ANALYST MEETING 2016 • JAKARTA
State of We are a Multi-format Retailer We have a Clear Vision and Mission We have the Right Strategy We focused on Business Institutionalization 2
Vision To be the no.1 multi-format retailer in Indonesia Mission To deliver Sustainable Sales/Profit Growth by creating a World Class Retailer with format and technological leadership through a focus on the development of Human Capital and Systematized, Relevant Business Practices 3
MFB being Transformed to MPPA Pre-2014 5.9 % 0.5 % 93.6 % 4
Q1 2016 Investment Highlights Rp3.3 TRILLION Q1 2016 TOTAL SALES WE COVER 68 CITIES IN INDONESIA OPERATING 289 STORES NEARLY 13,100 3 DISTRIBUTION ASSOCIATES COMPANY WIDE CENTERS 5
2. Extensive and Attractive Nationwide Store Footprint Over 60% of new stores in 2016 will be opened in outer islands Sales contribution (a) Focus on penetration outside Java where there is less competition and Region 2015 Q1 2016 typically higher profitability Greater Jakarta 30.8% 31.6% Maximize utilization of the superior logistics infrastructure and Java 27.4% 27.6% distribution process to cater to these markets ahead of our competitors Sumatera 17.7% 15.9% Kalimantan 11.6% 11.3% Kalimantan Sulawesi 7.1% 6.7% • 13 Hypermart • 2 Foodmart East Indonesia 5.4% 6.9% • 39 Foodmart Xpress • 13 Boston Sulawesi • 9 Hypermart Total Gross Space: • 10 Boston 724,603 m² Sumatera • 20 Hypermart • 4 Foodmart • 16 Boston East Java Indonesia • 59 Hypermart • 9 Hypermart • 16 Foodmart • 1 Foodmart Carrefour Giant Hypermart • 11 Foodmart Xpress • 8 Boston • 58 Boston • 1 SmartClub (a) As of 31 March 2016 • Source: Company Data 6
2. Proven Asset Light Business Model Scalable for Rapid Growth • Asset-light business model with 100% of stores leased Asset • Self-funding working capital Light Cash • Generative Limited capital expenditure requirements Capital expenditure of ~4-5% of sales • Fully leased store base enables rapid opening of new stores • Fast payback and attractive returns Scalable • Average repayment period of capital investments within 5 years • Operating leverage driving profitability 7
3. Efficient Logistics Platform in Place for Rapid Expansion Across Indonesia DC Throughput (IDR bn) 8,875 8,382 61 % 59 % Balaraja 7,419 Cibitung Surabaya 59 % Segmentation of Distribution Centers 2013 2014 2015 Dry Goods Fresh Location Balaraja Surabaya Cibitung Space 41,000 m 2 16,000 m 2 4,000 m 2 Throughput as % of sales Capacity 43,000 pps 11,000 pps 2,800 pps No of SKUs 13,000 5,500 665 Logistics net cost is 0.6 % of sales WMS Manhattan Manhattan Manhattan pps = palette positions As of 31 December 2015 • Source: Company Data 8 8
4. Established Customer Loyalty Program Established customer loyalty program More than 3.9 million members with average of Rp336k per transaction per day for 55% of 2015 gross sales Basket size is 60% more for Hicard holders Discounts of 5 to 15% Additional benefits with discounts for services and restaurants As of 31 December 2015 • Source: Company Data 9
5. Strength in Assortment and Category Dominance Contribution to Sales – Retail (without Wholesale) Top 10 Suppliers Flexibility to customize product offering on a store by store basis, Grocery Products which is important for Indonesia given its regional variations in consumption patterns across the archipelago 2015 8.9% 15.6% 4.3% 16.8% All Products 54.5% As of 31 December 2015 • Source: Company Data 10
MPPA Historical Sales 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net Revenue (Rp. Billion) 10,281 8,545 8,909 10,868 11,913 13,590 13,928 Gross Revenue (Rp. Billion) 5,620 6,916 8,488 9,768 11,977 13,787 9,547 9,268 11,305 12,564 14,288 14,550 - MFB Retail 1,512 2,470 3,689 4,455 5,663 6,490 7,622 8,782 10,810 12,564 14,288 14,550 - MPPA Other 4,108 4,446 4,799 5,313 6,314 7,297 1,925 486 495 - - - 2 3 Gross Sales 16,000 FY15 NOTES ● MPPA Retail Sales +2.5% in FY15 - - 14,000 1 ● MPPA SSSG -1.9% in FY15 ● All MPPA Sales generated - 12,000 495 by MPPA Retail 7,297 10,000 Rp. Billions 6,314 486 FULL YEAR NOTES 1,925 ● After the divestiture of Matahari 14,550 8,000 14,288 5,313 Department stores in 2010, 12,564 4,799 10,810 MPPA-Retail contributed 6,000 4,446 the majority of sales 8,782 7,622 4,108 ● In 2009, MPPA was required to report 4,000 6,490 5,663 Gross Sales following BAS7 4,455 3,689 2,000 ● Reported Sales are Net Sales with 2,470 1,512 variance attributable to consignment - COGS. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 - MFB Retail - MPPA Other 1 MPPA begins execution of Merrill Lynch strategic recommendations 2 MFB transformed into sole MPPA entity in 2013 and issued first with dual language report. New Management joins MPPA to establish strategy 3 11 11
