Development and business results

Group

In 2016, gross sales under banner increased by 10.2% (ex-currency) to EUR10.55bn. Comparable sales growth amounted to 8.7%, the highest annual rate reported by DIA since its listing in 2011.

In local currency, gross sales under banner and comparable sales grew in every DIA country in full-year 2016.

Iberia

2016 gross sales under banner grew by 1.1% to EUR6.81bn, with 1.0% comparable sales growth and a very limited contribution from new openings and acquisitions.

During 2016, DIA continued to make progress in its network with the upgrade of 307 stores. This upgrade plan, apart from improving the customer experience, reinforces DIA’s product offering with new categories.

In 2016, 143 El Arbol stores were converted into La Plaza de DIA, well ahead of the 95 stores initially planned for the year.

During 2016, DIA extended its perishable offering with the addition of meat and fish counters in almost 250 stores.

Clarel’s gross sales under banner in Iberia increased by 6.5% to EUR349m in 2016. Gross sales under banner of La Plaza de DIA stores amounted to EUR 866m in 2016.

Emerging Markets

In 2016, gross sales under banner declined by 1.9% in Euros to EUR3.74bn. In local currency, they rose by 26.3%.

Comparable sales growth was 19.1% in 2016 (excluding a +0.3% calendar effect).

In 2016, the negative FX effect of the Brazilian Real over gross sales was -5.1%.

DIA China remained in positive growth territory in the last quarter of 2016, delivering a healthy 3.4% comparable sales growth rate in the year (excluding a positive 0.3% calendar effect).

In local currency, all the DIA countries posted positive growth in gross sales under banner in 2016.

Net sales decreased by 0.6% in Euros to EUR8.87bn (fully explained by the detrimental effect on net sales figures of the steady expansion of the franchised activities), and grew by 9.0% in local currency in 2016.

Currency depreciation was reflected in a FX effect of 9.7% on 2016 net sales growth, although they reflected a much more stable performance at the end of the year, especially in the case of the Brazilian Real.

Excluding the currency effect, adjusted EBITDA climbed by 8.6% in 2016, with increases of 1.4% and 41.9% in Iberia and Emerging Markets, respectively.

In Euros, adjusted EBITDA grew by 2.4% to EUR625.1m, supported by positive growth both in Iberia (+1.4%) and Emerging Markets (+7.3%).

Adjusted EBITDA margin expanded by 21bps to 7.0%, as a result of the solid execution of costs driven by purchasing synergies and the positive effect of scale in our business in Emerging Markets.

Depreciation and amortization increased by 8.6% to EUR232.4m, above sales growth primarily due to the recent acquisitions and, to a lesser extent, the remodeling process carried out in recent years.

Adjusted EBIT slid by 0.9% in Euros to EUR392.7m, with 5.8% growth at constant currency. This operating result translates into a stable margin over net sales of 4.4%.

Non-recurring items declined by 19.9% to EUR97.7m. Accrued expenses related to the Long-Term Incentive Plans amounted to EUR15.2m in 2016. With regard to non-recurring cash items, they decreased by 22.6% to EUR73.0m.
EBIT increased by 7.6% to EUR295.1m (+15.5% ex-currency).

Despite the increase in interest rates in Argentina and Brazil, consolidated net financial expenses decreased by 7.1% in 2016 to EUR52m. Total financial costs related to the factoring activity of the company amounted to EUR0.14m.

Income taxes in the period amounted to EUR69.1m, reflecting an effective tax rate of 28.4% in 2016.

Net attributable profit declined by 41.8% to EUR174.0m, due to the activation of EUR140.4m in deferred tax assets in 2015 mainly related to losses carried forward from El Árbol.

Adjusted by these exceptional effects, DIA’s underlying net profit amounted to EUR258.6m in 2016, 1.8% higher than last year (+3.9% ex-currency).

Trade Working Capital 

DIA’s negative trade working capital increased by 39.1% in Euros to EUR1.02bn, 38.7% ex-currency.

Inventories were 19.0% higher than last year (17.3% higher ex-currency). The value of stock was higher due to the expansion of the assortment, a greater focus on perishable products at the upgraded stores, and because of the company’s effort to reduce its out-of-stock ratio.

Trade and other receivables increased by 17.9% in 2016, or 16.4% at constant currency. This growth in debtors is half explained by the expansion of the franchised activity and the other half by the superior conditions negotiated with suppliers.

