentation CEO Sonae MC - key performance & strategic highlights Lunch Presentation CEO Sonae SR - key performance & strategic highlights Guided visit to Norte Shopping Zippy (Fashion) Modelo (Super) SportZone (Sports) Presentation CEO Sonae & CEO Sonaecom End of Event 3

4 SONAE AT A GLANCE 4

5 WE ARE A RETAIL COMPANY Market leader in food and specialized retail formats With Board control of a Shopping Centre and a Telecommunications business 100% RETAIL 100% 100% SONAE 50% 53% 100% SONAE MC Food Retail Hypers and Supers SONAE SR Specialized Retail Non-Food Retail formats: sports, fashion and electronics SONAE RP Retail Properties Retail real estate assets SONAE SIERRA Shopping Centres Shopping centre developer, owner and manager SONAECOM Telco Integrated telecom provider Investment Manag. Business with M&A activity: Insurance, Travel and DIY CORE BUSINESSES RELATED BUSINESSES CORE PARTNERSHIPS ACTIVE INVESTMENT 5

6 WITH A STABLE SHAREHOLDER STRUCTURE Reference shareholder, Efanor, a family holding company MEDIUM/LONG TERM ORIENTED Others 33.5% Efanor 53% Free float Bestinver 2.1% Banco BPI* of circa 47% 8.9% Fundação Berardo 2.5% *including BPI equity swap 6

7 STRATEGIC DIRECTIONS 7

8 WHERE WE ARE GOING AND WHY? International Expansion The main strategic priority Dilution of country risk New growth avenues Diversifying Investment Style Adopt the most appropriate investment style Wholly owned businesses Majority stakes Partnerships Minority stakes Property: rent instead of owning Leverage the exceptional asset base in Portugal Innovate Generate new businesses Strengthen our competitive position 8

9 WHAT ARE OUR STRATEGIC AMBITIONS ROE > 15% 25% OF TURNOVER AND 35% OF ASSETS ABROAD TURNOVER CAGR > 10% ~ 1/3 OF CE IN MINORITY STAKES OR PARTNERSHIPS WITHOUT FULL CONTROL 9

10 WHAT ARE OUR STRATEGIC AMBITIONS CAPITAL LIGHT STRATEGIES To implement capital light growth strategies and look for opportunities to release capital employed 10

11 WHAT ARE OUR STRATEGIC AMBITIONS REACH INVESTMENT GRADE PROFILE To insure access to debt in competitive conditions and/or alternative financing solutions 11

12 HIGHLIGHTS OF THE DAY 12

13 REGARDING SONAE MC, YOU SHOULD RETAIN: Strong value proposition of each format Brand recognition Prime locations Value retailing proposal Price & diversity positioning Loyalty card Own brand Space optimization leveraging on excellence of logistics Distinctiveness of hyper format compared to peers High penetration of private label offering Low weight of non-food City centric The winning concept of our supermarket format Food sales area below 2,000 m 2 Cornered by: consumer electronics + fashion "Privately owned" shopping centre for medium sized cities The continuous leverage of our asset base Exploring new business opportunities in retail (eg: book.it; Well's; Continente ice) 13

14 REGARDING SONAE SR, YOU SHOULD RETAIN: 14 Leadership of the Worten concept Market leader in white goods and consumer electronics (135 stores) Debut entry in Spain in 2008 (19 stores) Positioning of low price, quality of service and product range Combining super and mega stores of around 500 m 2 and 1,500 m 2 Distinctiveness of the SportZone format Market leader in white sports goods (75 stores) Entry in Spain in 2008 (22 stores) Offering known brands with own brand options Average sales area of 1,000 m 2 Uniqueness of the Zippy format Still young format in Portugal (36 stores) Entry in Spain in 2009 (20 stores) Offering a range of clothing and accessories for children 90% of offer being controlled label Average sales area of 350 m 2 Strong position of Modalfa in the Portuguese fashion market With attractive lines of clothing, shoes and accessories Average sales area of 500 m 2

