A leading player in the European
ITC* Distribution Industry
* Information Technology, Telecommunication, Consumer Electronics
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Investora, September 12, 2013
Disclaimer
► This management presentation in both oral and written form (together the
„Presentation“) has been prepared by ALSO Holding AG (“ALSO”)
► The Presentation contains selected information and does not purport to be
complete. Any estimates and projections involve significant elements of subjective
judgement and analysis, which may or may not be correct. Accordingly, each
recipient, prior to making any decision with regard to business relations with ALSO,
should conduct an investigation of its own regarding the chances and risks
connected with such relations. Neither ALSO nor any of its affiliates, members,
employees or agents, or any of its direct or indirect shareholders provide – or have
the authority to provide – any guarantee or warranty (expressed or implied) or
assume any responsibility or liability whatsoever with respect to the authenticity,
origin, validity, accuracy or completeness of the information and data contained or
made in the Presentation, or assume any obligation for damages, losses or costs
resulting from any errors or omissions contained in the Presentation.
► ALSO does not assume any obligation to update and/or revise the Presentation or
the information upon which it has been based.
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Investora, September 12, 2013
Agenda
► Company
► Industry
► Competitive Position, Key Figures
► Strategy, Outlook, Investment Opportunity
► Q&A
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Investora, September 12, 2013
Company overview
► Europe's third largest distribution and logistics
company for IT, Telecommunication and
Consumer Electronics, with 6.3 bn EUR net
sales in 2012 and ~3’000 employees
► Active in12 European countries, market leader
in 7 of them
► More than 160 000 products from 350 vendors
Shareholding structure
as of December 31, 2012
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Investora, September 12, 2013
ITC Distribution Industry – Structure,
Value proposition, Attractiveness, Risks
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Investora, September 12, 2013
ITC Distribution – important part of value chain
“Channel”
HW/SW Vendors (Apple, Cisco, Dell, HP, IBM, Microsoft, Samsung…)
ITC-Distributors
(ALSO, Ingram, TechData, …)
Corporate Resellers
large
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Business Users
medium
Investora, September 12, 2013
VAR
s
small
Resellers
Private Users
(SOHO)
ITC Distribution – sustainable value proposition
► 24 hour availability
• Stock management, logistics not a core competence of reseller
► Choice
• „Multi-vendor“ end user infrastructure
► Credit
• Resellers need to finance cash cycle
► Supply chain management
• Complex „purchase-to-ship“ process, different for each vendor
► Customer breath for vendors
• Distributors reach more than 100‘000 resellers across Europe
 Even DELL (previously direct marketer) has turned to distributors
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Investora, September 12, 2013
ITC Distribution – very profitable business
• “ROS” =
Return on sales
60%
40%
► Alternative views
EBIT
EBIT
EBIT =
1.5%
of Sales
EBIT =
30%
of
Gross
Margin
“ROS”
“ROMA”
OPEX
► Traditional view
80%
GM
• Sales 100
• GM = 5%
• EBIT = 1.5%
100%
COGS
► Assumptions
EBIT =
43%
of
Value
Added
20%
• “ROMA” =
Return on margin
0%
• “ROVA” =
Return on value added
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Investora, September 12, 2013
“ROVA“
ITC Distribution – resilient sales/margin model
With 30% lower sales still break-even EBIT!
