Claes-Göran Sylvén, President and CEO Interim report January – June 2008
Business environment • General slowdown in retail sector • Reduced consumer purchasing power affects both slow-moving and fast-moving consumer goods • Risk of lagging behind in cost inflation • Streamlined and innovative businesses are winners Fixed prices, Current prices calendar adjusted June Accum. June Accum. Retail Trade Index Fast-moving consumer goods 3,8 6,3 1,2 0 Retail Trade Index Mostly food 4,5 6,4 -0,2 -0,2 January – June, 2008 January – June, 2008 Systembolaget -1,4 4,9 11,6 2,4 Consumer durables 0,9 4,3 4,9 4,8 Pharmacies 3,4 6 4 4,6 Books and paper -1,4 -2,2 -0,9 -0,6 Electronics 0,7 0,7 23 18,1 Jewellers -6,8 -3,8 -8,6 -11,9 Clothes -1,3 1,9 6,1 3,1 Shoes -6,8 -4,9 -16,9 -8,3 Total retail trade 2,3 5,2 3,3 2,7 Source: HUI, SCB
Hakon Invest Apr 1 – Jun 30, 2008 Improved operating profit in second quarter despite slowdown • Revenues totaled SEK 301 M (273) • Operating profit rose to SEK 191 M (168) • Net financial items were SEK -71 M (95) • Profit for the period amounted to SEK 118 M (259) • Purchase of additional shares in Hemtex • Strong financial position
Operations Hakon Invest ICA AB, 40%* Portfolio companies Forma Publishing Group, 100% Kjell & Company, 50% Hemma, 61% * Remaining 60% is owned by the Dutch company Royal Ahold. According to a shareholder agreement both owners Cervera, 48% have joint control of ICA AB, through an agreed requirement for unanimity at Annual General Meetings and in the Board of Directors inkClub, 50% Hemtex, 18.3%
ICA AB Strong improvement in underlying earnings in second quarter • Positive sales trend in Sweden and the Baltic countries • ICA Norge continues with change program – Focus on new price positioning to improve competitiveness and profitability • ICA Sverige reports strong earnings. Focus on logistics and assortment development has yielded results • Proposal drafted for a new quality standard in the stores for the industry • Rimi Baltic continues to increase sales and profitability • ICA Banken growing with profitability
Sales trend for ICA stores Apr-Jun 2008 Jan-Jun 2008 Change Change Change all Change all Sales comparable Sales comparable stores stores stores stores ICA Sverige SEK 21,749 M 6.4 % 4.8 % SEK41,897 M 7.6 % 6.7 % ICA Norge NOK 5,005 M 0.2 % 2.2 % NOK 9,701 M 0.0 % 1.5 % Rimi Baltic EUR 336 M 14.3 % 11.5 % EUR 637 M 15.1 % 12.6 %
ICA Group Apr 1 – Jun 30, 2008 • Net sales SEK 22,765 M (+10.0%) • Operating margin 2.9 % (2.9) • Operating profit SEK 660 M (595) – of which capital gains and property impairments SEK 137 M (215) • Profit for the period SEK 557 M (491)
ICA Group’s operating profit per segment Apr-Jun Apr-Jun Jan – Jun Jan – Jun SEK M 2008 2007 2008 2007 ICA Sverige 672 503 1,144 843 ICA Norge -47 57 -202 122 Rimi Baltic 66 29 72 -7 ICA Banken 25 19 46 34 ICA Group Functions -56 -13 -141 -51 Total 660 595 919 941
ICA Group operating margin, % 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2005 2006 2007 2008
Forma Publishing Group Apr 1 – Jun 30, 2008 One of Sweden’s largest publishing houses • Revenues SEK 223 M (191) • Operating profit SEK 11 M (2) • Icakuriren increases revenues for both circulation and advertising • Acquisition of lifestyle magazine Leva • Trade magazines increase revenues with Market and Icanyheter • Forma Books improves profitability despite declining book market in Sweden • Good development for contractual operations
Kjell & Company Apr 1 – Jun 30, 2008 A leading home electronics accessories retailer • Revenues SEK 90 M (72) • Operating loss SEK 6 M (-8) • 34 stores today – 4 new stores opened during the quarter • Continued expansion in autumn • Electronics industry showed volume increase but price decrease during first half • Kjell & Co less sensitive to price falls than others in the industry
Bild Kjell & Co öppning - kommer
Hemma Apr 1 – Jun 30, 2008 One of Sweden’s largest white goods retailers • Revenues SEK 78 M (82) • Operating loss SEK 21 M (-9) • Tough competition in white goods market • New CEO in August • New store in Infra City during autumn • Stocks reduced to an effective level
