Wesfarmers Limited · ASX:WES
Wesfarmers — JP Morgan Investment Conferences, New York and Edinburgh 2009
66 slides from Wesfarmers's conference presentation, October 2009
Slide 1: Discussion Pack: JP Morgan Investment Conferences New York and Edinburgh
Investment Conference scuss o Pack Discussion ac JP Morgan Investment Conferences New York and Edinburgh October 2009 1
Slide 2: Index
Index 1 Philosophy, Performance and Direction 3 2 Sustainability 8 3 Group Overview 12 4 2009 F Fullll Y Year R Results lt 16 5 Operating Divisions 29 6 Capital Management 63 7 Outlook 65 8 Investor Relations Contacts and Information 66 2
Slide 3: Philosophy, Performance and Direction
Philosophy, Performance and Direction
Slide 4: Long-term, consistent strategies
Long-term Long term, consistent strategies MANAGING BALANCE SHEET EFFECTIVELY 4
Slide 5: Recent evolution of Wesfarmers
Recent evolution of Wesfarmers November 2007 Coles Group Acquisition Events | Divestment Events | Growth Events | Capital Events November 2006 OAMPS February/March 2009 3:7 rights issue April 2001 August 2003 April p 2008 Westralian Farmers Co-operative and Landmark rural 1:8 rights issue Franked In
Slide 6: Portfolio of leading brands
Portfolio of leading brands Retail Businesses Industrial Businesses Hotels Insurance 6
Slide 7: Strong long-term performance
Strong long long-term term performance EPS (cents per share) 300 250 200 150 100 50 0 98 99 00 01 02 03 04 05 06 07 08 09 EPS (AGAAP) Girrah EPS Landmark EPS EPS (AIFRS) ARG EPS Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Wesfarmers TSR Index All Ordinaries Accumulat
Slide 8: Sustainability
Sustainability
Slide 9: Sustainability
Sustainability Financial performance • All our actions are directed towards satisfying y g our corporate p objective j of p providing g a satisfactory return to shareholders. To be sustainable, Wesfarmers must continue to achieve high standards of financial performance thereby allowing us to make th
Slide 10: Sustainability
Sustainability Environmental responsibility • Our diverse range of businesses expose us to a number of challenging or Wesfarmers is a potentially challenging environmental issues, including waste disposal, member of the Dow packaging, environmental contamination, energy use and greenhouse gas emissi
Slide 11: Sustainability
Sustainability Sustainability reporting • Voluntarily publicly reporting on sustainability issues since 1998/99. The stand-alone Sustainability Report is published to coincide with the company's p y Annual General Meeting. g The 2008 report p runs to more than 130 p pages g of very y detailed inform
Slide 12: Group Overview
Group Overview
Slide 13: Financial Summary
Financial Summary FY09 FY08* % Change pcp Operating Results Revenue A$m 50,982 33,584 51.8 EBITDA A$m 4,001 2,889 38.5 Earnings before interest and tax A$m 2,977 2,229 33.6 Net profit after tax (pre significant items) A$m 1,641 1,132 45.0 Net profit after tax (post significant items) A$m 1,535 1,063
Slide 14: Divisional Summary
Divisional Summary Activities FY09 Revenue FY09 EBIT FY09 EBIT (A$m) (A$m) Contribution* The division comprises one of Australia's largest supermarket Coles businesses, liquor retailing outlets, fuel and convenience outlets. 28,799 831 25% Australia and New Zealand's leading supplier of home Home Im
Slide 15: Divisional Summary (cont.)
