Ceconomy : Results Presentation Q2/H1 2019/20

Q2/H1 2019/20

RESULTS PRESENTATION

Dr Bernhard Düttmann, Karin Sonnenmoser, Ferran Reverter Düsseldorf, 14 May 2020

DISCLAIMER

AND NOTES

This disclaimer shall apply in all respects to the entire presentation (including all slides of this document), the oral presentation of the slides by representatives of CECONOMY AG, any question-and-answer session that follows the oral presentation, hard copies of the slides as well as any additional materials distributed at, or in connection with this presentation. By attending the meeting (or conference call or video conference) at which the presentation is made, or by reading the written materials included in the presentation, you (i) acknowledge and agree to all of the following restrictions and undertakings, and (ii) acknowledge and confirm that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation.

To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. All forward-looking statements herein are based on certain estimates, expectations and assumptions at the time of publication of this presentation and there can be no assurance that these estimates, expectations and assumptions are or will prove to be accurate. Furthermore, the forward-looking statements are subject to risks and uncertainties including (without limitation) future market and economic conditions, the behaviour of other market participants, investments in innovative sales formats, expansion in online and omnichannel sales activities, integration of acquired businesses and achievement of anticipated cost savings and productivity gains, and

the actions of public authorities and other third parties, many of which are beyond our control, that could cause actual results, performance or financial position to differ materially from any future results, performance or financial position expressed or implied in this presentation.

Accordingly, no representation or warranty (express or implied) is given that such forward-looking statements, including the underlying estimates, expectations and assumptions, are correct or complete. Readers are cautioned not to place reliance on these forward-looking statements. See also "Opportunity and Risk Report" in CECONOMY's most recent Annual Report for risks as of the date of such Annual Report. We do not undertake any obligation to publicly update any forward-looking statements or to conform them to events or circumstances after the date of this presentation. This presentation is intended for information only, does not constitute a prospectus or similar document and should not be treated as investment advice. It is not intended and should not be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. CECONOMY AG assumes no liability for any claim which may arise from the reproduction, distribution or publication of the presentation (in whole or in part). The third parties whose data is cited in this presentation are neither registered broker-dealers nor financial advisors and the permitted use of any data does not constitute financial advice or recommendations.

Historical financial information contained in this presentation is mostly based on or derived from the consolidated (interim) financial statements for the respective period. Financial information with respect to the business of MediaMarktSaturn Retail Group is particularly based on or derived from the segment reporting contained in these financial statements.

Such financial information is not necessarily indicative for the operational results, the financial position and/or the cash flow of the CECONOMY business on a stand-alone basis neither in the past nor in the future and may, in particular, deviate from any historical financial information based on corresponding combined financial statements with respect to the CECONOMY business. Given the aforementioned uncertainties, (prospective) investors are cautioned not to place undue reliance on any of this information. No representation or warranty is given and no liability is assumed by CECONOMY AG, express or implied, as to the accuracy, correctness or completeness of the information contained in this presentation.

This presentation contains certain supplemental financial or operative measures that are not calculated in accordance with IFRS and are therefore considered as non-IFRS measures. We believe that such non-IFRS measures used, when considered in conjunction with (but not in lieu of) other measures that are computed in accordance with IFRS, enhance the understanding of our business, results of operations, financial position or cash flows. There are, however, material limitations associated with the use of non-IFRS measures including (without limitation) the limitations inherent in the determination of relevant adjustments. The non-IFRS measures used by us may differ from, and not be comparable to, similarly-titled measures used by other companies. Detail information on this topic can be found in CECONOMY's Annual Report 2018/19, pages 52-55.

All numbers shown are as reported, unless otherwise stated. All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts below €0.5 million are rounded and reported as 0. Rounding differences may occur.

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Agenda

01 02 03 04

Highlights	Financial	Outlook	Operations
Performance	Update

01

Highlights

After a solid start into FY 2019/20, the second quarter started off well, but was then impacted by the outbreak of COVID-19

			Q1 19/20			Q2 19/20				Q3 19/20
										COVID		-19
30.09.		31.12.
2019		2019		2020

Foundation for a sound FY 2019/20

Profitable Black	Progress on
Friday period,	strategic
in-store and	initiatives with
online	promising results

Significant cost	Encouraging
optimization,	group earnings
esp. in Germany	improvement