In 2016 almost three fourths of the increase in inventories and debtors values came from the DIA activities in the Emerging Markets.

During 2016, DIA supported its franchise network with incremental funding based on strict business criteria (to improve sales) and full recoverability of the credits. DIA is comfortable with the total credit risk borne with its franchised network due to the healthy performance of this activity, the total volume of guarantees received, and the enormous risk fragmentation.

The value of trade and other payables increased by 28.6% to EUR1.95bn, 27.5% up at constant currency.

Non-recourse factoring from receivables from our suppliers amounted to EUR88.4m by the end of December 2016.

The equivalent number of days of negative trade working capital (over COGS) increased by 15.5 to 53.8 days in 2016. This change would have been reduced to 10.9 (to 49.1 days) in the absence of any factoring facility to better manage the company’s working capital.

Capex

DIA invested EUR345.4m in 2016, 5.7% lower than in the same period last year after excluding the investment related to the Eroski asset deal.

In Iberia, capital expenditure increased by 22.0% to EUR225.8m. Remodeling efforts in the Maxi and El Árbol banners continued during the year, although openings represented a significant portion of the total investment in the region (almost 25%). During 2016 in Iberia, DIA also capitalised EUR25m of store and logistics equipment that was previously operated under leasing agreements.

In Emerging Markets, investment declined by 34.0% in Euros (15.8% in local currency). Investment fall in all of the emerging countries in which DIA operates, but particularly in Argentina, namely due to the demanding 2015 comparison base, a period in which the company displayed an exceptional investment effort.

New openings represented half of the total investment in Argentina and Brazil. Over the last three years, DIA has invested a total of EUR445m in its emerging markets unit.

Net Debt

Net debt at the end of December 2016 amounted to EUR878m.

In 2016, the company invested EUR19.9m in the acquisition of treasury shares to hedge the liabilities related to the 2016-18 LTIP. Additionally, last July DIA paid EUR122.2m in dividends to shareholders.

The ratio of net debt over the last twelve months’ adjusted EBITDA was 1.4x, while DIA’s estimate for the leased adjusted leverage ratio calculated under the S&P methodology stands at 2.1-2.2x versus 2.5x in 2015. Both ratios imply significant scope for potential additional leverage without threatening the company’s corporate investment grade rating.

In 2016, DIA obtained proceeds of EUR38.5m from asset disposals, namely related to a group of stores divested in the last quarter of 2016.

(€m)	31 Dec 2014	31 Dec 2015	31 Dec 2016
Net debt	533.4	1,132.4	878.3
Net debt / ajusted EBITDA	0.9x	1.9x	1.4x

 

At the end of December 2016, DIA operated a total of 7,799 stores, 81 more than in the same period last year.

In Iberia, the number of stores fell by 64 in 2016 to 5,498. This decline is due to the closure of 46 El Arbol stores at the start of the year, and the reclassification of 34 very low sales Cada DIA stores in Spain at the end of 2016.

In Iberia (Spain), the number of supermarkets declined from 520 to 355 during 2016. This decrease of 165 stores is due to the closure of 46 stores (almost all of them at the start of the year), the transformation of 125 stores into DIA format stores, and the opening of six new La Plaza stores in 2016.

Clarel increased its network by 38 stores in 2016, reaching a total of 1,233 at the end of the year. This format continues to add new franchisees, reaching a total of 107 stores operated under this model by the end of 2016, 76 more than a year ago. Franchised Clarel stores already represent 8.7% of the total.

In Emerging Markets, DIA operated 2,301 stores at the end of December 2016, 145 more than in the same period last year. Brazil continued with its rapid expansion, with the net addition of 121 stores during the year. Argentina also maintained a dynamic rate of expansion with 96 gross openings, although net openings in 2016 amounted to 26 due to the discontinuation of 70 small sales stores, of which 34 correspond to effective closures and 36 to very low sales Cada DIA stores reclassified.

Over the last twelve months, the number of Dia banner stores operated under franchised models in Iberia increased by 113, totaling 2,296, which represents 58.7% of the banner. In the Emerging Markets, the number of stores franchised increased by 83 in this period, to a total of 1,566 stores, representing 68.1% of the total.

Iberia

Net sales slid by 0.2% in 2016 to EUR5.75bn. This negative performance is due to the closure of some underperforming El Árbol and DIA stores in Spain (reflected in a 2.9% decline in store selling area), the store upgrading activity conducted throughout the year (in El Árbol and DIA Maxi, namely) and the ongoing process of transferring COCO stores to the franchised network (a total of 243 transfers were completed during 2016).

