investor presentation - otto group · pdf fileversand“ in 1949, the otto group has been...

Investor Presentation30 May 2017

Investor Presentation 30 May 2017

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Disclaimer

2

This presentation has been prepared and issued by Otto (GmbH & Co KG) and is intended for

professional customers and institutional investors. The information in this presentation is

based on data obtained from sources considered to be reliable. No representations or

warranties, expressed or implied, are made by Otto (GmbH & Co KG) with regard to the

accuracy or the completeness of the information contained in this presentation and any liability

therefore (including in respect of direct, indirect or consequential damages) is expressly

excluded.

Further, the information given in this presentation contains predictions which are based on

current assumptions and forecasts. Such predictions are subject to known as well as unknown

risks, uncertainties and influences which may lead to a business development, final results and

a financial situation which deviate from those given in the estimates. Otto (GmbH & Co KG)

does not assume any obligation to update any forward-looking statements.

This presentation is for information purposes only. It is not intended to be and should not be

construed as an offer or solicitation to buy or sell any of the securities or issues mentioned in

this presentation.


Agenda

1 The Otto Group at a glance

2 Financial review

3 Strategy and outlook

4 Summary

3 Investor Presentation 30 May 2017

The Otto Group is one of the world’s largest online retailers

Founded as the mail-order company “Otto Versand“ in 1949, the Otto Group has been a family business since its foundation

Today, the Otto Group consists of 123 major companies operating in more than 30 countries in Europe, North and South America and Asia

The Otto Group is divided into three strategic segments: Multichannel Retail, Financial Services and Services

Currently, the Otto Group employs approximately 50,000 people

The Otto Group is one of the largest online retailers worldwide


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1950s and 1960s

1970s

~2000s to present

1980s and 1990s

Foundation as a mail order business

Development of the segments

Financial Services and Services

Internationalisation of the Otto

Group

Transformation and innovation in

the e-commerce age

1949

Werner Otto established the “Otto

Versand” mail-order business

1950

The first catalogue is published

1969/74

Establishment of the Financial Services

segment with the foundation of Hanseatic

Bank and EOS Group

1972

Development of the Services segment with

the foundation of Hermes Versand

Services

1974-1998

Expansion to France, UK, the Netherlands,

Japan, Spain, Austria, Italy, Hungary,

Switzerland, USA

1987

Otto is the world‘s largest mail order

business

2010/2011

Internet sales exceeded catalogue sales for

the first time

2015

Dr. Michael Otto transfers majority stake to

Michael Otto Foundation

2016

Trend towards mobile commerce: Mobile

exceeds desktop traffic for the first time

2017

Alexander Birken takes over as 5th CEO in

the company’s history

Otto Group: A success story for more than 65 years

Werner Otto

(1949-1966)

Günther Nawrath

(1966-1981)

Hans-Otto Schrader

(2007-2016)

Dr. Michael Otto

(1981-2007)CEO Alexander Birken

(since 2017)


http://www.hermes-logistik-gruppe.de/HLG/wg_hlg.nsf/ContentByKey/KGRE-6M9BX6-DE-p

http://www.hermes-logistik-gruppe.de/HLG/wg_hlg.nsf/ContentByKey/KGRE-6M9BX6-DE-p

More than 98% of the shares in Otto (GmbH & Co KG)

are owned by members of the Otto family and by the

Michael Otto Foundation

Dr. Michael Otto transferred his majority stake to the

“Michael Otto Stiftung”, a non-profit foundation, in 2015.

He continues to have influence through his position as

the chairman of the Foundation Board

As a family-run business, the Otto Group follows a long-

term oriented business strategy

The Otto family pursues a conservative dividend policy

Otto (GmbH & Co KG) serves both as holding company

and as the operating entity for OTTO, the Otto Group’s

company with the highest sales

6

Otto (GmbH & Co KG)

Otto family and Michael Otto Foundation (> 98%)

Multichannel

Retail

Financial

ServicesServices

OTTO Aktiengesellschaft

für Beteiligungen

GSV Aktiengesellschaft für

Beteiligungen

Ownership position of the Otto family


7

Sustainability is part of the Otto Group’s core values

• Sustainability has been a guiding principle for the Otto Group since the 1980s

• Our family owners are also committed to sustainability with activities outside the Otto Group,

e.g. via the Michael Otto Foundation for Environmental Protection

Sustainability is a matter of conviction to our family owners

• Reconciling economic goals with social and ecological sustainability is a central part of the

shareholders’ mandate to the Executive Board

• All members of the Executive Board are incentivised to reach the Group’s Corporate

