Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Day (June 2016)
140 slides from Wesfarmers's investor day presentation, Jun 22, 2016
Slide 1: Presentation to be given at Strategy Briefing Day - Sydney
22 June 2016 The Manager Company Announcements Office Australian Securities Exchange Dear Sir, PRESENTATION TO BE GIVEN AT STRATEGY BRIEFING DAY - SYDNEY Following is a presentation that is to be given today at a Strategy Briefing Day in Sydney which is scheduled to commence at 6:30am AWST / 8:30am
Slide 2: 2016 Strategy Briefing Day
2016 Strategy Briefing Day Wednesday, 22 June 2016
Slide 3: Agenda
Agenda Time Topic 8.00 – 8.30 am Registration 8.30 – 9.10 am Introduction & Group Overview Richard Goyder 9.10 – 10.10 am Coles John Durkan 10.10 – 11.10 am Home Improvement John Gillam 11.10 – 11.25 am Morning Tea Break Guy Russo 11.25 – 12.25 pm Department Stores Ian Bailey 12.25 – 12.50 pm Office
Slide 4: Group Overview
Group Overview Richard Goyder Managing Director, Wesfarmers Limited
Slide 5: Wesfarmers operating model
Wesfarmers operating model Inputs Value creating business model Outputs A portfolio of quality businesses s Robust financial capacity Superior long-term financial performance Superior people resources A strong Value adding transactions sustainable future Strong corporate infrastructure Group Overvie
Slide 6: Robust financial capacity
Robust financial capacity $b % Cumulative cash realisation 25 150 • Cash flow generation 20 – Cash generative portfolio 100 15 – Working capital efficiencies 10 50 – Disciplined capital expenditure 5 FY16f net capex $1.3b to $1.4b 0 0 FY10 FY11 FY12 FY13 FY14 FY15 1H16 • Strong balance sheet Cumulat
Slide 7: Superior people resources
Superior people resources $b Wages, salaries & other benefits % • Ability to attract, motivate & retain high calibre 9 16 talent 8 14 • High-performance culture & strong focus on team 7 member development 12 6 • Ability to fill key roles with Group talent 5 10 FY10 FY11 FY12 FY13 FY14 FY15 • Continu
Slide 8: Strong corporate infrastructure
Strong corporate infrastructure Strong corporate infrastructure Wesfarmers’ core values underpin key corporate systems, processes & initiatives: • Lean corporate office • Divisional boards • Group wide planning, budgeting & monitoring processes • Executive talent development & key role succession pl
Slide 9: Long history of value adding transactions
Value creating business model Long history of value adding transactions Group transaction activity $2b pre-tax gain on divestments (inflation adjusted transaction size) $b 2.0 Girrah coal Coles Group 1.8 Acquisitions Howard Landmark Smith 1.6 Homebase 1.4 Australian IAMA Quadrant Railroad Group Core
Slide 10: Growth through disciplined acquisitions
Value creating business model Growth through disciplined acquisitions EBIT ($b) 5 Divestments Acquisitions Pre-2001 businesses 4 3 2 1 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Group Overview 2016 Strategy Briefing Day | 9
Slide 11: Growth through strong operations & disciplined investment
Value creating business model Growth through strong operations & disciplined investment Cumulative deployment of capital (FY10 – 1H16) Return on capital employed (R12) $b 16 $b % 14 32 14 Thousands 31 12 12 30 10 10 29 8 8 28 6 6 27 4 4 26 2 25 2 0 24 0 Gross capex Property Net capex D&A Net capex F
Slide 12: Above market returns
Superior long-term financial performance Above market returns Total Shareholder Return1 TSR Index TSR since November 1984: (November 1984 = 100) Wesfarmers: 19.7% (CAGR) 35,000 All Ordinaries Accumulation Index: 10.8% (CAGR) 30,000 25,000 20,000 15,000 10,000 5,000 0 WES TSR (since listing) All Ordi
Slide 13: Strong history of shareholder distributions
Superior long-term financial performance Strong history of shareholder distributions Shareholder distributions (declared) $/share • Deliver growing dividends over time, subject to: 3.00 3.00 – Current earnings 2.50 2.30 1.00 2.00 2.00 0.50 0.10 1.65 – Franking credit availability 1.50 1.25 1.50 1.10
