Interim Report Axfood AB – 1 January-30 September 2011Interim Report Axfood AB (publ)THIRD QUARTER SUMMARY•      Axfood’s ...
Interim Report Axfood AB – 1 January-30 September 2011CEOS COMMENTSFor the third quarter of 2011, Axfood presented yet ano...
Interim Report Axfood AB – 1 January-30 September 2011SALES, AXFOOD GROUPThird quarterConsolidated wholesale and retail sa...
Interim Report Axfood AB – 1 January-30 September 2011EARNINGS, AXFOOD GROUPThird quarterOperating profit for the quarter ...
Interim Report Axfood AB – 1 January-30 September 2011THE SWEDISH FOOD RETAIL MARKETAccording to Statistics Swedens retail...
Interim Report Axfood AB – 1 January-30 September 2011HemköpThird quarterHemköp is once again showing stronger earnings an...
Interim Report Axfood AB – 1 January-30 September 2011PrisXtraThird quarterPrisXtras sales during the third quarter amount...
Interim Report Axfood AB – 1 January-30 September 2011Axfood NärlivsThird quarterAxfood Närlivs had continued favourable s...
Interim Report Axfood AB – 1 January-30 September 2011SIGNIFICANT RISKS AND UNCERTAINTIESIn the course of its business the...
Interim Report Axfood AB – 1 January-30 September 2011FORECASTAxfoods goal for 2011 is to achieve an operating profit at l...
Interim Report Axfood AB – 1 January-30 September 2011AUDITORS REVIEW REPORTTo the Board of Directors of Axfood AB (publ)R...
Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL STATEMENTS, GROUPCondensed statement of comprehensive inco...
Interim Report Axfood AB – 1 January-30 September 2011Condensed statement of financial position, GroupSEK m               ...
Interim Report Axfood AB – 1 January-30 September 2011Condensed statement of cash flows, Group                            ...
Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL STATEMENTS, PARENT COMPANYCondensed income statement, Pare...
Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL DEFINITIONSAverage number of employees during the year: To...
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Axfood interim report q3 2011

  1. 1. Interim Report Axfood AB – 1 January-30 September 2011Interim Report Axfood AB (publ)THIRD QUARTER SUMMARY• Axfood’s consolidated sales for the period July–September totalled SEK 8,735 m (8,582), an increase of 1.8%.• Retail sales for Group-owned stores rose 0.1% during the period. Like-for-like sales decreased by 1.2%.• Operating profit for the period was SEK 370 m (364).• Profit after financial items was SEK 362 m (357) for the period.• Profit after tax for the period was SEK 267 m (262), and earnings per share were SEK 5.09 (5.00).• The work on converting Vi stores to Hemköp has begun.• Axfood Närlivs entered into a cooperation agreement with Svenska Statoil.• Axfood’s goal for 2011 is to achieve an operating profit at least as the same level as 2010.NO SIGNIFICANT EVENTS HAVE TAKEN PLACE AFTER THE BALANCE SHEET DATEKey ratios Change, Nine months Nine months Change, Full yearSEK m Q3 2011 Q3 2010 % 2011 2010 % 2010Net sales 8,735 8,582 1.8 25,881 25,375 2.0 34,260Operating profit 370 364 1.6 928 888 4.5 1,209Operating margin, % 4.2 4.2 0.0 3.6 3.5 0.1 3.5Profit after financial items 362 357 1.4 902 862 4.6 1,172Profit after tax 267 262 1.9 665 635 4.7 862Earnings per share, SEK1 5.09 5.00 1.8 12.67 12.10 4.7 16.42Cash flow per share, SEK 0.1 -0.9 - -2.0 -1.8 -11.1 0.0Cash flow from operating 6.9 6.3 9.5 19.1 19.8 -3.5 26.0activities per share, SEKReturn on capital employed, %2 32.9 33.3 -0.4 32.9 33.3 -0.4 33.2Return on shareholders equity, %2 31.0 32.3 -1.3 31.0 32.3 -1.3 30.7Shareholders equity per share, SEK3 - - - 57.35 52.30 9.7 56.64Equity ratio, % - - - 38.0 37.2 0.8 38.81) Before and after dilution.2) Moving 12-month figures.3) Net asset value per share corresponds to shareholders equity per share.For further information, please contact: The information in this interim report is suchAnders Strålman, President and CEO, mobile +46-70-293 16 93. that Axfood is required to disclose in accord-Karin Hygrell-Jonsson, CFO, mobile +46-70-662 69 70. ance with the Securities Market Act.Anne Rhenman-Eklund, Head of Corporate Communications, +46-8-553 998 13, Submitted for publication at 7.30 a.m. (CET)mobile +46-70-280 64 59. on 20 October 2011. 1
  2. 2. Interim Report Axfood AB – 1 January-30 September 2011CEOS COMMENTSFor the third quarter of 2011, Axfood presented yet another favourable result in a business environmentcharacterized by uncertainty. Again, our stable profitability development testifies to Axfoods efficiency andgood cost control.Favourable results overallHemköp continues to strengthen its earnings, with good profitability and positive like-for-like sales. Withthe structural measures now completed, the focus is on driving growth, renewing the stores andstrengthening the brand. A key part of the latter are the agreements that have been signed with most ofthe Vi retailers, under which Hemköp is being expanded by roughly 50 proprietor-run stores during theautumn. The work on converting the stores is expected