zooplus ag fy 2019 results · 3/25/2020 · 1) total net market = online + offline market, based...
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INVESTOR & ANALYST PRESENTATION
ZOOPLUS AG
FY 2019 RESULTS
25 March 2020 – Munich – Dr. Cornelius Patt, CEO, Andreas Maueröder, CFO
SAFE HARBOR STATEMENT
2FY 2019 Results Presentation
This document includes supplemental financial measures that are or may be non-GAAP financial measures. These supplemental financial measures should not be viewed in isolation as alternatives to measures of zooplus’ financial condition, results of operations or cash flows as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently.
This document contains statements related to our future business and financial performance and future events or developments involving zooplus that may constitute forward-looking statements. We may also make forward-looking statements in other reports, in presentations, in material delivered to stockholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of zooplus’ management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond zooplus’ control, affect zooplus’ operations, performance, business strategy and results and could cause the actual results, performance or achievements of zooplus to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends. Further information about risks and uncertainties affecting zooplus is included throughout our most recent annual and interim reports, which are available on the zooplus website, investors.zooplus.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of zooplus may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. zooplus neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
3
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE – SAFE AND SUCCESSFUL
STABILITY OF OUR BUSINESS – SECURING OUR LOYAL CUSTOMER BASE
AVAILABILITY OF PRODUCTS AND SERVICES
ZOOPLUS OPERATES A HIGHLY RESILIENT BUSINESS MODEL, WITH SOLID CRISIS MANAGEMENT IN PLACE
AND EXCELLENT POSITIONING IN EUROPEAN MARKET TO VENTURE THROUGH CURRENT ENVIRONMENT
SAFETY FIRST
4
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE SAFE AND SUCCESSFUL
Employee safety✓ Home-office mandatory, tech equipment in place✓ Confirmed and suspected cases handled by strict
HR-protocol
Fulfillment staff safety✓ additional safety and sanitary measures in our 11
FCs operated by our partners
Partner safety ✓ Reducing communication to telephone / video
conference
Customer safety✓ Product can be safely ordered directly to doorstep ✓ Customer communication on parcel delivery time;
no need to leave the house✓ COVID-19 FAQ on all our shop sites
Pet safety✓ Supporting the welfare by providing essential pet
products
SAFETY FIRST
5
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE - SAFE AND SUCCESSFUL
Management & staff✓ Daily sync of board members ✓ Communications & updates to staff by CEO✓ Crisis management team in place
Business model✓ Excellently positioned to manage distribution
across 30 European countries✓ No offline retail dependency and staff exposure to
customer contact✓ Loyal customer base – priority access to capacity
Infrastructure✓ Top-notch IT infrastructure for remote / home
office for all team✓ Cloud services in place for shop infrastructure
managed remotely
Operations✓ Running FC network at full capacity✓ Replenishment / Supply-chain management with
high-adaptability and quick responsiveness to crisis due to strong tech approach
✓ All FCs currently up and running, last-mile providers delivering parcels
Financial stability✓ Regular liquidity stress testing✓ Revolving credit facilities of EUR 50 m in place ✓ Monitoring currency expenses and currency
hedging in place✓ Clear priorities for cash and cost alignment✓ Ad spend on hold
STABILITY OF OUR BUSINESS – SECURING OUR LOYAL CUSTOMER BASE
6
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE - SAFE AND SUCCESSFUL
Product availability✓ Ensuring replenishment meets current product
demand✓ Reducing capacity around non-essential SKUs to
secure pallet space✓ Focus on stock availability has always been part of
our DNA to ensure positive customer experience✓ Alternative products for high-demand product
ranges in place ✓ Limiting bulk-purchasing to the necessary to ensure
equal availability for all in times of high demand
Service availability✓ All shop sites up and running✓ Customer service continues to be available and
enhanced social media customer communication
Management team in direct contact to key partners✓ Continued dialogue with our supplier and
logistics partners to ensure supply and delivery chain is not disrupted
✓ Working together on ensuring product and service availability for our consumers
AVAILABILITY OF PRODUCTS AND SERVICES
FY 2019 RESULTS
PRESENTATIONFY 2019 Investor & Analyst Call
SALES INCREASE BY 14% IN 2019
FY 2019 SALES GROWTH RATE WITHIN GUIDANCE RANGE
8
SALES (in € m)
o Sales driven by customer loyalty, own
brands and customer acquisition
o Solid year-on-year development
across all quarters in FY 2019:
o Q1 ´19 vs. Q1 ´18 +41m (+13%)
o Q2 ´19 vs. Q2 ´18 +43m (+14%)
o Q3 ´19 vs. Q3 ´18 +47m (+14%)
o Q4 ´19 vs. Q4 ´18 +52m (+14%)
FX-adjusted +14%
+14%
FX-adjusted +14%
+14%
368
419
Q4 2019Q4 2018
1.342
1.524
2018 2019FY 2019 Results Presentation
+ 182m + 52m
ZOOPLUS IS ONLINE MARKET LEADER IN EUROPE BY A
DISTANCE AND GRABBING SHARE FROM OFFLINE
9
ZOOPLUS SALES BY REGION (in € m)
444
248
171
137
119
116
105
94
90
DACH
NORDICS
IT
FR
CEE
BENELUX
PL
UK , IE
ES,PT
TOTAL MARKET SHARE1
+15%
+6%
+15%
+10%
+11%
+7%
+9%
+25%
+25%
6%
8%
9%
5%
3%
4%
6%
14%2
5%2
1) Total net market = online + offline market, based on Euromonitor International 2020 and management estimates; 2) change vs . prior disclosure due to updated market data reflecting an overall larger total market in Poland and CEE; zooplus continues to outperform total market growth in respective markets.