Divisional Summary (cont.) (cont ) Activities FY09 Revenue FY09 EBIT FY09 EBIT (A$m) (A$m) Contribution* Mining of metallurgical and steaming coal to domestic and export Resources markets 2,411 915 28% Provider of underwriting, broking, premium funding and financial Insurance services activites in A
Slide 16: 2009 Full Year Results
2009 Full Year Results
Slide 17: 2009 Full Year Results: Group Performance Highlights
2009 Full Year Results Group Performance Highlights Year ended 30 June (A$m) 2009 2008* % Revenue 50,982 33,584 51.8 • Operating revenue of A$51.0bn EBITDA 4,001 2,889 38.5 EBIT 2,977 2,229 33.6 – Significant revenue growth in the Resources, Net profit after tax (pre significant items) 1,641 1,132 4
Slide 18: 2009 Full Year Results: Divisional Performance Overview
2009 Full Year Results Divisional Performance Overview Year ended 30 June (A$m) 2009 2008* % Coles 831 475 n.m. • Coles turnaround continues to meet Home Improvement 659 589 11.9 Wesfarmers’ expectations Office Supplies 65 36 n.m. Target 357 221 n.m. • Bunnings and Target delivered strong Kmart 109
Slide 19: Coles – 2009 Full Year Performance
Coles – 2009 Full Year Performance Highlights Financial Performance Food Year ended 30 June (A$m) 2009 2008* Revenue 28,799 16,876 • Encouraging sales trend with 4Q comp sales of 7.3% 7 3% (Easter 1 EBIT 831 475 adjusted) Food & Liquor Revenue 3 22,506 12,825 • Supply chain transformation reducing n
Slide 20: Home Improvement & Office Supplies 2009 Full Year Performance
Home Improvement & Office Supplies 2009 Full Year Performance Highlights Financial Performance – Home Improvement Home Improvement Year ended 30 June (A$m) 2009 2008 % Revenue 5,845 5,359 9.1 • Store on store cash sales growth of 10.1% EBIT 659 589 11.9 • 2.8% decline in trade sales in challenging m
Slide 21: Target – 2009 Full Year Performance
Target – 2009 Full Year Performance Highlights Financial Performance • EBIT margin strength maintained at 9.4% Year ended 30 June (A$m) 2009 2008* • FY09 comp store sales growth of 4.2% Revenue 3,788 2,198 – All departments increased sales over the period EBIT 357 221 EBIT margin (%) • Cost control
Slide 22: Kmart – 2009 Full Year Performance
Kmart – 2009 Full Year Performance Highlights Financial Performance • Profitability improving through Renewal Year ended 30 June (A$m) 2009 2008* – Exiting unprofitable categories Revenue 3,998 2,454 – Margin improvement with reduced discounting EBIT^ 109 111 EBIT margin (%) 2.7 4.5 – Supply chain r
Slide 23: Resources – 2009 Full Year Performance
Resources – 2009 Full Year Performance Highlights Financial Performance • Record full year production, sales and earnings Year ended 30 June ($m) 2009 2008 % • Highest h achieved h d prices ffor metallurgical ll l and d steaming Revenue1 2,411 1,311 83.9 coal (up to March 2009) EBITDA 1,188 571 108.
Slide 24: Insurance – 2009 Full Year Performance
Insurance – 2009 Full Year Performance Highlights Financial Performance • Frequency and severity of weather events affected Year ended 30 June ($m) 2009 2008^ % underwriting claims and earnings Gross Written Premium Underwritten 1,358 1,328 2.3 Total Revenue 1,720 1,649 4.3 • Profit and margin growt
Slide 25: Industrial & Safety – 2009 Full Year Performance
Industrial & Safety – 2009 Full Year Performance Highlights Financial Performance • Solid result, given challenging market conditions Year ended 30 June ($m) 2009 2008 % – Business activity slow down in 2H09 Revenue 1,294 1,309 (1.1) EBITDA 127 141 (9.9) • Continued strong DIFOT and customer service
Slide 26: Chemicals & Fertilisers – 2009 Full Year Performance
Chemicals & Fertilisers – 2009 Full Year Performance Highlights Financial Performance • Ammonium nitrate sales volumes up 52.1% Year ended 30 June ($m) 2009 2008 % • Disruption of contracted gas supplies impacted Revenue Chemicals 615 464 32.5 Fertilisers 547 533 2.6 production of sodium cyanide and
Slide 27: Energy – 2009 Full Year Performance
Energy – 2009 Full Year Performance Highlights Financial Performance • Reduced earnings largely due to a reduction in Year ended 30 June ($m) 2009 2008 % international LPG prices and gas supply disruption Revenue 598 565 5.8 EBITDA 122 128 (4.7) – Estimated gas supply EBIT impact c$25 million Deprec
Slide 28: Other Businesses – 2009 Full Year Performance
Other Businesses – 2009 Full Year Performance Highlights Financial Performance Holding Year ended 30 June (A$m) 2009 2008 % Gresham Private Equity Share of net profit/(loss) of associates: • Carrying value of investment in Gresham Private Gresham Private Equity Funds Various (57) 16 Gresham Partners
Slide 29: Operating Divisions
Operating Divisions
Slide 30: Coles
