q3 report 2014 - marketscreener.com · •improved profit sharing from stores vs last year sekm...
TRANSCRIPT
General information
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As a consequence of ICA Gruppen’s divestment of the retail
operations in Norway, from the start of the third quarter ICA
Norway is reported as “Profit from discontinued operations”.
This means that in this presentation ICA Norway is not
included in the Group’s consolidated sales and operating
profit. ICA Norway’s earnings are reported on a line in the
consolidated income statement before “Profit for the period”.
The consolidated income statement from 1 January 2012 will
be changed in the same manner. In the balance sheet, ICA
Norway is recognized as “Assets available for sale” and
“Liabilities available for sale” respectively. ICA Norway is
included in consolidated cash flow. ICA Norway is included in
the calculation of consolidated capital employed.
The acquisition of Apotek Hjärtat that was announced today –
November 12, 2014 – will not be presented in this quarterly
report.
A separate presentation of the acquisition is available on ICA
Gruppen’s website.
www.icagruppen.se
Divestment ICA Norway Acquisition of Apotek Hjärtat
ICA Norway divested – acquisition of Apotek Hjärtat
• Net sales increased by 5.8% • In local currency +5.0%
• Increased sales in ICA Sweden and Rimi Baltic
• EBIT excluding non-recurring items +6%
• ICA Norway divested for SEK 2.8 billion,
conditional upon approval from the Norwegian
competition authority, Konkurransetilsynet • Gain approximately SEK 1 billion
• Acquisition of Apotek Hjärtat
• Forma divested • Purchase price SEK 155 million, no earnings impact
• Impairment of goodwill in inkClub
of SEK -322 million
SEK m Q3 2014 Q3 2013 2013
Proforma
Net sales 22,016 20,800 82,993
EBIT
excl. non-recurring items 1,172 1,110 3,695
EBIT 904 1,109 3,482
Net result 495 551 1,424
EBIT margin excl. non-
recurring items 5.3% 5.3% 4.5%
EBIT margin 4.1% 5.3% 4.2%
Profit per share, SEK 2.29 2.76 7.18
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The market in Sweden
• Continued low inflation
• Repo rate at zero - Riksbanken reduced the repo rate
again in October
• Still low grain prices due to continued good harvests and
large quantities available for export
• Within retail, consumer durables showed strong
development so far this year, +5.6% in fixed prices, while
growth for grocery retail was +1.4% in fixed prices
• According to HUI Research, the grocery market is
expected to grow by 1.5% this year and in 2015
4
Segments during the quarter
ICA Sweden
• Higher market growth than the food retail
market in general • Increased market shares in Q3
• Strategic priorities better than plan: • PL share increased to 22.7% (21.4)
• High growth for Cura pharmacies. No of
pharmacies 64 (55) as of Q3
• 9 new ICA stores established YTD Q3, of which 4
in metro areas
• Test launch of Online initiated
5
Segments during the quarter (cont’d)
Rimi Baltic
• Increased market shares during Q3 for Rimi Baltic • Good growth in Latvia and Lithuania
• Rimi is the third most preferred brand in Latvia
• 6 new stores YTD Q3, out of 12 planned this year
ICA Bank
• Low repo rate impact
• Number of customers and bank cards have continued to
increase during Q3 (compared with Q2) • 13,000 new bank customers
• 24,000 new bank cards
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Segments during the quarter (cont’d.)