Pet supplies market1
EUR 25.3 bn
FY 2019 Results Presentation
other than PL
GROSS MARGIN STABILIZATION CONTINUED IN FY 2019
10
GROSS MARGIN1
29.0%28.7%
20192018
+0.3%p
(in % of sales)
FY 2019 Results Presentation
positive
Own Brands Portfolio:Increased sales share andmargin improvements
Margin stabilization across all other food segments
Lower sales shareof accessories / non-food
1) Gross margin = sales – cost of goods (as a % of sales)
neutral
adverse
OVERPERFORMING OWN BRANDS PORTFOLIO
GROWING TO SUBSTANTIAL SIZE
11
PRIVATE LABEL SALES FOOD & LITTER (in € m)
o High-margin business in the mid to
premium segment contributing to
gross margin increase
o Launch of first private label
veterinary nutrition brand in 2019
o Growth index own brands / food
1.8 (2019)
FY 2019 Results Presentation
65
88
120
162
210
20182015 2016 2017 2019
+34% CAGR
SALES RETENTION SLIGHTLY REDUCED
RETURN TO PREVIOUS HIGHS IS POSSIBLE
12
SALES RETENTION RATE1
95%
2018 2019
91%
-4%p
Transient
effects
o Trademark 94% Revenue
Retention took a temporary hit in 2019
o Issues:
o Temporary unavailability of offerings relevant
to customers (food / accessories)
o Relative loss of reach of Direct Marketing
o Loyalty tools drive future revenue retention
o Outlook: Revenue Retention is stabilising (Q3)
and recovering (Q4), trend continues
FY 2019 Results Presentation1) Sales retention (net, non-BMF)
ACQUISITION MOMENTUM IN 2019 CAME AT
SUBSTANTIALLY INCREASED COST
13
REGISTERED NEW CUSTOMERS (in k)
+22%(Registered new customers)
3,053
2018 2019
2,506
o New customer acquisition confirms
offline to online migration trend
o Per channel / activity:
o Google: cost per click increase
o Alternative channels: performance issues, KPIs below target
o 20-years campaign designed as brand building exercise
o Outlook: decreasing overall spend,
increase in CpNC efficiency
FY 2019 Results Presentation
12
17
20192018
+44%
(Advertising & Traffic acquisition cost)1
1) Based on all registered new customers acquired in respective year
LOYALTY DRIVEN REPEAT CUSTOMER BUSINESS
WITH STRONG CONTRIBUTION MARGIN
14
REPEAT CUSTOMER BUSINESS
NEW CUSTOMER BUSINESS
1,047
Contribution Margin 2Net Sales
112149
1,217
Net Sales Contribution Margin 2
295
3
1.1%
Net Sales Contribution Margin 2
307
-14
-4.6%
Margin improvement reflects:
o Yield management / reduction in number of loss-making orders
o Efficiency gains in logistics andadditional income from shipping fees
o Increased share of own brands
o Higher CpNC and lower in-year spend of new customers
o Reduced share of accessories
2019
4.9%
2019
2019 201920182018
xx% Contribution Margin 2 = (Sales – CoGs– variable logistics cost– CAC ), as a % of sales
10.7% 12.3%
FY 2019 Results Presentation
(in € m)
Net Sales2018
Contribution Margin 22018
CUSTOMER ACQUISITION COST OFFSET BY INCREMENTAL
CUSTOMER VALUE INCREASE WITH LIFETIME
15
1. Only accounts with repurchasing activity2. Acquisition cost per new account with repurchase activity, reduced by contribution margin of one time- purchasers in respective year3. CM = contribution margin = net sales – all variable cost (excl. acquisition cost) = 10.7%
2019-36 €
160 €
customer acquisition cost
CM cumulative 10 years plus
acquisition year
Net Sales / Account Net Sales / Account (Cumulated)
1,497 €182 €
a + 10 (proj.)