Responsibility targets

Corporate Responsibility is a top-management task


Revenue by region 2016/17

8

Germany

61.5%

Europe(excl. Germany /

Russia)

19.8%

Asia and other

regions

1.9%

Russia

2.1%

North

America

14.6%

Besides Germany, the Otto Group is present in more than 30 countries

International market presence

The international setup provides important diversification benefits

The Group includes 123

major companies and is

present in over 30 countriesLargest online shop for fashion

and lifestyle in Germany (otto.de)

More than 100 venture

capital investments


Multichannel Retail

A diversified business: The Otto Group is a globally active group of retailers and retail-related service providers

Services(Logistics, procurement and other

retail-related services)(E-Commerce, catalogue sales and retail stores)

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Financial Services(Receivables management,

innovative financial services)


Multichannel Retail

Domestic and foreign retailers with three

distribution channels: e-commerce,

catalogue and over-the-counter retail stores

Product range includes fashion, shoes and

lifestyle articles, furniture and home

accessories, toys as well as electronics,

sports and leisure goods

Broad brand portfolio with diversification

across countries, customer groups and price

ranges

E-Commerce is the main growth driver

Financial figures for the segment

10

In mEUR 2016/17 2015/16

Revenue 9,819 9,588

EBITDA 403 433

EBITDA margin 4.1% 4.5%






E-Commerce is the main growth driver

In FY 2016/17, the Group significantly increased online revenues by 10% on a like-for-like

basis. E-commerce revenues now stand at 7 billion EUR

E-Commerce is by far the most important distribution channel of the Otto Group,

representing 71% of the Group‘s retail revenues in FY 2016/17. The operating entity OTTO

(otto.de) generates over 90% of its overall revenues online

Strong trend towards mobile commerce: Mobile already accounts for more than 50% of

traffic at the Otto Group’s online shops

Revenue by distribution channel in the Multichannel Retail segment

11

E-Commerce

Catalogue

OTC retail

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

38%31%

44%

35%

28% 24% 20%

57%48% 53%

43%

61%65%

68%

15% 12%13% 12% 11% 11% 12%

71%

16%

13%


Financial Services

Comprises retail-related financial services with a

focus on debt collection and receivables

management

Segment mainly characterised by the EOS Group

In addition, minority shareholdings in Hanseatic

Bank and Cofidis Group, which specialise in

consumer credit

The Financial Services segment is largely

independent of the Multichannel Retail segment.

More than 95% of revenues are generated with

customers outside the Otto Group


12

In mEUR 2016/17 2015/16

External revenue 732 678

EBITDA 320 233



The Financial Services segment is dominated by the EOS Group, an international leader in receivables management.

EOS Group: International presence in more than 25 countries

13

Established by the Otto Group

in 1974 as Deutscher Inkasso-

Dienst (DID)

The company operates under

the EOS brand since 2000

Presence in more than 25

countries via 60 operating

companies

More than 20,000 B2B

customers worldwide trust in

the EOS Group

EOS’ core business is receivables management. Its services include the purchase of non-performing receivables,

fiduciary debt collection and business process outsourcing

Target industries are the banking sector, utilities and the telecommunications market, as well as the public sector,

real estate, mail order and e-commerce

For many years the EOS Group has continuously maintained an “A” rating from rating agency Euler Hermes


Services

Service providers specialising in logistics, mainly

operated under the Hermes brand

Focus on parcel distribution and 2-man-

handling. In addition, further services along the

value chain from procurement to fulfilment

In Germany, Hermes is the largest alternative to

Deutsche Post in the field of home delivery to

private customers and has over 14,000

franchised parcel shops

International market presence with logistics

providers in the UK, France and Russia


OTTO International

14

In mEUR 2016/17 2015/16

External revenue 1,961 1,838

EBITDA 90 60



Agenda


2 Financial review


4 Summary


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Highlights of financial year 2016/17

EBT in mEUREBITDA in mEURRevenues in mEUR

12,104

2015/16

12,512

2016/17

Growth at constant

scope of consolidation:

+5%

+3.4%

639

730

2015/16 2016/17

+14.3%

5% like-for-like growth exceeds target

Turnaround completed with positive results on all earnings levels

Strong improvement in profitability

187

2015/16

262

2016/17

+40.1%


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Key drivers for FY 2016/17 performance

Strong

performance of

key

subsidiaries

across all three

segments

Growth rates of the largest group companies:

Divesture of 3SI Commerce (legacy 3 Suisses retail business) successfully

completed

• In Multichannel Retail:

• In Financial Services and Services:

+6%

+11% +5%

+6% +11%

Strong growth

in e-commerce

and mobile

commerceStrong shift towards mobile commerce: First year with more traffic from

mobile devices than desktop computers

E-Commerce revenues grow by 10% on a like-for-like basis and reach 7.0 bn EUR

1

2

Continued

active portfolio

management

3

Continued focus on companies with sustainable future prospects going forward


The key credit ratios show the Otto Group’s financial solidity

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2016/17 2015/16

Net financial debt* (in mEUR) 1.432 1.317

F

Net financial debt / EBITDA* 2.0x 2.2x

Net financial debt / Equity* 1.1x 0.9x

Equity / Total assets (in %)* 17.5 21.4

Discontinuation of French activities and continued investments key drivers behind increase in debt

Net debt / EBITDA ratio improved due to increase in profitability

Equity ratio affected by increase in pension obligations due to fall in interest rates

Improvement in Net debt / Equity ratio targeted for the medium term

* All figures in “FS@equity“ view (Financial Services segment accounted for at equity) in order to allow comparability with pure retail and service peers


Key figures over time

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The Otto Group has shown stable and profitable growth for many years…

Figures based on the most current financials as published in the

Otto Group’s Annual Reports. No restatements of prior years.

3SI Commerce

discontinued

*

…and has been able to keep key ratios relatively stable despite restructurings over the past years.


Diversified maturity profile Access to a wide range of funding sources

-

100

200

300

400

500

2017 2018 2019 2020 2021 2022 2023 2024-2034

Diversification of funding sources and a balanced maturity profile are key to the Otto Group’s financing strategy

Access to a variety of funding sources, including a large and diversified bank group and a proven track record of

issuance in the capital markets

Well diversified maturity profile

Financial mix: Medium and long-term loans, ABS, commercial paper as well as longer term bond issues

Strong liquidity buffer: More than 1 bn EUR in committed credit lines (large majority undrawn)

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Long-term Capital Market Debts

(Bonds)

Short-term Capital Market

Debts (incl. CP)

Long-term bank loans

Short-term bank loans

Other

Split of drawn financial debt as of 28 Feb 2017Maturities of long-term debt (excl. short-term drawings and commercial paper) as of 28 Feb 2017


Agenda


2 Financial review


4 Summary


Outlook: The strategic priorities for the medium term are clearly defined

Expect further growth at sustained profitability

Clear focus on e-commerce as main growth driver

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Continued active portfolio management, potentially further targeted disposals

Growth and investments across all three segments:

Multichannel Retail: Focus on platforms/ecosystems (otto.de, Aboutyou) and

brands/verticals (Bonprix, C&B, Witt)

Financial Services: Focus on debt collection and receivables portfolios (EOS)

Services: Focus on parcel distribution and 2-man-handling (Hermes)


1

2

3

4

Agenda


2 Financial review


4 Summary


Summary: Key investment considerations

Commitment from

family owners

Diversification

Market leadership in

strong growth sector

Financial solidity

Long-term orientation

Family-owned company with a long tradition, a history of stable

management and family owners that are committed to the business

Diversification across countries, segments, brands, product ranges

and customer groups. Active portfolio management ensures strategic

coherence

Among the world’s largest online retailers, ideally positioned to benefit from

the growth of the e-commerce sector across all three segments

Solid financial profile, supportive bank group, ample liquidity and proven

access to the capital markets

Long-term orientation of the owners allows investments in infrastructure

and innovations, which will be the basis for future growth

24

Innovation and

transformation

Track record of anticipating trends and launching innovations. Successful

transformation from catalogue to e-commerce business


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In case of questions, please contact:

[email protected]

Otto (GmbH & Co KG)

Werner-Otto-Straße 1-7

22179 Hamburg

www.ottogroup.com

Contacts


mailto:[email protected]

investor presentation - otto group · pdf fileversand“ in 1949, the otto group has been...

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