Ocado Group plc Investor and Analyst Workshop. 20 th October 2011

Transcription

1 Ocado Group plc Investor and Analyst Workshop 20 th October

2 Forward-Looking Statements Disclaimer This presentation contains oral and written statements that are or may be forward-looking statements with respect to certain of Ocado s plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements are usually identified by words such as anticipate, target, expect, estimate, intend, plan, goal, believe or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they are based on current expectations and assumptions but relate to future events and circumstances which may be beyond Ocado s control. There are important factors that could cause Ocado s actual financial condition, performance and results to differ materially from those expressed or implied by these forward-looking statements, including, among other things, UK domestic and global political, social, economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, variations in commodity prices and other costs, the ability of Ocado to manage supply chain sources and its offering to customers, the effect of any acquisitions by Ocado, combinations within relevant industries and the impact of changes to tax and other legislation in the jurisdictions in which Ocado and its affiliates operate. Further details of certain risks and uncertainties are set out in our IPO prospectus released on 6 July 2010 and our 2010 Annual Report and Accounts. Ocado expressly disclaims any undertaking or obligation to update the forwardlooking statements made in this presentation or any other forward-looking statements we may make except as required by law. Persons receiving this presentation should not place undue reliance on forward-looking statements which are current only as of the date on which such statements are made. 2

3 IGD s latest research predicts online grocery will double by 2016 UK Online Grocery Sales ( F), bn 1 A growth market Estimates of longer term online penetration vary; with up to c.40% predicted IGD notes rapid move from PC to mobile shopping, with quality of mobile apps becoming an increasingly important differentiator IGD s research reveals that 44% intend using the online channel for grocery shopping within five to ten years time, compared to just 17% who are doing so in ) IGD estimates published October

4 CFC 1 capital project summary On-going projects CFC1 Ambient mini-load Overview Productivity Capacity Go Live Automated store of 40k ambient totes Live, in ramp-up Conveyor extension Flow Rate Control c5km of additional conveyor for load balancing, buffer and flow Smart control software to regulate tote flow 100% of conveyor installed, ~70% in live testing Live in testing OSR2 Fast picking long tail product range extension H1 FY12 Ambient zone pick Extension of zone pick capacity with latest generation conveyor H2 FY11 Key benefit 4

5 Automatic Storage and Retrieval System Ambient mini-load crane, capable of holding up to 40,000 totes in random access storage The equivalent of 3,500 pallets of grocery storage Allows whole pallets of goods to be directly decanted to storage totes Improves the productivity of the inbound operation by removing double handling Expands the potential range of ambient by 2,500 lines Supports further range extension in OSR2 5

6 Order Storage Retrieval 2 Picking machine capable of storing over 40,000 tote locations Up to 20,000 skus of range growth, when combined with ASRS Adds up to 25,000 orders per week of pick capacity Significant enhancements in design over OSR 1 Supports pick speeds of up to 750 units per hour per person The blueprint for the MASOPS picking system in CFC 2 6

7 Flow Rate Control Software Natural flow Max desired throughput Pick Output Av. throughput Description Intelligent control software to flatten peaks and troughs of tote throughput Time With FRC Max desired throughput Av. throughput By reducing peaks, higher overall throughput can be obtained Reduces potential for congestion and allows warehouse to run closer to maximum capacity Pick Output Currently in testing pending full rollout Time 7

8 CFC 2 continues on time and on budget CFC2 Overview Land purchased in March 2011 Groundworks and external building work complete Mezzanine currently being installed MHE will be installed on-site from the autumn System testing from mid-2012 Go-live planned for Q ~ 105m capital spend during FY11 8

9 The online opportunity driven by the improving online proposition Late Total UK Grocery Market Online Drivers Adopter Profile Increasing adoption over time Range Price Freshness Ease of use Availability Early % of shoppers for whom online shopping is more appropriate As the online proposition improves over time more of the market 0% 100% becomes addressable Reliability Timeliness 9