FY 2019 Results Presentation
1
2
3
CONSUMERS ARE SHIFTING TO MOBILE DEVICES
MOBILE USAGE FURTHER GAINING TRACTION IN 2019
16
THIS IS A SUBHEADLINEVISITS ORDERS
BASKET VALUECONVERSION RATE
58%
11%
22%
10%
51%
9%
26%
14%
Desktop Tablet Mobile - Web
Mobile - App
21%
15%
7%
16%
21%
14%
6%
16%
Mobile - Web
Desktop Tablet Mobile - App
57€ 57€51€ 54€57€ 58€
51€ 55€
TabletDesktop Mobile - App
Mobile - Web
FY 2019 Results Presentation
38%
10%
43%
8%
30%
9%
51%
10%
Desktop Tablet Mobile-Web
Mobile-App
2018
2019
2018
2019
2018
2019
2018
2019
o Mobile / Tablet / App
accounting for around 70%
of traffic
o Desktop traffic is highly
transactional
o App shows the strongest
growth rate
o Tablet leading in basket
value
17
WE ARE THE ONLY CATEGORY SPECIALIST WITH A
PAN-EUROPEAN LOGISTIC NETWORK
Fulfillment center (FC)
Hubs (DSP) - shown are selected relations from FC to Hub of DSPs
11 fulfillment centers across Europe
» all managed as one integrated pan-European network
» Flexibility and capacity for future growth
All FCs operated by partners
» Experts in their field, exclusive for zooplus in pet category
» No capex for zooplus
» Quick access to new technology
Intelligent network solution by zooplus-owned algorithms
» SKU allocation, replenishment, order routing and packing
» Optimization of transport distances
» Management of parcel allocation to FCs and DSPs
Optimized last mile distribution with external partners (DSPs)
» At least two DSPs for every country
» Focus on delivery speed and efficiency
» Customer communication for high transparency
FY 2019 Results Presentation
LOGISTICS AS KEY SOURCE FOR EFFICIENCY
GAINS
18
COST STRUCTURE (IN % OF SALES)
1) Figures for 2018 showing like-for-like IFRS 16 impact comparison 2) Impairment expenses on financial assets reclassified to payment3) Including LTI & SOP; own work capitalized reclassified to personnel
o Overall efficiency superior to online
and offline competitors
o Operational improvement and
network synergies drive logistics costs
down by 0.7%p
o Size and scaling effects allow for
continuous investments in IT and team
o One-off marketing spend in Q2/Q3
2019 for zooplus 20-year campaign
FY 2019 Results Presentation
3.3%2.2%Advertising / Marketing
18.3%19.0%
1.1% 1.1%
Logistics
Payment
IT/Admin2.5%3.3%
2018 2019
2.6%3.5%Personnel
1
2
3
EBITDA WITHIN GUIDANCE RANGE FOR FY 2019
FREE CASH FLOW REFLECTING WORKING CAPITAL OPTIMIZATION
19
EBITDA (in € m)
+ 3.2
(in € m) 11.8
2018
8.6
2019
EBITDA 2019 based on full IFRS 16 application; IFRS 16 impact to EBITDA € 13.9 m, of which € 10.9 m logistics (0.7%p) and € 3.0 m admin costs (0.2%p) go into depreciation;Free Cashflow based on full IFRS 16 application; Free Cash Flow impact in 2019 due to IFRS 16: EUR +14.3m
CASH FLOW 2019 (in € m)
€28m
€25m
Cash flow from operating activities
- €3m
Cash flow from investing
activities
Free cash flow
FY 2019 Results Presentation
20
NET WORKING CAPITAL IS ON THE WAY TO ZERO
RELATIVE TO SALES
NET WORKING CAPITAL (absolute in € m)1
27
3128
28
108
118
-97
2018
-125
2019
63
52
Trade payables
Inventories
Trade receivables
Supplier receivables
WORKING CAPITAL2 (relative to sales)
2015 201920182016 2017
7.1%
10.4%
8.7%
4.7%
3.6%
FY 2019 Results Presentation1) Based on year-end figures (31.12)2) WC = Inventory + prepayments + receivables (trade receivables + supplier receivables) - payables
o Increase in inventory turnover
o More efficient replenishment process
o Improvement in payment days
21
2019: A CHALLENGING YEAR WITH SIGNIFICANT
LEARNINGS AND IMPROVEMENTS
FY 2019 Results Presentation
Revenues € 1,524m (+ € 182m)
EBITDA € 12m ( + € 3m)
Positive Free Cash Flow(+ € 25m)
Own brand portfoliogrowing at 29%
Overall Margin improved to 29.6%
Transient issuesdenting revenue
retention
Best in class logisticswith further efficiency
gains
Marketing push led into
inefficient territory
Net Working Capital further reduced
KEY PRIORITIES &
GUIDANCE 2020FY 2019 Investor & Analyst Call
GROWTH WILL BE RETENTION DRIVEN, FOR 2020
AND BEYOND
232020 figure projections based on management estimate at time of FY 2019 publication and are not part of the full year 2020 guidance
FY 2019 Results Presentation
274
2018 Total 2019 Repeat 2019 New 2019 Total
1,2171,387
E 2020 Repeat
E 2020 New E 2020 Total
1,342
1,5241,432
>1,706
307
91%
91%
94%
3.05m€ 100 p.a.
