Company Presentation
9M 2020 Results and Performance October 2020
2
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Head Office Address
2nd floor, Tabacalera Building, 900 Romualdez Street, Paco, Manila, 1007 Philippines
Disclaimer
3
First store
Opened in
Mandaluyong
City, Metro
Manila
Expansion
Launched loyalty
program in 2001;
renamed as
Tindahan ni Aling
Puring in 2004
Between 2002 and
2006, launched an
average of 3 new
stores every year
and expanded
operations in North
and South Luzon
Brand recognition
Reader’s Digest
Asia’s “Most
Trusted Brands”
Market leadership
The 2nd largest
hypermarket and
supermarket
retailer in the
Philippines in terms
of net sales
Rapid expansion via organic
new Puregold stores roll-out
and acquisitions
2011 - Opened 38 new
Puregold stores
2012 – Opened 31 new
Puregold stores; Acquired
Parco supermarkets with 19
stores and S&R warehouse
membership shopping club
with 6 stores
Rapid store expansion from 1 to 436 stores in 21 years
Continuing new stores roll-
out via organic geographic
expansion and acquisitions
Acquired Company E with
15 stores in 2013
NE Bodega 9 stores and
Budgetlane 8 stores
acquisitions in 2015
B&W Supermarket
acquisition in 2017First format
introduction
New format
introduction
- 2008
New format
introduction - 2010
Store roll-out through FY 2019
1 3 16 3064
102
215
298
360408
436
1998 2001 2006 2008 2010 2011 2013 2015 2017 2018 2019
4
Macroeconomic Updates
• PH GDP Growth Rates
6.4 7.2 7.56.6 6.5 6.4 6.1 6.4 5.7 5.4
6.3 6.7
-0.7
-16.5
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
source: PSA, NEDA, HSBC
• Q3 2020 GDP forecast to decline by 11.1% (HSBC)
5
Shopper Trends
• Decline in Frequency of store visits
– Local government restrictions/quarantine
• Increase in spending per trip is not enough to offset big
frequency drop
• Shorter browsing time per store visit
• Re-prioritization of spending
– Focusing on essential needs
– Health (vitamins)
– Home-cooking
– Sanitation
• Online Shopping and Digital Payments
6
Update on Sari-sari stores customers
Sari-sari stores challenged to stay afloat:
• Less capital due to lower sales– Needs to prioritize assortment
• Lower sales due to less foot traffic in general– No Work / No School
– Limited Income of shoppers during ECQ
– Limited operating hours
• Sourcing Issues– Out of stock products and no delivery/delayed delivery
– Long lines in Supermarket
– Imposed buying limits (anti-hoarding) by government
– Seniors not given quarantine pass (LGU level)
• Lack of income drive more customers asking for “credit”
7
Puregold Enterprise
S&R
• Membership shopping model
• Catering to the upper income customers
• Class A & B and upper C segment
• Imported and large size SKUs
Puregold
• Caters to the low income and low-middle income customers
• Lower C, D and E market
• Sari sari store customers/resellers
• Popular local and small sized SKUs
8
4 Pillars of Growth
1. Protect our Supply Chain
- Revised inventory targets for emerging categories, food
preparation and health/sanitation
- Increased inventory levels since most companies had supply
chain disruptions during lockdown and raw
materials/packaging material sourcing
- Develop local suppliers to improve supply in provincial areas
2. Improve Logistics end-to-end
- Strengthen and open additional cross-dock facilities for Puregold
- Build new and bigger distribution center for S&R
- Build additional capacity for store to shopper delivery
9
4 Pillars of Growth
3. New Channel Development & Digital Marketing Activities
‒ Reactivate coverage of sari-sari stores
‒ Opening up of new accounts
‒ E-commerce investments
4. Margin Improvement
- House Brands
- Streamlining of current operations thru Digitization
- Front margin pricing strategy
- Marketing activation = more supplier support
10
Update on Puregold – 9M 2020
11
• Consolidated net sales were better than expected; grew by 10.1%
in 9M 2020;
• Gross profit grew by 7.9% in 9M 2020; with gross profit margin
posted 16.4%
• Operating income increased by 11.8% in 9M 2020; with operating
margin at 7%
• Consolidated Net income increased by 10.9% in 9M 2020;
consolidated net profit margin at 4.2% (PGOLD net margin is at
2.6% while S&R net margin is 8.8%.)
• Opened 16 new PGOLD stores; 2 S&R Warehouse and 4 S&R
QSR in 9M 2020; closed 3 PGOLD store
• Operating 455 stores in 9M 2020; with consolidated NSA of
around 583,000 sqm
9M 2020 Results and Performance
12
Operating Performance – 9M 2020
*Same Stores Growth for 2020 are based on stores opened as of end December 2018.