Solid Q2 interrupted by COVID-19

In the first two			Strong growth
		rates in online
months group
		and services &
sales and overall
	solutions in
business
			January and
performed well
		February
			C. 87% of all			FY 2019/20
		stores affected,	guidance
		impacting B&M	withdrawn,
		sales, somewhat	effects on sales
		offset by shift to	and earnings
		online channel	expected

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CECONOMY has adopted a successful pro-active crisis management approach to mitigate COVID-19 impacts

Ensuring a safe	Implementing	Preparing for the
environment	comprehensive	reopening and a
for employees	cost and liquidity	strong commercial
and customers	measures	comeback

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CECONOMY has increased its financial flexibility by safeguarding and expanding access to substantial back-up lines

1.7€bn RCF

& banking consortium

Ensures access to additional liquidity in an unprecedented time

Sufficient back-up even for potentially longer lock- down and a possible second wave

Mitigation of current COVID-19 impact

Underpins our continued prudent financial policy

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CECONOMY's Q2 19/20 in a nutshell

Strong performance in January and February

Marked increase in pure online sales in March, supported by successful adaption of business model (shipment-from-store)

Successful, proactive crisis management incl. immediate initiation of short-termcost and liquidity mitigation measures

Sales performance and gross margin in March strongly impacted by COVID-19related store closures

Lack of sales in combination with high operating leverage led to substantial bottom-lineimpact

Impairment of Fnac Darty stake

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The negative impact of the COVID-19 pandemic is already evident in the Q2 financial figures

-6.6%

-131 €m

Sales change yoy	Adj. EBIT1,2
adjusted for fx-effects and	excl. associates3
portfolio changes	-157 €m vs. PY

Note: 1Adjusted EBIT before non-recurring earnings effects in connection with the reorganization and efficiency program and portfolio changes. 2Incl. IFRS 16. 3Companies accounted for using the equity method.

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02

Financial Performance

Sales decline driven exclusively by COVID-19 related store closures

Q2	Total sales
			fx- and portfolio adj.1
	(in €m)
				-6.6%
						-7.7%
			5,015	4,631

Q2 18/19

Q2 19/20

Sales by segment

(fx- and portfolio adj.1, yoy change)

		-0.2%
-6.0%	-8.7%
			-12.6%
DACH	W. & S. Europe	E. Europe	Others

1Excluding Greek MediaMarkt business (portfolio adjustment).

Q2 Highlights

• Fx- and portfolio adjusted1 sales excl. iBood at -6.3%
• DACH: Germany, Austria and Switzerland impacted by store closures in March; Hungary continued to grow solidly
• Western & Southern Europe: Italy and Spain faced strong decline, largely driven by store closures; sales in the Netherlands on PY's level
• Eastern Europe: Turkey with solid double-digit growth despite store closures; Poland impacted by early store closures
• Others: Positive sales momentum in Sweden; segment decline due to disposal of iBood

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Closure of c. 87% of our physical stores led to a drop in Group sales of around 28% in March

Q2	Sales development (fx- and portfolio adj.1, yoy change)
			-6.6%
			+ Remarkable
		+ Strong	Online growth
		development in
		Germany, Austria
		and Turkey
		+ Solid Online and		− C. 87% of physical
		S&S growth		stores closed
		Jan/Feb: +3.7% yoy	Mar: -27.5% yoy
	Q2 18/19	January/February	March Online	March B&M	Q2 19/20

1Excluding Greek MediaMarkt business (portfolio adjustment).

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COVID-19-related channel shift in March led to strong growth in Online, while it was a headwind for Services & Solutions

Q2	Online sales1
	(in €m)

+23.7%

Q2 Highlights

 Online1 growth +26.9% excl. iBood

694

859

 Doubling of pure online1 sales in March (+98%)

with further ramp-up in April (approx. +300%)

14.0%	in % of sales	18.6%
Q2 18/19		Q2 19/20

Services & Solutions sales1

(in €m)

			-0.4%
	280		279
	5.6%	in % of sales	6.0%
	Q2 18/19		Q2 19/20

1Excluding Greek MediaMarkt business (portfolio adjustment).