ICA Real Estate
• 10 properties sold to Ancore, a total value of SEK 918
million
Portfolio companies
• Impairment in inkClub • Lower profitability
• Delayed effects from a new technical platform and brand
strategy
• Forma divested
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Net sales development in Q3
• Net sales increased by 5.8% • In local currencies +5.0%
• Higher sales volumes • Increased market shares in a growing
market
• Price impact limited (store sales) • Sweden, +0.5%
• The Baltics, +0.7%
Net sales (SEK m)
20 800 22 016
0
5 000
10 000
15 000
20 000
25 000
Q3 2013 Q3 2014
Net sales
+5.8%
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Earnings development in Q3
• Group EBIT excluding non-recurring
items increased by 6%
• Driven by increased volumes
• Partly re-invested in larger strategic
activities
• Improved EBIT mainly in ICA Sweden
EBIT excluding non-recurring items (SEKm)
1 110 1 172
0
200
400
600
800
1 000
1 200
1 400
Q3 2013 Q3 2014
EBIT excl. non-
recurring items
+6%
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Food retail market and inflation according to HUI Retail Sales Index
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Food retail market ICA ICA, comparables Inflation
Percent (value)
Sales development for ICA stores and the food
retail market in Sweden Total store sales (including Non food)
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Store sales in Sweden
July-September 2014 January-September 2014
Store sales excl. VAT SEKm
Development
total
Development
comparable SEKm
Development
total
Development
comparable
Maxi ICA Stormarknad 7,708 3.1% 1.9% 22,768 2.7% 1.8%
ICA Kvantum 6,326 5.2% 2.4% 18,577 4.0% 1.8%
ICA Supermarket 8,398 2.1% 1.9% 24,148 1.5% 0.8%
ICA Nära 4,284 1.6% 2.6% 11,880 0.9% 1.8%
TOTAL 26,716 3.0% 2.1% 77,374 2.4% 1.5%
Development compared with the same period 2013
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ICA Sweden Strong quarter
• Increased net sales +4.8%
• EBIT excl non-recurring
items increased by
approximately 10 percent • High wholesale sales
• Improved profit sharing from
stores vs last year
• Improved results Cura
pharmacy and own stores
• Increased costs for strategic
initiatives
SEKm
Q3
2014
Q3
2013
Jan-Sep
2014
Jan-Sep
2013 FY 2013
Net Sales 17,997 17,171 52,330 50,390 67,992
EBIT excl. non-recurring items 982 891 2,433 2,239 3,058
EBIT margin excl. non-recurring
items 5.5% 5.2% 4.6% 4.4% 4.5%
PL share of store sales - - 22.7% 21.4% 21.4%
Number of stores - - 1,313 1,321 1,321
0
200
400
600
800
1000
0
5 000
10 000
15 000
20 000
Q3 2013 Q3 2014
Net sales EBIT excl. non-recurring items
SEKm SEKm
13
SEKm Q3 2014 Q3 2013
Jan-Sep
2014
Jan-Sep
2013 FY 2013
Net sales 2,952 2,548 8,437 7,495 10,333
EBIT excl. non-recurring
items 93 85 238 195 308
EBIT margin excl. non-
recurring items 3.2% 3.4% 2.8% 2.6% 3.0%
PL share of store sales - - 20.0% 18.0% 18.1%
Number of stores - - 238 233 235
0
20
40
60
80
100
0
1 000
2 000
3 000
Q3 2013 Q3 2014
Net sales EBIT excl. non-recurring items
SEKm SEKm
Rimi Baltic Continued good sales
• Net sales rose by 16% in Q3 • In local currencies +9%
• Slightly improved EBIT excl.
non-recurring items: • Improvement mainly due to
increased sales in Latvia
• Off-set by costs from
conversions and new store
openings
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Note: exchange rates SEK/EURO Q3 2014: 9.2153, Q3 2013: 8.6783
SEKm Q3 2014 Q3 2013
Jan-Sep
2014
Jan-Sep
2013 FY 2013
Revenues 207 213 641 635 850
EBIT excl. non-recurring
items 58 64 144 150 201
EBIT margin excl. non-
recurring items 28.0% 30,0% 22.5% 23.6% 23.6%
Business volume - - 25,850 24,529 24,772
0
50
100
0
100
200
Q3 2013 Q3 2014
Net sales EBIT excl. non-recurring items
SEKm SEKm
ICA Bank Increased business volume
• Slightly lower revenues in Q3
due to lower net interest, driven
by low repo-rate
• Lower EBIT excl. non-recurring
items: • Lower revenues
• Increased costs mainly due to new
regulations and higher personnel
costs
• Release of credit loss reserve
gave positive impact of SEK +9
million
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SEKm Q3 2014 Q3 2013
Jan-Sep
2014
Jan-Sep
2013 FY 2013
Net sales 562 564 1,678 1,686 2,255
Depreciation 126 106 385 312 421
EBIT excl. non-
recurring items 112 126 314 350 473
EBIT margin excl. non-
recurring items 19.9% 22.2% 18.7% 20.8% 21.0%
0
50
100
150
0
100
200
300
400
500
600
Q3 2013 Q3 2014
Net sales EBIT excl. non-recurring items
SEKm SEKm
ICA Real Estate Solid development
• Net sales in line with Q3 last year
• Slightly lower EBIT excl. non-
recurring items: • Higher depreciations of SEK 25
million, compensated by higher