Adjusted EBITDA grew by 1.4% in 2016 to EUR508m. The adjusted EBITDA margin remained almost flat in 2016, accumulating a limited expansion of 13bps to 8.8%.

In the full-year 2016, D&A in Iberia increased by 8.3% to EUR178.4m, namely due to the recently completed acquisitions.

Adjusted EBIT slid by 2.0% in 2016 to EUR329.6m, reflecting an 11bps decrease in margin over net sales to 5.7%. The decline in operating margins is mainly due to Portugal’s performance, although the increased weight of supermarket sales has also impacted profitability.

(1) Adjusted by non-recurring items.

Emerging Markets

In 2016, net sales in Emerging Markets climbed by 25.7% in local currency, but declined by 1.5% in Euros to EUR3.12bn due to the average depreciation of currencies (-4.8% Brazilian Real, -37.4% Argentinean Peso and -5.2% Chinese Yuan).

In 2016, adjusted EBITDA rose by 41.9% (ex-currency) and by 7.3% in Euros to EUR117.1m. Adjusted EBITDA margin improved by 31bps in 2016 to 3.8%.

D&A increased by 24.4% in Q4 2016 to EUR15.2m and by 9.4% in 2016 to EUR54.0m due to the higher level of investment activity carried out in recent years.

In spite of the challenging market backdrops in all of DIA’s emerging markets, the company managed to close another outstanding year of business. Market share figures continued their solid upward trend in Argentina and Brazil, the commercial offer has been improved across the board, private label keeps improving its offer, penetration rates, and the number of SKUs, and the DIA Club loyalty program is fully implemented in the state of Sao Paulo.

(1) Ajustado por elementos no recurrentes.

• Gross sales under banner: total turnover value obtained in stores, including indirect taxes (sales receipt value) in all the company’s stores, both owned and franchised.
• Net sales: sum of the net sales generated in our integrated stores and sales to franchises.
• LFL sales growth under banner: growth rate of gross sales under banner at constant currency of the stores that have been operating for more than thirteen months under the same business conditions.
• Adjusted EBITDA: operating profit after adding back non-recurring costs, impairments, re-estimation of useful life and gains/losses arisen on the disposal of assets and depreciation and amortization of fixed assets.
• Adjusted EBIT: operating profit after adding back non-recurring costs, impairment and re-estimation of useful life and gains/losses arisen on the disposal of assets.
• Underlying net profit: net income calculated on net profit attributable to the parent company, excluding non-recurring items (restructuring costs, impairment and re-estimation of useful life, gain/losses on disposal of assets, tax litigations, exceptional financial expenses and equity derivatives), discontinued operations and the corresponding tax impact.
• Reported EPS: fraction of the company’s profit calculated as net attributable profit divided by the weighted average number of shares.
• Underlying EPS: fraction of the company’s profit calculated as underlying net profit divided by the weighted average number of shares.
• Cash from operations: adjusted EBITDA less non-recurring cash items less recurrent capex.

The environmental commitments taken on by the DIA Group and reflected in its Environmental Policy are put into practice through the procedures included in the Environmental Management System, and the level of compliance is supervised by means of an environmental assessment of activities and facilities.

The DIA Group’s environmental commitments are as follows:

• Comply with existing environmental legislation, applicable in each of the countries in which the DIA Group is present.
• Promote the responsible use of resources.
• Apply sustainability and ecodesign criteria to the development of products and packaging.
• Manage the waste generated following the waste hierarchy model, prioritising the prevention, reuse, recycling, and recovery.
• Adopt measures to reduce greenhouse gas emissions.
• Actively work to identify improvement opportunities by developing and implementing procedures that allow for environmental self-assessment.
• Encourage staff through training and awareness so that they actively participate in the application of these commitments.

SGMA (Environmental Management System)

During 2016, the DIA Group finished defining the procedures and working guidelines that make up its Environmental Management System, standardising aspects such as the supervision of regulatory requirements, waste management, reporting of indicators, efficient energy management, emissions supervision, calculation of the carbon footprint, and the environmental assessment of facilities and activities.

Environmental assessment

In order to ensure that the DIA Group’s facilities and activities are managed in accordance with legal requirements and internal regulation, the Environmental department periodically audits the conduct of offices, warehouses and stores in relation to waste management, emissions and waste control, and consumption of resources.