15 REGARDING THE RETAIL PROPERTIES OWNED, YOU SHOULD RETAIN IT IS AN IMPORTANT SOURCE OF CAPITAL 15 RATIONALE Manage Assets more proactively Build Retail Real estate competencies Partial release of invested capital INVESTED CAPITAL (end 1H10) 1.5 Billion Euros (Net book value) 2 SALES & LEASEBACK TRANSACTIONS COMPLETED Azambuja logistics platform Yield % Value million Capital gain - 7 million 2 Modelos stores Yield % Value million Capital gain - 3 million Currently underway Sales & Leaseback of 20 Modelo stores HIPERMARKETS - CONTINENTE 34 stores owned 85% total sales area SUPERMARKETS - MODELO 100 stores owned 82% total sales area

16 OVERALL, AT THE END OF THE EVENT, YOU SHOULD Know our retail portfolio Identify the strengths of our offer Recognize our leader positioning in Portugal Understand our strategic ambitions for the retail operations 16

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18 SONAE MC

19 VISION leadership of the Portuguese food based retail market in in in in market share business best terms of client corporate responsibility practices orientation terms 1.8x2 nd player 3x3 rd player international profitability benchmark Continente elected the most trusted brand reference in community involvement programs p.p. of market share Ebitdar > 9,5% 8 th consecutive year actively participates with >1,000 institutions 2

20 BUSINESS OVERVIEW Store portfolio Sales area ( 000 m2) Turnover M +6% EBITDA M +6% +36 2,930 3, ,428 1,517 +6% % e e e 3 1H figures 2H figures

21 KEY ACTION DRIVERS CONSOLIDATE LEADERSHIP POSITION IN PORTUGAL REINFORCE STATE OF THE ART BUSINESS PROCESSES DEVELOPMENT OF INTERNATIONAL GROWTH AVENUES 4

22 KEY ACTION DRIVERS CONSOLIDATE LEADERSHIP POSITION IN PORTUGAL Coverage of the Portuguese market and consolidate market leadership Selective Continente t and Modelo expansion plan with assured value creation Smaller Modelo expansion program for middle tier Portuguese cities Reinforcement of convenience format for major urban areas 5

23 KEY ACTION DRIVERS CONSOLIDATE LEADERSHIP POSITION IN PORTUGAL Explore adjacent business opportunities leveraging on extensive experience and know-how Roll-out of tested concepts Bom Bocado Well s Book.it Development of new growth avenues 6

24 KEY ACTION DRIVERS CONSOLIDATE LEADERSHIP POSITION IN PORTUGAL Leveraging g on the value and success of the loyalty program Number of clients with loyalty card million 2.9 million 2010e >3.0 million % of sales associated with card 83% 84.5% >86% 7 NEW TECHNIQUE OF USING CLIENT INFORMATION: CUSTOMER CENTRICITY RETAIL

25 KEY ACTION DRIVERS REINFORCE STATE OF THE ART BUSINESS PROCESSES Key issue: International sourcing International procurement, quality control, administrative and logistic management Since 1994 Recurrent contacts in 50 countries Dedicated offices in China and Brazil ~ sku s Sonae MC with 14% and ~2.000 suppliers of international sourcing 700 M of global imports for Sonae group 8

26 KEY ACTION DRIVERS REINFORCE STATE OF THE ART BUSINESS PROCESSES Key issue: Private labels #Own References and % FMCG Sales 2,100 20% 2,400 2,500 26% 23% 1H08 1H09 1H10 9

27 KEY ACTION DRIVERS REINFORCE STATE OF THE ART BUSINESS PROCESSES Key issue: Resource optimization Store costs gains (p.p.) Operational efficiency Cost control Stock optimization +1.0 EBITDA gains (p.p.) p 1H10 VERSUS 1H08 10

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30 SONAE SR STRATEGIC DEVELOPMENT PROGRAM PORTUGAL Consolidate leadership position with improving profitability INTERNATIONAL Reinforcement of the spanish market presence Strong push towards internationalisation 2

31 SONAE SR KEY ACTION DRIVERS in Portugal CONSOLIDATE LEADERSHIP Coverage of the portuguese market with the current formats' portfolio and consolidate market leadership Continue to use Portugal as a test plant for new formats, leveraging on a strong management team and know-how in Retail Manage the business in Portugal as a sustainable cash flow generator 3

