capital markets daymarket trends 1-2 % long-term growth ... 2016 –2018 with full ebit-effect from...
TRANSCRIPT
Capital Markets Day
Introduction
Digitalisation
Streamlining central warehouse
Break at 10.00
International strategy
Supplier consolidation
Business development &
Innovation
Financial development
Contents Capital Markets Day
Group Management
Magnus Johansson President and CEO
Marcus Larsson
Executive Vice President
Morten BirkelandManaging Director
Sørensen og Balchen
Örjan GrandinSupply Chain Director
Per HedblomCFO
David LarssonCOO
Pehr OscarsonManaging Director MECA
Scandinavia
The difference
between brand-
dependent and
brand-independent
players has
increasingly been
erased
Consolidation in
Europe – to achieve
profitability through
synergies
Demand for a higher
degree of technical
expertise and
advanced equipment
The average age of
the European car
fleet
is increasing
Shortage of
competence –
mechanics
The car – a
smartphone on four
wheels, Telematics,
Digital services
Market trends
1-2 % long-
term growth
More cars
Car pools
Electric
/Hybrid cars
E-commerce
Potential for increase in cars older than three years in Sweden coming years
Strong sale of new
cars in recent years
gives potential for
increase in carpark
older than three
years when these
cars become older
Such increase of
carpark > 3y requires
that sprapping does
not increase from
current levels
3 706 268 3 751 475 3 844 722 3 861 298
695 084 743 998740 797 807 765
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
2011 2013 2014 2015
Carpark Sweden
Older than 3 years Up to 3 years
CAGR 2011-2015
Total:
1,49%
3,83%
1,03%
33%
817Stores
85
Workshops
50%
1025Stores
187
Workshops
Sørensen og balchen
13%
246Stores
70
Workshops
MekonomenMECA
Overview group companies
Vision
We are the car owner’s first choice
and strive for a simpler and more
affordable CarLife
Strategic focus
We lead the development
in the industry
We have the best supply
chain in the industry and
the optimum
infrastructure for our
business
We have the best
purchasing terms in the
industry
We have differentiated
concepts to meet our
B2C & B2B customers´
various needs
We have the customers in
focus in everything we do
The workshop as the
focus for growth – We are
the best workshop
partner
Focus areas
Digitalisation Customer focus B2C & B2B
Wholesale optimisation/ Automation Business development & Innovation
The company's development & growth
Utveckling
Technical support & product information- Competent employees- Technical support B2B
- Catalogue – ”Level good”
Price worthiness- Price benchmark
- Own brands
Assortment- Competence product & category
- Same suppliers as the car manufacturers- ProMeister & Carwise- Workshop equipment
- Own wholesale operation
Availability- Wide workshop- & store network
- E-commerce B2C + B2B- Mekonomen/MECA Direct
- Lasingoo
Services & Offers- Service & repairs of all car brands
- Efficient logistics- Courtesy car
- Car glass- Fleet agreements
- Assistance Insurance - Lasingoo
Customer service- Customer rating
- Mystery shopping
Quality- ProMeister Academy
- Guiding system- “Godkänd bilverkstad”
(certification “Approved workshop”)- Mystery Shopping
The company's further initiatives to drive the development and growth
Technical support & product information- Group common technical support B2B
- Catalogue –”level best in class”
Price worthiness- The most affordable workshop
offers in the industry- Modern price system
- Store optimisation- Supplier consolidation
Sortiment- Implementation of a new warehousecontrol system for local warehouses
- Modern, automated central warehouse- One stop shop supplier to workshops
Availability- Meeting the customer in physical and
digital channels- Digital workshop bookings – fixed price
- New workshop concepts solving more ofthe car owners needs
- Shop in shop in the workshops
Services & Offers- Continued customer based business
development- 1-2-1 marketing
Customer service- The highest ambassador Index
in the industry
Quality- ProMeister Solutions
Focus
The company - impacts
3D-printing
Self-driving cars
Telematics
Private leased cars New digital services linked to car ownership
Carsharing
Digitalisation
