investor & analyst presentation · investor & analyst presentation – december 2018 | page...
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Investor & Analyst PresentationDecember 2018
Dr. Cornelius Patt, CEOAndreas Grandinger, CFO
Investor & Analyst Presentation – December 2018 | page 2
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, www.zooplus.de. 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.
Safe Harbor Statement
Investor & Analyst Presentation – December 2018 | page 3
European pet supplies market is a very attractive market
Pet supplies market in Europe 2008-2020e (gross sales € bn)
» Ownership of pets is on the rise in Europe
» Humanization of pets drives spending
» Market is resilient through economic cycles
» Consumables recurring revenue – subscription like
» No technology and fashion obsolescence risk
» Low product return rates
20 20 21 22 23 23 2425 26 26
29
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 … 2020e
Source: Euromonitor 2016 and zooplus estimation
CAGR +3% p.a.
Investor & Analyst Presentation – December 2018 | page 4
The online share is expected to continue to grow far beyond 2020
Current online share and long-term hypothesis (€ bn)
2014 2017 2020e
25 26
15-20%
80-85%
8-10%
Offline share
Online share
Total market (gross)
< 50%
Long-term
> 50%
> 30
Online market opportunity
> 15
Long-term growth potential of online should leave enough growth for zooplus after 2020
4-5%
95-96%
1 zooplus estimation; assuming successful shift of pet food grocery segment to online
1
29
92-90%
Investor & Analyst Presentation – December 2018 | page 5
Sales continue to grow super linear – high retention core of the growth path
1) in local currencies2015
711
319
2018e20172013
407
2012 2014
543
1,111
2016
909
+88
+136
+198
+202
+168
85%91%
94%93%1
92%94%1
28%31%33%28%30%Sales growth vs. PY
Repeat customer sales
New customer sales (1st year)
22%
93%93%1
21% –23%
9M:95%1
1,344 –1,366
+233-255
Investor & Analyst Presentation – December 2018 | page 6
zooplus reached No. 2 position in Europe in 2017 and is well on its way towards market leadership
Net sales and growth 2017 – European market (EUR bn)
Strategic goals
Close the gap towards the current number 1 in Europe
Working towards market leadership in the total market (online and offline)
Benefitting from all the advantages of size and market leadershipSource: Company data for 2017 figures; zooplus assumptions
n/a
1.0
1.1
1.7+ 6%
+22%
+7%
Online ~0.06
Online ~0.05
1
23 2)
1) Net sales estimated from gross sales 2) Includes services 3) amazon international growth rate
4 3) +22%
(+100 EUR m)
(+202 EUR m)
(+65 EUR m)
1)
Investor & Analyst Presentation – December 2018 | page 7
HU
Source: zooplus sales, unaudited data, growth rates compared to 9M 2017; market shares based on Euromonitor 2016 market data and zooplus estimation
96m
Total market 2017 23bn
Sales zooplus in 2017
DK, SE, FI, NO
D,A,CHCZ, SK, HU, RO, SI, HR, BG, TR, GR, LV, LT, EE
ES, PT
zooplus is the online market leader in all geographies of Europe – double digit sales growth in all regions in 9M 2018
NL, BE, LU
+27%
+21%(fx-adj.)
+24%
+22%
+22%
+39%
+16%
+21%
70m
124m
335m
62m
187m
66m
90m
1,111m
zooplus market share in 2017
6.2%
2.4%
5.1%
3.9%
3.7%
4.5%
7.0%
4.5%
4.9%
UK, IE
IT
FR, MC
Sales growth in 9M 2018
80m12.2%
+39%
PL
» Sales growth 9M 2018: + 23% (+23% fx-adjusted)
Investor & Analyst Presentation – December 2018 | page 8
Customer loyalty – the winning factor of the business model – is at very high levels
Retention rates – Cohort analysis – Sales (€ m)
Reading example: 2011 a = sales of 2011’s new customers in 2011 1) in local currencies
90 86 85 86 89 91 9255 46 45 44 46 46 47
100 62 56 55 56 56 56125 87 79 78 77 77
135 105 95 91 88
174 145 127 119
202 167 144
253217
271
2011 2012 2013 2014 2015 2016 2017
100%
84% 98%
62% 90%
70%
<=2009
2010 a+1
2011 a
2012 a
Ø 79%
Ø 85%
Ø 91%
2013 a
2014 a
91%
2015 a
78%
99%99%
101%
83%
Ø 94%Ø 93%1)
90%
99%
102%104%
104%
245319
407
543
711
2016 a
94%
83%
88%
96%
99%
100%101%
102%
909
86%
86%
94%
97%
99%
100%101%
100%
2017 a
Ø 93%Ø 93%1)
Ø 92%Ø 94%1)
1,111
Investor & Analyst Presentation – December 2018 | page 9
Account value and customer account retention increase with length of customer life
191
244270 285 291 290 295 312 331 345 360
a a+1 a+2 a+3 a+4 a+5 a+6 a+7 a+8 a+9 a+10
Projected sales per active account out of 2017 (in €)
Cumulated sales per account created over a+10 years: € 1,730
100%1) 79% 64% 57% 53% 50% 40%
Account survival rate2)
a: year of acquisition = 2017
