Woolworths Group Ltd · ASX:WOW
Woolworths — H1 FY18 Earnings Presentation
42 slides from Woolworths's earnings presentation, Feb 23, 2018
Slide 1: Half-Year Results FY18
For personal use only Woolworths Group Limited ABN 88 000 014 675 H A L F - Y E A R R E S U LT S F Y 1 8 1
Slide 2: Table of contents
Table of contents For personal use only Key highlights and progress..................................................................................................3 Brad Banducci Financial results .....................................................................................................
Slide 3: Key highlights
Key highlights For personal use only Voice of Customer (VOC) scores continue to improve across the Woolworths Group with all businesses improving their customer experience Continued improvement in customer metrics driving sales growth with Group sales from continuing operations up 3.8%, with Austral
Slide 4: Woolworths Group FY18 priorities
Woolworths Group FY18 priorities For personal use only 6 CUSTOMER 1ST Create competitive TEAM AND CULTURE advantage across Woolworths Group CONNECTED, PERSONALISED AND CONVENIENT 5 SHOPPING EXPERIENCES IN FOOD AND DRINKS Create differentiated TRANSFORM EVOLVE UNLOCK VALUE customer propositions 2 AUS
Slide 5: Progress against our key priorities
Progress against our key priorities For personal use only Customer 1st team and Connected, personalised & Transform Australian and culture convenient shopping experiences New Zealand Food • Increasing VOC scores across the Group • Material improvements in woolworths.com.au site • In Australian Food,
Slide 6: Table of contents
Table of contents For personal use only Key highlights and progress ................................................................................................. 3 Brad Banducci Financial results ....................................................................................................
Slide 7: Financial Results
Financial Results WOooLwortTHs GROUP
Slide 8: Results – Half-year 2018
Results – Half-year 2018 For personal use only Continuing Operations Total Group Change Change Sales 29.8bn 3.8% 32.3bn 0.9% EBIT 1,430m 9.9% 1,552m 23.4% NPAT attributable to 902m 14.7% 969m 37.6% shareholders of Woolworths Earnings per share 69.7¢ 13.7% 74.9¢ 32.4% Dividend per share 43¢ 26.5% Ret
Slide 9: Group EBIT
Group EBIT For personal use only $m HY18 HY17 Change Continuing operations Australian Food 901 812 11.1% Endeavour Drinks 310 302 2.5% New Zealand Food (AUD) 138 155 (11.1)% New Zealand Food (NZD) 150 163 (7.7)% BIG W (10) (27) (64.4)% Hotels 163 139 17.1% Central overheads (72) (80) (9.4)% EBIT con
Slide 10: Key balance sheet metrics continuing to improve
Key balance sheet metrics continuing to improve For personal use only Average inventory days ROFE Days Percentage Continuing operations Continuing operations Group Continuing operations – lease adjusted 41.6 41.3 40.7 40.6 40.4 24.0 39.7 20.8 39.4 39.3 38.2 13.8 12.6 36.6 HY14 HY15 HY16 HY17 HY18 HY
Slide 11: Cash realisation and free cash flow remain strong
Cash realisation and free cash flow remain strong For personal use only Cash flow summary $m HY18 HY17 Change Operating activities before interest and tax 2,406 2,758 (12.7)% Interest and tax (431) (562) (23.3)% Operating activities 1,975 2,196 (10.1)% Investing activities (605) (386) 56.9% Free cas
Slide 12: Higher operating capex driven by increased store renewals, IT and digital investment
Higher operating capex driven by increased store renewals, IT and digital investment For personal use only $m HY18 HY17 Continuing operations Operating capex 770 606 Property development 107 107 Gross capex 877 713 Property sales (24) (162) Net capex 853 551 Discontinued operations – Home Improvemen
Slide 13: Capital management
Capital management For personal use only Interim Final Interim payout (RHS) Dividend and Dividend Reinvestment Plan Payout (%) 100 80 Cents 75 80 • Fully franked FY18 interim dividend of 43 cents per 70 share – up 26% on prior year 60 33 65 0 • DRP discount of 1.5% retained for FY18 interim 60 50 40
Slide 14: Table of contents
Table of contents For personal use only Key highlights and progress…............ ................................................................................... 3 Brad Banducci Financial results .....................................................................................................