2.6m€ 105 p.a.
SALES RETENTION RATE AS A MAJOR REVENUE PERFORMANCE DRIVER (PLANNING SCENARIO)
SALES (in € m)
24
STRATEGIC GROWTH DRIVERS
FY 2019 Results Presentation
Brand Portfolio
> 200 Pet food & accessories brands
zooplus & bitibapan-European retail brands
Own brands portfolio
Customer Experience
Digital experience
(Dig. Multichannel)
Delivery experience
Care experience
(Customer Care and Pet Care)
Loyalty Drivers
Product promotion & campaigns
Bonus Points
(auto enrol loyaltyprogram)
Savings Plan
(upfront payment, regular savings)
EARNINGS AND EFFICIENCY DRIVERS
25
FOUR KEY LEVERS WE ARE FOCUSING ON IN 2020
Portfolio Strategy&
Own Brands
Marketing
Efficiency
Scaling
Effects
21
3 4
FY 2019 Results Presentation
Upselling&
Basket Size
26
PORTFOLIO COVERAGE OF PET FOOD CATEGORY
FY 2019 Results Presentation
European Pet Food Market
super premium 60%premium
aspiring specialty trade
quality grocery
grocery
discount / white label
25%
55%
super premium
premium
aspiring specialty trade
specialty tradespecialty trade
quality grocery
20%
30%
10%
KEY PRIORITIES & STRATEGY UPDATE 2020
PUSH OWN BRANDS
27
VALUE CREATING PORTFOLIO OF OWN BRAND PRODUCTS RETAILED EXCLUSIVELY ON ZOOPLUS SHOPS
=
+
WE KNOW OUR CUSTOMERS
WE KNOW THE CATEGORY / TRENDS
WE ARE BEST POSITIONED TO OPERATE
A OWN BRAND PORTFOLIO
• Believe in brands
• Look for natural products and concepts
• Open for strong emotional messages
• Species-appropriate concepts
• Holistic concepts
• Special nutritional concepts
Own Brands sales shareof total food & cat litter
16%14%
Share of first order
sales
7%6%
Growth index own brands / food
1.81.6
FY 2019 Results PresentationFigures for FY 2019 and FY 2018
GUIDANCE 2020FY 2019 Investor & Analyst Call
FY 2020 GUIDANCE
ZOOPLUS IS WELL POSITIONED TO CONTINUE ON GROWTH PATH
29
FINANCIAL YEAR 2020 OUTLOOK
SALES
EBITDA
Taking into account effects related to COVID-19 known at the current stage, we expect:• Sales growth volume in the same range to prior year, corresponding a year-on-year
increase in sales of at least EUR 180 m
Due to efficiency losses in the total cost ratio, particularly in logistics, in connection to effectsrelated to COVID-19:• We expect EBITDA to come in below the prior year‘s level – but in the positive to neutral
range
FY 2019 Results Presentation
Q&AFY 2019 Investor & Analyst Call
MAJOR KPI’S PER QUARTER
31
Major KPIs Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019Sales (in € m) 363 364 378 419 1524Δ vs. PY 12.6% 13.5% 14.1% 14.0% 14.0%
Private label growth vs. PY 29% 29% 29% 29% 29%
New customer count (in k) 825 794 825 865 3.309t/o registered new customers (in k) 746 723 761 823 3.053t/o unregistered new customers (in k) 79 71 64 42 256
Sales retention (net, Non-BMF) 93% 92% 91% 91% 91%
Total Margin 28.8% 29.4% 29.2% 30.9% 29.6%Cost ratio 28.2% 28.8% 28.6% 29.7% 28.8%
EBITDA (in € m) 2.2 2.3 2.2 5.1 11.8EBITDA 0.6% 0.6% 0.6% 1.2% 0.8%
FY 2019 Results Presentation
PROFIT & LOSS
FY 2019
32
in € m2019 2018
