Fielmann Group Ag U/Adr

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Fielmann Group AG following the publication of the financial half-year figures of 2025. And with this, I'm happy to hand over to Fielmann's CFO, Steffen Becher.

Hello. Well, Ingmar, that was definitely the most enthusiastic intro we had in a long time. Thank you very much for that. And I think it's just It really given the way the company performed. I think this is the right setting the right tone. So to say welcome everybody to our earnings call for the half year one results that and that is the period ending 30th of June. Today is the 28th of August. We already published our preliminary numbers just ahead of our AGM on the 10th or 11th or something of July. So no real news, but still we want to give you the opportunity to hear a little bit more on the numbers and definitely give you the opportunity to ask any questions You might have, you are all aware that this is the half year one results call and we're going to host in September, we're going to host a more comprehensive session on our vision 2030 and or vision 2035 and targets 2030 that we announced on the AGM where we're going to So let's jump straight to the summary. But before we do that, I have with me Nils Scharwichter and Nils Scharwichter most of you know maybe Nils you turn on the camera there is Nils hello and Nils has been as I introduced him to some of you as he was one of my guys so working in the CFO office He has been with the company six years then left us to do some equity research then came back. We're very happy to announce that mid of August we promoted Niels to Permanent full-time director of investor relations Patrick Möller who was with us for a few months helped us tremendously in taking what we had you know telling us what you know normal companies should have helped us through the AGM and he's now taking a well-deserved break and we thank him very much for everything he did for us. And he basically helped me to jump into this position. And I'm actually super proud that somebody who after school decided to do his first professional endeavor with Thielmann is now a director in our company and part of the senior management team. Thank you very much for everything you've done here so far. Good luck. And very glad to have you on board or being in a different role. With that, we go to the summary of the first half year in a nutshell. We continue our growth trajectory. We have a slight delay here. We continue our growth trajectory. We continue our margin expansion. We are in a challenging environment. Consumer sentiment is still, because of everything that's going on, is still difficult. In the first quarter, we had a lot of snow, even a lot for upper Midwest standards, a lot of snow. And then we had Liberation Day right on the beginning of the second quarter. And all that was absolutely not helpful for consumer sentiment, but it has picked up since. in, you know, in late May, June, it started to pick up. But still, across the world, challenging consumer sentiment was true. We do have a strong development across all major markets. We have a very strong development across all product categories. So very Happy with the numbers that we're producing. You see that group sales increased by 12%, 4.5% of that organically. Around 8% come from the U.S. acquisition, so SHOPGO that we consolidated fully for the first time on 1st July 2024. So with that, we're basically down to organic growth for the remainder of the year. Just want to flag that to you so that you don't expect, you know, all these big numbers from now on. Quarter by quarter, it's going to be organic. 4.5% is good. It's not great. It's definitely at the low end. Over the last five, six years, we delivered around 6% organic growth, but, you know, with four and a half in that environment, we are satisfied. Vision 2030, our target is around 5% organic growth in that part of the business. So we're kind of there, but as I said, definitely on the lower end of the range that we're going to deliver. Our group suggested EBITDA profitability. We always said, and I've been saying it for the last, two years actually that I've been working for a few months just at my anniversary one and a half weeks ago so for the last two years I've been saying we're working on profitability we're working on profitability and we're working on profitability adjusted EBITDA improved significantly margin for the group is now at 24% after 21% last year Europe at 25% US at 15% all with quite impressive growth rates and that is You know, the usual mix. That's the great news about our business. There are no news in terms of what we do. We're pulling the same levers that we've been pulling, you know, cost control, efficiency in the stores, and, and improve continuously improving sellout structure and all that trust profitability. for the business and gets us fully into the target corridor that we have. Adjusted EBITDA, EBT increased also substantially by 29%. Margin is now at 12.9% after 11% in the last year and that is despite, you know, us I think 300 million and 300 million in debt, which obviously is not helpful for EBT. You know, we have all the PPAs, so the acquisition related riders of the intangible. So despite all that, our margin is improving. And it's actually quite a nice pyramid shape that you want to have as a As a CFO, you want to have group sales at 12%, adjusted EBITDA by 26%, and then adjusted EBT by 29%. So you have this pyramid structure. The further down you go in your P&L structure, the higher the percentage growth rate. That shows you that we're looking at operation leverage here, which is exactly what we're aiming for. We confirmed, and I know this is boring, but there are quite a few companies who didn't. We confirm our outlook that we published for the financial year 2025. So we're saying nearly 2.5 billion sales, 24% margin for the group. And looking at the results, you see why we do