Format Hypermarket, supermarket, extra Membership shopping
Revenue contribution
Gross profit (PHP million) & Margin (%) 12,694 (14%) 7,150 (23.7%)
Total traffic (million) 99 7.2
Average net ticket (PHP) 919 4,465
Net sales growth (%) 4.5% 24.5%
Traffic growth (%) -25.7% 13.4%
Average net ticket growth (%) 44.3% 9.8%
Same Store net sales growth (%)* 4.5% 6.4%
Same Store traffic growth (%)* -28.4% -2.5%
Same Store average net ticket growth (%)* 46.1% 9.2%
Puregold75%
S&R25%
13
Breakdown of Stores (per format) Net Selling Area of Stores (in sqm)
Traffic and Ave Ticket Size
Operating Performance – 9M 2020
*NE Bodega and Budgetlane Stores are converted to Puregold Stores in 2018
518,862 537,965 565,995 582,889
Traffic (in M) PGOLD S&R2018 178 8.2
2019 180 8.9 9M 20 99 7.2
Ave Ticket (in Php) PGOLD S&R2018 612 3,959
2019 656 4,212 9M 20 919 4,465
Group 2018 2019 9M 20Hypermarket 208 230 234
Supermarket 104 103 102Extra 42 47 57S&R 16 18 20S&R QSR 39 38 42
NE & Budgetlane 0 0 0TOTAL 409 436 455
Puregold Only 2018 2019 9M 20
Metro Manila 125 130 136North Luzon 93 100 104
South Luzon 101 106 110Visayas 25 33 32Mindanao 10 11 11
TOTAL 354 380 393
442,449 450,791 468,994 474,963
72,904 83,048 92,883 103,529 3,509 4,126 4,078 4,397
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2017 2018 2019 9M 20Puregold S&R only S&R QSR
14
North Luzon
(112 stores)
Visayas
(40 stores)
South Luzon
(120 stores)
Metro Manila
(170 stores)
BULACAN
RIZAL
LAGUNA
CAVITE
Manila Bay
Laguna de Bay
Caloocan
Pasig
Marikina
Valenzuela
Caloocan
Malabon
Quezon City
ManilaSan Juan
Mandaluyong
Navotas
Makati
Parañaque
Pasay Taguig
Pateros
Las Piñas
Muntinlupa
Key statistics 9M 2020 Geographic coverage
Area with Puregold store coverage
Mindanao
(13 stores)
Store Portfolio – 9M 2020
Total no. of
stores 455
No. of stores
per format
234 hypermarkets;
102 supermarkets;
57 extras
20 S&Rs
42 S&R QSR
Consolidated
net selling
area
about 583,000
square meters
*NE Bodega and Budgetlane Stores are converted to Puregold Stores in 2018
Metro Manila 136 10 24
North Luzon 104 3 5
South Luzon 110 3 7
Visayas 32 2 6
Mindanao 11 2 0
393 20 42
15
Net sales (in Php billions) Gross profit & Margin (in PHP billions)
• Continuing strong revenue growth driven by the 380 Puregold stores and the 20 S&R stores in 2019
• Increasing costs of suppliers resulted to reduced marketing and promo support
• Positive effect of Tax Reform law to Filipino consumers supported continuing growth in revenues
Financial Performance – 9M 2020
124.7141.14
154.49
109.98121.14
2017 2018 2019 9M 19 9M 20
21.69 23.93 25.95
18.3919.84
17.4% 17.0% 16.8% 16.7% 16.4%
12.0%
17.0%
22.0%
27.0%
0
5
10
15
20
25
30
35
2017 2018 2019 9M 19 9M 20
Gross Profit GP Margin
16
Financial Performance – 9M 2020
Other Operating Income (in PHP millions) Operating Expenses (in PHP millions)
EBITDA & Margin (in Php millions)
2,692 2,941 3,263 2,307 2,298
2.2% 2.1% 2.1% 2.1% 1.9%
0.0%
5.0%
10.0%
15.0%
-
1,000
2,000
3,000
4,000
2017 2018 2019 9M 19 9M 20
Other Income % of Sales
14,611 16,639 17,830
13,097 13,645
11.7% 11.8% 11.5% 11.9% 11.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-
5,000
10,000
15,000
20,000
25,000
2017 2018 2019 9M 19 9M 20OPEX % of Sales
12,730 13,719 15,204
10,412 11,594
10.2% 9.7% 9.8% 9.5% 9.6%
0.0%
10.0%
20.0%
30.0%
40.0%
(1,000)
4,000
9,000
14,000
19,000
2017 2018 2019 9M 19 9M 20EBITDA EBITDA Margin
17
Financial Performance – 9M 2020
Operating Income/EBIT and Margins (in PHP millions) Net Income & Margins (in PHP millions)
9,769 10,231 11,384
7,600 8,497
