Building a more focused business Capital Markets Day, ICA Gruppen 10 December 2014 Per Strömberg, CEO
Ica Gruppen is one of the main grocery retail players in the Nordic region Our core business is grocery retail ICA Gruppen has approximately 2,100 own and retailer owned grocery stores in Sweden, Norway and the Baltic countries Other businesses are ICA Bank, ICA Real Estate and our Portfolio companies Pharmacy will become the second largest segment in 2015 after the acquisition of Apotek Hjärtat 2013 net sales were SEK 100 Bn We have more than 21 000 employees ICA Gruppen is listed on NASDAQ OMX ICA Gruppen CMD 141210 2
Building a more focused business 2013 Forming ICA Gruppen Portfolio/non-food strategy ICA Norway & Norgesgruppen attempt Cash flow constraints 2014 Strong business performance all OpCos Rapid debt amortization Sale of Kjell & Co and Forma publishing ICA Norway divested Pharmacy chain Apotek Hjärtat acquired ICA Norway real estate will be sold More focused, more profitable Strong balance sheet, room to operate ICA Gruppen CMD 141210 3
The Norwegian exit Several years of losses and negative sales trend Lengthy approval process for suggested cooperation with Norgesgruppen Necessity for a plan B, divestment of ICA Norway started Divestment announced on 6 October 2014 SEK 2.8 bn enterprise value Capital gain c. SEK 1 bn Norwegian real estate assets retained for now, will be sold Transaction is subject to approval by Norwegian competition authority Decision at the latest in May 2015 ICA Gruppen CMD 141210 4
Strong platform for organic growth Continue Cura expansion New non-food destinations in Maxi New Rimi stores & conversions from HD format Implement Customer Centric Retailing Focus on large cities and border trade Increase PL in Sweden, Baltics & non-food Add insurance Stronger marketplace Roll-out of online channel ICA Gruppen CMD 141210 5
Opportunities for value-added acquired growth ADJACENT CATEGORY EXPANSION Expand into adjacent physical retail categories INTERNATIONAL GROCERY ACQUISITION Acquisition to expand grocery business internationally (current and/or new countries) BACKWARD INTEGRATION Integrate backward in value chain e.g., in ready-meals SERVICES Expand service offer related to the food business or ICA Bank e.g., insurance NEW CHANNELS AND FORMATS Capture growth in new formats; convenience, discount, or step-up e-commerce B2B Expand offer into food service for restaurants, hotels and businesses ICA Gruppen CMD 141210 6
be attractive and have potential on its own merits ICA Gruppen criteria for growth support core grocery business generate synergies need to be a good owner have potential to be worth the effort ICA Gruppen CMD 141210 7
Pharmacy fits our strategic growth criteria HIGH Pharmacies Strategic fit with ICA Gruppen High synergy potential Support core business LOW LOW HIGH Stand-alone attractiveness (size, profitability, growth, consolidation)
Acquisition of Apotek Hjärtat has a clear industrial logic Opportunities in an interesting and important sector Similarities with grocery retail (low cyclical financial profile) Growth potential within traded goods, e-commerce and through development of product offering Proven experience and expertise in pharmacy retail from successful establishment of Cura apoteket Apotek Hjärtat is a well-run, successful business with a strong brand and is highly complementary to Cura apoteket s pharmacy network Significant cost and revenue synergies ICA Gruppen CMD 141210 9
Pharmacy and grocery grew from 42% to 45% in health and beauty market Other Health & Beauty 1, SEKbn (%) Department stores Online 17,5 17% 6% 13% +5% p.a. 21,6 13% 7% 15% 21% Specialists and Other (such as convenience stores, hairdressers) losing market shares to other channels Specialists Grocery retail Pharmacies 22% 26% 16% 27% 18% 2009 2013 1. Includes Beauty & Personal Care and Consumer Health SOURCE: Euromonitor ICA Gruppen CMD 141210 10
ICA Gruppen s opportunity a unique health position that no other player can deliver GROCERY RETAIL Experience Inspiration Assortment Movement BENEFIT FOR ICA CUSTOMERS Service Pharmaceutical expertise Assortment Personal care/wellness PHARMACY Food and non-food Health Pharmaceuticals Synergies (cost and revenues) ICA Gruppen CMD 141210 11
Apotek Hjärtat, a good base for a successful private label range Apolosophy premium Hjärtat mid-range Cooperation with Boots: No 7, Soltan and Botanics Private label range (premium and mid-range) with high gross margin ICA Gruppen CMD 141210 12
Strategic priorities
ICA Gruppen s strategy framework Vision We make every day a little easier Strategic Themes Consistent over time Give direction Strategic Priorities Specific, near-term priorities Part of Annual Plan Close, quarterly follow up OpCo activities ICA Gruppen CMD 141210 14
Strategic Priorities 2014 Strategic Themes Strategic Priorities Strengthen customer loyalty & brand position Strengthen & expand our customer offering Optimize & broaden our sales channels Simplify our business 1 2 3 4 5 6 7 8 Turnaround the Norway business Develop and leverage leading CRM Further strengthen the Private Label offering Ensure competitive pricing and fair price perception Implement the portfolio and non-food strategy Build a leading position online Strengthen the store network (main focus on Cura, Lithuania, metro Sweden) Exploit sourcing synergies Engage & develop our people Excel in corporate responsibility 9 10 Implement ICA s common values Support sustainable customer choices ICA Gruppen CMD 141210 15
into 2015 updated strategic priorities Strategic Themes Strengthen customer loyalty & brand position Strategic Priorities 2015 1 Develop and leverage leading CRM Strengthen & expand our customer offering 2 3 4 Further strengthen and grow the Private Label offering Ensure competitive pricing and fair price perception Build the new ICA Pharmacy business and ICA s overall health position Modified New Optimize & broaden our sales channels Simplify our business 5 6 7 8 Build a leading position online Strengthen the store network (focus on Cura, Lithuania, metro Sweden) Develop and implement large logistics infrastructure projects Implement IT outsourcing project New New Engage & develop our people Excel in corporate responsibility 9 10 Implement ICA s common values and improve talent management Drive sustainable and healthy customer choices Modified Modified ICA Gruppen CMD 141210 16
Building a more focused business Finalise streamlining ICA Norway Kjell & Company Forma Cervera Real Estate Norway Continue to grow Strong organic growth Build unique health position Execute on strategy Strengthened management team in place Deliver increased shareholder value ICA Gruppen CMD 141210 17