1) customers with at least one consecutive purchase after first transaction2) Projected rate based on account retention rate of respective cohort3) Average projected share of remaining accounts based on account survival rate
Share of remaining accounts3)47% 45% 43% 42%
100%1) 79% 81% 89% 93% 94% 95% 95% 96% 96% 95%
191 192 173 163 154 144 142140 142 144 144 Sales per account created
Investor & Analyst Presentation – December 2018 | page 10
1997
164
Customer lifetime value is strongly positive and justifies stronger investment focus
Customer acquisitioncosts2
CM cumulative 5 yearsplus acquisition year
CM cumulative 10 yearsplus acquisition year
1 Only accounts with repurchasing activity based on cohort specific retention rate (incl. fx-effects)2 Traffic acquisition costs per new account with repurchasing activity3 CM = contribution margin = net sales – all variable costs (excl. acquisition costs) = 9.5%
2017a+5
projecteda+10
projected
1,017
1,730
2017 net sales per account in EUR (cum.)1
Investor & Analyst Presentation – December 2018 | page 11
Gross margin stabilization in Q2 2018 confirmed in Q3 2018
Q1 2018 Q2 2018 Q3 2018
in % of sales
1 Sales – CoGS
Gross margin1
27.1%
28.3%
» Less customer and transactional discounts
» Reduction of non-profitable orders
» Higher charges for shipping
− Changes in free-shipping thresholds
− Charges for 2nd parcel in an order
» Margin increase due to better sourcing
28.6%
Investor & Analyst Presentation – December 2018 | page 12
Long-term gross margin decline halted
2012 2013 2014 2015 2016 2017 9M 2018
in % of sales
1 Sales – CoGS; years prior to 2018 adjusted from published external figures to new IFRS 15
Gross margin1
37.4%
30.6%32.3%
35.8%
28.7% 28.5% 28.0%
Investor & Analyst Presentation – December 2018 | page 13
12% 13%Share of
total food
1.3 1.5Growth index
private label / food
4% 5%Share of
first order sales
Online private label business gains traction and should grow to 20% share of food by 2020
Further significant increase in private label share until 2020
Figures for 2016 and 2017
Investor & Analyst Presentation – December 2018 | page 14
zooplus investment mode will continue and further improve zooplus’ market position
» Defending high loyalty of existing customers» Acquisition of new customers
» New customer acquisition for high customer lifetime value» Increased investment into mobile
» Improved product and user experience» Improved internal processes and efficiencies
» Close white spots in the distribution network» Increase capacity and speed up delivery to customers
Competitive pricing
Marketing costs
IT product development
Private label
Improved strategic position and driver for further growth
1
2
4
5
Logistics
3
» Expansion of private label share» Development of new brands
Investor & Analyst Presentation – December 2018 | page 15
3.3% 3.3%3.2% 3.2%
19.7% 19.8%
1.7% 2.0%
9M 2017 9M 2018
Cost ratio in 9M 2018 impacted by stronger investment focus since H2 2017
Total margin1
1.0% 1.1% 1.0%
28.9% 29.4%
1 Gross margin + other income on sales 3 All in, including LTI & SOP
1.1%IT/Admin/ (incl. depreciation & interest)
Advertising/Marketing
Logistics2
Personnel3
Payment
Total margin & cost structure (in % of sales)
2 Logistics costs reclassified to depreciation and interests according to IAS 17
1.0%
29.4%
1.9%
28.6%
» Higher traffic acquisition spend
» Logistics costs impacted by start-up costs for new fulfillment centers
» Admin costs impacted by higher depreciation
» Higher personnel costs in perspective of investment in people in IT and other key functions
Investor & Analyst Presentation – December 2018 | page 16
3.1% 3.5% 3.5%3.0% 3.4% 3.3%
20.1% 20.3% 19.1%
2.0% 1.9% 2.0%
Q1 2018 Q2 2018 Q3 2018
Back on improved cost ratio path and positive EBT in Q3 2018
Total margin1
1.0% 1.1% 1.0%
29.2% 29.0%
1 Gross margin + other income on sales 3 All in, including LTI & SOP
1.1%IT/Admin/ (incl. depreciation & interest)
Advertising/Marketing
Logistics2
Personnel3
Payment
Total margin & cost structure (in % of sales)
2 Logistics costs reclassified to depreciation and interests according to IAS 17
1.0%
27.5%
1.9%
29.5%
» Improved value per parcel with positive impact on logistics costs
» Further progress in routing efficiencies in logistics network
» Scale in IT/Admin, although increasing depreciation
30.1%
28.9%
EBT margin- 1.7% 0.5%-1.1%
Investor & Analyst Presentation – December 2018 | page 17
4.7% 3.1% 3.5%
3.8%3.2% 3.3%
24.1%20.3% 19.1%
4.8%
1.9% 2.0%
TY 2012 Q3 2017 Q3 2018
Cost efficiency and cost control continue to be major focus points