Target image
Automatedcentral warehouse
Digital transactions
Halve the number of
manual moments from
purchasing to the end-
customer
Digitalisation
PIM
Modernisedproductinformation flow- ”Best in class”
Digital services
Booking online at fixed prices
1-2-1 marketing
M.e-comInterface e-commercetowardscustomers B2C & B2B – new standard in the industry for managing orders and bookingonline
Business develop-ment & Innovation
Customer value
Automation central warehouse
Streamlining flow ofgoods
A significant part
of today´s B2B-
orders are digital
Streamlining of central warehouse
Central warehouse - vision
The industry´s most efficient business
flows with optimum infrastructure for our
business
Central warehouse – current situation
Central warehouses in Eskilstuna, Strängnäs
and Oslo. Regional warehouses in Gjövik,
Oslo, Odense, Luleå and Helsinki
Logistics structure in addition to stores
Older automations in parts of the flow in
Strängnäs and Eskilstuna
Estimated investment SEK 250 M during
2016 – 2018 with full EBIT-effect from
savings of SEK 50 M from 2020 and
reduction of tied up capital of SEK 80 M as
of 2020
Central warehouse – streamlining
Streamlining by centralisation of the central
warehouses in Sweden, one management in
the group (Sørensen og Balchen not
included)
Expansion of an automated central
warehouse next to existing central warehouse
in Strängnäs
Future flow of goods – streamlining regional warehouses
Central warehouses
Regional warehouses
Stores Workshops
Integration forward
Central warehouse – advantages in addition to savings
Lower level of tied up
capital, as a consequence
of centralisation, is made
possible by the
automation
Enable to respond to
changed customer
demands
Prepared for future
growth
Positive effects in sales
force
- Increased availibility
- Fewer returns and order picking per
customer
Increased
competitiveness
- The industy’s leading supply chain
model in existing markets in the Nordic
region
- Strength relative to the consolidation in
Europe
Model which supports
e-commerce B2C
Central warehouse
Letter of intent signed with the automation supplier
Next step
- Refine technology solution and timetable
- Negotiate and sign the final contract with the automation supplier
- Union negotiations with affected parties
- Building permit documents and contract building extension
Internationalstrategy
International strategy
Continued ambition to participate in the European consolidation of our
industry
Conditions
Acquisitions at right price,
significant purchasing
synergies to be achieved
Europe in focus
(Number of countries is not a
priority)
International strategy - ProMeister
Own premium spare part assortment with over 5000 articles
Sales growth SEK 0-500 M since 2013. Represents today 13% of total
consolidated sales of spare parts - long-term target is 30%
5 years warranty - extensive quality work
International strategy - ProMeister
Export of ProMeister spare parts into new markets with focus on specific
customers rather than countries
Supplier consolidation
• Acquisition MECA & Sørensen og Balchen
• Growth - Gain
Synergy projects
• Developing our own sparepart assortment
• Sales growth: SEK 0 – 500 M from 2013
ProMeister
spare parts• Fewer suppliers will
account for a larger part ofthe group assortment
• Rationalisation of articles
Focus on supplierconsolidation
Supplier consolidation
160 suppliers account for approximately 75 % of the Mekonomen
Group´s assortment
Business development& Innovation
Heavy vehicles – market
80 000
82 000
84 000
86 000
88 000
90 000
92 000
94 000
96 000
2013 2014 2015
Numbers of heavy vehicles (Trucks and buses over 3.5 tonnes) in traffic in Sweden and Norway
Sweden Norway
Source: SCB, OFV
IAM20-25%
Volvo Trucks30-35%
Scania Sweden30-35%
Others OES5-8%
Segments of the Swedish market for heavy vehicles per channel
IAM Volvo Trucks Scania Sweden Others OES
Heavy vehicles – segments of the Swedish aftermarket
Swedish aftermarket for spare parts to heavy vehicles, estimated at SEK 5.5-6.5 billion per
year (End customer prices excl. VAT and labor costs)
Source: Mekonomen analysis
Heavy vehicles – Nobina
First contract in the business area heavy vehicles - MECA enters a sales cooperation with