Slide 14: A strong sustainable future
A strong sustainable future Employees: $8b Government: $1.0b (taxes) Rent: $3b D&A: $1b EBIT: $4b FY15 FY15 Lenders: $0.3b (interest costs) Shareholders: $2.2b • Significant direct employer 220,0001 • Significant indirect employer (supplier payments) $46b • Strong business reinvestment (capital expe
Slide 15: Q&A - Wesfarmers Group
Q&A - Wesfarmers Group Richard Goyder Managing Director, Wesfarmers Limited
Slide 16: Coles
Coles John Durkan Managing Director, Coles
Slide 17: Our growth strategy
Our growth strategy Coles 2016 Strategy Briefing Day | 16
Slide 18: Progress this year
Progress this year • Double-digit volume growth in produce • ~25% Coles Online sales growth • Fresh participation increased 85bps • Launched a stand-alone Coles Online store • Continue to build trusted value • ~5% more active flybuys households • Now over 2,600 products on • CEXP shop sales remain i
Slide 19: But there remains much more to do
But there remains much more to do World class Average Weak Coles 2016 Strategy Briefing Day | 18
Slide 20: Key opportunities for progress
Key opportunities for progress • Step change quality & freshness • Continued growth in convenience • Ensure the right offer in every store • Deliver a world class customer • Even deeper supplier collaboration experience for Coles Online • Better position flybuys as an enabler • Continue customer-led
Slide 21: Focus on freshness
Focus on freshness Focus on quality Invest in team member Fresh food at great prices & freshness craft skills & service Longer & deeper New concepts & formats delivering Always available supplier relationships a better experience Coles 2016 Strategy Briefing Day | 20
Slide 22: Deeper supplier relationships [Video content]
Deeper supplier relationships [Video content] Coles 2016 Strategy Briefing Day | 21
Slide 23: Focus on freshness
Focus on freshness Fresh produce deflation & volume • Focus remains on providing exceptional quality fresh growth food, which is always available at great prices 12% 10% • Customers continue to respond to our fresh food focus 8% 6% with volume growth consistently at ~10% 4% 2% 0% • Deflation in prod
Slide 24: Exceptional quality fresh food always available at low prices [Video content]
Exceptional quality fresh food always available at low prices [Video content] Coles 2016 Strategy Briefing Day | 23
Slide 25: Create trusted value – lowering the cost of the weekly shop
Create trusted value – lowering the cost of the weekly shop Trusted value Innovation & quality Coles Every Day Brand There are four key pillars that enable us to continually Supported by compelling Supported by personalised lower the cost of the specials flybuys offers weekly shop Coles 2016 Strateg
Slide 26: Create trusted value – customer-led price investment
Create trusted value – customer-led price investment • Our customer-led value investment model makes sense Sales & Volume growth from Every Day because ‘hero’ items1 360% – Customers tell us that it is important to them Volume growth 100% 80% – It is well planned with suppliers 60% 40% – There are e
Slide 27: Create trusted value – customer-led price investment [Video content]
Create trusted value – customer-led price investment [Video content] Coles 2016 Strategy Briefing Day | 26
Slide 28: Unwavering focus on customer service
Unwavering focus on customer service Invest in customer service Relentless commitment to safety Build diversity & flexibility Adaptable & multi-skilled Develop more graduates Increase craft skills training team members to become future leaders Coles 2016 Strategy Briefing Day | 27
Slide 29: Coles Express
Coles Express • Aim to be Australia’s best fuel & convenience retailer • Committed to the long-term growth of our network with our alliance partner • Provide compelling value to customers, driven by our Every Day offering • In-store, continued growth will be driven by – A focus on Food-to-Go – Bold
Slide 30: Progressing the Liquor turnaround
