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Article Excerpt
ANNE RHENMAN-EKLUND, HEAD OF IR, AXFOOD AB: Ladies and gentlemen, very much welcome to Axfood, and to our year-end report. You will meet, as usual, Anders Stralman and Karin Hygrell-Jonsson. So, please, Anders, the floor is yours.
ANDERS STRALMAN, PRESIDENT & CEO, AXFOOD AB: Thank you. Good morning, ladies and gentlemen, and welcome.
I am pleased to announce that 2008 was a very successful year for Axfood. We have, once again, delivered a good sales growth and stable profitability. We reach our forecast. Willys made an outstanding performance. And I am especially pleased that we ended the year with a positive result for Hemkop in the last quarter. The positive development is, as previously, a combination of clear focus on sales, good cost control, and efficient logistics.
Sales growth has, as you realize, also been driven by the food price inflation. But 2008 will be remembered as a turbulent year. It began with ramping food inflation, an increasing turmoil in the financial market, and ended with a weakening currency and a sharp downturn in the Swedish economy.
Willys is, clearly, a winning concept. It now accounts for 53% of Axfood sales, and 68% of our EBIT. Both sales and results have developed strongly.
From the beginning of 2008, Willys has steadily attracted an increasing number of customer and strengthened its market position. This is a result of an attractive mix between assortment and strategic pricing, but also a reinforced marketing strategy.
As households' budgets are more and more stretched, due to food prices and a general weaker economy, Willys offer a valuable shopping alternative.
We intend to continue this positive trend, and we do this by improving what we offer to our customers. Part of this is the renewal program of Willys that will ensure our customers an even better and more inspiring shopping experience. The renewal project runs according to plans. And, presently, we have 15 stores that are successfully operating according to the new program.
Unfortunately, Hemkop did not perform in line with the expectation that we had in the beginning of 2008. It was also quite clear that the third quarter, that the weakening economy, was not going to make it possible to reach a positive EBIT for the full-year. Therefore, I am very happy to see that we actually reach profitability for the fourth quarter. This also demonstrates that our action plan is starting to give results.
Now, I guess, you all wonder if this is a stable and continuing trend. To be honest, it is too early to say but, of course, that is my intention. Hemkop is definitely on its way forward in a better shape than a year ago. This said, a lot of work remains before reaching improved sales and a stable profitability. The action plan is now continue focus on improved control of the cost and gross profit, and the development in the underperforming stores.
At the same time, quality control in the stores continues. And we are revising the product mix at Hemkop in order to offer customer a choice of value line, quality, and premium. Our ambition is to end 2009 with a positive EBIT for the full-year. To make this happen, we will keep the ongoing action plan at full speed.
In PrisXtra, integration with Axfood remains the focus. And, as you know, a sixth store opened in the center of Stockholm beginning of October. Unfortunately, two stores have seen sales decrease due to major road work in connection with the north link in Stockholm. That will continue in 2009. But both stores have very strategic locations going forward, and sales will increase when the road work is completed.
Dagab continued to perform excellent service level, and remains the most efficient logistic partner on the market. During the third quarter, we opened a new warehouse for fresh food in Borlange. The implementation of Autoorder in the stores has also started as planned.
Narlivs performed very well, with stable sales and earnings, especially the cash and carry stores. That showed strong development. Several contracts were either signed or renewed during the year.
In December, we were pleased to sign the new cooperation agreement with the Vi Stores Retailers Association. Axfood will, from November 2009, supply the Vi Stores through Dagab. The agreement also includes the Vi Stores and Axfood purchasing operations.
This will, of course, increase Dagab's volume in the future. Our rough estimate is that this might contribute approximately with SEK1.5 billion in the revenue for Dagab as from 2010.
During 2009, the Swedish economy might become even more challenging. We do not foresee much food price inflation, but we do not exclude increased prices.
Raw material prices have indeed fallen back, but it is likely that this effect will be offset by a continued weak Swedish currency. This is why, with no doubt, consumers will continue to focus on price, leading towards a more cost conscious shopping. A scenario, where both private label and Willys will continue to be very well positioned.
For the year 2008, the Board propose a dividend of SEK8, which is 57% of profit after tax, and well in line with our policy.
Entering 2009, I feel confident. Our capital structure is well suited for our business, we have a strong balance sheet, and our debt exposure is very limited. As we work with multiple formats, we can meet different needs among customers. We are good at cost control, and we have a leading position in soft discount. We have also -- have the highest percentage of private label in the Swedish market.
Our strategy, going forward, is unchanged, and Axfood's main priority is, and remains, profitable growth. We will also continue to develop and improve our concepts targeting a stronger market position....
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