The identification of improvement areas and the implementation of procedures and action plans have allowed the Group to gradually improve its environmental conduct, allowing it to post an overall improvement in the ratings obtained from environmental audits in relation to its warehouses in Spain.

Having an appropriate degree of supervision of the environmental conduct of its facilities and activities allows the company to identify the areas on which it needs to place particular emphasis to achieve a continuous improvement in terms of environmental issues.

In line with this objective, the DIA Group works to identify environmental aspects that are relevant both for the company and for its stakeholders, establishing a series of indicators that allow it to supervise the progress made on these aspects.

The company has a reporting system that is structured around a series of key management indicators (KPI – Key Performance Indicators) that are defined following the recommendations of the GRI international standard (Global Reporting Initiative). GRI is the measuring system that is most widely used internationally by listed companies for non-financial reporting.

The periodical gathering of the values of these indicators is carried out using “Enablon”, a 100% web-based software tool accredited by GRI and used in over 130 countries by leading companies in all sectors.

Year after year, the DIA Group has worked to improve the quality and traceability of reported information, and in 2016 the company submitted part of its Sustainability Report for external verification.

Furthermore, the DIA Group has a register of environmental regulation and non-compliance that allow it to act fast when faced with any contingency. During 2016, there were no significant fines related to non-compliance with environmental legislation.

In order to improve monitoring, regulatory updates (which are received periodically) are analysed and distributed to the relevant departments if they are applicable to DIA’s activity.

In addition, the company works with several associations and specialised bodies to improve the management and regulation of environmental issues.

DIA Group’s corporate website (www.diacorporate.com) makes available to its stakeholders all the Sustainability Reports published since the company’s listing in 2011.

Calculation and external verification of the carbon footprint

The DIA Group’s commitment to the challenge of reducing its carbon footprint has led the company to carry out a lot of work in this area in recent years, driving several emission reduction initiatives and developing a proprietary tool with which to calculate the carbon footprint of its facilities and activities in all geographical and operational areas.

During 2016, DIA’s 2015 Greenhouse Gas Emission Inventory was submitted for external verification, obtaining a favourable report.

Accordingly, the calculation and verification of its carbon footprint allows DIA to better supervise the main emissions hotspots, and adopt measures to reduce its carbon footprint and evaluate its efficiency.

CDP (Carbon Disclosure Project)

During 2015, DIA took the step of publicly sharing information about its emissions of greenhouse gases and its measure to mitigate them, answering the CDP-climate change questionnaire, obtaining the highest score of all the companies that replied for the first time to the questionnaire.

In 2016, DIA renewed its commitment to transparency by again answering the CDP Climate Change questionnaire, improving its score versus the previous year, obtaining an A- level. 

At the end of 2016, DIA Group employed 44,495 people across five countries: Spain, Portugal, Brazil, Argentina and China. The business performance, coupled with the company’s focus on innovation with various formats, has led the company to develop new competencies and adapt to customers’ new requirements at all levels.

In December 2016, the Board of Directors approved the Human Resources Strategic Plan, applicable to all the countries in which the group is present, and aligned with the main business objectives. Furthermore, in 2016 the company has worked on developing an integrated training program for the entire workforce with the aim of placing the customer at the heart of all operations, and it carried out an employee satisfaction survey among all employees in order to listen and act according to their needs.

Out of DIA’s 44,495 employees, 69% work in Europe, 29% in Latin America, and 2% in Asia. By workplace, 73% of employees work in stores, 14% in warehouses, and 13% in offices.

The company’s ongoing focus on permanent contracts and talent retention means that at the end of fiscal 2016, 87% of employee contracts at group level were permanent, and the average workforce turnover (understood as voluntary termination) was 0.9%, with an average tenure of 8.2 years.

In America, the workforce has grown compared to last year, as there has been a return to growth, mainly in Brazil, where the selection team has been reorganised, with experts in the operations and commercial areas. In addition, a new recruitment centre was opened in Río de Janeiro, and two new talent acquisition programs were launched: ‘Talento Joven Día’ (DIA Young Talent’) and ‘Talento Futuro-Joven Aprendiz’ (‘Future Talent – Young Apprentice’).