Progressing the Liquor turnaround • Liquor remains on track to deliver the five year Liquor transaction growth transformation plan • Improving sales trends but profitability remains an opportunity • The next phase of the turnaround will focus on: – Continued value investment to drive customer growth
Slide 31: Outlook
Outlook • Remain focused & consistent in our strategy to deliver long-term growth • Remain customer-led in everything that we do • Growth will be driven by higher sales, resulting from continued investment in the customer offer • Investment will be funded by a focus on simplifying our business • Ele
Slide 32: Q&A - Coles
Q&A - Coles John Durkan Managing Director, Coles Chris Nicholas Finance Director, Coles
Slide 33: Home Improvement
Home Improvement John Gillam Chief Executive Officer, Bunnings Group
Slide 34: Agenda
Agenda 1. Presentation: John Gillam • Bunnings Australia & New Zealand • Bunnings UK & Ireland • Outlook 2. Q&A Panel • John Gillam • Michael Schneider • PJ Davis Home Improvement 2016 Strategy Briefing Day | 33
Slide 35: Slide 35
Slide 36: Bunnings Australia & New Zealand Agenda
Bunnings Australia & New Zealand Agenda 1. Long-term value creation 2. Market evolution 3. Strategic agenda Home Improvement - BANZ 2016 Strategy Briefing Day | 35
Slide 37: Long-term value creation
LONG-TERM VALUE CREATION 1. A winning 2. An engaged, 3. Business 4. Sustainable offer to focused & behaviour returns customers committed that builds team trust Home Improvement - BANZ 2016 Strategy Briefing Day | 36
Slide 38: Lowest prices. Widest range. Best service.
Long-term value creation LOWEST PRICES. WIDEST RANGE. BEST SERVICE. Home Improvement - BANZ 2016 Strategy Briefing Day | 37
Slide 39: Addressable market expanded by evolution & innovation
Market evolution Addressable market expanded by evolution & innovation Home Market Size Improvement & Outdoor Living Home Aust market Today ~$48b Traditional Improvement Bunnings 19% Hardware 1980 2016 Home Improvement - BANZ 2016 Strategy Briefing Day | 38
Slide 40: Addressable market wider than just home improvement & outdoor living
Market evolution: Wider addressable market Addressable market wider than just home improvement & outdoor living … $48B $48B Home Improvement - BANZ 2016 Strategy Briefing Day | 39
Slide 41: Addressable market wider than just home improvement & outdoor living
Market evolution Addressable market wider than just home improvement & outdoor living … … most products used in & around homes & toilets in every building light fittings everywhere gardens have much wider everyday use in every building, structure & grounds … ply for formwork & hoarding line trimmers
Slide 42: HIOL market structure & drivers
HIOL market structure & drivers Home Improvement - BANZ 2016 Strategy Briefing Day | 41
Slide 43: Slide 43
Slide 44: Strategic agenda
Strategic agenda Our strategic agenda is a framework for: • Focusing on customers, team & community • Growing the market • Growing our share of the market • Long-term value creation Home Improvement - BANZ 2016 Strategy Briefing Day | 43
Slide 45: Strategic agenda
Strategic agenda conscious choices across all activities giving customers the best offer Home Improvement - BANZ 2016 Strategy Briefing Day | 44
Slide 46: Strategic agenda: Creating Better Experiences
Strategic agenda: Creating Better Experiences … Striving to be more helpful (in-store & digitally) Investing to improve processes - Easier for customers; productivity gains Continue expanding & improving services offer Even more happening in store - Learning, sharing & fun More community involvement
Slide 47: Strategic agenda: Strengthening The Core
Strategic agenda: Strengthening The Core … Stronger team - Continue improving safety - Build team diversity & effectiveness - Continue investing in knowledge & skills Lift Productivity - Refresh store productivity … ‘simple & easy’ - More digital process innovation - Better information & lower costs
Slide 48: Strategic agenda: Driving Stronger Growth (i)
