earnings 3Q17 FINAL V9b

PT Matahari Department Store Tbk
Q3 2017/9M 2017 Earnings Call

October 2017
1

Table of Content

 Indonesia Macro Overview

4

 Q3 2017/ 9M 2017 Financials

 Operational and Strategic Updates
 Store network

16

 Key Financial Highlights

6

 Operations, Merchandising and Marketing

17

 Sales and DP/CV Mix

7

 Mataharistore.com

18

 Same Store Sales Growth

8

 Logistics

19

 Regional GDP, Sales and SSSG

9

 Summary

 Gross Profit and Margin

10

 Appendix

 OPEX

11



 EBITDA and Margin

12

 Net Income and Margin

13

 Inventory and Cash Position

14

Shareholding Structure

20

22

2

Indonesia
Overview
IndonesiaMacro
Macro
Overview

3

Key Macro-Economic Data
GDP Growth

Consumer Confidence Index
125.9
123.4 123.8
123.7

116.8
115.4
121.5
114.2

122.4 121.9
112.6
112.1
112.6
113.3
117.1
110.0
115.9
115.3
109.8
113.7 113.3
110.0
109.0
109.9 103.7
107.5

.
Inflation
7.26%

5.01%
4.71%
5.04%

5.03% 4.92%

5.01%

5.02%

4.92%
5.18%

4.94%

4.67% 4.73%

5.01%

2Q17

1Q17

4Q16

3Q16

2Q16

1Q16

4Q15

3Q15

2Q15

1Q15

GDP Regional

2Q16

2Q17

6.83%

5.68%

5.90%
5.41%

4.94%

4.86%
4.44%

4.09% 4.09%

4.33% 4.37%
3.61%

3.31%
3.49%
3.82%
3.33%
4.42%
3.07% 2.79%
4.17%3.88% 3.72%
3.60% 3.45%
3.58% 3.83%
3.35%
3.21%
3.02%
4.14% 4.45%

Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15

Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17

Aug-17
Sep-17

7.18%
6.25%
4.89%

4Q14

3Q14

2Q14

1Q14

99.3

Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17

97.5

5.14%

Sumatra

Java

Kalimantan

Eastern Indonesia

Source: Bank Indonesia and BPS

4

Q3
2017/ 9M
2017Overview
Financials
Indonesia
Macro

5

Key Financial Highlights
9M‘16

9M ‘17

Gross Sales

13,215

13,208

SSSG

6.0%

-2.7%

23.9%

Gross Profit

4,710

4,724

0.3%

305

52.9%

EBITDA

2,274

2,164

4.8%

453

167

63.2%

Net Income

1,610

1,505

6.5%

Gross Margin

34.8%

34.7%

10 bps

Gross Margin

35.6%

35.8%

20 bps

EBITDA Margin

15.5%

9.6%

590 bps

EBITDA Margin

17.2%

16.4%

80 bps

Net Margin

10.8%

5.2%

560 bps

Net Margin

12.2%

11.4%

80 bps

Q3 ‘16

Q3 ‘17



Gross Sales

4,181

3,191

23.7%

SSSG

-22.2%

-26.0%

Gross Profit

1,456

1,109

EBITDA

648

Net Income



IDR Bn

IDR Bn

0.1%

6

Sales in Q3 impacted by seasonality, YTD sales flat with LY

IDR Bn

Q3

FY

9M

16,347
13,208

13,215

15,491
37.0%

36.7%

35.5%
DP

64.5%

CV

4,181

DP
3,191

35.6%
63.0%

37.0%

DP

63.3%
63.0%

36.6%
CV

64.4%
CV
63.4%

FY '15

FY '16

Q3' 16

Q3' 17

9M' 16

9M' 17

7

SSSG was -26% in Q3 2017 and -2.7% YTD for 9M 2017

SSSG %

FY

6.8%

6.0%

5.5%
-22.2%

FY' 15

9M

Q3

-26.0%

-2.7%

FY' 16

Q3’ 1

Q3’ 1

9M’ 1

9M’ 1
8

GDP growth, SSSG and Sales per region
Gross Sales by Region (%)

SSSG Outside Java
Q3 : -25.0 %
9M : -3.1 %
Kalimantan

Q3 2017

9M 2017

Greater Jakarta

27.3%

28.1%

Java exc Jkt

34.1%

34.8%

Outside Java

38.6%

37.1%

Total Sales

100.0%

100.0%

Sumatra

Greater Jakarta
East Java

SSSG Greater Jkt
Q3 : -25.7%
9M : -3.1%

Bali and East Indonesia

West Java

Note: Regional GDP as of Q2 2017
Source: Bank Indonesia for GDP growth

Central Java

SSSG Java
Q3 : -27.5%
9M : -2.0%

>7%
6%< GDP≤ %
5%< GDP≤ %
4%< GDP≤ %
GDP≤ %
Negative

9

Merchandise margins declined on seasonality in Q3, up 20 bps in 9M
Gross profit and margins
IDR Bn

FY

9M

Q3
6,146
5,627

4,710

1,456
35.5%

4,724

35.8%

1,109

35.6%

35.2%
34.8%
34.7%

FY' 15

FY' 16

Q3' 16

Q3' 17

9M' 16

9M' 17

Gross profit as a % of Gross Sales

10

On a comp store opex basis, the impact of weaker sales is less pronounced
Opex(1) as a % of Gross Sales
Comp store