a — 3 Coles coles BFLO °25:: WHY PAY MORE! MTT CHOICE viecsce ceuses Liquor Superstore coles.com.qu
Slide 31: Coles Network
Coles Network at 30 June 2009 Selling Area Supermarkets (sqm) 1,600,578 7 8 11 Liquor (sqm) – ex hotels 173,886 153 230 78 81 93 6 117 67 62 30 6 43 251 252 5 211 161 195 162 763 Supermarkets 14 15 q 775 Liquor stores 95 Hotels 625 Convenience 31
Slide 32: Coles – Strategy
Coles – Strategy Phase 1 of turnaround on track… Building a Solid Delivering Driving the Coles Foundation Consistently Well Difference Performance f • Culture C lt off continuous ti • Embed the new culture improvement • Create a strong top team • Team member development • Strong customer trust and •
Slide 33: Coles – Strategy Phase Progress
Coles – Strategy Phase 1 Progress Create a strong top team 100% of leadership team new to Coles/role with over 125 years of retailing experience. 50% of zone manager new, 44% of Merchandise General Managers new. Continual increase in expectations and calibre of team. Cultural change Move to customer
Slide 34: Home Improvement & Office Supplies
Home Improvement & Office Supplies WIDEST RANGE LOWEST PRICES BEST SERVICE 34
Slide 35: Bunnings Network
Bunnings Network at 30 June 2009 175 Warehouse stores 56 Smaller format stores 2 22 Trade Centres 29 5 7 22 7 3 8 2 1 53 16 5 12 25 43 5 4 2 1 1 35
Slide 36: Home Improvement Performance
Home Improvement Performance Growth Strategies EBIT ROC Home Improvement p Strategies g A$m $ % Profitable sales growth Improving service 700 40 Expanding the network 35 600 Improving the merchandise offer 30 Better stock flow Improving the end to end supply chain to lift in- 500 stock levels and re
Slide 37: Office Suppliers Performance
Office Suppliers Performance Growth Strategies Officeworks & Harris Technology Network – 30 June ‘09 Officeworks Strategies g Retail Stores Improving the customer offer Enhance and expand the range Provide more useful customer information 123 Officeworks Rollout new special orders service 5 Harris T
Slide 38: Target
Target 38
Slide 39: Target Performance
Target Performance Growth Strategies Latest Store Design - Sunbury Strategies Details Profitable sales growth Continued investment in the store portfolio and targeted mix of volumes in product ranges Product leader Continued focus on core categories, supported by new and differentiated product devel
Slide 40: Kmart
in —2 Kmart | |. <oaes Tyre & Auto Service
Slide 41: Kmart Store Network
Kmart Store Network at 30 June 2009 2 3 36 52 20 28 13 20 50 72 12 43 74 184 Kmart stores 255 KTAS centres 5 6 3 41
Slide 42: Kmart Performance
Kmart Performance Growth Strategies Strategies Details Customer Continue to improve the in-store experience and rebuild Customer customer trust Outstanding Product Build on-trend on trend profitable categories that deliver quality and C t Customer reliability People Experience Product Focus on volum
Slide 43: Resources
Resources 43
Slide 44: Resources - Locations
Resources - Locations Coal Premier Coal Curragh Bengalla (40%) 44
Slide 45: Resources - Performance
Resources - Performance Growth Strategies EBIT ROC Opportunities Strategies A$m % Maximise export sales and optimise Long-term contracts ongoing 1 000 1,000 100 sales mix Price relativity maintained 900 90 Maximise higher value products 800 80 Cost reduction programmes Improve operational performanc
Slide 46: Resources - Sales
Resources - Sales Coal Sales Volumes by Mine (FY09) Australian Hard Coking Coal Prices Mine Domestic Export Export 400 Total (mtpa) Steaming Steaming Metallurgical 350 300 Curragh, QLD 3.3^ 6.5 9.8 250 200 Premier, WA 3.4 3.4 150 Bengalla*, NSW 0.2 1.8 2.1 100 50 Total 6.9 1.8 6.5 15.2 0 2003 2004 2
Slide 47: Hedging profile as at 30 June 2009
Hedging profile as at 30 June 2009 Curragh – Open Contracts Bengalla – Open Contracts Current US$ Average Current US$ Average Year end Year end sold forward A$ / US$ sold forward A$ / US$ 30 Jun 30 Jun (US$m) hedge rate (US$m) hedge rate 2010 350 0.78 2010 97 0.79 2011 285 0.79 2011 65 0.79 2012 62
Slide 48: Insurance
Insurance OAMPS CROMBIE @ LOCKWOOD New Zealand's Insurance Brokers 404
Slide 49: Geographical Presence
Geographical Presence 3 1 UK 6 1 3 14 4 19 1 2 1 1 4 16 8 17 11 8 17 6 1 Lumley Insurance (Australia) 12 6 Lumley General New Zealand 10 3 2 WFI 86 1 2 OAMPS 34 Crombie Lockwood 17 49
Slide 50: Insurance - Performance
Insurance - Performance Growth Strategies EBITA ROC Opportunities Strategies A$m % Portfolio review complete - remedial action underway 160 35 IT systems alignment and upgrade Underwriting Business Improvement Building technical capabilities 140 30 LGNZ margin improvement Australian single licence e
Slide 51: Insurance – Underwriting Performance