revenues from new investments
• 10 properties sold to Ancore • Value SEK 918 million, net gain
SEK 59 million, cash flow effect
SEK 710 million
• New market value • SEK 14.1 billion (incl. Långeberga)
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MKr
Q3
2014
Q3
2013
Jan-Sep
2014
Jan-Sep
2013
FY
2013
Net sales 579 586 1,731 1,765 2,657
EBIT excl. non-
recurring items -13 -15 -63 -110 21
EBIT margin excl. non-
recurring items -2.2% -2.6% -3.6% -6.2% 0.8%
-50
0
0
200
400
600
Q3 2013 Q3 2014
Net sales EBIT excl. non-recurring items
SEKm SEKm
Portfolio companies Depreciation of goodwill InkClub
• Net sales rose adjusted for
divestment of Forma Books (fall
2013), +5.1%
• EBIT excluding non-recurring items
slightly improved: • Higher results in Cervera and
Hemtex
• Depreciation of goodwill in inkClub,
SEK -322 million
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Net sales, SEKm
Q3 2014 Q3 2013
ICA Sweden 17 997 17 171
Rimi Baltic 2 952 2 548
Portfolio companies 579 586
ICA Bank 207 213
ICA Real Estate 562 564
Intra-group sales & other -281 -282
Total 22 016 20 800
Net sales and
EBIT excluding non-recurring items in Q3
EBIT excl. non-recurring
items, SEKm Q3 2014 Q3 2013
ICA Sweden 982 891
Rimi Baltic 93 85
Portfolio companies -13 -15
ICA Bank 58 64
ICA Real Estate 112 126
Other -60 -41
Total 1 172 1 110
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Cash flow Excluding ICA Bank
• Cash flow in the quarter is weaker than
last year
• Increased working capital – calendar
effects
0
1 000
2 000
3 000
4 000
5 000
6 000
-250
250
750
1 250
1 750
2 250
2 750
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014
Cash flow from operating activities, excl. ICA Bank
Cash flow R12
SEKm SEKm
Pro forma until Q2 2013
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Long-term
goal <2.0x
0
1
2
3
4
2.7x
2.1x 2.1x
2.8x
1.7x 1.5x
Net debt / EBITDA ratio lower
• Net Debt/EBITDA at 1.5x follow
better 12Mth rolling EBITDA and
lower Net Debt (down SEK 0.8
billion in the quarter to SEK 8.3
billion)
• The lower Net Debt at third
quarter closing is mainly due to
real estate divestments in Sweden
and Rimi Baltic
ICA Gruppen Net debt / Proforma EBITDA
20
Goal Actual 12 months
rolling 30
September 2014
Long-term
Grow faster than the market
Sweden
Baltics All markets
EBIT margin excl. non-recurring
items 4.6% 4.0%
Return on capital employed* 9.3% 9.0%
Net debt/EBITDA** 1.5x <2.0x
Dividend (% profit for the year) 68%*** 50%
* Excluding ICA Bank
** Interest-bearing liabilities excluding pensions and ICA Bank minus cash and cash equivalents in
relation to EBITDA, excluding effects of acquisitions, before depreciation and impairment.
*** Based on profit for 2013
ICA Gruppen’s financial targets
• As a consequence of the
acquisitions and
divestments that have
taken place during the fall,
an overview of the group’s
financial targets will be
made during the fourth
quarter
• Potential adjustments will
be announced as soon as
they are decided upon
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Outlook
Sweden • Continued strong development for ICA Sweden
• Increased costs for strategic activities
• A moderate market growth is expected, weaker than in the
past (HUI Research, expects the grocery market to grow by
1.5% this year and in 2015)
Baltics • Good sales growth for Rimi Baltic
• Continued great focus on new establishments
• Another 6 store openings after the end of Q3
ICA Bank • Lower repo rate impacts future earnings expectations
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Outlook (cont’d)
ICA Real estate
• Expansion of Helsingborg warehouse continues according to plan
• Divested properties in Q3 gives lower revenues short-term
Streamlining and growth • Complete the divestment of ICA Norway
• Successful integration of Apotek Hjärtat
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Summary
• Continued positive development during the third quarter • Net sales +5.8%
• EBIT excluding non-recurring items +6%
• ICA Norway divestment
• Acquisition of Apotek Hjärtat
• Increased market shares in Sweden and the Baltics
• Our work with strategic priorities continues according to plan,
among others: • Increased PL share in Sweden and the Baltics
• Establishing new stores in Sweden and the Baltics
• Start building a leading position within Online
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ICA Gruppen’s
capital markets day
10 December at 13-17 for
analysts, investors and media
Spårvagnshallarna Birger Jarlsgatan 57A, Stockholm
Registration starts at 12.30
To join, please visit www.icagruppen.se/investors
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