In China, the company has continued to focus on the efficiency of the structure in Shanghai to give the business unit the best competitive position. Progress in Portugal was significant, where the staff has been increased mainly due to the stability of the Clarel banner and the transformation to new supermarkets with fresh over-the-counter products. In Spain, store personnel is still being adapted due to the new acquisitions to increase profitability, and there was an increase in the number of stores being converted from COCO to COFO.

Strategic Human Resources Program 2017-2019

In July 2016, DIA Group’s Strategic Human Resources Program was presented to the Board of Directors. The main pillar of this program, which covers a three-year period, is the company’s strategic program, and it focuses on three key aspects in order to achieve its objectives:

• Customer focus: Provide continuity and strengthen the actions initiated in recent years to enhance the level of customer focus of its employees, which is a basic pillar of DIA Group’s strategy.
• Digital transformation: Drive the necessary organisation and cultural changes to achieve a digital transformation of the organisation. 
• Employee focus: Work on employee satisfaction within the framework of the “100% love my job” project, which includes a series of actions focused on the employee and designed to achieve greater employee commitment to the company’s project.

Employee satisfaction survey

In September and October 2016, the second employee satisfaction survey was carried out at Group level, in which more than 22,000 people participated, equating to 48% of the current workforce. This figure represents a 10% increase versus the last employee satisfaction survey conducted in 2013.

Of note in 2016 was the degree of employee participation, which was over 70% in some countries, such as China, Argentina and Brazil.

Overall, the category that improved the most is the client category, which has risen by 9% since 2013, and the degree of satisfaction with employees’ immediate supervisors also improved, reaching levels similar to those seen among other large retail sector companies worldwide, and in some cases above the levels of other companies in the countries in which DIA Group operates.

The results, along with the associated action plans, started to be communicated to all employees in December 2016 and will continue during the first quarter of 2017.

The DIA Group has an active policy in terms of talent retention and training that identifies, recognises and promotes the value that the different job profiles generate for the organisation. Accordingly, the company applies an ongoing, differentiated focus on continuous training for all of its staff. During 2016, more than 471,000 hours of training were given to more than 29,800 employees in stores, warehouses, and headquarters across all the countries in which the company operates. 

The company has a total of 31 training centres for store employees across all countries. In 2016, two new training centres were opened in Spain and Brazil, with the aim of complementing and strengthening the training of new job profiles. The group’s training centres train new employees to carry out store functions in a very practical way. Specific training is also given in the logistics centres, focused on the efficient use of tools and machinery, and (as for other job profiles) guarantee employees’ occupational safety.

Accordingly, 2016 was characterised by numerous actions focused on updating store operations, which has allowed training teams to roll out new operating procedures to all employees in the store network, to be immediately adopted by the teams.

During 2016, a transversal training project aimed at all of the Group’s employees was also undertaken; this project involves the use of short informational videos that explain how tools work, as well as the Google applications that the company uses to improve collaborative work and communication, as well as providing technological solutions that help to streamline employee tasks.

2016 saw the launch of an e-learning program on the new Ethical Code and the ethical principles behind it, with the aim of aligning all of the company’s employees with this new code. This training program, translated into four different languages, was launched in Spain and China for staff at the Headquarters and Regional Centres in November and December, and will be rolled out in America and Portugal during the first quarter of 2017. At the end of 2016, 2,981 employees had received training on the Ethical Code.

The "Actitud CLIENTE" (‘CLIENT Attitude’) project was one of the key training initiatives during 2016. This project is a transversal program aimed at enhancing the shopping experience of DIA customers, mainly focusing on two parameters: in-store experience with the “Experiencia Cliente” (‘Client Experience’) project, and employee engagement at all levels with the “Actitud Cliente” (‘Client Attitude’) project.

As with all the projects developed internally by the company, there was an initial implementation and development stage in Spain, and a subsequent rollout in the following years to the rest of the group’s countries.

Also of note is the language training provided, with 16% of employees already participating in online training.

Training at the headquarters and in offices

During 2016, employees at the Headquarters and in offices started to be trained in new work methodologies such as:

• Design Thinking and other methodologies related to innovation projects applied to Customer experience. 
• Product Owner Methodology Agile.
• Individual and Team Coaching.

New training methods have been included, such as “serious game” e-learning to develop employees’ negotiating and time management skills.

Training in stores and warehouses

DIA provides high-quality, practical occupational training for people in store roles. This training teaches staff how to use the cash registers, instils DIA’s values, and shows them basic concepts such as stock replenishment, customer service, and teamwork.