that. We have a slide later at the end of the presentation on that. And we announced Vision 2035 and targets for 2030 in our ADM. And as I said, in September, we're going to talk about that. On the next slide. You see the numbers basically again, but in a much prettier shape. You see the total consolidated sales with the organic growth. CAGR actually for 23 to 25 was 12%, so we're pretty stable on the consolidated sales growth rate. CAGR for adjusted EBITDA was about 19% now this you know the last year we were 26 so we see an acceleration but that's also acquisition driven Q2 in profitability we typically talk about year to date but Q2 was a bit lower but that's basically a phasing of our marketing expenses we really held back you know with timing the marketing a little bit according to season and that changes every year because you know we're not one of these companies that says we always do this campaign then and then we do the other campaign then so we face it a bit so there's an 8 million difference in marketing spent between Q1 and Q2 and if you factor that in for the Excel guys among you that's the in other operating expenses if you factor that in then you see that actually the profitability across the quarters is pretty similar product mix we always if the Sun is with us and it was this year especially in Germany if the Sun is with us we always have a slightly higher Cost of goods sold in Q2 that's basically driven by more sun and therefore more sunglasses and margin on sunglasses without prescription is lower than margin on glasses with prescription. And that's basically it because all the Northern Europeans, once the sun comes out, they come to feel them and they buy new pair of sunglasses. We talked about 28 or 29% growth. The CAGR for the two years is 23%. So we see an acceleration. We see a stableness in the sales growth. We see an acceleration in the profitability growth, which is exactly what we wanted. A bit more into detail, the top line growth or the top line increased by 12%. By now, everybody knows that song. Let's look at what we mean when we say all product categories in all countries. Here you see the product categories. First, you look at it and sunglasses is the only one. that helped me back by writing double digit growth in all product categories. Sunglasses still at plus 9%. and all other categories at double digit growth. This is obviously mainly influenced by the Schottko optical consolidation, especially the contact lenses, because the contact lenses are a strong product in the U.S. Organically, we put that here for your further information. and adjacent healthcare services relatively small high growth because all the eye exams we do in our US practices as basically adjacent those eye exams done by the optometrists are actually adjacent healthcare services by 87% Organically, it's still 50%, but that's because we're really trying to broaden in the US. We're trying to broaden the availability of doctor appointment, and that's why that category grows. And it also grows because we have our eye care, eye health checkup in Europe, and that is developing as well as undoubtedly you have. I wear 4% some of that influenced by by our US acquisition organically to be honest SVS vision a bit struggling if you put if you put together the SVS and Shopko and you treat them as if we acquired them all on day one, you see a slight growth in unit sales in the US and we're flat to slightly positive in unit sales in Europe. As I said, very, very challenging consumer environment at the moment for us. so we're pretty happy that we're outperforming the market with our growth and that's partially by this growing slightly above zero and it's partly because we're growing quite extensively as we do in you know countries like Spain and Austria and the Czech Republic and Poland we see that there the economy is a lot more is a lot more vibrant and therefore we also see that we have higher unit sales than for example in Germany Innovation is driving our adjacent iHealth business. We have the, as I said, we have the iCheckup and then we have the business in the US and you might, you know, all these trends that you see here are basically the foundation for our 2030 targets. So these strategic growth drivers that you see on this page and that we talked about, are basically the growth drivers that we're going to use to get to our 2030 targets. But as I said, that's more equivalent than what September had. One way to tell you the story. So product categories overall, you know, ignore sunglasses, double digit growth. We're very happy with that. If we look at the individual markets, On the next page, you see the company growing, the group growing at 12%, obviously the U.S. at 143%. That's driven by the SHOPCORE optical consolidation. I'm so glad that this consolidation part is over and we can talk about real numbers going forward. All the other countries, as you see, 5%, 8%, you know, 5%, 6%. So really a healthy development. Think about where we stand and what the state of the world is and you know and what market position we have so you have an absolute market leader in Germany, Switzerland and Austria and in these countries we still grow by five and six percent and outperforming the market overall. We're still at mid-syndagic and that's as we always said you know four to seven percent is our guidance for organic growth in Europe The US is now our second largest market, which still driving the integration of the businesses. So, you know, I said earlier in Q1, we were done with the, you know, systems integration. So the, you know, management team integration, now it's all about business model transformation, which try out a few things and you know, identify the winning formula for all the U.S. But still, all that integration really drives profitability, as you will see on, you know, on one of the latest slides that the profitability has really increased quite dramatically. And actually, we're