to be completed by early December. Hemköpsgoal to achieve a 2% operating margin for the full year 2011 and 3% for 2012 remains.Willys showed continued stable development with good margins despite establishment of a number of newstores and the high pace of remodelling. The renewal programme aimed at improving customers shoppingexperience is now beginning to generate results. At the same time, the like-for-like sales trend has beenunsatisfactory. This can be attributed in part to dampened growth during the year for the stores that havenot yet been renewed. It is for this reason that the pace of store modernization will remain undiminished in2012.PrisXtras accumulated result is in line with plan, but sales continue to be affected by extensive road work.The goal remains to attain a positive result for the full year.For Axfood Närlivs, sales were very favourable for the wholesale, cash & carry and renewed e-commercebusinesses. In addition, during the quarter a new two-year agreement was signed with Svenska Statoil onthe supply of newsstand and food retail products.Dagab continues its efficient and stable performance with good cost control and high delivery reliability.Parallel with this, Dagabs extensive environmental programme continues in inventorying, transports andalternative energy sources.Market outlookThe market outlook and growth in the food retail sector are difficult to judge amidst the prevailingturbulence. The economic crisis in several EU countries and the USA is giving rise to considerable anxietyand elevated caution among households and businesses, who fear an economic downturn. This maycontribute to more price consciousness and restraint among customers, which would benefit private labelproducts as well as low-price alternatives. We are also facing an approaching contract negotiation, whoseoutcome is uncertain.Ambitious pace of investment and good cost control to ensure profitable growthAxfoods strategic direction remains unchanged, and during the rest of the year we will continue to focuson greater efficiency and good cost control in order to parry uncertainty in the future. Our goal is also tooffer all our customers alternatives that give them value for their money. At the same time, we will maintaina high pace of modernization and development of our various concepts. Capital expenditures for 2011 areexpected to amount to SEK 900–1,000 m (862), and the same level is anticipated for 2012.Axfoods goal for 2011 is to achieve an operating profit at least at the same level as in 2010.Anders StrålmanPresident and CEO 2
  3. 3. Interim Report Axfood AB – 1 January-30 September 2011SALES, AXFOOD GROUPThird quarterConsolidated wholesale and retail sales for the Axfood Group totalled SEK 8,735 m (8,582) during the thirdquarter, an increase of 1.8%. Store sales for the Axfood Group (wholly owned stores and Hemköpfranchises) totalled SEK 6,976 m (6,926), an increase of 0.7%. Sales for Axfood-owned retail operationsrose 0.1% during the third quarter, with a 1.2% drop in like-for-like sales. Axfoods private label share was23.1% (21.6%) as of September.Nine monthsConsolidated wholesale and retail sales for the Axfood Group totalled SEK 25,881 m (25,375) for theperiod, an increase of 2.0%. Store sales for the Axfood Group (wholly owned stores and Hemköpfranchises) totalled SEK 20,911 m (20,789), an increase of 0.6%. Sales for Axfood-owned retail operationsrose 0.4% during the period, with a 1.0% decrease in like-for-like sales. Net sales per operating segment Nine months Nine months SEK m Q3 2011 Q3 2010 2010 2011 2010 Hemköp 1,143 1,164 3,532 3,667 4,978 Willys 4,706 4,660 14,056 13,791 18,613 PrisXtra 123 143 409 475 637 Axfood Närlivs 1,714 1,571 4,775 4,355 5,847 Dagab 6,427 6,379 19,191 18,980 25,701 Other1 1,038 993 3,140 3,012 4,052 Internal sales Dagab -5,425 -5,381 -16,210 -16,026 -21,694 Axfood Närlivs -3 -6 -18 -18 -26 Other -988 -941 -2,994 -2,861 -3,848 Total 8,735 8,582 25,881 25,375 34,2601) Includes joint-Group support functions, such as purchasing coordination, IT and corporate offices. Retail sales, own and franchise stores Like-for-like Nine months Like-for-like SEK m Q3 2011 %1) sales, %1) 2011 % 1) sales, %1) Hemköp 1,130 -1.8 0.6 3,493 -3.7 0.8 Hemköp franchises 1,017 4.6 1.7 2,953 2.0 1.9 Hemköp total 2,147 1.1 1.1 6,446 -1.2 1.3 Willys total 4,706 1.0 -1.3 14,056 1.9 -1.1 PrisXtra total 123 -14.0 -8.9 409 -13.9 -9.9 Total 6,976 0.7 -0.8 20,911 0.6 -0.61) Percentage change compared with the corresponding period a year ago. Change in store structure, nine months 2011 New establish- Conversions Dec. 2010 ment Acquisitions Sales/ closures to/from September 2011 Hemköp 65 1 -4 -1 61 Willys1) 160 4 2 -1 1 166 PrisXtra 5 5 Total, Group-owned 230 4 3 -5 - 232 Hemköp franchises 82 18 -3 97 1) Of which, Willys Hemma 41 1 -1 1 42 3