 Shipment from store facilitated to support

online sales

 Pick-upoption (only partly available to

customers in March) at 34% vs. 47% in PY

 Services & Solutions sales on PY's level after

double-digit increase in the first 2 months of Q2

 Strong demand for extended warranties and

insurances, other categories below PY due to

COVID-19 impact

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EBIT decline essentially attributable to negative sales and margin development in connection with COVID-19 store closures

Q2 Gross margin1,2 (in % of sales)

OPEX1,2,3 (in % of sales)

Q2 Highlights

		Absolute cost savings 33 €m	 Positive trend development of the gross
-2.3%p.	0.7%p.
19.6%		20.1%	20.8%		margin in January/February; in March, gross
17.3%		margin impacted by channel and product mix,
					higher delivery costs and stock-related effects
				 Initial COVID-19 cost measures had a smaller
Q2 18/19	Q2 19/20	Q2 18/19	Q2 19/20		positive impact; full impact materializing in
	April
Adj. EBIT1,2 excl. associates (in €m)	Q2 18/19		DACH / W. &. S. Europe: Sales- and margin-
		Q2 19/20 incl. IFRS 16
			related decline in Germany, Spain and Italy due
	47
26				to store closures; also Netherlands below PY
1

		-33	-4	-24	-18-21	 Eastern Europe: Poland with ongoing earnings
	-53
					weakness
-131						 Others: Declining earnings in Sweden
Group	DACH	W. & S. Europe	E. Europe	Others4

1Excl. non-recurring earnings effects in connection with the reorganization and efficiency program. 2Adjusted for portfolio changes. 3 Sum of SG&A expensesand Other operating expenses. 4 Incl. consolidation.

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Reported EBIT additionally impacted by impairment of Fnac Darty stake

Q2 Adj. EBIT1,2 excl. associates to reported EBIT (in €m)

	+ Fnac Darty profit
	share
	− Fnac Darty
	impairment
-131	-3
	− Expected trailing
	restructuring
	expenses
	-234
	-368

Adj. EBIT Q2 19/20	Restructuring-related	Other adj. items	Reported EBIT Q2 19/20
	earnings effects	(portfolio, associates)

Note: EBIT incl. IFRS 16 effect. 1Adjusted EBIT excl. associates and non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019. 2Adjusted for portfolio changes.

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EPS impacted by lower operational earnings and Fnac Darty impairment

€m	Q2 2018/19	Q2 2019/20	Change
EBITDA	83	102	19
EBIT	19	-368	-387
Net financial result	14	-23	-37
Earnings before taxes	33	-391	-424
Income taxes	-13	82	95
Tax rate	40.3%	20.9%	-19.5%p.
Profit or loss for the period	20	-309	-329
Non-controlling interest	-5	-15	-10
Net result	25	-295	-320
EPS (in €)	0.07	-0.82	-0.89

Note: From continuing operations and based on reported figures; EBIT/DA in CY incl. IFRS 16 effect.

Q2 Highlights

• Reported EBITDA includes c. 143 €m IFRS 16 effect
• Reported EBIT includes c. 3 €m IFRS 16 effect and Fnac Darty impairment of 268 €m, partly offset by Fnac Darty profit share of 34 €m
• Net financial result in prior year included positive effects related to METRO stake still held at that time
• Tax rate in H1 at -36.6%; negative tax rate essentially due to Fnac Darty impairment
• EPS declined by -0.89 yoy

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Adjusted Free Cash Flow above prior year due to lower NWC outflow

H1

2019/20: Free Cash Flow (in €m)

611

-60

-46

-105

286

-115

7

-279

EBITDA

NWC

Tax

Other

Cash

FCF

Lease

Lease

investments

repaym.

adj. FCF1

2018/19: Free Cash Flow (in €m)

374

-280

-61

-12

-96

-76

-3

-79

EBITDA

NWC2

Tax

Other

Cash

FCF

Lease

Lease

investments

repaym.

adj. FCF1

H1 Highlights

• Adj. Free Cash Flow improved by 86 €m
• Change in NWC improved due to higher increase in trade liabilities, driven by higher starting point as of 30 September 2018 and the temporary extension of payments in the context of COVID-19
• Other OCF at - 105 €m mainly impacted by reversal of non-cash effects related to Greek transaction and restructuring-related cash outflows
• Increase in cash investments mainly due to cash-effectiveinvestment into the joint venture in Greece; modernization and expansion investments below PY

1Lease adjusted free cash flow subtracts the repayment of lease liabilities for better FCF comparability under IFRS 16. 2Prior-year adjustments due to changes in presentation and definition.

