Winning in a changing market

Capital Markets Day15 December 2016

Per Strömberg, CEO ICA Gruppen

Winning in a changing market


15/12/2016 ICA Gruppen CMD 2016 2

We have a strong foundation for future growth

Rapidly changing retail market

Clear strategy to deliver on our targets

DIVESTMENTS:

• Kjell & Co, 2014

• Forma Publishing Group, 2014

• ICA Norway, 2015

• Cervera, 2015

• Apotek Hjärtat, B-2-B, 2015

• inkClub, 2016

• ICA Real Estate Norway, 2017

ACQUISITIONS:

• Apotek Hjärtat, 2015

• Hemtex (Acquisition of minority shares, now wholly owned), 2015

NEW BUSINESS:

• ICA Insurance, 2015

Many structural changes delivered in thepast three years…

ICA Gruppen CMD 2016 315/12/2016

..have been an important driver of EBIT improvement since 2012…

15/12/2016 ICA Gruppen CMD 2016 4

EBIT-margin excl. non-recurring items

20122.7 %

EBIT-margin excl. non-recurring items 4.4 %

Divestments

ICA Norway 0.6 pp

Kjell & Co, Forma, Cervera 0.0 pp

Acquisitions

Apotek Hjärtat 0.4 ppImprovementICA Sweden 0.5 pp

Rimi Baltic 0.2 pp

Other 0.0 pp

Q3 2016 (R12)

..and have led to ICA Gruppen’s current structure

GroceryNon Food

Bank &Insurance

Pharmacy

Real Estate

5ICA Gruppen CMD 201615/12/2016

Well positioned for continued growth

• A very strong position in our core businesses− Clear #1 in Sweden with good business momentum and high margins− #2 in Rimi Baltic with leading position in Latvia and increasing market

share in Estonia and Lithuania− Strong and improving #2 position in the Swedish pharmacy market− Excellent brand positions across the group

• High quality retail real estate portfolio in Sweden, well positioned to further strengthen the store network

• ICA Bank’s +700,000 customers provide a good base for future growth

• Strong cash flow and balance sheet to fund further business growth and business development

15/12/2016 6ICA Gruppen CMD 2016

Delivering on our strategic priorities 2016

CREATEGROWTH

SIMPLICITY

CUSTOMEREXPERIENCE

PEOPLE

BRAND & LOYALTY

ENABLEGROWTH

Drive efficiency throughout the value chain

Create customer engagement and responsible, climate-neutral operations

Engage and develop our people in a fast-moving and diverse organisation

Provide a great offering, value for money, a strong store network and a personal, omni-channel experience

Strengthen customer relationships through leading brands, loyalty programs and CRM

1. Ensure competitive pricing and fair price perception 2. Build ICA’s overall health offering and position 3. Strengthen the Non Food offering, leveraging Hemtex4. Build a leading omni-channel offering across OpCos and platforms5. Further strengthen our position in the Baltics

6. Develop leading CRM and build a common Swedish loyalty program

7. Drive efficiency throughout the value chain, with focus on store operations and digitalisation

8. Improve IT development through closer business integration and new ways of working

9. Integrate ICA’s common values and improve talent management

10. Drive sustainable customer choices and climate-smart operationsSUSTAINABILITY

15/12/2016 ICA Gruppen CMD 2016 7

Delivering on our strategic priorities in 2016

15/12/2016 ICA Gruppen CMD 2016 8

Invested in Private Label pricing, (”Nytt lägre pris”)New pricing strategy Apotek Hjärtat online

Grown online sales in the retail business. +46% in Grocery (Q3), +117% in Pharmacy,CDO in place (Chief Digital Officer)

Launched common loyalty program for ICA Sweden, ICA Banken and Apotek Hjärtat

Grown market share in Rimi Baltic, +0.5pp

Delivering on our strategic priorities in 2016

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”Leading way of working” (LEAN) scaled up in stores

Introduced agile development in several areas (ICA Bank, ICA Sweden, marketing)

ICA Values rolled out and fully embedded

On track to reach 2020 climate neutrality target (focus transportation and cooling)

Continuing to strengthen sustainability to meet stakeholder demands

ICA Gruppen CMD 2016 10

• ICA Gruppen won the UN Momentum for Change award during COP22 for the project ”Klimaträtt” (Climate Right)