  4. 4. Interim Report Axfood AB – 1 January-30 September 2011EARNINGS, AXFOOD GROUPThird quarterOperating profit for the quarter was SEK 370 m (364). The operating margin was 4.2% (4.2%). Netfinancial items totalled SEK -8 m (-7), and profit after financial items was SEK 362 m (357). The marginafter financial items was 4.1% (4.2%). Profit after tax was SEK 267 m (262). Axfood has no significant transactions with related parties, other than transactions with subsidiaries.Nine monthsOperating profit for the period was SEK 928 m (888). The operating margin was 3.6% (3.5%). Net financialitems for the period totalled SEK -26 m (-26), and profit after financial items was SEK 902 m (862). Profitafter tax was SEK 665 m (635). Operating profit for the period, broken down by operating segment Nine months Nine months SEK m Q3 2011 Q3 2010 2010 2011 2010 Hemköp 34 11 70 27 45 Willys 212 214 574 576 772 PrisXtra -1 1 10 1 -5 Axfood Närlivs 44 43 86 91 113 Dagab 56 58 138 122 189 Other1 25 37 50 71 95 Operating profit for the period, total2 370 364 928 888 1 2091) Includes joint-Group support functions, such as purchasing coordination, IT and corporate offices. For the nine-month period, "Other” also includes charges for, among other things, amortization of surplus value pertaining to the acquisition of PrisXtra and depreciation of SEK 24 m (10) pertaining to the new business system.2) Net financial items are not distributed per operating segment.CAPITAL EXPENDITURESTotal capital expenditures during the period January–September amounted to SEK 696 m (592), of whichSEK 49 m (6) pertained to acquisitions of businesses. In addition, SEK 345 m (309) pertained toinvestments in non-current assets in retail operations, SEK 78 m (71) to investments in non-current assetsin wholesale operations, and SEK 156 m (114) to IT development.FINANCIAL POSITIONCash flow from operating activities for the first nine months of the year before paid tax was SEK 1,279 m(1,309). Paid tax amounted to SEK -275 m (-272). Cash and cash equivalents held by the Group (fixed-income investments) amounted to SEK 211 m, compared with SEK 315 m in December 2010. Interest-bearing liabilities and provisions totalled SEK 1,043 m at the end of the period, compared with SEK 840 min December 2010. Interest-bearing net debt was SEK 832 m at the end of the period, compared withSEK 525 m in December 2010. Payout of the shareholder dividend affected cash flow by SEK -630 m(-525), and net capital expenditures affected cash flow by SEK -664 m (-567). The equity ratio was 38.0%, compared with 38.8% as per December 2010. Capital expenditures*, depreciation/Equity ratio, % Debt-equity ratio, multiple amortization, SEK m 50 1.0 250 38.8 38.0 40 37.2 0.8 34.4 200 32.6 30 0.6 0.5 150 0.4 0.4 20 0.4 0.3 0.3 100 10 0.2 50 0 0.0 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Capital expenditures* Deprec./Amortization * Excluding goodwill 4
  5. 5. Interim Report Axfood AB – 1 January-30 September 2011THE SWEDISH FOOD RETAIL MARKETAccording to Statistics Swedens retail trade index for August, accumulated sales for the food retailsegment rose 1.2% since the start of the year in current prices. In fixed prices, adjusted for price andcalendar effects, volume decreased by 0.1%.STORE OPERATIONSWillysThird quarterWillys continued its stable development during the quarter, with good profitability. Sales amounted toSEK 4,706 m (4,660), an increase of 1.0% compared with a year earlier. Like-for-like sales decreased by1.3%. Sales were affected by competition from new establishment and dampened growth for stores thathave not yet been modernized. Operating profit amounted to SEK 212 m (214), a decrease of 0.9%. Theoperating margin was 4.5% (4.6%). The private label share as of September was 25.3% (24.4%) for Willys and 29.0% (28.0%) for WillysHemma. As part of an effort to improve the shopping experience for customers and boost sales, modernization ofstores continued at a high pace. Four stores were adapted to the new generation of Willys during theperiod, which currently comprises 70 stores. An additional 40 stores will be modernized in the yearsahead. During the third quarter, a Willys store was established in Eslöv, and a store was acquired inSundbyberg and opened with the Willys profile.Nine monthsWillys sales during the period January–September amounted to SEK 14,056 m (13,791), an increase of1.9% compared with a year earlier. Like-for-like sales decreased during the same period by 1.1%.Operating profit for the first nine months of the year totalled SEK 574 m (576), and the operating marginwas 4.1% (4.2%). During the period, three Willys stores and one Willys Hemma were established. Two stores wereacquired and opened with the Willys profile. An additional store was converted from Hemköp to WillysHemma, and one Willys Hemma store was sold. Willys thereafter comprises 166 wholly owned stores, ofwhich 42 are Willys Hemma. Sales, SEK m, and operating margin, % Key ratios6,000 8 Nine Nine 4,822 7 Q3 Q3 months months5,000 4,660 4,805 4,706 4,545 SEK m 2011 2010 2011 2010 2010 64,000 Net sales 4,706 4,660 14,056 13,791 18,613 5 4.6 4.5 4.1 4.3 Change in like-for-like sales, % -1.3 -0.2 -1.1 0.1 0.43,000 4 3.5 3 Operating profit 212 214 574 576 7722,000 2 Operating margin, % 4.5 4.6 4.1 4.2 4.11,000 Number of Group-owned stores - - 166 159 160 1 Average number of employees 0 0 during the period - - 3,359 3,185 3,266 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Private label share (Willys/Willys Hemma) - - 25.3/29.0 24.4/28.0 24.0/28.7 5