32 SONAE SR 2010 DEVELOPMENTS in Portugal STORE NETWORK ( 000 M 2 ) TURNOVER (M ) EBITDA (M ) 1H 2H +16% % % % +10% % Y08 Y09 Y10e Y08 Y09 Y10e Y08 Y09 Y10e 4

33 SONAE SR KEY ACTION DRIVERS abroad WHY GROW INTERNATIONALLY? The Portuguese market is small and, for the time being, within a difficult economic framework Importance of scale Quality and distinctiveness of the concepts 5

34 SONAE SR KEY ACTION DRIVERS in Spain REINFORCEMENT OF THE MARKET PRESENCE Of Worten,, building Of SportZone,, leading Of Zippy, exploring a strong and distinctive position in the iberian market the reinforcement of the internationalisation process pocess the distinctiveness of the concept in both geographies 19 stores 22 stores 20 stores 47,000 m 2 29,000 m 2 7,000 m 2 ~150 M turnover ~30 M turnover ~10 M turnover 6 End of September network figures 12 months till 1H2010 turnover figures

35 SONAE SR KEY ACTION DRIVERS in Spain Break-even: EBITDA 2012 EBIT 2013 IMPACT OF SPANISH BUSINESS EBITDA (M ) 1H figures Y08 Y09 Y10e Y11e Y12e

36 SONAE SR KEY ACTION DRIVERS STRONG PUSH TOWARDS NEW MARKETS Build skills and experience in order to develop the international identity of the formats' portfolio Enter into new countries Configure an international development model based on franshising and joint venture as means to accelerate growth 8

37 SONAE SR KEY ACTION DRIVERS STRONG PUSH TOWARDS NEW MARKETS 9

38 SONAE SR 2010 DEVELOPMENTS in the international front STORE NETWORK ( 000 M 2 ) TURNOVER (M ) EBITDA (M ) 1H 2H +380% % 34 Y Y % +70% Y10e Y08 Y09 Y10e Y08 Y09 Y10e +0% 10

39 IMPORTANT ACHIEVEMENTS IN ORDER TO FULLY IMPLEMENT SONAE SR MISSION Develop World Class International specialized Retail formats, in a unique and innovative way, surprising consumers with an excellent price/quality ratio 11

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41 Ângelo Paupério I Executive Board Director Sonae

42 WE CONTINUED TO DELIVER OUR VALUE CREATION MODEL 2

43 IN 1H10 Sonae achieved very positive evolutions on the majority of its businesses

44 IN 1H10 TURNOVER EBITDA NET DIRECT PROFITS +6% +10% +89% Sonae continued to deliver profitable growth, while pursuing its internationalization strategy reinforce it s capital structure increase equity holders profitability 4

45 WITH GOOD PERFORMANCE OF THE CORE PARTNERSHIPS 5

46 SONAE SIERRA EBITDA UP BY 10% AND DIRECT PROFITS INCREASED BY 46% EBITDA (M ) DIRECT PROFITS (M ) % % 28 Occupancy rate = 96% (+2pp ) Total of rents collected (fixed and variable) up 3% on a LfL basis Expansion restricted in Europe but partially offset by greater development activity in Brazil 1H09 1H10 1H09 1H10 EBITDA PERFORMANCE REFLECTING ONGOING COST CUTTING MEASURES AND OPERATIONAL IMPROVEMENTS 6 INDIRECT PROFITS ALREADY SHOWING SIGNS OF STABILIZATION/INFLEXION OF THE NEGATIVE TREND Management figures

47 SONAECOM EBITDA GROWS 9% AND CASH FLOW IS POSITIVE RESULTS CONTINUE TO SHOW A FAVOURABLE EVOLUTION MOBILE SEGMENT CUSTOMERS (M) EBITDA (M ) 327 3,450 3,469 3,269 3,327 3, % +6% 2Q09 3Q09 4Q09 1Q10 2Q10 1H08 1H09 1H10 Growth in mobile customers and customer revenues 30% share of fibre market despite inexistence of regulation Cost control policies Strict investment management 7