10 Ocado is expanding own brand range Ocado Own Brand New Label Design Offering customers greater choice and a wider range of price points Own brand products will fill gaps in the Waitrose range Quality and price will be equivalent to Sainsbury s & Tesco standard own brand ranges Currently 350 SKUs, will expand to 600 by end of

11 Supply partnership with Carrefour Another step in Ocado s strategy to offer the broadest and most diverse grocery range to all our customers around the UK Ocado agreed with Carrefour to trial the Reflets de France range (over 300 SKUs) An authentic and historic French range. Complementary to our existing lines from our partner Waitrose Reflets de France 11

12 Ocado Shop in Shop has delivered strong sales uplift for Daylesford Daylesford Farmshop Shop in shop technology developed for Ocado s website Allows suppliers to showcase their products, and provide supplier specific branding, marketing and information Maintains access to the Ocado shopping basket and delivery First shop launched in partnership with Daylesford Farm Offering organic meat, butchery, bakery, condiments and home products. Sales uplift for Daylesford on Ocado of over 400% after shop launch. 12

13 Developing a comprehensive Non-Food offer Non-food development Ocado has a customer base of 300k active customers and a world-class last mile solution Online general merchandise retailers are reliant on third party delivery with low success rates at meeting the customer on the first attempt We plan to build our range of non-food products from 3.5k non-food SKUs today to 40k by end of 2013 Initial focus will be on adding breadth to non-food ranges that are adjacent to grocery Products will all be available via the Ocado delivery network, in addition to standard mail where customers prefer or require 13

14 A destination site for select categories Non-Food Website Ranges in which we have depth will be highlighted as separate stores on the Ocado website All products available in a single unified Ocado basket Store differentiation allows for wider, higher end range than suppliers would permit to be sold with grocery Website mock-up only not indication of chosen categories or design 14

15 Non-Food will be fulfilled from a separate warehouse Non-Food Warehouse Grocery logistics is about cost domination In Non-Food, with extensive range, higher average item prices and lower item collation, a different warehouse solution is required Lower capital expenditure than grocery picking Able to deal with additional complexities Reverse logistics Third party shipping Fragile and secure Further details on warehouse launch to be announced Items for delivery with Ocado orders will be cross-docked into Ocado vans at CFC1/CFC2 15

16 Ocado Saving Pass at least 10% off over 500 leading branded lines Ocado Saving Pass In return for a small annual fee, Ocado Saving Pass will be offered discounts of at least 10% off a range of over 500 leading branded goods Ocado Saving Pass for all 500 products costs 8.99 per year 16

17 Customers have option of total saving pass or just specific saving groups Ocado Saving Pass groups 8.99 total saving pass gives customers savings to all discounts in saving groups Customers have option of purchasing saving pass for specific saving groups (costing between 1.99 and 5.99 per year) Examples of saving groups are: Kids Ladies Health & Beauty Laundry 17

18 Ocado loyalty scheme to be trialled Loyalty Scheme Loyalty scheme to be trialled on 10% of customers Trial customers will no longer receive vouchers Cost of loyalty scheme equivalent vouchers but expected to encourage more loyalty Customers earn 1 loyalty point for every 2 spent with Ocado Double loyalty points for Delivery Pass members Once a quarter, points converted into vouchers and ed to customer Every 100 points earns a 1 voucher 18

19 More than 17% of Ocado checkouts are done through mobile Checkouts on Mobile Devices by Month, % Checkouts 20% 15% % Checkouts 10% 5% Ocado mobile app launched July % Jan 10 Aug 10 Jan 11 Aug ) Up to August

20 Updated mobile apps due for launch in the coming months Updated iphone and ipad apps 20

21 Ocado s new Webshop reduces time to shop by 25% Time for a customer to complete a shop, as % of time taken in June % 110% 105% 100% 95% 90% 85% 80% 75% 70% Jun-10 Sep-10 Dec-10 Mar-11 Customers placing their 1st order All customers 21