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03

Outlook

In view of the developments in connection with COVID-19, the original outlook for FY 19/20 was withdrawn

"Knowns"

"Unknowns"

• Solid performance in 5M 19/20, fully on track to reach original FY guidance
• March performance essentially impacted by Corona-induced store closings
• Sales and margin in April impacted by Corona-induced store closings, yet mitigating cost measures helped to slow down earnings shortfall
• Cost reduction linked to Reorganization & Efficiency program not at risk
• Further development of the coronavirus outbreak
• Pace of normalization subsequent to stores reopening
• Extent of economic recession
• Possible long-term effects on consumer behavior and trends

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New outlook for FY 19/20

• Coronavirus impact on the Company's business for the full year cannot be predicted with sufficient reliability at this time
• Adjusted for portfolio changes
• Excluding non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019

	FY 19/20	thereof IFRS 16
	incl. IFRS 16		effect
Fx-adjusted sales	Below prior year
EBIT (excl. associates)	Significantly		5 - 15 €m
below prior year

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04

Operations Update

We have managed to react to the crisis early and have taken bold immediate measures to protect our people and business

Starting point

• We have managed to react to the crisis early
• • Early indications from our suppliers/partners in Asia
  • Leverage of early insights from Italy (HQ in Milan)
  • Establishment of internal task force already in January

Bold immediate measures

Comprehensive measures to ensure health and safety of our employees and customers (in stores and HQs)

>30k employees in	Suspension of
rental payments
short-time work
for closed stores
Reduction of	Extension of
payment terms
investments (stores)
with suppliers
Suspension of brick	Deferral of tax
& mortar marketing	payments

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We have implemented structural improvements to our business model during COVID-19 that will continue to bring benefits long-term

Structural improvements

to cope with immediate challenges from COVID-19 and to accelerate change

Costs	Supply chain	Marketing	IT

Flexibilization of our fixed costs	Adaption of our supply chain	Strong shift towards digital	Accelerated implementation of
(e.g. rent, logistics costs)	to tremendous omnichannel	marketing and targeted	"one inventory" and new
			growth (backbone, last mile)	below-the-line communication	capability "ship from store"
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We have successfully leveraged our omni-channel business model to keep sales momentum during the crisis

Online		Stores

• Strong increase in pure online sales in March (+98% yoy) further accelerating in April (approx. +300% yoy)
• High number of new first-time buyers
• New "ship-from-store"capability
• High product availability and fast delivery times through "pick-up"and "ship-from-store"

• 87% of stores were closed at the end of March
• Increasing re-openings since mid-April,now 943 stores open (92%)
• Full assortment and smartbars available to our customers
• Sales at re-opened stores normalize fast, also driven by release of pent-up demand

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We are now working to sustainably transform our business model for the post-COVID-19 era

Strengthen

omni-channel

proposition

• Further strengthen online (roll-out new webshop/app, increase online attachments)
• Play-out omni-channeladvantages (e.g. delivery from store, smartbar services)
• Improve operations based on advanced data analytics (become smart retailer)

Continue

rigorous cost management

• Further improve our sales and service productivity
• Accelerate right-sizing of our store footprint
• Further flexibilization of overall cost base

• Launch marketplace in Q4 19/20 (expand into more categories/services in 2021)

	Tap into new			Introduce advertising services for suppliers ("transfer WKZ into the online world")
	income pools
			Monetize our supply chain capabilities (both towards customers and suppliers)
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Looking ahead, we see challenges but also strong opportunities for us as the market leader for CE products in Europe

COVID-19

Crisis

Challenges

• Store sales are expected to catch up only gradually
• Risk of 2nd COVID-19 wave
• The macro-economic situation will reduce consumer spend for CE in 2020+, effects will vary by country

Opportunities

• Opportunity to grab market share in times of accelerating market consolidation
• We will become even more relevant for our suppliers and landlords
• Online sales will remain elevated in addition to recuperating store sales
• Strong demand uptake in many categories (e.g. home office, home entertainment, home schooling)

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Key take-aways

1	2	3		4
Coronavirus caused	The year remains		At the moment, we	At the same time, we
	see the current
temporary standstill	exceptional and		are focused on a
	COVID-19 crisis as an
of majority of our	challenging as the		careful reopening and
	opportunity to
stationary business	extent and duration of		are happy to be there
	accelerate the
after good start into	the crisis are		again for our
	transformation of our
2020	unpredictable		customers on site
	business model

Despite the current situation, we are confident about the attractive long-term prospects

of this company

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Q&A

Dr Bernhard Düttmann	Karin Sonnenmoser	Ferran Reverter
Chief Executive Officer	Chief Financial Officer	Chief Executive Officer
CECONOMY AG	CECONOMY AG	Media-Saturn-Holding GmbH

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CECONOMY AG

Investor Relations

CONTACT Kaistr. 3

40221 Düsseldorf

Germany

Tel.: [phone]