abs % abs %
Sales 1523.7 100.0% 1341.7 100.0%Other income 9.5 0.6% 8.6 0.6%Cost of materials -1082.1 -71.0% -956.8 -71.3%Personnel costs -53.2 -3.5% -44.3 -3.3%Other expenses -386.1 -25.3% -340.6 -25.4%
thereof logistics / fulfillment -278.6 -18.3% -263.8 -19.7%thereof marketing -50.9 -3.3% -29.1 -2.2%thereof payment -16.7 -1.1% -14.2 -1.1%thereof other costs -39.9 -2.6% -33.6 -2.5%
Earnings before depreciation, interest and taxes (EBITDA) 11.8 0.8% 8.6 0.6%Depreciation -26.3 -1.7% -10.1 -0.8%Financial income 0.0 0.0% 0.0 0.0%Financial expenses -1.4 -0.1% -0.8 -0.1%
Earnings before taxes (EBT) -15.9 -1.0% -2.3 -0.2%Taxes on income 3.8 0.3% 0.2 0.0%
Consolidated net result -12.1 -0.8% -2.1 -0.2%Differences from currency translation -0.1 0.0% -0.7 -0.1%Hedge reserve -0.2 0.0% 0.3 0.0%
Items that may be relclassified subsequently to profit or loss -0.3 0.0% -0.4 0.0%Comprehensive income -12.3 -0.8% -2.5 -0.2%
Earnings per share in €basic -1.69 - -0.29 -diluted -1.69 - -0.29 -
FY 2019 Results Presentation
BALANCE SHEET
FY 2019
33
Equity and Liabilities
in € mDec. 31st.
2019Dec. 31st.
2018*Δ abs
A. Equity
I. Capital subscribed 7.1 7.1 0.0
II. Capital reserves 102.8 100.8 2.0
III. Other reserves -2.0 -1.8 -0.3
IV.Profit and Loss carried forward
-7.2 4.9 -12.1
Total equity 100.8 111.1 -10.3
B. Non-current liabilities 61.8 41.4 20.4
C. Current liabilities
I. Accounts payable 125.1 99.7 25.3
IIDerivative financial instruments
0.4 0.1 0.3
III. Other current liabilities 31.8 25.1 6.7
IV. Contract liabilities 14.0 12.0 2.0
V. Tax liabilites 0.2 0.1 0.1
VI. Finance lease 20.4 9.8 10.7
VII. Provisions 6.5 2.6 4.0
Total current liabilities 198.4 149.3 49.1
361.0 301.8 59.2
Assets
in € mDec. 31st.
2019Dec. 31st.
2018*Δ abs
A. Non-current assets
I. PP&E 5.5 55.9 -50.4
II. Right-of-use assets 81.0 0.0 81.0
III. Intangible assets 12.8 14.2 -1.4
IV. Deferred tax assets 3.6 0.0 3.6
Total non-current assets 102.9 70.0 32.8
B. Current assets
I. Inventories 117.7 107.6 10.1
II. Advance payments 0.0 0.4 -0.4
III. Accounts receivable 27.7 28.1 -0.4
IV. Other current assets 47.7 35.2 12.6
VI. Tax receivables 0.6 0.9 -0.2
VIII.Cash and cash equivalents
64.3 59.5 4.8
Total current assets 258.1 231.7 26.4
361.0 301.8 59.2
* The previous year's figures have been adjusted. Please refer to section 2.1.1 of the notes to the consolidated financial statements.
FY 2019 Results Presentation
CASH FLOW STATEMENT
FY 2019
34
Cash Flow 2019
in € m 2019 2018*
EBT -15.9 -2.3
Cash flow from operating activities 28.1 21.7
Cash flow from investing activities -3.2 -7.3
Free cash flow 24.9 14.3
Cash flow from financing activities -20.1 -6.1
Currency effects on cash and cash equivalents 0.0 0.0
Net change of cash and cash equivalents 4.8 8.3
Cash on hand, bank deposits 64.3 59.5
* The previous year's figures have been adjusted. Please refer to section 2.1.1 of the notes to the consolidated financial statements.
FY 2019 Results Presentation
Q&AFY 2019 Investor & Analyst Call