Investor Presentation - 30 May 2017 - Otto Group
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Investor Presentation 30 May 2017 Investor Presentation 30 May 2017
Disclaimer
This presentation has been prepared and issued by Otto (GmbH & Co KG) and is intended for
professional customers and institutional investors. The information in this presentation is
based on data obtained from sources considered to be reliable. No representations or
warranties, expressed or implied, are made by Otto (GmbH & Co KG) with regard to the
accuracy or the completeness of the information contained in this presentation and any liability
therefore (including in respect of direct, indirect or consequential damages) is expressly
excluded.
Further, the information given in this presentation contains predictions which are based on
current assumptions and forecasts. Such predictions are subject to known as well as unknown
risks, uncertainties and influences which may lead to a business development, final results and
a financial situation which deviate from those given in the estimates. Otto (GmbH & Co KG)
does not assume any obligation to update any forward-looking statements.
This presentation is for information purposes only. It is not intended to be and should not be
construed as an offer or solicitation to buy or sell any of the securities or issues mentioned in
this presentation.
2 Investor Presentation 30 May 2017
Agenda
1 The Otto Group at a glance
2 Financial review
3 Strategy and outlook
4 Summary
3 Investor Presentation 30 May 2017
The Otto Group is one of the world’s largest online
retailers
Founded as the mail-order company “Otto
Versand“ in 1949, the Otto Group has been a
family business since its foundation
Today, the Otto Group consists of 123 major
companies operating in more than 30
countries in Europe, North and South America
and Asia
The Otto Group is divided into three strategic
segments: Multichannel Retail, Financial
Services and Services
Currently, the Otto Group employs
approximately 50,000 people
The Otto Group is one of the largest online
retailers worldwide
4 Investor Presentation 30 May 2017
Otto Group: A success story for more than 65 years
~2000s to present
1980s and 1990s Transformation and innovation in
1970s the e-commerce age
Internationalisation of the Otto
2010/2011
1950s and 1960s Group
Internet sales exceeded catalogue sales for
Development of the segments
Financial Services and Services the first time
1974-1998
Foundation as a mail order business
Expansion to France, UK, the Netherlands,
1969/74 2015
Japan, Spain, Austria, Italy, Hungary,
1949 Establishment of the Financial Services Dr. Michael Otto transfers majority stake to
Switzerland, USA
Werner Otto established the “Otto segment with the foundation of Hanseatic Michael Otto Foundation
Versand” mail-order business Bank and EOS Group
1987
2016
Otto is the world‘s largest mail order
1950 1972 Trend towards mobile commerce: Mobile
business
The first catalogue is published Development of the Services segment with exceeds desktop traffic for the first time
the foundation of Hermes Versand
Services 2017
Alexander Birken takes over as 5th CEO in
the company’s history
CEO Werner Otto Günther Nawrath Dr. Michael Otto Hans-Otto Schrader Alexander Birken
(1949-1966) (1966-1981) (1981-2007) (2007-2016) (since 2017)
5 Investor Presentation 30 May 2017
Ownership position of the Otto family
Otto family and Michael Otto Foundation (> 98%)
More than 98% of the shares in Otto (GmbH & Co KG)
OTTO Aktiengesellschaft GSV Aktiengesellschaft für are owned by members of the Otto family and by the
für Beteiligungen Beteiligungen Michael Otto Foundation
Dr. Michael Otto transferred his majority stake to the
“Michael Otto Stiftung”, a non-profit foundation, in 2015.