48 AND OVERALL STRONG CONSOLIDATED PERFORMANCE AS OF 1H10 8

49 TURNOVER GREW BY 6% WITH RETAIL UNITS MAKING A SIGNIFICANT CONTRIBUTION TO THIS PERFORMANCE GROWTH +6% +10% +70% +7% +6% -6% +9% +11% +6% ,517 2,777 2,608 MC SR (PT) SR (SP) RP SIERRA S COM IM PS E&A 1H10 1H09 Sonae MC and Sonae SR growing 9% International business approaching 20% of Sonae SR turnover 9 YTD 1H10; Million euros

50 EBITDA INCREASED BY 10% GENERATING A MARGIN OF 11% RETAIL UNIT MARGINS WERE SUSTAINED BY GAINS IN MARKET SHARE AND IN EFFICIENCY GROWTH +14% +31% n.m +2% +9% +9% +10% MC SR (PT) SR (SP) RP SIERRA S COM IM E&A RECURRENT Total Total EBITDA 1H10 1H09 EBITDA includes capital gains of 10m from Sonae RP with the sale & lease back of retail real estate assets (Modelos of Póvoa de Varzim and Rio Tinto; Azambuja logistics platform) 10 YTD 1H10; Million euros

51 DIRECT NET PROFITS INCREASED BY 89% REFLECTING STRONG EBITDA PERFORMANCE AND A SIGNIFICANT FALL IN NET FINANCIAL EXPENSES % 29 EBITDA D&A P&I Financial Results 11 YTD 1H10; Million euros Other Income Taxes Minority Direct NetDirect Net Interests Profit 1H 10 Profit 1H09 Considerable better net financial activity due to the reduction in average debt in 1H10 and the lower level of the interest rates Higher taxes in retail formats and Sonaecom

52 INDIRECT PROFIT REFLECTS A SIGNIFICANT SLOWING DOWN OF YIELDS EoP quarterly data; Million euros -65 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Relatively stable yields across all the countries where Sierra is present, with the exception of Portugal The negative value was driven by an adjustment on deferred tax liabilities arising from the recent increase in corporate income tax in Portugal

53 INVESTMENT TOTALED 191M REFLECTING THE ADOPTION OF A CAPITAL LIGHT STRATEGY INVESTMENT Million Euros % Sonaecom 31% Sonae MC 21% Sonae SR 22% Sierra 17% Sonae RP 8% 1H08 1H09 1H10 Continuous store network development and modernization in Portugal Strong push to increase presence in the Spanish market Ongoing investment in the expansion and coverage of the mobile network Development of 2 shopping centres scheduled d to open in

54 AN APPROPRIATE CAPITAL STRUCTURE IN EACH BUSINESS TO SUPPORT FUTURE GROWTH PLANS Shopping centres and Holding Loan to Value 47.3% 46.1% 47.2% 2Q09 3Q09 4Q09 1Q10 2Q10 Sierra 14

55 MAJOR IMPROVEMENT IN DEBT RATIOS 10.9x EBITDA/INTEREST Consolidated figures 7.8x 9.7x 4.9x 4.7x 4.5x 4.7x 4.2x 4.1x 3.9x 4.0x 5.3x 4.5x 6.2x 5.1x 6.0x 7.1x 7.9x 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Withoutt Sonae Sierra With Sonae Sierra 15

56 MAJOR IMPROVEMENT IN DEBT RATIOS NET DEBT/EBITDA Consolidated figures 5.6x 4.8x 5.3x 4.6x 5.1x 4.2x 5.6x 4.8x 5.3x 4.5x 5.1x 4.2x 4.5x 4.8x 3.6x 4.1x 4.6x 3.8x 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Withoutt Sonae Sierra With Sonae Sierra 16

57 WE CONTINUED TO IMPROVE OUR RETURN ON EQUITY 21.2% 21.2% 15pp 11pp 6pp 10pp Direct Income contribution to ROE ROE Indirect Income contribution ti to ROE 17pp 18pp 13.9% 15.1% 16pp 12.9% 14pp 13pp 14pp 15pp 11pp 11pp 6.8% 8.1% 5.0% 3pp 2.8% 2.4% 0pp -7pp -7pp -4pp -3pp -10pp -11pp -11pp 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 17

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59 Paulo Azevedo I CEO Sonae