Strategic agenda: Driving Stronger Growth (i) Even More Customer Value - Reward customers everyday - Create more breathtaking value Wider Digital Reach - More digital eco-system investment - Product & project knowledge, how to, inspiration, engagement More Physical Reach - Store format flexibility c
Slide 49: Strategic agenda: Driving Stronger Growth (ii)
Strategic agenda: Driving Stronger Growth (ii) Stronger Commercial Development - Deeper customer relationships - Better experiences; in store, on-site & online - Grow new segments & widen specialist selling More Merchandise Innovation - Wider ranges & new products - Focus on ‘easiest’ for customers;
Slide 50: Strategic agenda: Driving Stronger Growth (iii)
Strategic agenda: Driving Stronger Growth (iii) Strong long-term growth opportunities for Home Improvement & Outdoor Living market Mega Trends Positioned for Growth • Population growth & urbanisation • Partnerships with world’s best & Australia’s leading brands • Sustainability & energy efficiency ‒
Slide 51: Strategic agenda
Strategic agenda Home Improvement - BANZ 2016 Strategy Briefing Day | 50
Slide 52: Slide 52
Slide 53: Bunnings UK & Ireland Agenda
Bunnings UK & Ireland Agenda 1. Acquisition overview 2. Immediate priorities 3. Post-completion update Home Improvement - BUKI 2016 Strategy Briefing Day | 52
Slide 54: Acquisition overview
Acquisition overview Home improvement & garden market attractive & growing - £38 billion market in UK Homebase provides an established & scalable platform - Right-sized stores & well located network - Network supports warehouse merchandising - Latent capability for a low-cost operating model Homebas
Slide 55: Acquisition overview: Three Phase Investment Plan
Acquisition overview: Three Phase Investment Plan Phase 1 Phase 2 Phase 3 • Combine essential local • Retail basics focus elements with best of Bunnings • Invest in team to build new business • Invest in core business • Warehouse format activities • Lowest prices, wider choice with trusted brands, g
Slide 56: Immediate priorities: Inside Phase Plans
Immediate priorities: Inside Phase 1 Plans … Build strong business foundations Drive stronger operating 1. Retail basics focus … performance in Homebase • Higher stock weights Combining the best of British & the best of Bunnings • Wider assortments First pilots later in 2016 2. Invest in team 3. Inv
Slide 57: Post Completion Update (i)
Post Completion Update (i) Leadership team established Advisory Board formed with three initial members - Archie Norman - Michael Mire - Matt Tyson Operational changes implemented as planned - Homebase “turnaround” underway » Increases to range width & stock depth » New marketing – “always low price
Slide 58: Post Completion Update (ii)
Post Completion Update (ii) Transition & integration activity well advanced Support team restructured & rebuild commenced - Restructuring costs of ~£7 million expensed in FY16 Rebased comparative annualised sales of ~£1.2 billion - Cessation of sales of Argos & Habitat product (~£80 million) - Full-
Slide 59: Slide 59
Slide 60: Format Flexibility, Total Market Capability
Format Flexibility, Total Market Capability • Large format • Smaller format, highly flexible • Cornerstone brand • Regional & metro markets • 3 core footprints + multi-levels • Retail & commercial customers • Retail & commercial customers • 70 in network at June 2016 • 240 in network at June 2016 •
Slide 61: Achieving long-term growth & sustainable returns
Achieving long-term growth & sustainable returns Investing for growth… acquisition & organic Delivering market leading returns Home Improvement 2016 Strategy Briefing Day | 60
Slide 62: Outlook: Positioned for continued growth
Outlook: Positioned for continued growth Australia & New Zealand Lots of runway in HIOL markets - Creating better experiences - Strengthening the core - Driving stronger growth UK & Ireland Early days; building strong foundations Exciting medium & long-term growth opportunity Home Improvement 2016 S
Slide 63: Q&A - Home Improvement