He continues to have influence through his position as
the chairman of the Foundation Board
Otto (GmbH & Co KG) As a family-run business, the Otto Group follows a long-
term oriented business strategy
The Otto family pursues a conservative dividend policy
Otto (GmbH & Co KG) serves both as holding company
and as the operating entity for OTTO, the Otto Group’s
company with the highest sales
Multichannel Financial
Services
Retail Services
6 Investor Presentation 30 May 2017
Sustainability is part of the Otto Group’s core values
Sustainability is a matter of conviction to our family owners
• Sustainability has been a guiding principle for the Otto Group since the 1980s
• Our family owners are also committed to sustainability with activities outside the Otto Group,
e.g. via the Michael Otto Foundation for Environmental Protection
Corporate Responsibility is a top-management task
• Reconciling economic goals with social and ecological sustainability is a central part of the
shareholders’ mandate to the Executive Board
• All members of the Executive Board are incentivised to reach the Group’s Corporate
Responsibility targets
7 Investor Presentation 30 May 2017
Besides Germany, the Otto Group is present in more
than 30 countries
International market presence Revenue by region 2016/17
The Group includes 123 Russia
major companies and is Largest online shop for fashion 2.1%
present in over 30 countries and lifestyle in Germany (otto.de)
North Asia and other
America regions
14.6% 1.9%
Europe
(excl. Germany /
Russia)
Germany
19.8%
61.5%
More than 100 venture
capital investments
The international setup provides important diversification benefits
8 Investor Presentation 30 May 2017
A diversified business: The Otto Group is a globally
active group of retailers and retail-related service
providers
Multichannel Retail Financial Services Services
(E-Commerce, catalogue sales and retail stores) (Receivables management, (Logistics, procurement and other
innovative financial services) retail-related services)
9 Investor Presentation 30 May 2017
Multichannel Retail
Domestic and foreign retailers with three Financial figures for the segment
distribution channels: e-commerce,
catalogue and over-the-counter retail stores
Product range includes fashion, shoes and In mEUR 2016/17 2015/16
lifestyle articles, furniture and home
Revenue 9,819 9,588
accessories, toys as well as electronics,
sports and leisure goods EBITDA 403 433
Broad brand portfolio with diversification
across countries, customer groups and price EBITDA margin 4.1% 4.5%
ranges
E-Commerce is the main growth driver
10 Investor Presentation 30 May 2017E-Commerce is the main growth driver
In FY 2016/17, the Group significantly increased online revenues by 10% on a like-for-like
basis. E-commerce revenues now stand at 7 billion EUR
E-Commerce is by far the most important distribution channel of the Otto Group,
representing 71% of the Group‘s retail revenues in FY 2016/17. The operating entity OTTO
(otto.de) generates over 90% of its overall revenues online
Strong trend towards mobile commerce: Mobile already accounts for more than 50% of
traffic at the Otto Group’s online shops
Revenue by distribution channel in the Multichannel Retail segment
E-Commerce
71%
68%
65%
61%
57%
48% 53%
44%
43% 38% 35%
31%
28% 24% 20% 16% Catalogue
13% 15% 12% 12% 11% OTC retail
11% 12% 13%
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
11 Investor Presentation 30 May 2017Financial Services
Comprises retail-related financial services with a Financial figures for the segment
focus on debt collection and receivables
management
In mEUR 2016/17 2015/16
Segment mainly characterised by the EOS Group
In addition, minority shareholdings in Hanseatic External revenue 732 678
Bank and Cofidis Group, which specialise in
consumer credit EBITDA 320 233
The Financial Services segment is largely EBITDA margin 43.7% 34.4%
independent of the Multichannel Retail segment.
More than 95% of revenues are generated with
customers outside the Otto Group
12 Investor Presentation 30 May 2017The Financial Services segment is dominated by the
EOS Group, an international leader in receivables
management.
EOS Group: International presence in more than 25 countries
Established by the Otto Group
in 1974 as Deutscher Inkasso-
Dienst (DID)
The company operates under
the EOS brand since 2000
Presence in more than 25
countries via 60 operating
companies
More than 20,000 B2B
customers worldwide trust in
the EOS Group
EOS’ core business is receivables management. Its services include the purchase of non-performing receivables,
fiduciary debt collection and business process outsourcing
Target industries are the banking sector, utilities and the telecommunications market, as well as the public sector,
real estate, mail order and e-commerce
For many years the EOS Group has continuously maintained an “A” rating from rating agency Euler Hermes
13 Investor Presentation 30 May 2017Services
OTTO International
Service providers specialising in logistics, mainly Financial figures for the segment
operated under the Hermes brand
Focus on parcel distribution and 2-man-
handling. In addition, further services along the In mEUR 2016/17 2015/16
value chain from procurement to fulfilment
External revenue 1,961 1,838
In Germany, Hermes is the largest alternative to
Deutsche Post in the field of home delivery to EBITDA 90 60
private customers and has over 14,000
franchised parcel shops EBITDA margin 4.6% 3.3%