In order to implement this growing demand for warehouse and store staff training in Spain, during 2016 a new National Training Centre was opened, which has traditional training rooms and new types of classrooms such as an “Aula de la Tierra” (‘butcher’s classroom’) and an “Aula del Mar” (‘fishmonger’s classroom’). These classrooms are used for the theoretical and practical training of our butchers and fishmongers, and include all the equipment necessary to train our professionals.

In the warehouses in Spain, a leadership training program was launched for middle management, with the aim of establishing and standardising the leadership styles of the warehouse teams.

For the Clarel banner, training has also been increased both in terms of products and sales techniques, linked to a new sales incentive system.

In Portugal, progress has been made in terms of the staff training with the “Market III” project, which is an integral part of the strategy to boost sales and offer our customers a better shopping experience: “Atención y Ventas” (‘Customer Service and Sales’) and “Perecederos” (‘Perishables’).

In Brazil, the ‘Universidad Corporativa DIA’ (‘DIA Corporate University’) is still working at full capacity, updating professionals’ knowledge at all levels. 2016 saw the launch of expansion team training as well as training for the area and operations managers, with the aim of improving the levels of service to franchisees, which is one of the pillars of our company.

During 2016, Argentina launched the DIA Academy, which includes three schools that are focused on staff training.

Employee training focused on franchises

With the aim of raising employee awareness in the franchise business and making them more participative, DIA Group launched a series of training programs aimed at understanding and improving processes.

Accordingly, during 2016 in Argentina, a new videoconference-based franchisee training and communication resource was launched, whereby employees provide support to franchises, and franchisees cover important issues such as business management.

In Portugal, an “Initial training and opening monitoring program” has been launched. This program lasts for three years from the time that a franchisee starts.

In DIA China, training is focused on the Service Managers, who supervise groups of stores, both owned and franchised, and relates to people management to improve employee recruitment and retention.

The publication of all vacancies that arise at the DIA Group’s headquarters through the DIA portal has led to an increase in internal job opportunities, thus boosting job profiles with a greater global and transversal vision of the company. In 2016, 28% of vacancies were covered internally, which implies that 2% of the headquarters staff change jobs internally. In Brazil, 27 people changed jobs at the headquarters during 2016. Portugal is also managing vacancies internally at its headquarters, thus covering 12% of vacancies. In 2016, Argentina and China started to use this recruitment method at their headquarters. 

Increasingly, new technologies and socialisation processes are leading recruitment teams to find new ways to recruit staff, with the creation of ‘Marca Empleador’ (‘Employer Brand’). Two examples of initiatives that are already in place are the launch of DIA Group’s corporate website on LinkedIn, with links to the company’s country websites, where vacancies are published. DIA China is recruiting through a smartphone app, as this is the way to reach a younger age group due to the fast growth in smartphone use.

Due to rapid labour market growth, Brazil has made progress in recruiting staff able to fill positions at the new centres and at its headquarters. The aim is to train DIA professionals aligned with the company’s strategy and values, and with the objectives of each business area.

During 2016, Portugal continued to renew strategic and tactical positions at all levels, hiring and promoting professionals both internally and externally. This enhances its ability to respond in an efficient and dynamic way to the company’s current and future challenges. In the operations area, the teams have been strengthened with the hiring of new Store Heads who have considerable expertise in the retail sector and university degrees, as well as qualified professionals for the over-the-counter sections (fishmonger’s, butcher’s, take-away).

Clarel Portugal has strengthened its store coordination team, and all employees and their families have been given health insurance cover.

DIA China has created a dedicated team to deal with the logistics requirements of the e-commerce project (online sales on its own platform and on Tmall), with its own incentive system and with seasoned professionals among its middle management.

During 2016 in Brazil, the human resources teams started to support the selection process for Franchise candidates, something that was already being done in Argentina. The Franchise is one of DIA’s basic business pillars, with very successful results.

New, more digital job profiles

Work has also been done on new technological job profiles in line with the digitalisation process at all levels implemented by the company. Thus, during 2016 new professionals were hired, specialised in Big Data processes, technology, and e-commerce, among others.

The evaluation of potential at Manager level continues to be carried out in Spain and Brazil by means of Assessment as a tool to evaluate skills.