Q&A - Home Improvement John Gillam Chief Executive Officer, Bunnings Group Michael Schneider Managing Director, Bunnings Australia & New Zealand Peter Davis Managing Director, Bunnings UK & Ireland
Slide 64: Department Stores
Department Stores Guy Russo Chief Executive Officer, Department Stores Managing Director, Target
Slide 65: Department Stores Structure
Department Stores Structure Department Stores Department Stores 2016 Strategy Briefing Day | 64
Slide 66: Strategy life cycle
Strategy life cycle Grow Reset Fix now Discovery Department Stores 2016 Strategy Briefing Day | 65
Slide 67: Department store market – $18 billion
Department store market – $18 billion Premium DJs Myer Big W Target Kmart Value Revenue¹ 1 FY15 revenue based on FY15 public information & FY15 estimate for David Jones Department Stores 2016 Strategy Briefing Day | 66
Slide 68: Addressable market opportunity – $80 billion
Addressable market opportunity – $80 billion Department Stores 2016 Strategy Briefing Day | 67
Slide 69: Target
Target Guy Russo Managing Director, Target
Slide 70: Business overview
Business overview • More than 19,000 team members • Revenues exceeding $3.4 billion • 306 stores – 186 large & 120 small • Improved safety performance – R12 LTIFR improvement of 10.2% to 4.4 at 31 December 2015 Target 2016 Strategy Briefing Day | 69
Slide 71: Progress
Progress • Completed detailed assessment of business opportunities • Revised strategic plans, including property alignment • Decisive steps taken to reduce the cost base & reset the business, with up-front restructuring costs of ~$145 million incurred in FY16 – Rightsizing store support centre (~240
Slide 72: Progress (continued)
Progress (continued) • Reset of vision, values & strategy • Completing transition to EDLP • Reducing inventory levels (towards long-term target of ~10 weeks cover from ~15 weeks currently) • Introducing further merchandise planning disciplines • Ceasing mid-year Toy Sale • Reducing marketing, design
Slide 73: Our Vision
Our Vision Target 2016 Strategy Briefing Day | 72
Slide 74: Our Values
Our Values Target 2016 Strategy Briefing Day | 73
Slide 75: Our Strategy
Our Strategy Target 2016 Strategy Briefing Day | 74
Slide 76: Product: Volume, quality, fashion & basics
Product Volume, quality, fashion & basics • Reduce inventory & options • Remove loss making products • Fix merchandise planning systems • Increase volume & 365 basics • Reset quality & fashion • Increase direct sourcing on one critical path Target 2016 Strategy Briefing Day | 75
Slide 77: Price: Low prices every day
Price Low prices every day • Lower prices to sell volume • Accelerate EDLP • Institute ‘clear as you go’ markdowns • Consistent ‘Good, Better, Best’ Target 2016 Strategy Briefing Day | 76
Slide 78: Promotion: Brand love with mass reach
Promotion Brand love with mass reach • Reduce marketing • Reduce point of sale • Reduce catalogues • Leverage customer insights Target 2016 Strategy Briefing Day | 77
Slide 79: Customer: Easiest customer experience
Customer Easiest customer experience • Reduce cost & simplify • Improve stock management • Revise trading hours • Consistent store layout Target 2016 Strategy Briefing Day | 78
Slide 80: Place: Great stores & locations
Place Great stores & locations • Improve network profitability • Optimise space allocation • Renewal reset & trial • Simpler & lower cost Target 2016 Strategy Briefing Day | 79
Slide 81: People: Inspired team, living our values
People Inspired team, living our values • Build on safety culture • Create a high performance culture, live & breathe our values • Develop clear accountabilities & development plans Target 2016 Strategy Briefing Day | 80
Slide 82: Outlook
Outlook • FY17 reflects a transitional year – High levels of seasonal stock (>$100 million) in the first half – Cost base reset to enable acceleration of operating model change (EDLP completion) – Improve merchandise disciplines, including planning systems investment – Complete EDLP transition, redu
