Shop Apotheke Europe N : Transkript Earnings Call FY 2021 (Englisch)

	Shop Apotheke Europe - Investor and analysis call Earnings Release FY 2021
Company:	Shop Apotheke Europe
Conference Title: Investor and analysts call Earnings Release FY 2021
Moderator:	Stefan Feltens, CEO
Date:	Wednesday, 2ndMarch 2022
Conference Time: 11:00 (UTC+01:00)
Operator:	Good day and welcome to the Shop Apotheke investor and analyst call earnings release

full year 2021. Today's conference is being recorded. At this time I would like to turn the conference over to Stefan Feltens, CEO Shop Apotheke. Please go ahead.

Stefan Feltens: Well, thank you very much. And yes, and I want to welcome everybody to the full year 2021 Shop Apotheke Europe earnings release call in these truly unprecedented times. Our thoughts are, of course, with the people of Ukraine, and I hope, I assume you are all joining us in hoping for a very quick cessation of all hostilities and an end of the suffering. By the way, a substantial delivery of urgently needed pharmacy products will be on its way from Shop Apotheke to the Ukraine tomorrow. And just to preempt a question that you might have, no, Shop Apotheke is not directly impacted by the war in Ukraine. We don't have any suppliers that are based in Russia or in the Ukraine, and we don't have any currency exposure beyond the Swiss Franc. And I think you all agree that in times like this, having some Swiss Francs in your balance sheet is probably not the best - the worst currency to have.

Admittedly, this is not an easy transition, but we, at Shop Apotheke, have some really good news that we want to share with you about what we did last year and what we are going to do this year, and what 2022 is going to look like. We are once again broadcasting live from our headquarters here in Sevenum, which is fully [inaudible] certified facility. At the end of our presentation, you will, of course, have the opportunity to ask questions. Please use the dial in numbers that have been provided together with the invitation. We'll start by walking you through the financial performance of last year, and we're going to share with you some of the e-commerce typical KPIs, and we'll give an update on where we are with the execution of Shop Apotheke's strategy. And then Jasper is

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Shop Apotheke Europe - Investor and analysis call Earnings Release FY 2021

going to conclude by sharing with you what the outlook and the guidance for 2022 and beyond is going to look like.

So how did we do last year? Last year, when I look back, it was a very good year for Shop Apotheke. We had experienced some challenges, but most importantly we overcame these challenges very quickly, and we marked an important milestone last year. We joined, I dare to say so, the club of sales billionaire last year with sales of €1.06 million. In total our sales were up by 9.5% in the national, went up our international segment by around 40%. That went up by around 4% in Germany. And I think that is a remarkable achievement. We significantly increased our market share in the nonprescription market, so our growth outpaced, that is probably not a surprise, the growth of the nonprescription overall pharmacy market in Germany last year, but we also, significantly, by a wide margin, exceeded the growth of the non [inaudible] pharmacy market in Germany. Based on our own estimates, by the way, the same is true for Shop Apotheke's other large markets, notably Austria, Belgium and Italy.

The adjusted EBITDA margin came in at a little bit more than -€5 million last year. This translates into an adjusted EBITDA margin of minus -0.5%. This compares to the last guidance that we have provided to the markets which was aiming for an adjusted EBITDA margin of -1.0%. Very important. We are a growth company and we grow through our customers. Our active customer base went up by 25% of 1.6 million. And by the end of last year we had reached an active customer base of

7.9 million. As of today, of course, we have surpassed the eight million mark by a significant margin. In terms of strategy execution, we remain fully on track, and we are ready for e-prescriptions. Of course, we're going to talk about all of these components more when it come to the strategy update with the conclusion of our move from our old pharmacy and our old distribution facility to our new headquarters which holds our new pharmacy and our new distribution facility. We are in a position to support the growth ambition of Shop Apotheke Europe in future. We certainly will have ample capacity over the next two years to participate in the e-Rx opportunity.

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Shop Apotheke Europe - Investor and analysis call Earnings Release FY 2021

With the acquisition of smartpatient and MedApp earlier last year, we significantly expanded our capabilities in the area of digital health services, with an emphasis, a focus on digital medication management. Since the middle of last year, in June, we are in a position to offer same day delivery services through our partner pharmacies under the label, Shop Apotheke NOW in all 13 metropolitan areas in Germany. By the way, late last year we also started our new service in Vienna, in Austria, and we are very excited about the launch of our own marketplace in Germany to be able to offer a much broader assortment of health care and beauty related products to our more than eight million customers.