FY

Q3

9M

Total Company
15.1%

18.6%

18.9%

3Q' 16

19.1%

3Q' 17

14.6%

14.7%

9M' 16

9M' 17

Total Company
25.2%
19.4%

19.3%
18.4%

FY' 15

FY' 16

Note
1. Opex calculated as Adjusted Gross Profit less Adjusted EBITDA

Q3' 16

Q3' 17

9M' 16

9M' 17
11

Expense savings partially offset seasonality and weaker sales
EBITDA and Margins
IDR Bn

FY

Q3

9M

2,872
2,661

2,274

2,164

648

305

16.7%

17.2%

16.4%

16.6%
15.5%
9.6%

FY' 15
Notes
EBITDA adjusted for severance pay

FY' 16

Q3' 16

Q3' 17

9M' 16

9M' 17

EBITDA as a % of Gross Sales

12

Net income was Rp1,505bn YTD
Net Income (IDR Bn)

FY

9M

Q3

11.1%
9.8%

2,020
1,781
1,610

1,505

453

11.4%

167

11.7%
11.1%

12.2%

7.6%

10.8%
5.2%

FY' 15

FY' 16

Q3' 16

Q3' 17

9M' 16

9M' 17

Net Income as a % of Gross Sales

13

Balance sheet remains healthy
INVENTORY DAYS, CASH POSITION AND OUTSTANDING BANK LOAN BALANCE

Inventory days and cash position improved

End of Jun 2017

End of Sep 2017

112 days

118 days

Rp 2,550 Bn

Rp 768 Bn

Rp 0

Rp 0

FY 2016

FY 2017E

Capex

Rp357 Bn

Rp400-450 Bn

Refurbishments

16 stores

20-25 stores

LTM Ave. Inventory Days
Cash on Hand
Outstanding Bank Loan Balance
CAPEX AND REFURBISHMENTS

14

Operational and Strategic Updates

15

Expansion policy remains unchanged
Store Count Split by Region
Greater Jakarta

o Opened 1 new store in July
o Still on track to open 1-3 more new

Java exc Jkt

Outside Java

35.3%

36.8%

39.7%

40.1%

40.4%

36.2%

35.2%

32.8%

32.4%

31.1%

28.5%

28.0%

27.5%

27.5%

28.5%

2012

2013

2014

2015

2016

stores by the end of 2017

Actual
No

Geographic area

Forecast

FY2016

As of 30 Sep 2017

Balance in 2017

# of stores

# of stores

# of stores

# of stores

% mix

1 Jabodetabek (Greater Jakarta)

43

43

0

10

19.6%

2 Java (Exc Greater Jakarta)

47

51

0-1

12

23.5%

3 Outside Java

61

62

1-2

29

56.9%

151

156

1-3

51

100.0%

Total

Future Pipeline 2018 and onwards

16

Operational updates
Merchandising
• Entered into a multi-year strategic
agreement with Disney
• Rolling out new Direct Purchase
Handbag lines
• Extending our shoes and apparel
collection to cater for active
lifestyle customers

Operations
• Reformatting merchandise
assortments in stores
• Reducing over-assorted areas
• New fixture programs being
implemented
• Widening aisles and improving
access

Marketing
• Enhancing both Matahari and
Private Label brand positioning
• Implementing simpler promotional
policies
• Continuing with the increased
emphasis on digital media
• Further leveraging our growing
loyalty customer base

17

Mataharistore.com performance update
Sales by Region (9M 2017)

No. of transactions

Store pick-ups (%)
DP: CV sales mix

Q2 2017

Q3 2017

~133,000

~130,000

1.3%

2.7%

83:17

86:14

Sales by Category - Offline (9M17)
Youth Boy,
14.2%

Greater
Jakarta,
43.3%

Outside
Java,
11.0%

Sales by Category - Online (9M17)

Youth Girl, Ladies,
8.3%
10.2%
Cosmetics,
6.2%

Children,
14.3%

Men, 17.1%

Java excl.
G. Jkt,
45.7%

Bags/
Accessories
, 2.4%

Shoes,
21.5%

Others,
5.9%

Shoes,
16.2%
Ladies/
youth girl,
26.1%

Men/ Youth
boy, 36.5%

Children,
11.6%
Bags/
accessorie
s, 5.3%
Cosmetics,
0.4%
Others,
3.8%

18

Expanding our Logistics Capabilities

 Created a 100% owned subsidiary to focus on Logistics
 Delivery to both Stores and consumers
 Developed an e-commerce fulfillment facility in central Jakarta
 Expanding our Surabaya and Bandung operational hubs
 Increased investment in owned and operated fleet

19

Summary
 Q3 SSSG came in at -26% primarily due to the seasonal shift in Lebaran, with YTD SSSG being
-2.7%
 Expansion plans remain unchanged, with 6-8 new stores earmarked for completion in 2017
 Merchandise and operational initiatives are on track, including the signing of the multi-year
agreement with Disney
 Further developing logistics capabilities to support both offline and online sales and at the
same time reducing costs
 Overall strategy is to continuously explore ways to better serve our existing customers, as
well as to grow our overall customer base

20

Appendix

21

Shareholding Structure

Public

Multipolar

82.5%

17.5%

PT Matahari Department Store Tbk

22

Notes

23