Slide 83: Kmart
Kmart Ian Bailey Managing Director, Kmart
Slide 84: Business overview
Business overview • 209 Kmart stores across Australia & New Zealand • 248 Kmart Tyre & Auto service centres in Australia • 30,000 team members • More than 160 million customers per annum • Relentless focus on lowest price • Well established sourcing capability • Revenue in excess of $4.5 billion • S
Slide 85: Vision
Vision Kmart 2016 Strategy Briefing Day | 84
Slide 86: Growth strategy remains consistent
Growth strategy remains consistent Kmart 2016 Strategy Briefing Day | 85
Slide 87: Product, Price & Promotion
Product, Price & Promotion • Lowest price leadership • Better product – Improve quality consistency – Improve product aesthetics • Continue to enhance the current range architecture • Continue to develop multi-channel platform Kmart 2016 Strategy Briefing Day | 86
Slide 88: Place
Place • Continue the store refurbishment program – Approximately 40 stores per annum for the next two years • Strong new store pipeline – Opening approximately 10 new stores per annum • End to end productivity improvements to continuously reduce CODB Kmart 2016 Strategy Briefing Day | 87
Slide 89: Customer
Customer • Have customer needs at the heart of what we do • Increased focus on customer insights Kmart 2016 Strategy Briefing Day | 88
Slide 90: People
People • High Performing Culture • Kmart’s values & UGRs – Deliver results – Integrity – Customers come first – Teamwork – Boldness Kmart 2016 Strategy Briefing Day | 89
Slide 91: Outlook
Outlook • Become more customer-centric • Continue to lead on price • Continue to improve our products • Continued investment through the refurbishment program & store openings • Develop & enhance the multi-channel offer • Increase productivity to reduce CODB • Continued management of exchange rate i
Slide 92: Q&A - Department Stores
Q&A - Department Stores Guy Russo Chief Executive Officer, Department Stores Managing Director, Target Ian Bailey Managing Director, Kmart Marina Joanou Chief Financial Officer, Department Stores
Slide 93: Officeworks
Officeworks Mark Ward Managing Director, Officeworks
Slide 94: Agenda
Agenda • Ongoing value creation through vision & purpose • Financial performance • Market overview • Customer offer • ‘Every channel’ strategy • Strategic agenda • Outlook Officeworks 2016 Strategy Briefing Day | 93
Slide 95: Ongoing value creation through vision & purpose
Ongoing value creation through vision & purpose • Utilising our strengths to execute the agenda – Strategic clarity – Lowest Prices, Widest Range, Great Service – Leverage competitive advantage / core capabilities – ‘Every channel’ offer • Relentless & consistent focus on delivering – A compelling c
Slide 96: Financial performance
Financial performance Headline Sales Earnings before Interest & Tax $b $m 14.6% 2.0 8.8% 120 10.8% 0.7% 1.6% 4.7% 9.4% 4.4% 8.0% 6.3% 100 8.1% 1.5 13.8% 80 1.0 60 118 1.7 103 1.5 1.5 1.5 1.6 93 1.3 1.4 40 80 85 74 0.5 65 20 FY09-15 CAGR: 4.6% FY09-15 CAGR: 10.4% 0.0 0 FY09 FY10 FY11 FY12 FY13 FY14 F
Slide 97: Financial performance
Financial performance Sales growth momentum • 3Q16 sales growth of 5.6%, 7.8% YTD1 Sales growth 14% – Store sales growth maintaining momentum 12% 11.8% 10.4% 10% 9.0% » 16 consecutive halves of store transaction growth 8% 8.0% 7.5% 7.8% 6.5% 5.6% 6% » Five new stores opened YTD 4% 2% – Annualised on
Slide 98: Office Supplies
Office Supplies 2016 Strategy Briefing Day | 97
Slide 99: Market overview
Market overview Growing addressable market ($ billion) 1 6.5 Office Products Market – Core (Writing Instruments, Paper, Computer Consumables, Business Machines, 1 5.4 Filing, Labels, Envelopes, Pads & Books) Office Products Market – Non-Core (Catering & Cleaning, Office Furniture, Printing & Digital
Slide 100: Competitors by customer segment
Competitors by customer segment Non-Business Micro & Small Medium Contract Business (Households & Students) Business Business (Govt / Large Corporate) 1 2 Officeworks 2016 Strategy Briefing Day | 99