Slide 15: Half-Year Results FY18
For personal use only H A L F - Y E A R R E S U L TS F Y 1 8 19
Slide 16: For personal use only
For personal use only HALF-YEAR RESULTS FY18 16
Slide 17: Australian Food
Australian Food For personal use only HY18 HY17 Change Sales ($m) 19,339 18,440 4.9% EBITDA ($m) 1,207 1,096 10.3% EBIT ($m) 901 812 11.1% Gross margin (%) 28.8 28.3 55bps Cost of doing business (%) 24.2 23.9 29bps EBIT to sales (%) 4.7 4.4 26bps Sales per square metre ($) 16,259 15,715 3.5% ROFE (%
Slide 18: Our FY18 strategy: From turnaround to transformation
Our FY18 strategy: From turnaround to transformation For personal use only 6 CUSTOMER 1ST TEAM AND CULTURE Scale-up the future ACCELERATE RENEWAL AND EXTEND 5 APPROACH TO ONLINE AND METRO Extend core PRICES I TRUST CONSISTENTLY FAMOUS customer offer 2 ON PRODUCTS 3 GREAT SHOPPING 4 FOR FRESH I WANT
Slide 19: Progress highlights
Progress highlights For personal use only Create the • Record customer satisfaction levels with Overall Customer Satisfaction (including Online) reaching 82% and December store-controllable VOC of 84%, up from 80% a year ago future • Opened net 10 new Woolworths Supermarkets and 3 Metro stores, 37 R
Slide 20: Customer highlights
Customer highlights For personal use only Overall Satisfaction – Store & Online Store-Controllable VOC % customers satisfied, 6 or 7 out of 7 % customers satisfied, 6 or 7 out of 7 90 +4 90 +4 82 85 84 78 80 75 0 0 Dec-16 Dec-17 Dec-16 Dec-17 Fruit & Vegetables Product Availability Ease of Collectio
Slide 21: Sales highlights
Sales highlights For personal use only Australian Food sales Comp transaction growth (% year on year) (% year on year) 5.2 4.6 4.4 4.1 Q3* Q4* Q1 Q2 6.8 FY17 FY18 5.3 5.1 4.7 Comp items per basket growth (% year on year) Q3* Q4* Q1 Q2 FY17 FY18 1.4 0.6 0.6 Comp 0.4 Sales 4.3 6.5 4.9 5.0 (%) Q3* Q4*
Slide 22: Renewal highlights
Renewal highlights For personal use only Renewal progress Key metrics • We are in the second year of our five year • Performing strongly on sales, in line with expectations plan with 29% of our fleet renewed in the • Customer growth +7%pts first 18 months • Renewal Overall Customer Satisfaction +8%p
Slide 23: WooliesX highlights
WooliesX highlights For personal use only Building internal Extended our Rolled-out Pick digital and data Rewards up to all 1000+ capabilities to Personalisation Australian Food deliver customer Engine into sites with high benefits faster and woolworths.com.au VOC satisfaction differentiate and BWS
Slide 24: For personal use only
For personal use only HALF-YEAR RESULTS FY18 24
Slide 25: Endeavour Drinks
Endeavour Drinks For personal use only HY18 HY17 Change Sales ($m) 4,529 4,319 4.8% EBITDA ($m) 350 340 2.7% EBIT ($m) 310 302 2.5%1 Gross margin (%) 23.0 23.1 (13)bps Cost of doing business (%) 16.1 16.1 3bps EBIT to sales (%) 6.8 7.0 (16)bps2 Sales per square metre ($) 18,219 18,005 1.2% ROFE (%)
Slide 26: Dan Murphy's highlights
Dan Murphy’s highlights For personal use only H1’18 highlights 6 Six net new Awarded ‘Online 2.8m Launched new Focus on Record stores opened, Liquor Store My Dan drive through in-store VOC bringing total of the Year’ by Murphy’s Pick up model experience score fleet to 225 Liquor Stores Members (refu
Slide 27: BWS highlights
BWS highlights For personal use only H1’18 highlights 17 17 net new Express and Partnering with Successful Continued Record store openings Scheduled Australian brand refresh strength VOC score taking BWS Delivery from over Supermarkets in Team above 1,300 300 stores covering and Woolworths Engagemen
Slide 28: For personal use only