MPPA Historical EBITDA 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EBITDA (Rp. Billion) 482 677 751 953 1,094 1,451 769 669 815 871 1,010 589 - MPPA Retail (49) 36 83 108 202 327 396 513 616 723 924 567 - MPPA Other 531 641 668 845 892 1,124 373 156 199 148 86 22 FY15 NOTES EBITDA 1 3 ● EBITDA of MPPA Other represents ongoing 1,600 corporate activities impacting MPPA EBITDA. 1,400 FULL YEAR NOTES 1,200 ● MPPA-Retail EBITDA represents the Business Unit EBITDA and does not reflect 1,000 MPPA other corporate activity and subsidiaries Rp.Billions that are currently offsetting income reported in 800 Other MPPA 4 ● On going corporate activities impacting MPPA 600 Retail EBITDA in 2014 is 0.20% of Sales 400 1 MPPA 2012 reported EBITDA was 785 prior to a reclass for consistency with 2013 reporting. 200 2 MPPA Historical EBITDA was generated from revenue and expenses that will no longer be incurred as a result of the 2012 0 corporate restructuring. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -200 3 Future MPPA EBITDA will be comprised of MPPA-Retail less on-going corporate activities which is a different - MPPA Retail - MPPA Other income composition than generated in historical MPPA. MFB EBITDA has been consistently reported as part of MPPA going back to 2004 New Management addresses assortment issues and institutionalization issues 4 12 12
Strategic Shift: Focus to be a Multi-format 2 Retailer
Critical Success Factors Format Leadership Store Network: Cost Nationwide Leadership Access Category Logistics Management Infrastructure Process 14
Where do Indonesian Shoppers shop? 69 % 14 % 20 % Minimarket Vegetable Hypermarket Vendor 77 % 32 % 17 % Traditional Wet Supermarket Store Market Source: Nielsen Shopping Frequency per month 25 24 24 24 16 15 8 7 5 4 3 2 Hypermarket Supermarket Minimarket Traditional Store Wet Market Vegetable Vendor 2012 2014 Source: Nielsen 15 15
Significant Growth Potential Under-penetrated markets: Modern Retail 1 Hypermarket per million people Total of 300 Hypermarts Vast Potential in Indonesia’s Hypermarket Segment (2013) Vietnam 0.3 1700 Indonesia 1.0 Number of (Indonesia Potential Universe) hypermarkets Philippines 1.4 per million people 7 Hypermarkets Singapore 2.6 of selected countries per Million People China 4.0 Thailand 4.1 Malaysia 5.6 USA 13.3 Source: OC dated January 25 th , 2014 16
FMCG Sales Contribution by Channel and how MPPA participates MPPA Existing MPPA Existing 2014 (Universe) 2014 Proforma 2014 1.13% Wholesale 25.80% 15.52% 1.13% 57.60 % 83.35% 98.87% 15.40% Based on internal sales including consignment Source: AC Nielsen & Company Data 17 17
MPPA 2015 Onwards Strategy: To Be a Multi-format Retailer FMX is classified as retail for operation segment information in financial statements Contribution to Total Revenue B2B 78.4 % 15.8 % 5.3 % 0.5 % 93.6 % 5.9 % 0.5 % 18 18
Mid 2014 MPPA began to Institutionalize Business Processes 2014 - 2016 Source: The Sibbet/Le Saget – Stages of Organization Model 19
5 Pillars of Growth Customer Focused Back End Customer Focused Focused Customer Customer Focused Focused Sustainable New Accelerate Remodel & New Formats: Retail Channels: Remerchandising Hypermart G7, Network Management B2B, Foodmart Primo, Expansion Mobile & SmartClub, Building Online Boston Combo, comparable & FMX store growth The 5 Pillars of Growth of 20
Key Drivers Generation 7 Hypermart introduction and Foodmart Fresh New formats Foodmart Primo, SmartClub, Foodmart Express, Boston Combo Accelerate expansion Renovation 60 stores over 5 years Expand logistic network Fresh food leadership Leverage data, build business intelligence system & enabling technology Store Wage Productivity and Opex focused Direct sourcing capability for fresh & bazaar Private label and direct import development: target to 5.0-10.0% of sales Improving capability: investing in training & development New Channels: Establish Wholesale Division New Channels: E-commerce 21
3 Pillars are Customer Focused Changes shop. hypermart.co.id 22
5 Pillars of Growth # 1 : The New Boston Combo COMBO opened April 14, 2016 23
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