7.8% 7.2% 7.4%6.9% 7.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
(1,000)
1,000
3,000
5,000
7,000
9,000
11,000
13,000
15,000
2017 2018 2019 9M 19 9M 20
EBIT EBIT Margin
5,494 6,200 6,773
4,553 5,050
4.4% 4.4% 4.4%4.1% 4.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
2,000
4,000
6,000
8,000
10,000
2017 2018 2019 9M 19 9M 20
Net Income NI Margin
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Financial Performance – Puregold Only
Revenues (in PHP Billions) Gross Profit & Margins (in PHP millions)
EBITDA and Margin (in PHP millions) Net Profit & Margins (in PHP millions)
98.7 109.53118.24
84.93 90.99
-10
10
30
50
70
90
110
130
150
2017 2018 2019 9M 19 9M 20
15,758 16,997 17,659
12,632 12,694
16.0% 15.5% 14.9% 14.9% 14.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
-
5,000
10,000
15,000
20,000
25,000
2017 2018 2019 9M 19 9M 20GP GP Margin
8,995 8,893 9,281
6,436 6,356 9.1% 8.1% 7.8% 7.6% 7.0%
0.0%
5.0%
10.0%
15.0%
20.0%
-
2,000
4,000
6,000
8,000
10,000
12,000
2017 2018 2019 9M 19 9M 20EBITDA EBITDA Margin
3,842 4,274 4,330
2,525 2,399
3.9% 3.9% 3.7% 3.0% 2.6%-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2017 2018 2019 9M 19 9M 20NIAT NIAT Margin
19
Financial Performance – S&R Only
Revenues (in PHP Billions) Gross Profit & Margins (in PHP millions)
EBITDA and Margin (in PHP millions) Net Profit & Margins (in PHP millions)
25.8731.61
36.32
2530.1
2017 2018 2019 9M 19 9M 20
5,795 6,932
8,291
5,757 7,150
22.4% 21.9% 22.8% 23.0%23.7%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
-
2,000
4,000
6,000
8,000
10,000
12,000
2017 2018 2019 9M 19 9M 20
GP GP Margin
2,162 2,399 2,917
2,0282,650
8.4%7.6% 8.0% 8.1%
8.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2017 2018 2019 9M 19 9M 20NIAT NIAT Margin
3,712 4,826
5,922
3,976
5,238
14.3% 15.3% 16.3% 15.9% 17.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2017 2018 2019 9M 19 9M 20EBITDA EBITDA Margin
20
Financial Performance – 9M 2020
Notes:
1.Average of inventory at the beginning and end of the period / cost of sales x 363 (for full year))
2.Average of trade receivables at the beginning and end of the period / net sales x 363 (for full year)
3.Average of trade payable at the beginning and end of the period / cost of sales x 363 (for full year)
Working capital days due to S&R importations and
Puregold rapid store expansions and acquisitions
Trade Receivables Days
Inventory Days
Trade Payables Days
New Puregold Store roll out and new S&R Stores to be opened in 2019
Similar payments terms to suppliers to avail of continued discounts
2018 2019 9M 20
7.6 6.6 2.9
58.0 55.4 57.0
23.9 22.9 15.8
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Guidance for 2020
• Consolidated net sales target to grow between 4 to 5% in 2020
– Opening of 25 new Puregold stores
– Opening of 2 S&R Warehouse stores
• Improve PGOLD gross and net profit margins versus 9M 2020
• Sustain S&R gross profit margins versus 9M 2020
• Pursue acquisitions and expand into new geographic locations
22
Use of Proceeds: Php 12 Billion
1. M&A Opportunities Php 5 billion
2. Increase Inventory Supply by 1.5 to 2 weeks Php 4.5 billion
3. Investments in Logistics (DC and Cross Dock) Php 2 billion
4. S&R Solar Projects for 8 warehouse clubs Php 200 million
5. S&R Store Renovations Php 300 million
23
CAPEX Guidance for FY 2020
• CAPEX Budget of Php 3.4 billion in 2020
– Php 1 billion for 25 new Puregold Stores
– Php 1.6 billion for 2 S&R stores
– Php 200 million for 10 S&R QSR
– Php 600 million Maintenance Capex
Q & A
Thank you!