Investor & Analyst Presentation · Investor & Analyst Presentation – December 2018 | page 3....

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


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.


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%


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


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)


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)


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


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


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


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%


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%


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


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


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


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%




Logistics2

Personnel3

Payment



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%


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%




Logistics2

Personnel3

Payment



38.0% 29.5%

29.9%

29.5%

2.2% 2.0%


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


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 .


» 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


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)


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


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


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


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


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

Investor & Analyst Presentation · Investor & Analyst Presentation – December 2018 | page 3....

Documents

Transcript of Investor & Analyst Presentation · Investor & Analyst Presentation – December 2018 | page 3....