International market presence with logistics
providers in the UK, France and Russia
14 Investor Presentation 30 May 2017Agenda 1 The Otto Group at a glance 2 Financial review 3 Strategy and outlook 4 Summary 15 Investor Presentation 30 May 2017
Highlights of financial year 2016/17
Revenues in mEUR EBITDA in mEUR EBT in mEUR
12,104 12,512 730
639
+3.4%
+14.3%
262
Growth at constant 187
scope of consolidation:
+5% +40.1%
2015/16 2016/17 2015/16 2016/17 2015/16 2016/17
5% like-for-like growth exceeds target
Strong improvement in profitability
Turnaround completed with positive results on all earnings levels
16 Investor Presentation 30 May 2017Key drivers for FY 2016/17 performance
1
Growth rates of the largest group companies:
Strong
performance of
key • In Multichannel Retail: +6% +6% +11%
subsidiaries
across all three
segments • In Financial Services and Services: +11% +5%
2
Strong growth E-Commerce revenues grow by 10% on a like-for-like basis and reach 7.0 bn EUR
in e-commerce
and mobile Strong shift towards mobile commerce: First year with more traffic from
commerce mobile devices than desktop computers
3
Divesture of 3SI Commerce (legacy 3 Suisses retail business) successfully
Continued
completed
active portfolio
management
Continued focus on companies with sustainable future prospects going forward
17 Investor Presentation 30 May 2017The key credit ratios show the Otto Group’s financial
solidity
2016/17 2015/16
Net financial debt* (in mEUR) 1.432 1.317
F
Net financial debt / EBITDA* 2.0x 2.2x
Net financial debt / Equity* 1.1x 0.9x
Equity / Total assets (in %)* 17.5 21.4
Discontinuation of French activities and continued investments key drivers behind increase in debt
Net debt / EBITDA ratio improved due to increase in profitability
Equity ratio affected by increase in pension obligations due to fall in interest rates
Improvement in Net debt / Equity ratio targeted for the medium term
* All figures in “FS@equity“ view (Financial Services segment accounted for at equity) in order to allow comparability with pure retail and service peers
18 Investor Presentation 30 May 2017Key figures over time
The Otto Group has shown stable and profitable growth for many years…
3SI Commerce
discontinued
*
…and has been able to keep key ratios relatively stable despite restructurings over the past years.
Figures based on the most current financials as published in the
19 Investor Presentation 30 May 2017 Otto Group’s Annual Reports. No restatements of prior years.Diversification of funding sources and a balanced
maturity profile are key to the Otto Group’s financing
strategy
Access to a variety of funding sources, including a large and diversified bank group and a proven track record of
issuance in the capital markets
Well diversified maturity profile
Financial mix: Medium and long-term loans, ABS, commercial paper as well as longer term bond issues
Strong liquidity buffer: More than 1 bn EUR in committed credit lines (large majority undrawn)
Diversified maturity profile Access to a wide range of funding sources
500
Other
Long-term
400 Capital
Market
Debts
300 Short-term (Bonds)
bank loans
200
100
Short-term
- Long-term Capital Market
2017 2018 2019 2020 2021 2022 2023 2024-2034 bank loans Debts (incl. CP)
Maturities of long-term debt (excl. short-term drawings and commercial paper) as of 28 Feb 2017 Split of drawn financial debt as of 28 Feb 2017
20 Investor Presentation 30 May 2017Agenda 1 The Otto Group at a glance 2 Financial review 3 Strategy and outlook 4 Summary 21 Investor Presentation 30 May 2017
Outlook: The strategic priorities for the medium term
are clearly defined
1 Expect further growth at sustained profitability
2 Clear focus on e-commerce as main growth driver
3 Growth and investments across all three segments:
Multichannel Retail: Focus on platforms/ecosystems (otto.de, Aboutyou) and
brands/verticals (Bonprix, C&B, Witt)
Financial Services: Focus on debt collection and receivables portfolios (EOS)
Services: Focus on parcel distribution and 2-man-handling (Hermes)
4 Continued active portfolio management, potentially further targeted disposals
22 Investor Presentation 30 May 2017Agenda 1 The Otto Group at a glance 2 Financial review 3 Strategy and outlook 4 Summary 23 Investor Presentation 30 May 2017
Summary: Key investment considerations
Market leadership in Among the world’s largest online retailers, ideally positioned to benefit from
strong growth sector the growth of the e-commerce sector across all three segments
Diversification across countries, segments, brands, product ranges
Diversification and customer groups. Active portfolio management ensures strategic
coherence
Innovation and Track record of anticipating trends and launching innovations. Successful
transformation transformation from catalogue to e-commerce business
Solid financial profile, supportive bank group, ample liquidity and proven
Financial solidity
access to the capital markets
Long-term orientation of the owners allows investments in infrastructure
Long-term orientation
and innovations, which will be the basis for future growth
Commitment from Family-owned company with a long tradition, a history of stable
family owners management and family owners that are committed to the business
24 Investor Presentation 30 May 2017Contacts
In case of questions, please contact:
creditor-relations@ottogroup.com
Otto (GmbH & Co KG)
Werner-Otto-Straße 1-7
22179 Hamburg
www.ottogroup.com
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