60 OUR STRATEGIC DIRECTIONS 2

61 CORPORATE STRATEGIC GUIDELINES FOR FUTURE GROWTH Main goal is to transform Sonae into a large multinational i l retail corporation GO INTERNATIONAL Main growth avenue Use concepts believed to be distinctive Leverage our competencies DIVERSIFY INVESTMENT STYLE Partner to complement competencies and costs Adopt new expansion models: joint-ventures franchising and technical partnerships Capital light approach to property: rental instead of ownership LEVERAGE EXCEPTIONAL ASSET BASE IN PORTUGAL Continue to explore new business opportunities in retail New ventures should have potential to become a large business in the medium term and with a path to internationalization 3

62 OUTLOOK 4

63 OUTLOOK FOR RETAIL The strength of our retail value proposition, clearly l demonstrated d on our past performance, allows us to be confident on future growth We are Value Retailers, with a low and competitive price offer Price positioning explains continuous gains in market share despite a tough consumer market We have proven our ability to manage successfully in challenging environments 5

64 OUTLOOK FOR RETAIL with consolidation of market share and high h levels l of profitability at Sonae MC Turnover M M +6% 2,930 3,106 EBITDA % 199 Sonae MC being one of the few players gaining market share in 2009 (~1.3pp 1 ) and 1H10 (~1.5pp 1 ) 1,428 1,517 +6% % Y08 Y09 Y10 Y08 Y09 Y10 1H 1 Source: Nielsen & TNS consumer panels 6

65 OUTLOOK FOR RETAIL and with growth and profitability, in Portugal, at Sonae SR Turnover EBITDA M M enabled by +10% a reinforcement 1H of position of the % 898 leader formats (+2pp 71 Worten; +1pp 58 SportZone) (1) and continuous growth in market share of the younger formats % Y08 Y09 Y10 Y08 Y09 Y % 1 August YTD; according to GFK and to internal researches) 7

66 OUTLOOK FOR RETAIL Sonae will emerge from this recession as a stronger company and with a strengthened long term growth potential Market leader formats Continente, Modelo, Worten, SportZone, Zippy and Well s in Portugal Maintain gains of market share and profitability Value oriented offering Food sector as non-cyclical Weakness of high cost/low efficiency retailers, reinforced with the economic crisis Continuous improvements in operational efficiency Lower market share formats Worten, SportZone, Zippy in Spain and Loop, Bom Bocado, book.it in Portugal Consistently gain market share Value oriented offering Resilience on the back of the distinctiveness of the concepts Leverage on Sonae s competences and strong asset base 8

67 OUTLOOK FOR RETAIL Progress on Internationalization in line with planned Strong expansion in Spain with Worten, SportZone and Zippy Expecting to end the year with additional 60 thousand m2 of new sales area (~2x the area in YE 2009) On track to achieve EBITDA break even, on Spanish operations, by 2012 Angolan market under analysis Expansion of Sonae SR business frontiers, with opening more than 100 stores, until 2014, in 10 countries Worten - Joint Venture Contract for the Canary islands SportZone - Joint Venture Contract for the Canary islands Zippy - Franchising contracts for Canary Islands and Middle East Attentive to international expansion opportunities 9

68 OUTLOOK FOR RETAIL Sonae RP to free up invested capital Execute an asset monetization plan to release circa 50% of invested capital freehold ownership of food retail sales area Focus on Asset Management Seek Property Development opportunities 10

69 OUTLOOK FOR CORE PARTNERSHIPS SONAE SIERRA Grow in promissing markets: Speed up expansion in Brazil Reinforce emergent markets presence and services to third parties Continue to make operational improvements in spite of the fall in consumption in certain sectors in Europe SONAECOM Manage cash flow and optimize operational efficiency Ensure continuous market share gain in the mobile segment Reinforce SSI s International presence and grow client base through new services and sectors Prepare the company for European recovery in selected countries (freeing up capital and starting up with the best projects) 11

70 SONAE AN ATTRACTIVE INVESTMENT OPPORTUNITY Confirmed growth in Turnover and Profitability in the face of adverse macroeconomic conditions Value proposal offer adapted to market demands A clear and ambitious strategy that will enable for future growth and value creation Strong culture and values High quality management teams 12

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