• Chief Corporate Responsibility Officer appointed in Q3 to the executive management team

• New sustainability committee at board level

15/12/2016

ICA Real Estate – supporting urban growth, Norwegian divestment completed


• Agreement signed for divesting Norwegian properties− Transaction to be finalized Q1 2017− 1.9 SEK billion cash-flow− 400 MSEK capital gain

• Stable EBIT development

• Focus ahead:− Continue to develop attractive locations− Implement urban strategy− Land & property banking, larger project

scope*Excluding real estate in Norway

EBIT* excl. non-recurring items, MSEK

323

377366

2014 2015 2016 Q3 R12

15/12/2016

ICA Bank – Actions show result, underlying improvements coming through


• Operational environment difficult in 2016

• Many mitigating actions have been implemented and should reverse trend in coming years− ICA insurance off to a good start and follows

plan but not yet contributing to profits− Improved customer loans and mortgage

offering− Continue launch of ICA Bank Corporate

services

EBIT excl. non-recurring items, MSEK

189

110

67

2014 2015 2016 Q3 R12

15/12/2016

Hemtex – in a transition phase


• Profit level clearly not satisfactory

• Market conditions:− Moderate growth for the home textile

market− Increasing competition − Online sales growing quickly

• New strategy/actions− Clearer assortment and pricing strategy− New store concept− Develop omni-channel & e-commerce− Reduce overhead and improve efficiency

in stores

-30

-20

-10

0

10

20

30

-1 200

-900

-600

-300

0

300

600

900

1 200

2014 2015 2016 Q3 R12

Net sales EBIT excl non-recurring items

EBIT excl. non-recurring items, MSEK

15/12/2016

Three dominant forces affecting retail

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Advancements in technology and innovation

Changing face of the consumer

Structural industry shifts

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Urbanization centralizes shopping

Migration and growing

minorities drive new assortments

Millennials early adopters of new technology and shopping habits

Changing face of the consumer

Structural industry shifts

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Optimize portfolio and formats

towards growing channels

Consider M&A to reach scale and

improve cost position

Technology changes require

finding new talent

Advancements in technology and innovation

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Digitalization to improve

processes and lower costsData to improve

customer offering and customer

experience

Core areas to focus on and invest in…

Convenience

18

Digital transformation Price value Health and

sustainabilityICA Gruppen CMD 201615/12/2016

19

...reflected in our 2017 Strategic Priorities

CREATEGROWTH

CUSTOMEREXPERIENCE

ENABLEGROWTH

SIMPLICITY

Drive efficiency throughout the value chain

PEOPLE

Engage and develop our people in a fast-moving and diverse organisation

Provide a great offering, value for money, a strong store network and a personal, omni-channel experience

BRAND & LOYALTY

Strengthen customer relationships through leading brands, loyalty programs and CRM

1. Ensure competitive pricing and fair price perception 2. Implement new strategies with strengthened customer offerings for

Non Food, Hemtex and ICA Bank3. Build a leading omni-channel offering across businesses and platforms4. Strengthen store network and concepts with focus on urban areas,

convenience and health5. Further strengthen our position in the Baltics*

6. Develop leading CRM and leverage the common Swedish loyalty program

7. Drive reliability and efficiency throughout the value chain with focus on logistics and store operations

8. Improve speed and project delivery through new ways of working

9. Improve performance management process and change ability

10. Drive sustainable customer choices and climate-smart operationsCreate customer engagement and responsible, climate-neutral operationsSUSTAINABILITY

15/12/2016 ICA Gruppen CMD 2016

Strategic priorities 2017

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Ensure competitive pricing and fair price perception

Build a leading omni-channel offering across businesses and platforms

1

3

– Price perception and online


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Strengthen store network and concepts with focus on urban areas, convenience and health

Develop leading CRM and leverage the common Swedish loyalty program

4

6

– strengthen urban network and leveraging Swedish loyalty program


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Drive reliability and efficiency throughout the value chain with focus on logistics and store operations

7

– efficiency in focus


15/12/2016 ICA Gruppen CMD 2016 23

We have a strong foundation for future growth

Rapidly changing retail market

Clear strategy to deliver on our targets

Winning in a changing market

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