  6. 6. Interim Report Axfood AB – 1 January-30 September 2011HemköpThird quarterHemköp is once again showing stronger earnings and stable like-for-like sales. Like-for-like sales forGroup-owned stores rose 0.6% during the period. Sales for Hemköps stores – both Group-owned and franchises – rose 1.1% during the third quarter.Sales for Group-owned stores amounted to SEK 1,130 m (1,151), a decrease of 1.8%. Compared with thesame period a year ago, sales were affected by store closures or conversions. Sales for franchise storesamounted to SEK 1,017 m (972), an increase of 4.6%, with a 1.7% increase in like-for-like sales. Operating profit for the third quarter was SEK 34 m (11). The operating margin for the period was 3.0%(0.9%). Profit was favourably affected by SEK 4 m pertaining to a reversal of structural costs for storeclosures that were previously charged against the first quarter. Hemköps private label share (including franchise stores) was 17.6% (14.9%) as of September. The number of loyalty cards in issue has been rising steadily and amounted to 497,000 at the end of theperiod. Loyalty cardholders have considerably higher average purchases than other customers, which iswhy the loyalty card plays a key role in strengthening customer loyalty and growing sales. The work on converting Vi stores to Hemköp was begun during the quarter. To date, 17 stores havebeen converted to Hemköp franchises, which means that the chain now comprises 61 wholly owned storesand 97 franchise stores. In all, some 50 Vi stores will be converted to proprietor-run Hemköp stores. Thisis expected to be completed by the start of December, thereby giving Hemköp the opportunity tostrengthen its brand and build a larger, stronger and more distinctive grocery chain.Nine monthsLike-for-like sales for Group-owned stores rose 0.8% during the period. Sales for Hemköps stores – bothGroup-owned and franchises – decreased by 1.2% during the period January–September. Sales forGroup-owned stores amounted to SEK 3,493 m (3,628), a decrease of 3.7%. Compared with the sameperiod a year ago, total sales were negatively affected by changes in the number of stores. Sales for franchise stores amounted to SEK 2,953 m (2,895), an increase of 2.0%, with a 1.9% increasein like-for-like sales. Operating profit for the period January–September was SEK 70 m (27). The operating margin for theperiod was 2.0% (0.7%). Operating profit was affected by one-time costs of SEK 8 m (6) associated withstore closures. To create further conditions for profitable growth, Hemköp has initiated modernization and renovation ofits stores, involving 10–20 units during the year. During the first nine months of the year, one store was acquired and four were closed. One store wasconverted to Willys Hemma. Also during the period, 17 franchise stores were established and one wasclosed. Hemköp had a total of 158 stores at the end of the period, of which 61 are Group-owned. Sales, SEK m, and operating margin, % Key ratios Nine Nine 1,600 3.0 3 Q3 Q3 months months 1,311 SEK m 2011 2010 2011 2010 2010 2.5 1,164 1,184 Net sales 1,143 1,164 3,532 3,667 4,978 1,164 1,143 1,200 2 1.9 Change in like-for-like sales, % 0.6 3.3 0.8 1.9 2.3 800 1.5 Operating profit 34 11 70 27 45 1.4 Operating margin, % 3.0 0.9 2.0 0.7 0.9 1.1 1 Number of Group-owned stores - - 61 66 65 0.9 400 Average number of employees 0.5 during the period - - 1,360 1,402 1,422 Private label share - - 17.6 14.9 16.8 0 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 6
  7. 7. Interim Report Axfood AB – 1 January-30 September 2011PrisXtraThird quarterPrisXtras sales during the third quarter amounted to SEK 123 m (143), a decrease of 14.0%. Like-for-likesales decreased by 8.9% during the period. Operating profit was SEK -1 m (1), and the operating marginwas -0.8% (0.7%). The goal is to achieve a positive operating result for the full year. As previously, the two largest stores continue to be hurt by traffic re-routing and roadwork associatedwith construction of the Norra länken motorway in Stockholm. These store locations have strategicimportance over time, however.Nine monthsPrisXtras sales during the period January–September amounted to SEK 409 m (475), a decrease of13.9%. Like-for-like sales decreased by 9.9% during the period. Operating profit for the period January–September was SEK 10 m (1), and the operating margin was 2.4% (0.2%). Sales, SEK m, and operating margin, % Key ratios Nine Nine 200 Q3 Q3 months months 9 SEK m 2011 2010 2011 2010 2010 162 144 7 Net sales 123 143 409 475 637 143 142 4.9 123 5 Change in like-for-like sales, % -8.9 -7.7 -9.9 -7.2 -7.0 2.8 3 100 Operating profit -1 1 10 1 -5 0.7 1 Operating margin, % -0.8 0.7 2.4 0.2 -0.8 -0.8 -1 Number of Group-owned