sale operational and integration excellence across the region - - PowerPoint PPT Presentation

Adria Retail & Whole- sale – operational and integration excellence across the region

Investor Days Zagreb, September 2015

1

Disclaimer

This presentation does not constitute or form part of, and should not be construed as, any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities

• f the Company or any member of its group nor should it or any part of it form the

basis of, or be relied on in connection with, any contract to purchase any securities of the Company or any member of its group or any commitment whatsoever. This document may not be distributed and may not be reproduced in any manner

• whatsoever. Any distribution or reproduction of the attached document in whole or in

part is unauthorized. No representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information contained herein and no reliance should be placed on it. None of the Company, their advisers, or any other person accepts any liability for any loss howsoever arising, directly or indirectly, from the issue of this document or its contents. This presentation includes certain forward-looking statements. Actual results could differ materially from those included in the forward-looking statements due to various risks and uncertainties, including but not limited to changes in business and economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings and availability of financing.

2

Mercator integration

The Adria Retail & Wholesale group that Konzum and Mercator represent today has taken an impressive development path

Historical development

First store opening

1957

Entire Croatian market coverage

2000

Velpro C&C launch

2001

Private label & loyalty card launch

2002

Web shop launch

2006

180 stores 19,000 m2 3,000 employees

1994

Serbia and BiH market entry

2005

MultiPlusCard introduction

2010 2014

>1,900 stores ~1,000,000 m2 >40,000 employees

3

3,491 2,428 4,374 3,151 2,873 3,303 3,917 4,365 2,824 9,044 6,025 4,736

With this impressive development, we have become a preeminent retailer in Southeast Europe and the #1 in all our core markets

1 Based on estimated banner sales in 2013 owned or operated by the group including VAT, franchised operations and partly owned stores / chains, with the exception of Mercator and Agrokor Retail which are as reported; Source: Planet Retail

2013 sales in SEE1, EUR m Metro Group Tesco Rewe Group Delhaize Group COOP Euro Agrokor Retail + Mercator Schwarz Group CBA Agrokor Retail Mercator SPAR Carrefour Southeast Europe (SEE)

Core markets

Key features

• f core markets

Dynamic market with 18.5 m inhabitants and GDP of EUR 137 bn EU integration path driving growth Fragmented retail market with further retail grocery market growth expected Common cultural heritage (consumption trends, ex-Yugo consumer brands) Tourism segment growth (Croatia, Montenegro, in particular)

BOSNIA & H. SERBIA CROATIA SLOVENIA MNG

4

In our core markets, we serve more than 1,200,000 customers daily across our diverse retail and wholesale formats

BOSNIA & H. SERBIA CROATIA SLOVENIA MONTENEGRO EXAMPLE EXAMPLE EXAMPLE EXAMPLE EXAMPLE

Data of full year 2014

5

Retail – we are the leading retail player in the Adriatic region with a strong footprint across all our countries of operation

BOSNIA & H. SERBIA CROATIA SLOVENIA MONTENEGRO

#1 #1 #1 #1 #1

321 stores 15% market share

Population of 6.9 m

220,000 m2 99 stores 21% market share

Population of 0.7 m

30,000 m2 258 stores 22% market share

Population of 4.6 m

125,000 m2 476 stores 32% market share

Population of 2.1 m

230,000 m2 705 stores 30% market share

Population of 4.3 m

350,000 m2

Data as of June 30, 2015; market shares from GFK (Croatia, Serbia), Valicon (Slovenia) and internal estimates (other countries)

6

BOSNIA & H. SERBIA CROATIA SLOVENIA MONTENEGRO

Wholesale – our 55 cash & carry centers reach more than 17,000 customer sales points across the region

55 wholesale centers 17,000+ sales points (retail, HoReCa) 3,000+ dedicated PL products 130,000 m2 sales surface

14 mn

Fleet km per year

1,000,000+

Deliveries every year

350

Transport vehicles

Data as of 30 June, 2015

7

Skilled and dedicated employees Corporate social responsibility Customer service and care Innovative store formats d Leading customer loyalty ma- nagement Price perception focus Tailored local & regional products Distinctive private label Quality focus CDIS/ logistics con- solidation in region Store integration excellence

Operational excellence

Rich experience and expertise, and leading practitioners across all core business areas ensure superior

• perations and a unique

customer experience KEY SUCCESS LEVERS

Across the region, we pride ourselves in operational excellence in several areas that are key success factors for our business

Leading manage- ment competencies Synergies with Agrokor group

8

Speed and professionalism with which Mercator stores were taken over and integrated is best practice in European retail

Integration excellence

Speed and rigor with which Mercator stores were successfully integrated is best practice in European retail

EXAMPLE

8/9/2014 9/9/2014, 9 am Operational excellence

9

Within just 3 weeks 73 stores have been rebranded and converted to Konzum systems and operations successfully

Completed

▪ 73 stores ▪ 1 warehouse ▪ 2 wholesale centers ▪ 1.515 employees ▪ 133,953 m²

▪ Turnover EUR 250 m

Activities

▪ Rebranding – in-store

& external

▪ IT systems ▪ Central distribution ▪ Replacement of PL

products

▪ Customer loyalty data

base integration

▪ Education & mentoring

teams

EXAMPLE Successful, smooth transition of Pika user base and loyalty EXAMPLE Welcome packs, employee education, mentoring teams, inventory teams, IT support teams

3 weeks

Kick-off 9/9/2014

71%

Users trans- fered

92%

Loyal customers kept

Operational excellence

Data as of June 30, 2015

10

Operational excellence

Aug May Apr Jul Jun Jun- Aug Mar Feb Oct- Dec Jan

Performance of reflagged Mercator stores has seen substantial lift under the new Konzum concept in Croatia