Insurance – Underwriting Performance Key Performance Indicators FY09 Gross Written Premium by Class of Business Year ended 30 June (%) 2009 2008 %pt Total $1,358m Liability Gross Earned Loss Ratio 79.4 64.8 14.6 Personal $248 $284 Net Earned Loss Ratio 72.9 66.5 6.4 Reinsurance Expenses (% GEP) 23.0
Slide 52: Industrial & Safety Business Portfolio
Industrial & Safety Business Portfolio Australia New Zealand “All your Safety Industrial workplace needs” Specialist Specialists (1) (1) Manufacturing and services 52
Slide 53: Industrial & Safety - Distribution Network
Industrial & Safety - Distribution Network 240 locations (163 Australia, 77 New Zealand) Australia No No. 2 69 MRO, “All your workplace needs” 1 1 16 6 Electrical 14 6 12 7 9 5 9 4 Safety 42 2 1 54 22 Materials handling, lifting, rigging 4 2 17 1 6 4 Fasteners 16 4 1 8 Engineering 11 5 New Zealand N
Slide 54: Industrial & Safety - Performance
Industrial & Safety - Performance Growth Strategies Opportunities Strategies EBIT ROC g customers Increase sales to existing Maintained strong g DIFOT performance p and securityy of A$m % 140 18 supply to customers Strengthening range of leading and home brands at 16 120 competitive prices 14 Reinfo
Slide 55: Chemicals & Fertilisers
Chemicals & Fertilisers 55
Slide 56: Chemicals & Fertilisers - Locations
Chemicals & Fertilisers - Locations ■ CSBP fertilisers Manufacturing plant 5 Import and distribution centres 5 Depots p 6 Regional Sales Representatives 27 Sales agents 135 ■ CSBP chemicals Manufacturing plants 10 ■ AV Manufacturing plants 2 ■ QNP (50%) Manufacturing f i plants l 4 56
Slide 57: Chemicals & Fertilisers – Performance
Chemicals & Fertilisers – Performance EBIT ROC Growth Strategies A$m % Opportunities Strategies 140 20 Sodium cyanide expansion (+8,000 tpa) 18 120 Maintain & Grow Businesses Improve ammonia plant production 16 performance 100 14 Optimise cost and capital Inventory and expense management 12 80 Susta
Slide 58: Energy
le Energy S KleenheatGas ay (‘( 'y =~ Wi! enGen WESFARMERS LPG . € wane LIQUIDE Coregqgas ce WESTERN AUSTRALIA
Slide 59: Energy - locations
Energy - locations I d Industrial, i l medical di l and d specialty i l gases Air separation units (ALWA) Air separation units (Coregas) Hydrogen/acetylene plants (Coregas) 2 1 1 Industrial gas depots/branches (ALWA) 1 1 1 Industrial gas depots/branches (Coregas) 14 5 Acetylene plant (ALWA) LPG & LN
Slide 60: Energy - Performance
Energy - Performance Growth Strategies EBIT ROC A$m % Strategies Segment 100 50 Industrial gas growth in: 90 • eastern states sales; and • oil and gas sector 80 40 Maximise LPG production 70 Improve – Existing Businesses LPG distribution: 60 30 • customer focus; and 50 • controllable costs Pursue ne
Slide 61: Energy – Businesses
Energy – Businesses Activities Activities distributor and marketer of LPG and LNG and Activities Production, distribution and marketing of gas appliances to a broad range of domestic, design, construction, operatation and industrial and medical gases on Australia’s east commercial, autogas and indus
Slide 62: Other Businesses
Other Businesses Gresham: 50% interest in Gresham Partners, an independent investment (A$m) 2008 2009 bank focused on financial advisory services, private equity investment and property investment funds. Wesfarmers also Share of associates profit/(loss): holds significant investments in Gresham's Pr
Slide 63: Capital Management
Capital Management • Net Debt / Equity of 18.3% at 30 June 2009 • Cash Interest Cover Ratio (rolling 12 months) to 30 June 2009 of 5.3 times • St Strong o g operating ope at g cas cash ge generation e at o ac across oss most ost d divisions vso s • Working capital improvement of $141 million – Retai
Slide 64: Cashflow
Cashflow • Retail strategies delivered improvements in working capital during the year, partl offset b partly by higher working orking capital le levels els in CSBP $m % 3,500 140 3,000 120 2,500 100 2,000 80 1 500 1,500 60 1,000 40 500 20 0 0 2005 2006 2007 2008 2009 NPATDA* Operating Cash Flow Cas
Slide 65: Outlook
Outlook • Cautiously y optimistic p about the economic outlook in FY10 although g cognisant of a degree of ongoing fragility • Underlying retail trading conditions remain somewhat volatile and difficult to predict despite recent signs of growing consumer confidence – Impact of cycling 2008/09 Govern
Slide 66: Investor Relations Contact
Investor Relations Contact Wesfarmer’s Investor Relations For further information on Wesfarmers including: Tanya Rybarczyk 61 8 9327 4323 trybarczyk@wesfarmers.com.au Annual reports Financial results announcements Presentations and webcasts Corporate policies Address Wesfarmers House 40 The Esplanad
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