higher in the U.S. profitability now than we were individually in those companies when we acquired them. Spain and Portugal still our high growth dynamic. countries they are performing the market I always said the great thing about our country portfolio is not only that you know we touch the lives of a few hundred million people but and you know help them to hear and see the beauty in the world better but we also have a great portfolio of countries in terms of very, very mature market leading companies in USA, you know, and then some really hot growth engines in Spain and Poland, and then some, you know, next generation growth entries like in the Czech Republic. In others, that's basically where you're going to find Poland. You're also going to find Italy. They have returned to growth. You know, we closed quite a few stores there because we had to review our profitability profile and it was not a profitability profile. It now is. Still, you know, mid-teens in terms of profitability for the year and Italy has also now returned to growth. after the store closes. So they're only at 2%, but still, you know, after everything the country went through, it's pretty great. And we're continuing to become more and more international 39% of sales are generated by Germany and that's just because of the US dollar that depreciated against the euro quite dramatically. Otherwise, we would have hit our target of 40%. But you know, in 2023, we were at 30%. So quite a dramatic increase in, in, you know, out of Germany sales, which helps us to be, you know, a lot more balanced across the global economy, looking at profitability. On the next slide, significant margin improvement. I told you all that you read about it. Yeah, Europe at 24.8%, so 25%, the US at 15%. You know, Europe is going to be there or there about for the end of the year, we said that in our, in our, in our guidance for the year, the US is going to improve a little bit. definitely not to 20%, somewhere between 16 and 18, 19-ish. And that's where the U.S. is going to land. So they're going to improve further and further and thinking about that they came from just under 10% by the end of 2024, ending up at mid-teens, high mid-teens is going to be a great success. And we're very happy with the EBT, I think. Looking at half the numbers, we also look at the balance sheet. Pretty happy, actually very happy. You need to move that finger away from the numbers. Yeah, thanks. Cash generation in the first year, we had a bridge facility for about 305 million and we refinanced 275 million. So despite that decrease in financial debt, which we paid out of cash, we still have 100 million more cash at hand than we had at the year end. We're going to pay a dividend of about 96 million. So first half year, we worked for the company to provide the company with. enough cash to grow and invest net debt to EBITDA so unadjusted EBITDA so our leverage is at 1.1 if you adjusted for the dividend that we don't that we then paid like two weeks after after the cutoff date and it's still 1.2 coming from 1.7 so pretty dramatic de-leveraging and that's all because of the strong cash generation, the EBITDA growth. So, you know, two-pronged approach. We're actually paying down debt, we're actually accumulating cash, and we're growing the EBITDA at the same time, and that's how we deliver the business. You know that in terms of leverage, our policy is, you know, we feel very comfortable with anything that has and that is below two. And yeah, we're at the lower end of that and that is including leases. Our equity ratio improved and jumped over the 40%. And then one of the bigger effects for those who look in detail at the at the balance sheet is the currency translation. So Euro to U.S. dollar, U.S. dollar depreciated from 104 against the Euro in December to 117. and that really drives a decrease in intangibles, goodwill and right of use assets, aka rent or leases, whatever you want to call it. That effect decreases our balance sheet by 35, 45 million euros alone just because of that currency translation effect. But as I said, it's all a non-factual rent, it's a translation and not transactional. On the next page, looking at our cash flow. Cash flow statement is mainly impacted by the U.S. acquisition and opposite roles in the business. Operating cash flow jumping from 198 to 236. The main difference here is slightly lower cash conversion with paid out bonuses. So slightly higher bonuses, so the provisions went down, the cash went out. So the cash conversion rate between operating cash and EBITDA moved from 86 to 83, still a very high cash generation. And the driver behind the growth is the EBITDA improvement because, you know, we're a cash on transaction business. People get their glasses and they pay. And then, yes, we deal with health insurances and all that. But the major part is cash on delivery. And that broke for a very healthy cash flow profile. In the U.S., we actually take down payments on ordering. So we actually have a slightly, you know, we actually have a positive working capital effect from growth there. So that's a small that you see. Cash flow from investing activities. 37 million, prior year was 15 million. If we just look at the maintenance and growth capex, remember we paid for the SHOPCO acquisition on the 1st of July. This is the 30th of June, so it's not in here. If you just look at maintenance and growth capex, we are this year at 37 million, last year we were at 33 million. And that is basically in line with our growing business. And then the prior year, you know, why is the prior year 15 million when you already spent 15 million for maintenance and growth capex? Well, because we had disposals and we had basically and basically to generate the cash. And that was a 18 million cash inflows. So 33 minus 18 is the 15. And this year we didn't do any of that in a significant manner.

So it's 37 and this is seven it's zero. So that's why 37 and 15 million.