stores - - 5 6 5 Average number of employees -3 during the period - - 138 164 164 -3.7 0 -5 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11AXFOOD WHOLESALINGDagabThird quarterDagab had stable performance during the quarter, with good cost control and efficiency. Sales during thethird quarter amounted to SEK 6,427 m (6,379). Operating profit was SEK 56 m (58), and the operatingmargin was 0.9% (0.9%).Nine monthsDagabs sales for the period January–September amounted to SEK 19,191 m (18,980). Operating profit forthe period was SEK 138 m (122), and the operating margin was 0.7% (0.6%). Sales, SEK m, and operating margin, % Key ratios Nine Nine 8,000 1.5 Q3 Q3 months months 6,721 SEK m 2011 2010 2011 2010 2010 7,000 6,623 6,427 6,379 6,141 Net sales 6,427 6,379 19,191 18,980 25,701 6,000 1.0 1 Distributed sales 4,322 4,287 12,921 12,771 17,408 5,000 0.9 0.9 Operating profit 56 58 138 122 189 4,000 0.7 Operating margin, % 0.9 0.9 0.7 0.6 0.7 0.6 3,000 Average number of employees 0.5 during the period - - 940 925 932 2,000 Delivery reliability, % 97.0 96.7 96.9 97.1 97.2 1,000 0 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 7
  8. 8. Interim Report Axfood AB – 1 January-30 September 2011Axfood NärlivsThird quarterAxfood Närlivs had continued favourable sales growth in all parts of its business. Sales during the thirdquarter amounted to SEK 1,714 m (1,571), an increase of 9.1%. The favourable performance can becredited in part to new agreements and good growth for e-commerce. Operating profit for the third quarter was SEK 44 m (43), and the operating margin was 2.6% (2.7%). During the period, a new e-commerce portal was launched for the Axfood Snabbgross stores. Thee-commerce venture is part of an effort to further improve customer service and grow sales. A new two-year agreement was reached with Svenska Statoil. This collaboration, which covers thesupply of newsstand and food retail products, will commence on 1 January 2012.Nine monthsAxfood Närlivs sales during the period January–September amounted to SEK 4,775 m (4,355), anincrease of 9.6%. Operating profit for the period amounted to SEK 86 m (91), and the operating marginwas 1.8% (2.1%). Sales, SEK m, and operating margin, % Key ratios Nine Nine 2,000 4 Q3 Q3 months months 1,714 SEK m 2011 2010 2011 2010 2010 1,691 1,571 Net sales 1,714 1,571 4,775 4,355 5,847 1,600 1,492 1,370 3 Distributed sales 1,500 1,355 4,185 3,761 5,070 2.7 2.6 1,200 Operating profit 44 43 86 91 113 2.1 Operating margin, % 2.6 2.7 1.8 2.1 1.9 2 800 1.5 Axfood Snabbgross, no. stores - - 20 19 19 Average number of employees 1 during the period - - 717 643 667 400 Delivery reliability, % 97.4 96.8 97.6 97.3 97.4 0.4 0 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 8
  9. 9. Interim Report Axfood AB – 1 January-30 September 2011SIGNIFICANT RISKS AND UNCERTAINTIESIn the course of its business the Axfood Group is exposed to operational, strategic and financial risks.Operational and strategic risks include business and liability risks, among others, while financial risksinclude liquidity risk, interest rate risk and currency risk. Axfood works continuously with risk identification and assessment. One of the most significant businessrisks that Axfood has identified in its safety analysis work is a total loss, such as from a fire at one of thecentral warehouses in Jordbro or Backa. Major emphasis is put on preventive work, and the organizationfor this is well developed, as is the Companys planning to maintain operating continuity in the event ofunforeseen events. For a thorough account of the risks that affect the Group, please refer to the 2010 Annual Report.SEASONAL EFFECTSAxfood has no significant seasonal variations.ENVIRONMENTAL IMPACTOne of Axfoods strategic objectives is to actively conduct work for environmentally sustainabledevelopment. In the day-to-day activities, sustainability aspects are integrated in product purchasing andselection as well as in logistics, product flows and store operations. Priority areas for Axfoodsenvironmental sustainability work are energy use, transports and waste handling. All of these areas havemajor bearing on Axfoods business and have large potential for improvement. One overall goal is toreduce the climate impact of the Groups operations by 75% by 2020. The remainder of the Groupsenvironmental impact will be climate-compensated. Great progress was achieved toward this goal in 2010,when the environmental impact was reduced by 60% through a changeover to renewable energy. In 2011,work on energy efficiency improvement will continue to have high priority. A redoubled focus on recyclinghas also been initiated, where most waste will either be recycled into raw material for the recycling industryor converted to energy. A more detailed account of Axfoods work with environmental matters can befound on Axfoods website: www.axfood.se.PARENT COMPANYOther operating revenue for the Parent Company during the period January–September amounted to SEK132 m (129). After selling expenses, administrative