For personal use only HALF-YEAR RESULTS FY18 28
Slide 29: New Zealand Food
New Zealand Food For personal use only HY18 HY17 Change Sales ($m) 3,317 3,203 3.6% EBITDA ($m) 216 223 (3.1)% EBIT ($m) 150 163 (7.7)% Gross margin (%) 24.0 24.0 6bps Cost of doing business (%) 19.5 18.9 62bps EBIT to sales (%) 4.5 5.1 (56)bps Sales per square metre ($) 15,228 14,960 1.8% ROFE (%)
Slide 30: New Zealand Food highlights
New Zealand Food highlights For personal use only H1’18 highlights Core sales growth Customer perception Service investment Driving online Overall VOC • Improved on-shelf • Pick up and delivery +3.0% Overall Customer Satisfaction product availability • Improved service capacity expansion • Lower Pic
Slide 31: For personal use only
For personal use only HALF-YEAR RESULTS FY18 31
Slide 32: BIG W
BIG W For personal use only HY18 HY17 Change Sales ($m) 2,037 2,015 1.1% EBITDA ($m) 29 13 122.1% LBIT ($m) (10) (27) (64.4)% Gross margin (%) 31.8 32.1 (30)bps Cost of doing business (%) 32.2 33.4 (117)bps LBIT to sales (%) (0.5) (1.4) 88bps Sales per square metre ($) 3,366 3,413 (1.4)% ROFE (%) (3
Slide 33: BIG W highlights
BIG W highlights For personal use only H1’18 highlights H2’18 focus • Turnaround on track – Customer 1st • Improve our VOC scores • Making progress on our priorities: • Keep investing in price for customer Prices down across range • Grow digital offer – range, convenience • Sales improved, transacti
Slide 34: For personal use only
For personal use only HALF-YEAR RESULTS FY18 34
Slide 35: ALH Hotels
ALH Hotels For personal use only HY18 HY17 Change Sales ($m) 861 829 4.0% EBIT ($m) 163 139 17.1% Gross margin (%) 84.3 82.5 178bps Cost of doing business (%) 65.4 65.7 (34)bps EBIT to sales (%) 18.9 16.8 212bps • Sales growth in all key areas of the business driving strong EBIT improvement HALF-YEA
Slide 36: Table of contents
Table of contents For personal use only Key highlights and progress…............ ................................................................................... 3 Brad Banducci Financial results .....................................................................................................
Slide 37: Outlook
Outlook For personal use only • Focus on transforming our business will continue to be the emphasis for the H2’18 and FY19. Our goal is to deliver a consistently good experience for both our customers and team and leverage end-to-end process redesign and technology to improve underlying productivity
Slide 38: Woolworths Group Purpose
Woolworths Group Purpose For personal use only H A L F - Y E A R R E S U L TS F Y 1 8 38
Slide 39: Half-Year Results FY18
For personal use only H A L F - Y E A R R E S U L TS F Y 1 8 40
Slide 40: Glossary
Glossary For personal use only Cash realisation ratio Operating cash flow as a percentage of group net profit after tax before depreciation and amortisation Comparable sales Measure of sales which excludes stores that have been opened or closed in the last 12 months and demonstrable impact on existi
Slide 41: Glossary
Glossary For personal use only Other non-IFRS measures used in describing the business performance include: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • Earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) • Cash flow from operating activities bef
Slide 42: Disclaimer
Disclaimer For personal use only This presentation contains summary information about Woolworths Group Limited (Woolworths) and its activities current as at the date of this presentation. It should be read in conjunction with Woolworths’ other periodic and continuous disclosure announcements filed w