120
100
Value (Index)
Value (Index)
Gross Profit
Sales
80
COGS
60
OPEX
4
3
EBIT
2
1
0
40
20
-1
-2
0
0
9
6
5
10
20
30
40
Revenue decline %
Investora, September 12, 2013
50
0
10
20
30
40
Revenue decline %
50
ITC Distribution – successful risk management
► Inventory
• Price protection clauses (typically 30 days)
• Active stock turn management
► Bad debt
• Account receivables insurance
• Highly developed own credit risk management systems
ALSO-Actebis
Unit
2010 1
2011
2012
DIO 2
days
20
20
21
Total stock provision
% of sales
0.18%
0.16%
0.15%
Annual bad debt 3
% of sales
0.07%
0.06%
0.05%
1 Actebis
only 2 based on annualized December sales
3 actual losses + use of provisions, but excluding A/R insurance premium
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Investora, September 12, 2013
Competitive Position and
Key Figures
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Investora, September 12, 2013
ALSO – top 3 players have still < 50% of market
Net Sales in Europe FY 2012 in bn EUR
Tech Data*
Ingram Micro**
ALSO**
Avnet***
Total European
distribution market
> 60 bn €
SerCom****
Esprinet**
0
*) Nov. 2011 – Oct. 2012
**) Jan. – Dec. 2012
***) Jan. – Dec. 2012/only Technology Solutions
****) Oct. 2011 – Sept. 2012
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Investora, September 12, 2013
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4
6
8
10
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ALSO – a leading player with superior profitability
ALSO
Tech Data
(Europe)
Ingram
(Europe)
6‘297
11‘719
8‘261
Rank in Europe
3
1
2
# Countries
12
16
13
# Market leader positions
7
5
3
EBIT FY 2012 (reported)
1.34%
1.06%
0.97%
100
79
72
Revenue 2012 (mEUR)
Profitability Index 2012
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Investora, September 12, 2013
ALSO – key figures HY1 2013 vs. HY1 2012
HY 2013
HY 2012
EUR Mio.
Net sales
Gross margin
EUR Mio.
3 040.3 100.0%
2 868.5 100.0%
200.8
6.6%
201.8
7.0%
Operating profit (EBIT)
31.9
1.1%
36.6
1.3%
Net profit Group (EAT)
16.3
0.5%
19.9
0.7%
1 192.6
100%
1 151.6
100%
389.3
33%
364.2
32%
Total assets
Equity
Cash flow before changes in WC
27.5
30.5
Cash flow from operations
30.4
-8.0
Free cash flow
25.1
-15.8
Net cash flow
11.7
5.4
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Strategy
Outlook
Investment Opportunity
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Investora, September 12, 2013
Strategic framework for ALSO
► MORE-Program defines ALSO strategy
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Investora, September 12, 2013
«MORE» strategy 2013
«Maintain»:
• Maintain / increase market shares in more profitable segments is first priority
«Optimize»:
• Migrate IT platform in LV and LT to group wide SAP
• Introduce business intelligence tool to increase the analytical capabilities of
the operational business
• Profit Improvement Program (PIP) and Process Optimization Program (POP)
in all regions
«Reinvent»:
• Unbundling of the Solutions, Service, and Supply business across the Group
to ensure a sustainable expansion of the value offerings and business
opportunities
«Enhance»:
• Further consistent examination of acquisition opportunities
in various regions and business segments
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Investora, September 12, 2013
Growth opportunities ahead
► Business expansion
•
•
•
•
•
Share gains
Industry consolidation
New vendors (e.g. Apple, Samsung)
New product categories (e.g. white goods)
Services
► Business extension
• Getting closer to the end customer (e.g. Managed Print Services)
► Geographical extension
• Focus is on EMEA
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Investora, September 12, 2013
EAT perspective
► Current EAT guidance for FY 2013 is 38 – 45 MEUR
► Mid-term EAT goal is 50 – 55 MEUR
► Additional EAT of 10 MEUR p.a. from 2016 onwards
• PPA from merger between ALSO and Actebis will lapse in
February 2016
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Investora, September 12, 2013
Attractive investment opportunity
► Attractive industry
• Little or no fixed assets
• Low capital requirements
• Technological innovation creates and drives new market segments
► Attractive business
• Sustainable value proposition
• Resilient business model
• Limited and manageable risks
• Highly profitable (returns on margin, returns on value added)
► Attractive player
• Very strong competitive position
• Superior profitability
• Untapped growth and earnings potential
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Investora, September 12, 2013
ALSO – the leading, customer-oriented ITC provider.
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