Nobina. Supply of batteries for Nobina's vehicle fleet and depots in the Nordic countries
(Sweden, Norway, Denmark and Finland). Successive start up in the Spring of 2016
Vehicle fleet of buses in the
Nordic countries
About 3500 buses
Short lead times with fast and
reliable deliveries important
for the customer segment
MECA's logistics,
business model
and geographical
spread is a
strength
MECA Norway is
already active
within heavy
vehicles in the oil
industry
Electric cars
Number of electric vehicles
Norway: 50 000 + (2015)
38 652 (31 Dec 2014)
Total number of cars:
2 591 300 (31 Dec 2015)
Electric / plug-in hybrids
more common in Sweden
than pure electric vehicles
(52 513 on 31 Dec, 2015)
Number of electric vehicles
Sweden:
4 765 (31 Dec 2015)
2 172 (31 Dec 2014)
Total number of cars:
4 669 063 (31 Dec 2015)
The Norwegian market is one
with fastest development
Norway has introduced
extensive government
subsidies: purchase tax, VAT
rebates, road charges,
parking and bus lane which
affected the high pace of
development
Source: SCB, SSB
Electric cars
Examples of electric car components within the
existing range:
Brakes, Suspension, Steering gear (servo becomes
electrical), Shock absorbers (development of control
through the electric air pump), Drive shafts, Wheels / tires,
Body, Exterior parts, Electric components (connectors,
sensors, etc.), Cooling (electrically powered)
Examples of components and service that do not
remain at 100% electric car conversion:
Fuel system, Transmission, Cardan, Engine Parts,
Turbocharger, Starters, Clutch
Easier control and change of cabin filters instead of
replacing the spark plugs, timing belt, oil at car service
New components
Battery, battery packs, more advanced electrical
components
Slightly fewer components in an electric vehicle
compared to a car with a combustion engine - long term
the transaction involves specific update of the range with
new types of items and service needs.
Electric cars – Mekonomen Drammen
35
Financialdevelopment
Financial development
Revenue and operating profit
Operating profit Revenue
SEK M
0
100
200
300
400
500
600
700
3000
3500
4000
4500
5000
5500
6000
2011 2012 2013 2014 2015
SEK M
Financial targets
Overall goal To develop with good profitability and thereby create value growth for the shareholders
Growth goal To achieve annual sales growth of at least 5 per cent, as a combination of organic and acquired growth
Financial goals To annually achieve an operating margin in excess of 10 per cent
The equity/assets ratio shall not in the long term be less than 40 per cent
Net debt / EBITDA shall not in the long term exceed 2,0
Growth goal
To achieve annual sales growth of at least 5 per cent, as a combination of organic
and acquired growth
The market long-term
growth 1-2 %
Growth in sales to
affiliated workshops
(quality, availability,
catalogue, new concepts)
ProMeister Nordic region
and internationally
Complementary
acquisitionsNew business
Cash Flow
SEK M Negative impact of discontinued operation in
Denmark affected 2014 and 2015
Strengthened local stocks to achieve increased availability
and ProMeister which has had a negative impact on
cash flow
Long-term focus on strengthening cash flow, in addition to one-time effect
related to the central warehouse
528
413
573
439
-115
-134
0
100
200
300
400
500
600
700
Excludingdiscontinuedoperations in
2014
Discontinuedoperations in
2014
Total 2014 Excludingdiscontinuedoperations in
2015
Discontinuedoperations in
2015
Total 2015
Cash flow from operating activities
Currency impact
1% strengthening EBIT: + 8,5 SEK M
1% strengthening EBIT: - 9,0 SEK M
Percentage of goods purchased in Euro has increased from 33 per cent in 2014 to 37
percent in 2015
Gross margin
Positive factors
- Purchasing, the "third wave"- Price Compensation
- Increased sales in company-owned workshops
Negative factors
- Customer mix- Competitive pressure
- Temporary currency effects
57,6%56,1% 55,6% 55,6% 55,0%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
2011 2012 2013 2014 2015
Gross marginSEK M
Questions
We are the car owner’s first choice
and strive for a simpler and more
affordable CarLife