Total margin1
1.5%1.0%
38.8%
29.0%
1 Gross margin + other income on sales 3 All in, including LTI & SOP
1.1%IT/Admin/ (incl. depreciation & interest)
Advertising/Marketing
Logistics2
Personnel3
Payment
Total margin & cost structure (in % of sales)
2 Logistics costs reclassified to depreciation and interests according to IAS 17
38.0% 29.5%
29.9%
29.5%
2.2% 2.0%
Investor & Analyst Presentation – December 2018 | page 18
29%
40%43% 41%
48%43%
Comparison of cost structure – significant advantage for zooplus
Cost ratio - selected competitors
Source: annual reports 2016 – Fressnapf 2015: all costs except for costs of goods sold, including depreciation and interest
Cost advantage for zooplus of more than 10%-points
Investor & Analyst Presentation – December 2018 | page 19
Strong profitability of repeat customers business invested to grow the business with long-term perspective
Repeat customer and new customer contribution (€ m)
253 28% - 5 - 2%656 72% 23 + 4%
New customers(sales in the year of acquisition)
Repeat customers(consecutive year’s sales)
2016
Sales % oftotal z+
EBT EBT-margin
Sales % oftotal z+
EBT EBT-margin
271 24% - 17 - 6%840 76% 21 + 3%2017
Reduction of profit margins in 2017 resulting from deliberate decision of stronger investment focus to improve overall zooplus strategic position and long-term valuation .
Investor & Analyst Presentation – December 2018 | page 20
» All centers managed as one integrated pan-European network
» All FCs operated by partners» Capex light approach» SKU allocation, replenishment,
order routing and packing algorithms intellectual property of zooplus
2013
2015
Fulfillment center (FC)
2009
2015
2016
2017/18
2000/2011
zooplus pan-European logistics network is a fully integrated flexible network
2017
2017
Planned FC’s for 2018
2018
2019e
2018
Investor & Analyst Presentation – December 2018 | page 21
zooplus logistics – significant expansion of pan-European network in 9M 2018
» Size of UK FC tripled in Q2 incurring one-off costs and reduced efficiency for transition period
» New FC Poland started end of September 2018 – 40,000 sqm
» New FC Spain started in September 2018 – closing of white spot in network and strong improvement of delivery speed to customers
» New FC Spain operated by 4th FC partner – XPO Logistics
Coventry (UK)
Krosno (PL)
Madrid (ES)
Investor & Analyst Presentation – December 2018 | page 22
Distribution to the customer with the leading local last mile providers
» Last mile distribution with external partners (DSPs)
» zooplus operates approx. 60 relations of line hauls (trunk) and direct DSP connections
» At least two DSPs for every country offered for better customer service
» Management of parcel allocation to FCs and DSPs by zooplus owned algorithms
» Focus on delivery speed and efficiency
2013
2015
Fulfillment center (FC)
2009
2015
2016
2017
Hubs (DSP) - shown are selected relations from FC to Hub of DSPs
2000/2011
2017
2017
Investor & Analyst Presentation – December 2018 | page 23
Example Cat‘s Best (cat litter): article flow between fulfillment centers and country of destination for a period of three months
zooplus logistics system is an intelligent network solution between fulfillment centers and destination countries
Country ofdestination
Criteria for choice of logistics center1:
» No. of products in parcel
» Top seller/long-tail
WRO
HOE
TIL
CHA
PL
DE
IT
FR
NL
ES
ANR
BHX
SXBGB
Fulfillment center
» DSP chosen
» Available stock
1 selective
Investor & Analyst Presentation – December 2018 | page 24
Operating cash flow continues to be positive – further improvements in working capital
Cash flow (€ m)
Cash flow fromoperatingactivities
Cash flow frominvestingactivities
Free cash flow2.5 %
9M 2018
20.4
-6.1
3.1 %
14.3
Major focus on working capital and operating cash flow improvements with main drivers:
» Inventory turn
» Payment days
Investor & Analyst Presentation – December 2018 | page 25
The planned growth should go with a positive operating cash flow
Working capital development in % net sales
9.5%
8.1%
6.3%5.1%
2014 2015 2016 2017
» Increase in inventory turnover
» More efficient replenishment process
» Improvement in payment days
Constant working capital in 2018 implies a further reduction to around 4.2% of sales, for 2019 to around 3.4% of sales
Investor & Analyst Presentation – December 2018 | page 26
Sales and EBT guidance for full year 2018
Guidance
Profit guidance 2018 based on current FX levels.
EBT (€ m)Sales (€ m)
2018e +21 to +23%- 0.5 to + 0.5%
of net sales1,344 to 1,366+ 233 to + 255 vs. 2017