Regarding communication with employees in Spain, there has been an ongoing increase in the number of people who have subscribed to DIA’s Internal Portal, and a similar portal has been launched for Clarel employees, with a high level of acceptance. During 2016, a new Social Portal was developed for all Group employees in all countries, and it will be launched in the second half of 2017, providing a service to all Group employees either on PCs or on smartphones, by means of an app.

With the aim of reinforcing employee pride in belonging to the DIA Group, a 15th Anniversary celebration was organised by DIA Brazil. The initiative presented 15 years of history, told by our staff. This was the first simultaneous action carried out across all locations, with celebrations in all offices, warehouses, and stores.

In Brazil, the use of social networks has been promoted, with the aim of allowing immediate communication with employees (mainly in stores) regarding information on our internal campaigns. Furthermore, other campaigns have been developed to boost employee participation and commitment to the company. These initiatives include the Reduction and Prevention of Losses campaign and the Economy Experts campaign.

With the aim of detecting employee problems in stores, the Human Resources teams in Brazil launched a campaign to increase their presence in DIA stores in Brazil. Thanks to this initiative, they managed to get closer to employees, improving issues related to health and safety, internal communication, and people management.

In Argentina the “Un DIA en Familia” (‘A Family DAY’) campaign was continued for employees at the Headquarters and in the Warehouses, with more than 1,700 people taking part. The initiative aimed to reach out to employees and boost a sense of belonging to the company.

 “Paz social” (‘Social peace’) is one of our company’s objectives, and year by year we manage to avoid the impact of external factors on the company’s activity, while guaranteeing employee rights. The Employee Relations teams in each country and the employee representatives are aware that unity between both parties is the most favourable option for the company overall. By way of example, at DIA, 80% of work contacts are permanent, and the company’s salary policies are aligned with each country’s practices.

As part of its Human Resources policies, DIA has set the safety, health and wellbeing of its employees as one of its top priorities. Thus, DIA has established as one of its commitments the promotion of health and safety, committing to including preventative management in all areas of its activity.

Aware of the importance of maintaining appropriate risk prevention conditions, DIA complies strictly with existing legislation. The accident rate at work in terms of the percentage of hours off work due to accidents is 0.49%, which is low taking into account the nature of the work in stores and warehouses and despite the integration of new banners and new stores and warehouses with staff that have limited experience with DIA’s work systems.

The aim during 2016 has been to achieve a safe and healthy work environment in all areas of the company: offices, stores, and warehouses. The company’s Risk Prevention Service aims to reduce workplace accidents and improve the safety of workers in all areas of activity. Each country has developed and adapted training in new stores and new processes, in order to ensure that all employees are trained in health and safety in the workplace. This applies to employees who are already working for the company (updating their knowledge), and to new hires.

In the warehouses and stores, a high degree of importance is given to training related to the prevention of occupational risk, and all employees are trained to operate specific machinery that they use in their workplace.

During 2016 in Spain, the “Semana Saludable” (‘Healthy Week’) event was held once again, both at the Headquarters and at the Regional Centres. All the proceedings were focused on improving staff wellbeing, promoting an active and healthy lifestyle, and included issues related to food, emotional wellbeing, and physical activity.

Of note is the updated carried out in Portugal in all areas (auditing, training, procedures, etc.) of Risk Prevention and Health for all staff.

DIA China carried out the same initiative with its service providers (cleaning, transport, security, maintenance, etc.) to ensure that everyone working at DIA do so under full safety conditions.

Moreover, 2016 saw a continuation of information and awareness campaigns related to information security, which is an ever-growing risk due to the high degree of technological connectivity, both in the workplace and in our private lives.

The DIA Group is committed to equal opportunities in the workplace, with a balanced proportion of women, who account for 65% of the total workforce. Women account for 38% of management positions at Group level, and this percentage rises to 46% in countries such as Spain, and 60% in China.

At the end of 2016, the gender breakdown by country was as follows:

The gender breakdown by job type was as follows:

In order to ensure gender equality, the group appropriately monitors and publicises selection processes, promotions, and workplace training, and also ensures salary equality in jobs of equal value.

In order to promote equal opportunities for all staff in Spain, an Equality Program has been in place since 2012. Proof of how well it works is that in 2016, women accounted for 39% of promotions to different professional groups.                 

In line with the company’s commitment to disclose equal opportunities, in March 2016, in the context of International Women’s Day, DIA Group in Spain participated in the "Decálogo Compromiso por la Igualdad" (‘Commitment to Equality Guidelines’), of the Fundación Madrid Woman's Week.