So taking a closer look at our two reporting segments. You remember our total sales grew by 9.5% to over a €1 billion. Starting on the right hand side, our international segment, consisting, again, of Italy, France, Belgium and the Netherlands, grew by almost 14%, exceeded sales of €200 million last year. And that segment requires a little bit of a closer look. In total, we grew sales by 4%, by almost 4%. But you see a very different picture when you split the total growth into the non-Rx segment and the other Rx segment. The non-Rx segment grew at, I think we can say, a healthy pace of 18% percent. And please keep in mind, for several months last year, around the middle of the year, we were capacity constrained. Our growth would have been significantly higher, even higher, if we have not been capacity constrained. We gained market share in the non-Rx online market Germany. On the Rx side, we see a different picture. Our sales decreased by a little bit more than a third. Admittedly, the impact of the Rx bonus ban, which came into effect in December 2020 had a more severe impact than we had anticipated. But we also want to state clearly the only driver behind the decline of our Rx business was indeed the Rx bonus ban. We can say this with certainty because we saw a decline in our business with publicly insured patients in Germany. But the business with privately insured patients, where we can still pay the average bonus, continued to grow last year. We remain convinced that the Rx bonus ban is a violation of European law, and this will have to be resolved - in all likelihood, this will have to be resolved through the legal system.

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Shop Apotheke Europe - Investor and analysis call Earnings Release FY 2021

So looking at a couple of e-commerce typical KPIs, we already talked about our customer growth, I just want to emphasize the gray blocks that you see on the left hand side that lead you from the

6.3 to the 7.9 million active customers at the end of last year. The biggest block here is Q4. We have Q4 in terms of customer growth, new customer growth was indeed a record quarter. We gained more than - we gained around half a million active customers. This is on par with Q2 2020, in Q2 2020, you remember, this was the first Corona quarter. We also gained around half a million customers. So Q4 last year, a record setting quarter. Our Net Promoter Score average 68 across the year. If you compare Net Promoter Scores across industries, you know that this is still a very, very strong score, a bit below 2020. Of course, our ambition is to get back to the 70 and beyond in 2021. Our average shopping basket value of AOV, average order value, dropped from a little bit more than €66 to a little bit more than €61. The almost exclusive driver behind the drop of our AOV was the reduced share of our Rx business. And if you follow Shop Apotheke, if you have followed Shop Apotheke for quite some time, you know that our average order values of Rx order are significantly higher than the average order values of our non-Rx orders.

So taking a quick look at our web traffic, the green line indicates the total number of visits to all of our websites and to our apps. You see a steady increase in the middle of last year. Again, that was the time when we were capacity constrained. We had to reduce our online marketing in order to manage the number of incoming orders to an amount, to a number, that we can actually handle. Again, you see a steady increase in December. In November and December we were at or above six million visits per week. And then we see another spike at the beginning of the year when we got to seven million weekly visits and beyond. The blue bars indicate the growth of our web traffic in comparison to the exact same week last year, a very similar picture. You see a re-acceleration of our growth since the beginning of last year. In Q4 we were between 30% and 40% percent growth over - compared to the same weeks a year ago. By the way, you see a drop in the growth towards the end of the year. The only reason for this drop was because Christmas last year fell completely on a weekend. [Inaudible], Jasper.

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Shop Apotheke Europe - Investor and analysis call Earnings Release FY 2021 Jasper Eenhorst: If you can go one slide back there. Yeah, just the last comment, if you look at the blue bars, the year over year growth, the fact that on the left side it is higher, that is because [inaudible]

when there was no Corona in Europe the year before. That's why the growth was very high.

Next thing, thanks a lot. Yeah. And this has left in total, all those customers have led the total to close to 20 million customer orders that we processed and delivered in 2021. In the graph, you're seeing years with the quarters, you see the growth. But most prominent on this slide, you see the huge increase not only year over year or quarter four 2020 to quarter four 2021, but we are most proud of the fact of the acceleration from quarter three 2021 to quarter four. We were able to leave the low point behind us and vary a bit. Each quarter last year has more than 80% of the orders coming from returning customers, so that is a very healthy level. And on the next slide, we see what those 20 million customers have brought us in financials.

So this is the normal slide we always look at with the key financial numbers from sales up to and including the adjusted EBITDA. Again, to not repeat too many of the numbers, but we achieved, last year, sales of €1.06 billion, which was a growth in total of 9.5% percent. In Q4 our year over year growth was 8.8%. And if we just go one level deeper, then you see that everything [inaudible], which was in total €970 million or 90% of our total sales in 2021 was increasing for the full year by 22%. And, actually, the growth was increasing in Q4 from 22% to 24%. And the only reason why total growth was lower is the impact of the Rx decline, as we have already talked about.

[Inaudible], we achieved with an improved gross profit margin that was in quarter four 1% higher than the year before, but later I have a bridge for the full year, 2.5%. Selling and distribution is including marketing, and that's the reason for the increase. The main reason for the increase in Q4, as we reflect with the release of the Q3 numbers, [inaudible] we use more marketing. In the end, you see, we get a better performance and we were guiding for - and it resulted in the big increase of market shares traffic to our website and more customers. Administrative costs as a percentage of sales were 3.1% of sales for the full year, and in quarter four that 3% of sales, it was

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