expenses and other operating expenses, totalling SEK187 m (165), and SEK -3 m (-6) in net financial items, the result after financial items was SEK -58 m(-42). Capital expenditures during the period totalled SEK 2 m (3). The Parent Companys interest-bearing net debt was SEK 675 m at the end of the period, comparedwith SEK 931 m in December 2010. The Parent Company has no significant transactions with relatedparties, other than transactions with subsidiaries.ACCOUNTING POLICIESAxfood applies International Financial Reporting Standards (IFRS) as endorsed by the European Union.This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, the SwedishAnnual Accounts Act, and recommendation RFR 2 – Reporting for Legal Entities, issued by the SwedishFinancial Reporting Board (RFR). In order to prepare the financial statements in accordance with IFRS,the Board and Executive Committee make estimations and assumptions that affect the Companys resultand position as well as other disclosures in general. These estimations and assumptions are based onhistorical experience and are reviewed on a regular basis. The accounting policies used by the ParentCompany and Group are unchanged compared with the most recently published annual report. 9
  10. 10. Interim Report Axfood AB – 1 January-30 September 2011FORECASTAxfoods goal for 2011 is to achieve an operating profit at least at the same level as in 2010.NEXT REPORTThe year-end report for the period January–December 2011 will be released on 7 February 2012.NOMINATING COMMITTEEShareholders who wish to submit nominations to the Nominating Committee ahead of Axfoods AnnualGeneral Meeting on 14 March 2012 may do so by e-mail at: valberedning@axfood.se.ANNUAL GENERAL MEETINGThe Annual General Meeting will be held at 5 p.m. on 14 March 2012, in Stockholm. The 2011 AnnualReport will be published on 20 February 2012 on Axfoods website, at which time it will be available atAxfoods head offices in Solna. In addition, printed versions will be distributed by post to shareholdersapproximately one week before the Annual General Meeting upon request.This interim report has been reviewed by the Companys auditors. The review report can be found on page11.Anders StrålmanPresident and CEOPRESS RELEASES ISSUED DURING THE THIRD QUARTER12 August 2011 Axfood supporting Save the Childrens disaster relief in the horn of Africa24 August 2011 Axfood Närlivs AB and Statoil Fuel & Retail enter cooperation agreement29 August 2011 Hemköp growing in Stockholm (released only in Swedish)28 September 2011 Axfoods annual report best 10
  11. 11. Interim Report Axfood AB – 1 January-30 September 2011AUDITORS REVIEW REPORTTo the Board of Directors of Axfood AB (publ)Reg. no. 556542-0824IntroductionWe have reviewed the accompanying interim report for Axfood AB (publ) for the period 1 January–30September 2011. The Board of Directors and the President are responsible for the preparation andpresentation of the interim report in accordance with IAS 34 Interim Financial Reporting and the SwedishAnnual Accounts Act. Our responsibility is to express a conclusion on this interim report based on ourreview.Scope of reviewWe have conducted our review in accordance with the Swedish Standard on Review Engagements, SÖG2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Areview of interim financial information consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A review hasanother focus and is substantially less in scope than an audit conducted in accordance with InternationalStandards on Auditing (ISA) and other generally accepted auditing standards. The procedures performedin a review to not enable us to obtain a level of assurance that would make us aware of all significantmatters that might be identified in an audit. Therefore, the conclusion based on a review does not providethe same level of assurance as a conclusion based on an audit.ConclusionBased on our review, nothing has come to our attention that causes us to believe that the interim report, inall material respects, is not prepared for the Group in accordance with IAS 34 and the Swedish AnnualAccounts Act and for the Parent Company in accordance with the Swedish Annual Accounts Act.Stockholm, 20 October 2011KPMG ABThomas ThielAuthorized Public Accountant 11
  12. 12. Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL STATEMENTS, GROUPCondensed statement of comprehensive income, Group Nine months Nine months Full yearSEK m Q3 2011 Q3 2010 2011 2010 2010Net sales 8,735 8,582 25,881 25,375 34,260Cost of goods sold -7,503 -7,424 -22,255 -21,940 -29,587Gross profit 1,232 1,158 3,626 3,435 4,673Selling/administrative expenses, etc. -862 -794 -2,698 -2,547 -3,464Operating profit 370 364 928 888 1,209Net financial items -8 -7 -26 -26 -37Profit before tax 362 357 902 862 1,172Tax -95 -95 -237 -227 -310Profit for the period 267 262 665 635 862Other comprehensive incomeChange in fair value of forward exchange 2 -3 3 -2 0contractsTax attributable to components in other -1 1 -1 1 0comprehensive incomeOther comprehensive income for the period 1 -2 2 -1 0Total comprehensive income for the period 268 260 667 634 862Operating profit includes depreciation/amortization 150 140 436 414 555ofEarnings per share, SEK 5.09 5.00 12.67 12.10 16.42 12
