Five reasons to invest in Axfood
A solid company with strong brands, historically favourable returns, and profitable growth. Below, five reasons to invest in Axfood are highlighted.
1. Clear strategy in a non-cyclical and growing market
The food retail market is relatively unaffected by economic swings and is driven largely by population growth and inflation. Annual market growth has historically been stable at 2–3%. However, in the past few years it has been impacted by the pandemic and substantial food inflation. Axfood has a clear strategy for addressing the trends in the market through concrete priorities in six focus areas: customer offering, customer meeting, expansion, supply chain, work approach and people. The goal is to grow faster than the market with a long-term operating margin of at least 4.5%.
To meet customers’ varying needs, Axfood is a family of different concepts with strong market positions. Willys is the leader in the discount segment, and Hemköp is a strong player in the traditional grocery segment. With Tempo, Handlar’n and Matöppet, Axfood also has a position in mini-marts. Eurocash operates cross-border shopping stores towards Norway, and with its partnership with City Gross, Axfood also has a presence in the hypermarket segment. Middagsfrid simplifies everyday life for online customers with pre-planned meal kits, and with its holding in Mathem, Axfood is also active in pure-play online retail for standard groceries with home delivery. Snabbgross and Urban Deli hold a position in the café and restaurant industry, and Apohem is active in the online pharmacy market. With a clear expansion plan, a focus on the customer meeting in physical stores and in e-commerce and the development of meal solutions, customers’ evolving behaviours are being met.
Economies of scale and cost efficiency are achieved through close collaboration within Axfood between the Group companies and the central support functions. Dagab is the joint purchasing and logistics company, setting high demands for price, quality and sustainability. Efficient and modern logistics convey many advantages and create the conditions for profitable growth and a continuous improvement of the customer offering. Axfood’s common IT company have a crucial role in the Group’s digital development, automation and data-driven work approach to meet future needs.
Axfood has a solid balance sheet, and the business model generates stable cash flow with efficient management of working capital. According to Axfood’s dividend policy, the shareholder dividend is to be at least 50% of profit after tax and is to be paid out on two occasions. During the last five years, the dividend yield has averaged closer to 4%. Axfood’s gearing is low, and excluding the accounting effects of IFRS 16, the Group’s net debt divided by EBITDA amounted to 0.0 at year-end 2022.
Axfood has long been working to be a positive force in society. This means offering affordable, good and sustainable food for everyone and being an inclusive business that is conducted in a responsible way, not least with respect to reducing the Group’s environmental impact. Axfood is taking the lead in promoting a sustainable food system, and innovative and sustainable products are being launched through the private label assortment. Decision-makers, politicians and authorities are engaged in an ongoing dialogue on how the industry can be developed to increase sustainability and competitiveness.