Slide 101: Customer offer
Customer offer DIY ‘Do it yourself’ Home Student School journey work office Home Medium workspace business Small micro business office DIFM ‘Do it for me’ Officeworks 2016 Strategy Briefing Day | 100
Slide 102: ‘Every channel’ strategy
‘Every channel’ strategy Every channel Sales growth in stores & online¹ $b % Store team 1.8 16 Apps members 1.7 14 Stores 1.6 12 1.5 Traditional Digital media media 1.4 10 1.3 8 1.2 6 Social 1.1 media Phone Internet 4 Online /fax 1.0 0.9 2 0.8 0 B2B team Call centre team FY09 FY10 FY11 FY12 FY13 FY1
Slide 103: Our strategic agenda
Our strategic agenda Embed great Do things better service in every channel Extend our Invest in talent, ‘every channel’ reach diversity & team safety Strengthen & expand Make a positive the customer offer difference in the community Improve & add more value-adding services Officeworks 2016 Strategy
Slide 104: Strengthen & expand the customer offer
Strengthen & expand the customer offer • Rollout new / expanded ranges – Learning aides, educational resources, art, home / office automation, 3D print, etc – Exclusive international brands (e.g. Jonathon Adler) – National & private brands – Expand non-core categories • Continue to add inspiration,
Slide 105: Extend our ‘every channel’ reach
Extend our ‘every channel’ reach Expanding the store network Enhancing the online experience • 5 - 7 new stores per annum • Make it easy for customers • Refine the CBD store concept • Improved mobile experience • Regional expansion • Enhanced information / recommendations • Alternative store formats
Slide 106: Embed great service in every channel
Embed great service in every channel • Making it easier for customers to shop through ‘every channel’ – New point of sale system (incl. mobile POS) – New self-serve print & copy offer – New in-store online ordering kiosk – Improved online offer (incl. mobile) – Improved ‘click & collect’ offer • Mak
Slide 107: Do things better
Do things better Working Capital Improvement Improve Space Utilisation • System investment to lift stock turn • Disciplined range review process • Continued focus on managing cash flow • Optimised in-store layouts • Add / expand categories Improve CODB & Productivity Refresh / Reshape the Store Netw
Slide 108: Invest in talent, diversity & team safety
Invest in talent, diversity & team safety • Ongoing investment in leadership development programs • Continue to enhance the diversity of the team – Optimise recruitment practices – Identify & prepare future leaders – Build Indigenous engagement • Rigorous approach to safety behaviours & outcomes – O
Slide 109: Make a positive difference in the community
Make a positive difference in the community Environment Responsible Sourcing • Retro-fitting LED lighting in stores • Committed to highest • Six million ink & toner cartridges sourcing standards recycled to-date • Sedex1 membership for • Clean Up Australia volunteering & international & local sponso
Slide 110: Improve & increase value-adding services
Improve & increase value-adding services • Creating a compelling point of differentiation – One stop shop – Supporting products with complementary services • Ongoing enhancement in print & copy offer • Drive awareness & repeat transactions for Mailman • Deliver services to help customers to start, r
Slide 111: Outlook
Outlook • Continue focus on disciplined execution of strategic agenda Driving ‘every channel’ improvement Providing customers with a compelling offer – ‘one stop shop’ Delivering great customer service through an engaged team Providing best value Building strong relationships with stakehol
Slide 112: Q&A – Officeworks
Q&A – Officeworks Mark Ward Managing Director, Officeworks Michael Howard Chief Financial Officer, Officeworks
Slide 113: Industrials
Industrials Rob Scott Managing Director, Industrials
Slide 114: Increasing the focus on the Group’s industrial businesses