Email: [e-mail] https://www.ceconomy.de/en/investor-relations/

Notes

• All numbers in the presentation incl. IFRS 16 (unless otherwise stated)
• The disposal of the Greek MediaMarkt business is treated as a portfolio effect
• Guidance-relevantEBIT is adjusted for portfolio effects and non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019 and excluding associates

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IFRS 16 effects on EBITDA and EBIT

	Adjusted EBITDA1,2	Adjusted EBITDA1,2	IFRS 16 effect
		including IFRS 16
€m	Q2 18/19	Q2 19/20	Q2 19/20
DACH	77	58	81
Western/Southern Europe	20	29	44
Eastern Europe	0	-3	12
Others3	-16	-13	5
Total	81	71	143
	Adjusted EBIT1,2	Adjusted EBIT1,2	IFRS 16 effect
		including IFRS 16
€m	Q2 18/19	Q2 19/20	Q2 19/20
DACH	47	-53	1
Western/Southern Europe	1	-33	0
Eastern Europe	-4	-24	1
Others3	-18	-21	0
Total	26	-131	3

1Adjusted EBIT/DA excl. associates and non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019. 2Adjusted for portfolio changes. 3Including consolidation.

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Store network as of 31 March 2020

	31/12/2019	Openings	Closures	31/03/2020					Highlights
Germany	429	-	-1	428
	 Selective expansion stopped in light of COVID-
Austria	52	-	-	52
Switzerland	26	-	-	26		19 outbreak
Hungary	32	-	-	32
DACH	539	-	-1	538		 4 store closures, thereof 2 stores in Poland and
Belgium	27	-	-	27
	1 each in Germany and Italy
Italy	117	-	-1	116
Luxembourg	2	-	-	2
Netherlands	50	-	-	50		 Average store size at 2,617 sqm at the end of
Portugal	10	-	-	10		March 2020
Spain	88	-	-	88
Western/S. Europe	294	-	-1	293
Poland	90	-	-2	88
Turkey	78	-	-	78
Eastern Europe	168	-	-2	166
Sweden	28	-	-	28
Others	28	-	-	28
CECONOMY	1,029	-	-4	1,025
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Net Working Capital1

€m	30/09/2018	31/03/2019	Change	30/09/2019	31/03/2020	Change
Inventories	2,480	2,909	429	2,548	3,161	613
Trade receivables and similar claims	610	528	-82	455	460	4
Receivables due from suppliers	1,241	1,240	-1	1,295	1,277	-18
Trade liabilities and similar liabilities	-5,745	-5,835	-90	-5,321	-5,835	-514
Net Working Capital	-1,415	-1,158	254	-1,023	-938	86

1Prior-year adjustments due to changes in presentation and definition.
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New syndicated loan of 1,700 €m complements our existing credit lines

Financing structure

			2,680 €m
			Tranche B
			1,700 €m
			o/w
			1,360 €m KfW
			340 €m Partner Banks
980 €m
Bilateral loans (committed)		Tranche C
430 €m			355 €m
Syndicated loan		Tranche A
550 €m			625 €m
Old Financing Structure	New Financing Structure

11-year extension option at KfW's discretion. 2Automatically extends by one year if tranche B is extended.

New syndicated loan complements existing committed credit facilities of 980 €m

Existing bilateral loans and syndicated loan will be rolled into Tranche A and C

One condition is that CECONOMY suspends dividend payments for the duration of Tranche B

Maturities:
Tranche B	December 20211
Tranche C	June 20222
Tranche A	January 2024

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We have sufficient liquidity to cover all outstanding net liabilities even in a theoretical worst case scenario

(in €m)

Gross cash 1	New syndicated loan	Trade receivables 1,2	Trade liabilities 1,3
+2,424	+1,700	+1,737	-5,835

Available liquidity	Net liabilities 1
+4,124		-4,098

New syndicated loan provides significant leeway even for a theoretical full net working capital unwind

1As of 31 March 2020. 2Trade receivables and similar claims as well as receivables due from suppliers. 3Trade liabilities and similar liabilities.
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Financial calendar and events

Financial calendar
Q3/9M 2019/20 results	13 August 2020
Q4/FY 2019/20 trading statement	23 October 2020
FY 2019/20 results	15 December 2020
Upcoming events
Virtual Roadshow Paris
		18 May 2020
Virtual Roadshow DACH/UK/US	19 May 2020
Virtual Roadshow Frankfurt	28 May 2020

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