  13. 13. Interim Report Axfood AB – 1 January-30 September 2011Condensed statement of financial position, GroupSEK m 30/9/2011 30/9/2010 31/12/2010AssetsGoodwill 1,597 1,545 1,567Other financial assets 32 33 32Other non-current assets 2,568 2,261 2,364Total non-current assets 4,197 3,839 3,963Inventories 1,832 1,768 1,822Accounts receivable – trade 674 614 660Other current assets 997 925 904Cash and bank balances 211 221 315Total current assets 3,714 3,528 3,701Total assets 7,911 7,367 7,664Shareholders equity and liabilitiesEquity attributable to owners of the parent 3,009 2,744 2,972Total shareholders equity 3,009 2,744 2,972Non-current interest-bearing liabilities 413 401 398Other non-current liabilities 215 204 219Total non-current liabilities 628 605 617Current interest-bearing liabilities 630 414 442Accounts payable – trade 2,212 2,118 2,208Other current liabilities 1,432 1,486 1,425Total current liabilities 4,274 4,018 4,075Total shareholders equity and liabilities 7,911 7,367 7,664Contingent liabilities 16 18 18Pledged assets 15 16 16 13
  14. 14. Interim Report Axfood AB – 1 January-30 September 2011Condensed statement of cash flows, Group Nine months Nine monthsSEK m 2011 2010 Full year 2010Operating activitiesCash flow from operating activities before changes in working capital,before paid tax 1,337 1,280 1,750Paid tax -275 -272 -322Changes in working capital -58 29 -63Cash flow from operating activities 1,004 1,037 1,365Investing activitiesAcquisitions of operations, net -51 -9 -59Acquisitions of non-current assets, net -613 -558 -771Change in financial non-current assets, net - -2 -1Cash flow from investing activities -664 -569 -831Financing activitiesChange in interest-bearing liabilities 186 -38 -10Dividend paid out -630 -525 -525Cash flow from financing activities -444 -563 -535Cash flow for the period -104 -95 -1Condensed statement of changes in equity, GroupSEK m 30/9/2011 30/9/2010 31/12/2010Amount at start of year 2,972 2,635 2,635Total comprehensive income for the period 667 634 862Dividend to shareholders -630 -525 -525Amount at end of period 3,009 2,744 2,972Key ratios and other data, Group Nine months Nine months 2011 2010 Full year 2010Operating margin, % 3.6 3.5 3.5Margin after financial items, % 3.5 3.4 3.4Equity ratio, % 38.0 37.2 38.8Debt-equity ratio, net, multiple 0.3 0.2 0.2Debt-equity ratio, multiple 0.4 0.3 0.3Interest coverage, multiple 31.1 31.8 31.1Capital employed, SEK m 4,052 3,559 3,812Return on capital employed, % 32.9 33.3 33.2Return on shareholders equity, % 31.0 32.3 30.7Capital expenditures, SEK m 696 592 862Earnings per share, SEK1 12.67 12.10 16.42Dividend per share, SEK - - 12.00Shareholders equity per share, SEK1, 2 57.35 52.30 56.64Cash flow per share, SEK1 -2.0 -1.8 0.0Number of shares outstanding1 52,467,678 52,467,678 52,467,678Average number of employees during the period 6,948 6,771 6,8951) The number of shares is the same before and after dilution. The average number of shares is the same as the number of sharesoutstanding. Axfood has no holdings of treasury shares.2) Net asset value per share corresponds to shareholders equity per share.Quarterly overview Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11Sales 8,431 8,210 8,583 8,582 8,885 8,257 8,889 8,735Operating profit 290 245 279 364 321 241 317 370Operating margin, % 3.4 3.0 3.3 4.2 3.6 2.9 3.6 4.2Earnings per share, SEK1 3.83 3.31 3.79 5.00 4.32 3.28 4.30 5.09Shareholders equity per share, SEK1 50.22 43.55 47.34 52.30 56.64 47.93 52.24 57.35Return on shareholders equity, % 32.4 37.5 34.8 32.3 30.7 35.8 34.0 31.0Cash flow from operating activities per 10.3 8.0 5.5 6.3 6.2 5.6 6.6 6.9share, SEKCapital expenditures 194 204 250 138 270 220 268 208 14
  15. 15. Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL STATEMENTS, PARENT COMPANYCondensed income statement, Parent Company Nine months Nine monthsSEK m Q3 2011 Q3 2010 2011 2010 Full year 2010Net sales - - - - -Selling/administrative expenses, etc. -13 -7 -55 -36 -47Operating profit -13 -7 -55 -36 -47Net financial items 0 -2 -3 -6 -6Profit after financial items -13 -9 -58 -42 -53Appropriations - - - - 4Profit before tax -13 -9 -58 -42 -49Tax 3 2 16 11 13Net profit for the period -10 -7 -42 -31 -36Operating profit includesdepreciation/amortization of 0 2 1 6 6Profit for the period corresponds to comprehensive income for the period.Condensed balance sheet, Parent CompanySEK m 30/9/2011 30/9/2010 31/12/2010AssetsProperty, plant and equipment 3 4 4Participations in Group companies 3,468 3,468 3,468Other financial non-current assets 4 4 3Deferred tax assets 9 10 11Total non-current assets 3,484 3,486 3,486Receivables from Group companies1 993 644 2,102Other current assets 227 207 8Cash and bank balances - - 0Total current assets 1,220 851 2,110Total assets 4,704 4,337 