The DIA Group works to integrate staff with disabilities in all the countries in which it operates. At the end of 2016, a total of 525 people with some form of physical or intellectual disability were part of the company’s workforce, and DIA Brasil had the highest number (264) of employees with some form of disability.

On 3 December, for the fifth year running, DIA celebrated International Disability Day, helping to integrate people with disabilities in all of the Group’s countries.

In Spain, DIA works closely with several Foundations and Associations, in particular Fundación Once, with which it works to integrate people into the company by means of internships, direct or direct hiring of goods and services, and reaching agreements with Special Employment Centres (companies with a minimum of 70% of staff with some sort of disability).

In 2016, the Chinese government introduced a law that requires companies to ensure that at least 1.5% of their workforce is made up of people with disabilities. Since the start of 2016, DIA China offered the opportunity for people with disabilities to join the company, and as of 31 December 2016, people with disabilities accounted for 1.5% of the workforce.

Furthermore, DIA China has integrated all of the people who belonged to five different service providers, offering them employment contracts as DIA employees with the same conditions as their colleagues. The company’s aim is to not only comply with the regulation, but achieve a higher degree of commitment with the company.

The DIA Group has in place performance evaluation mechanisms for all staff. In the case of store and warehouse staff, performance and productivity objectives are evaluated, both in relation to the workplace and individually. In the case of office staff, personal objectives are focused on individual performance and aligned with the Company’s results.

During 2016, the company continued to review and modify its performance evaluation system. These changes aim to increase the level of differentiation in terms of merit and talent recognition throughout the organisation, and improve the tool as an instrument for the professional development of employees and increase the weight of the DIA Group’s values in everyday decision-marking and the performance of the group’s employees.

Last year saw the end of the review and modification process relating to the Performance Evaluation System in Portugal. A single methodology has been implemented across the entire company (stores, warehouses, Portugal headquarters), with the same principles, and aligned with DIA’s Values. In 2016, training was given to those conducting the assessments and those being assessed in relation to the new methodology, IT application, and communication & feedback.

The company has continued to develop its talent management system for key roles within the organisation, with a particular emphasis on the development of horizontal careers, coaching, and the role of supervisors as people developers. Furthermore, a market-leading technological solution has been implemented to support the process and make it more accessible and productive for users.

Within the DIA Group, the remuneration policy is established by the Group’s Management, in accordance with local market practices, inflation, agreements with trade unions and collective bargaining agreements.

DIA’s remuneration policy is based on the following principles:

• Moderation and adaptation to the trends and references in matters of remuneration followed in companies of similar size and activity in a local way, ensuring that they are aligned with the best practices in the market.
• Reward the quality of work, dedication, responsibility, knowledge of the business and commitment to the Company of employees in key positions who lead the organisation.
• Close links between remuneration and the Company’s results, such that the weight of variable remuneration is adapted to effectively reward the attainment of individual objectives as well as the contribution of value to the Company and its shareholders.
• Internal equity and external competitiveness.

In Brazil, the company implemented new rules for promotion linked to a performance evaluation and positioning in the salary range. It has also conducted a review of the internal mobility policy for employees, adapting itself to the best practices in the market in Brazil. In order to guarantee the job profile management system, the company updated all the job profile descriptions for all of the Regional Centres and Warehouses.

DIA Brasil signed a contract with SAP’s Success Factors to implement the following modules: Performance Management, Objective Management, Recruiting, Learning, Development, Succession Planning, Remuneration and integration with SOC (a Health and Safety system) in order to improve and digitalise the management of the Human Resources systems.

DIA Argentina relaunched its Internal Development Program for Stores in order to continue to identify talent among its staff.

As part of the “Expertos en Clientes” (‘Client Experts’) project, the group of customers called “Expertas en Ahorro” (‘Savings Experts’) voted for their favourite checkout person according to their quality of service. The winner received an overseas holiday. This initiative aims to provide a high degree of visibility to customer service; a DIA customer was also given a prize.

In 2016, DIA Argentina also relaunched its ‘Propuesta de Valor al Empleado’ (‘Employee Value Proposal’) campaign, called "Sé el director de tu propia película" (‘Be the director of your own movie’), so that all of its employees were made aware of, and benefited from, its social benefits, while improving the sense of pride in belonging to the Company.

DIA China set up new incentives to favour the retention of its most experienced staff, both in stores and in warehouses, at times of peak workload prior to the main holiday periods.