11/29/2011
Efficiency - fuel for growth
Stéfan Descheemaeker, CFO Delhaize Group
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Efficiency provides the fuel for the New
Game Plan
“Executional excellence from
o independent
depe de ope
operating
a g
companies to one Group
supporting strong banners
through shared knowledge
and services”
(Analyst Field Trip
December 2009)
Annual gross cost savings target of EUR 500 million by the end of 2012
Based on our current status, we believe we will exceed this target
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1
11/29/2011
New Game Plan: transform to grow
1
Accelerate top-line and
operating profit growth
2
Respond to environmental
challenges
3
Create a better platform
for integration
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NGP aims at accelerating growth
Best-in-class
peers
Average
2008 - 2010
Peers
PFO margin
4.6%
5.0%
5.7%
Revenue growth
4.9%
2.6%
6.1%
Profit growth
1.8%
2.7%
6.0%
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2
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Higher revenue growth to drive operating
profit growth
Revenue
growth
Increasing
operating
profit
Short term
mismatch
between savings
and sales
building
investments
impacts
operating margin
Drive operating
profit growth
Time
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Cost savings are the fuel for growth
Strong savings
track record in
the past
EUR 500
million
EUR 160
million
2008 - 2009
Realized 60% of
the gross annual
savings target of
EUR 500 million
end of Q2 2011
Based on current
status, we expect
to exceed this
target.
2010 -2012
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3
11/29/2011
Cost savings are re-invested in the
business
Where from
-Increased labor efficiencyy
-Savings
and savings:
Cost inofrepair
sales
maintenance
- Supplier
-Energy
reductionnegotiations
initiatives
-Efficiency
in
- Valueimprovements
chain analysis
stores
- Supply chain automation
across the Group
SG&A savings:
- Labor efficiency
- Repair and maintenance
- Energy initiatives
- Store efficiency
Where to
More than half of these
savings were re-invested
in price decreases
EUR 500
million
gross annual
savings
target
to be
exceeded
d d
by the end of
2012
An important part was
used to offset p
payroll,
y ,
utility and rent inflation
Fund strategic initiatives
and offset various other
cost in creases
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A strong balance sheet supports growth
Improved working
capital management
Lowered our cost of
debt
Free cash flow (in millions of
EUR) and cash capex/sales (%)
More efficient
structure
Net debt to equity ratio
74%
665
626
3,6%
3,6% 3,8% 3,8%
3,2%
2,6%
332*
326
216
2006
61%
57%
50%
47%
35%
162
2007
2008
Free cash Flow
2009
2010 YTD Q3
2011
Cash Capex / Sales (%)
2006
2007
2008
2009
2010
Q3 11
* Excluding Delta Maxi transaction
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4
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Delhaize Europe will build on the experience at
Delhaize America
Delhaize Belgium
Own go-to
market strategy
Delhaize Southeastern Europe
Own go-to
market strategy
Own go-to
market strategy
Own go-to
market strategy
Own go-to
market strategy
IT platform
P
Procurement
t
Support services: finance/HR/legal
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Conclusion
• Multiple efficiency initiatives provide the fuel to
fund our revenue growth
• Delhaize Europe will fully leverage the scale of
the European operations, generate cost savings
and facilitate sharing of best practices
• We are well on track to achieve more than the
EUR 500 million gross annual savings target by
tthe
e end
e do
of 2012
0
• Our plans show we will accelerate revenue
growth and operating profit generation
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5