5,596Shareholders equity and liabilitiesRestricted shareholders equity 262 262 262Unrestricted shareholders equity 2,730 2,528 3,402Total shareholders equity 2,992 2,790 3,664Untaxed reserves 1 5 1Non-current interest-bearing liabilities 31 32 32Noninterest-bearing non-current liabilities 4 8 7Total non-current liabilities 35 40 39Current interest-bearing liabilities 600 380 406Liabilities to Group companies2 1,042 1,086 1,404Accounts payable – trade 13 12 15Other current noninterest-bearing liabilities 21 24 67Total current liabilities 1,676 1,502 1,892Total shareholders equity and liabilities 4,704 4,337 5,596Contingent liabilities 357 358 357Pledged assets - - -1) Of which, interest-bearing receivables 992 643 8722) Of which, interest-bearing liabilities 1,036 1,085 1,364 15
  16. 16. Interim Report Axfood AB – 1 January-30 September 2011FINANCIAL DEFINITIONSAverage number of employees during the year: Total Net debt: Cash and cash equivalents plus interest-bearingnumber of hours worked divided by the number of hours receivables less interest-bearing liabilities and provisions.worked per year (1,920 hours). Net debt-equity ratio: Interest-bearing liabilities andCapital employed: Total assets less noninterest-bearing provisions less cash and cash equivalents and interest-liabilities and noninterest-bearing provisions. Average bearing receivables, divided by shareholders’ equitycapital employed is calculated as capital employed at the including non-controlling interests.start of the year plus capital employed at the end of the Operating margin: Operating profit as a percentage ofyear, divided by two. net sales for the period.Cash flow per share: Cash flow for the year divided by a P/E multiple before and after dilution: Share price inweighted average number of shares outstanding. relation to earnings per share.Debt-equity ratio: Interest-bearing liabilities divided by Return on capital employed: Profit after financial items,shareholders’ equity including non-controlling interests. plus financial expenses, as a percentage of averageDividend yield: Dividend per share divided by the year- capital employed.end share price. Return on shareholders’ equity: Net profit for the yearEarnings per share: Net profit for the year attributable to attributable to owners of the parent as a percentage ofowners of the parent divided by a weighted average average equity attributable to owners of the parent.number of shares outstanding. Average equity is calculated as shareholders’ equity at theEquity ratio: Shareholders equity including non- start of the year plus shareholders’ equity at the end of thecontrolling interests as a percentage of total assets. year, divided by two.Interest cover ratio: Profit after financial items plusfinancial expenses, divided by financial expenses.Margin after financial items: Profit after financial itemsas a percentage of net sales for the period.Net asset value per share: Equity attributable to ownersof the parent divided by the number of shares outstanding.GLOSSARYAutoorder: An automated store restocking system. members within the Shell, Statoil 123, Hydro, Bilisten andDelivery reliability: The share of delivered goods in Preem service station chains.relation to the share of ordered goods. GRI: Global Reporting Initiative.E-learning: An interactive training program. Like-for-like sales: Like-for-like sales refer to store salesEMAB: EMAB is a collaborative organization for reported on the basis of an entire comparison period, i.e.,independent service station stores, with approximately 400 two years. ABOUT AXFOOD Axfood conducts food retail and wholesale business in Sweden. Retail business is conducted through the wholly owned store chains Willys, Hemköp and PrisXtra. Wholesale business is conducted through Dagab and Axfood Närlivs. Axfood is listed on Nasdaq OMX Stockholm ABs Large Cap list. Axfood has an approximate 20%Axfood AB, SE-171 78 Solna share of the food retail market in Sweden.Visitors address: Hemvärnsgatan 9 MissionTel. +46-8-553 990 00 Axfood’s business mission is to develop and run successful food retail conceptsFax +46-8-730 03 59 based on clear and attractive customer offerings.info@axfood.se, www.axfood.se Business model Axfoods business model is built upon a strong purchasing function, focus on private label products, efficient logistics and attractive grocery stores. Strategy Axfood will be the most profitable company in the Swedish food retail market and grow its market shares by strengthening and developing its position. Axfoods long- term goal is to attain an operating margin of 4%. Axfoods strategy is built upon five cornerstones: customers, profitability, growth, the environment and social responsibility. and employees and organization. Read more by visiting www.axfood.se. Value drivers Factors that affect Axfoods performance include: • Access to strategic store locations • Development of an attractive product offering • Innovativeness for enhancing customer benefit 16

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