22 Demonstrating increased consumer adoption Active Customers 1, k Shopping Frequency 2, % Customers % 26% 28% Shops during 12 week period % 18% 19% More than six Four to six 63% 56% 53% One to three FY08 FY09 FY10 Q3 11 FY08 FY09 FY10 1) A customer is classified as active if they have shopped within the previous 12 weeks. Data shows active customers at each FY end 2) Shopping frequency for active customers at year end in the previous 12 weeks 22

23 Ocado - developing the online grocery proposition Online Drivers Range Price Freshness Ease of use Availability Reliability Timeliness Targeting 40k SKUs end including authentic international/ethnic Adding an additional 40k lines of non-food over the next two years Currently price match Tesco over 7,000 branded products Ocado Saving Pass offers 10% additional discount to subscribers Ocado Loyalty Scheme (in beta) offers further discounts to regular customers Shorter supply chain and high sales volumes, one building hence more product life for customers Only online retailer to offer product life guarantee 17% of orders placed through mobile devices, and growing Over 7% of customers only shop Ocado on a mobile/ipad Most recent website has cut time to shop by 25% Widest range of 1-hour timeslots of any online grocer 99%+ items delivered as exactly ordered 95%+ deliveries on time or early 23

24 Q & A 24

25 Appendix A 2011 H1 Financial Results 25

26 Sales Gross Sales, m Net Revenue, m % % H09 1H10 1H11 1H09 1H10 1H

27 Sales drivers Average Orders Per Week, k Average Basket Size, % (1.5%) % 1H09 1H10 1H11 1H09 1H10 1H

28 Gross profit Gross Profit 1, m Gross Margin 2, % 85.0 Other Income, m % 28.8% 28.8% 28.6% 191% (0.1%) H09 1H10 1H11 1H09 1H10 1H11 1H09 1H10 1H11 1) Gross Profit is defined as Revenue less Cost of Sales. Please see Appendix for definition of key income and cost lines. 2) Gross Margin is the ratio between Gross Profit and Gross Sales, the latter is defined as Revenue plus VAT plus Marketing Vouchers 28

29 Operating costs 1H10 ( m) 1H11 ( m) Growth 1H10 (% Sales) 1H11 (% Sales) Change in % Sales 1H10 1H11 Trunking & delivery % 11.3% 10.7% (0.7%) CFC % 8.6% 8.8% 0.2% Other operating costs % 0.9% 1.0% 0.0% Admin expenses % 5.4% 5.3% (0.1%) Depreciation & amortisation % 4.4% 4.0% (0.3%) Total % 30.6% 29.7% (0.9%) 29

30 EBITDA EBITDA, m EBITDA Margin (Gross Sales) EBITDA Margin (Net Sales) % 4.8% +48% 5.2% +49% % 3.5% % 1.6% 1H09 1H10 1H11 1H09 1H10 1H11 1H09 1H10 1H

31 Operating profit and Profit before tax Operating profit, m Profit before tax, m H09 1H10 1H11 1H09 1H10 1H11 ( 2.7) ( 7.4) ( 6.7) ( 12.7) 31

32 Appendix B 2011 Q3 Trading Update 32

33 Q3 Financial Highlights Gross sales increased 19.5% to 444.6m for the 36 weeks to 7 August 2011 (2010: 372.2m) Gross sales increased 16.9% to 147.9m for the 12 weeks to 7 August 2011 (2010: 126.5m) Average orders per week for the 12 weeks to 7 August 2011: 110,945 (92,834 in equivalent period in 2010) Average order size for the 12 weeks to 7 August 2011: ( in equivalent period in 2010) At 7 August 2011 the Group had cash and cash equivalents, including monies on deposit, of 99.7m, borrowings of 89.3m and undrawn available facilities of 94.7m The results for the 24 weeks ending 15 May 2011 are unaudited 33