Cervera Apr 1 – Jun 30, 2008 Nationwide glass and porcelain chain • Revenues SEK 72 M (73) • Operating loss SEK 9 M (-7) • New assortment strategy in place – clearance of outgoing product range during summer • New store layout launched in Uppsala in August • Central warehouse relocated for improved efficiency
inkClub Apr 1 – Jun 30, 2008 European leader in online sales of ink cartridges and other printer accessories • Revenues SEK 89 M (85) • Operating profit 12 M (10) • Improved gross margin • Steady increase in customer orders and average purchases • Evaluation of new logistics center in Europe under way
Forecast • Gloomier expectations among consumers indicate further slowdown within retail in the autumn • Clarity even more important in times of lower economic growth • Greater focus on costs – question of setting right priorities • Less competition for attractive acquisition candidates and lower price expectations • Several business opportunities
Financial information Göran Hesseborn, CFO
Income statement Q2 Q2 Jan-Jun Jan-Jun SEK M 2008 2007 2008 2007 Revenues 301 273 584 427 Cost of goods sold -202 -168 -383 -258 Gross profit 99 105 201 169 Other operating income 4 7 8 7 Selling and administrative expenses -126 -135 -269 -228 Share of profits in JV 214 191 281 320 Operating profit 191 168 221 267 Net financial items -71 95 -133 173 Profit after financial items 120 263 88 440 Income tax -2 -4 3 331 Profit for the period 118 259 91 771 Earnings per share 0.79 1.64 0.64 4.82
Holdings January – June 2008 SEK M, 2008 ICA Forma Kjell & Co Hemma Cervera inkClub Revenues 44,064 431 186 153 142 197 EBIT 919 -7 -6 -27 -20 21 Share of profits 289 0 -2 0 -7 1 Cervera inkClub SEK M, 2007 ICA Forma Kjell & Co Hemma Revenues 39,490 345 143 170 145 - 941 -15 -8 -10 -16 EBIT - Share of 327 2 -3 -1 -5 profits -
Share of profits in holdings per quarter and rolling trend 4 quarters 2005 – 2008 SEK M SEK M 500 1000 400 800 Rolling 4 quarters 300 600 Quarter 200 400 100 200 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 Quarter Rolling 4 quarters Excl. Meny
Financial position • Non-current financial liabilities SEK 77 M (73) • Financial assets totaled SEK 1,736 M (2 292) • Financial investments under management amounted to SEK 1,695 M • Equity/assets ratio: 94.7% (94.4%) Comparable figures Dec 31 2007
Net financial items quarterly and rolling 4 quarters 2005 – 2008 SEK M SEK M 200 400 150 300 100 200 Rolling 4 quarters Quarter 50 100 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 -50 -100 -100 -200 Quarter Rolling 4 quarters
Breakdown of financial investments Jun 30, 2008 Cash and cash Equities 5% equivalents 15% (29) (12) Fixed income securities 36% (24) Hedge funds 44% (35) Total value at Jun 30: SEK 1,695 M (Total value at Dec 31: SEK 2,237 M)
Return on investment management 15 10 5 Quarter 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2006 2007 2008 -5 -10 -15 Hakon Invest SIX Portfolio Return
Profit per quarter and rolling 4 quarters 2005 – 2008 SEK M SEK M 600 1600 1400 500 1200 400 Rolling 4 quarters 1000 300 Quarter 800 200 600 100 400 0 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -100 0 2005 2006 2007 2008 Quarter Rolling 4 quarters
Profitability, % % 18 Q2 Q2 16 2008 2007 14 Return on 12 capital employed 6.8 13.3 10 8 Return on equity 7.1 16.8 6 4 2 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2007 2005 2006 Return on capital employed Return on equity Source: Hakon Invest. Calculated on rolling 12-month basis
Cash flow statement Group, SEK M Jan – Jun 2008 Jan – Jun 2007 Cash flow from operating activities 428 387 Cash flow from investing activities 58 -19 Cash flow from financing activities -480 -362 Cash flow for the period 6 6 Cash and cash equivalents at beginning of 281 349 period Exchange differences in cash and cash 0 0 equivalents Cash and cash equivalents at end of 287 355 period
Share price trend Share price development YTD 2008 • Share price -33% YTD comp. OMXS index -21% • Dividend SEK 6.00
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