Turnover of ex-Mercator stores L-F-L

Before integration After integration

Turnover uplift L-F-L

Store 1 ++++ Store 2 +++ Store 3 +++ Store 4 ++ Store 5 ++

Turnover uplift L-F-L

Store 1 ++ Store 2 ++ Store 3 ++ Store 4 ++ Store 5 ++

Refurbished Rearranged

11

We have the highest share of central distribution in the region and keep consolidating further across countries successfully

25,000+ SKUs 3,000+ employees ~7 million transport units picked

and delivered

700+ owned and partner transport vehicles 24+ million km with owned vehicles ~5,500 delivery points

85%

Central distribution share

279,000 m2

Warehouse area

380

Transport vehicles

Operational excellence

Data of full year 2014

12

Highest product quality and standards are our priority and are continuously monitored and controlled

130+

Manufacturing plants audited yearly

35,000+

Quality controls every year Operational excellence

Data of full year 2014

13

We have the most innovative and highest product quality standard private label assortment across the region

BOSNIA & H. SERBIA CROATIA SLOVENIA MONTENEGRO

600+

New products developed every year

7,000+

Private label products across the region

21% 17% PL share of turnover

20%+ cheaper than A-brand Controlled & constant quality Guaranteed satisfaction Declaration that can be trusted Local/regional Innovative & inspirational

11% 12%

Guaranteed satisfaction and controlled quality

EXAMPLES

Highlighting benefits

Operational excellence

Data of full year 2014

14

We cater to the distinct tastes and requirements of our diverse local markets through local and regional assortment

BOSNIA & H.

69

Cities covered across 10 administrative units

~9,600

Local traditional SKUs

Example Bosnia & Herzegovina

Operational excellence

Data of full year 2014

15

5,000

products are on promotion every day, delivering high customer value

Price perception is one of our key focus areas and supported through well-designed and targeted customer promotions

Very high brand awareness across the region (Konzum, Mercator, Idea, Roda) Aggressive leaflet distribution 75% of shoppers use leaflet as primary source of information

Operational excellence

Data of full year 2014

16

Our distinctive loyalty card offering is our comparative advantage

• vs. other retailers in the region

2,900,000+

Members to our loyalty system

Great source of insight about

• ur customers

63% turnover covered by

loyalty card

12,000,000+ mailings every year

Strong coalition partners 1m 1m +180% 2014 2012 0.4m 3m Thereof awarded per quarter

Operational excellence

Data of full year 2014

17

We continuously innovate new store formats and features to ensure continuously improving experience for our customers

Operational excellence

▪ Regular screening of global

format trends and best practices

▪ Ongoing customer research for

format demands

▪ Cross-country co-operation in

new format development

Example small store format "Neighbour" (Slovenia)

Cross- country

Format innovation and development

18

We offer distinctive customer service and care, adding to innovative service models for our customers

Self-check-out Gas stations Utility fees payment Web shop Cash advance Lottery service Konzum app

2,800+

Customers talked to every day (by phone, e-mail, Facebook)

5 hours

Average reaction time to customer’s complaints Operational excellence

Data of full year 2014

19

Operational excellence

We take responsibility in the well-being of our local environments and use unique approaches of local co-operation and support

30+

CSR initiatives across the region

Initiatives

Covering local & regional development, and social, environment and sports

Examples Slovenia Example Serbia

Belgrade, new town IDEA Niš in your heart At the heart of Banata Sports – Red Star Basketball Federation of Serbia

20

Skilled and dedicated employees are our strength, so we coach and develop several thousand employees every year

Operational excellence

▪ Business

aligned hard & soft skills training

▪ Succession

planning through talent pool man- agement tools

▪ Test store,

IT lab

35.000+

Participants trained in 2014

THEY DEVELOP THEY DEPLOY THEY DELIVER Knowledge Challenge Execution

How our people learn

Best business schools IMD IMD IEDC IEDC Best partners and consultants Internal know- ledge academy

How our people

• perate

Our employees are the most valuable part of our company. They are our key market advantage and the main initiators

• f all our achievements

Ivica Todorić President, Agrokor Group We encourage

• ur teams in taking

chances & making

• pportunities and

mistakes, not to wait and watch for outcomes Every year we onboard high potentials & give them opportunities to learn and trust to develop and execute

21

Continuous improvement

We continuously develop

• ur product and service
• ffering further,

leveraging cross-country talent, innovation, and best practices KEY FOCUS AREAS

Across the region, we continuously strive for excellence and

• perational improvements

22

Continuous product and service improvements – Project “Vukovarska”

▪ New „business & family center”

in Zagreb

▪ 5.100m² sales area refurbished in

line with highest world standards

▪ Innovative interior design and a

completely new shopping experience

▪ Integrated pharmacy in retail space ▪ Largest toy department in Zagreb

along with playground & diaper change room

▪ Sushi bar, pizza bar, pasta

bar, grill bar, fish bar, coffee bar, salad bar, dessert bar

▪ Shop & Touch buying

system

▪ New assortment range ▪ Attractive center tenants

Continuous improvement

23

▪ Food & near food assortment ▪ 5.400m² of warehouse area ▪ Developing new webpage

design

▪ Customer satisfaction

– Freshness – Service level – Ordered – delivered – On time Continuous product and service improvements – Project “Konzum Online”

Continuous improvement

24

Adria Retail & Whole- sale – operational and integration excellence across the region

Investor Days Zagreb, September 2015