Increasing the focus on the Group’s industrial businesses Leadership & governance Focus on shareholder value creation • Retain operational autonomy & focus in three • Improving ROC in existing businesses businesses • Addressing areas of financial • Leverage insights & capabilities in talent, underpe
Slide 115: Delivering improvements in safety
Delivering improvements in safety • Focused on improving health, safety & environmental performance across Industrials • Chemicals, Energy & Fertilisers: Ongoing safety improvements & continued environmental focus • Industrial & Safety: Improvements in both LTIFR & TRIFR • Resources: No lost time in
Slide 116: Industrial & Safety
Industrial & Safety Rob Scott Managing Director, Industrials
Slide 117: The WIS portfolio – building a platform for growth
The WIS portfolio – building a platform for growth Before After Safety Industrial Workwear Blackwoods specialists Specialists Group Industrial Gas B2B industrial & safety supplier Workwear & uniforms Industrial & Safety 2016 Strategy Briefing Day | 116
Slide 118: Drivers for change
Drivers for change • EBIT & ROC decline since peak in FY12 WIS EBIT & ROC Performance • Weak sales & margin in specialist businesses $m % 250 20.0 • High exposure to large mining & heavy industrial 200 16.0 customers 150 12.0 Market • Reduction in industrial capex & move from build to operate 100 8.
Slide 119: Simplifying Blackwoods Australia – a more customer-centric business
Simplifying Blackwoods Australia – a more customer-centric business • 5 brands consolidated into the new Blackwoods Sales by channel (May 2016, R12) 17 branch & 7 DC mergers Digital Branch & Leverage national merchandising & supply DC pick-up chain capabilities Approximately 600 FTE reduction
Slide 120: Case study – Our safety specialist offer
Case study – Our safety specialist offer Provides customers with tailored products & technical support New • Blackwoods safety catalogue More than 50% of sales to safety customers are in other categories 11,000+ • Preferred products Safety customers – sales by categories (May 2016 R12) • Own brand p
Slide 121: The new Blackwoods – a more customer-centric & competitive platform
The new Blackwoods – a more customer-centric & competitive platform Focusing on the areas that deliver value to our customers & strengthen our competitive position Dynamic Sales & specialised services Supply Chain Aware of Winning global best culture practice Merchandising Digital & sourcing Always
Slide 122: Growth strategy: Customer size diversification
Growth strategy The addressable market for the new Blackwoods platform is ~$31 billion Customer sector diversification Industrial Sectors Growth opportunities Heavy – core Heavy - adjacent Light 1 1 Sell existing (& new) products to Large existing customers Customer size diversification Grow medium
Slide 123: Similar challenges in New Zealand driving transformation
Turnaround New Zealand & Workwear Group & grow Coregas • Similar challenges in New Zealand • Australia’s largest provider of • Fastest growing national industrial driving transformation industrial & corporate workwear gas distributor New brand leverages market • Underperforming in industrial wear
Slide 124: Industrial & Safety outlook
Industrial & Safety outlook • Market conditions in traditional industrial customer segments expected to remain challenging in the near term • Continue implementation of the new Blackwoods platform Sales & Continue to grow share in core markets & extend into adjacent segments & mid-market specialis
Slide 125: Chemicals, Energy & Fertilisers
Chemicals, Energy & Fertilisers Rob Scott Managing Director, Industrials
Slide 126: Business overview
Business overview Chemicals & (50% owned) (75% owned) Ammonium nitrate Ammonia Sodium cyanide PVC / Specialty chemicals / Decking Fertilisers Energy (13.7% owned) LPG / LNG Natural gas / Electricity Oil & Gas Chemicals, Energy & Fertilisers 2016 Strategy Briefing Day | 125
Slide 127: Chemicals
Chemicals Significant improvement in earnings & ROC following successful capital investments programs Business Current environment Strategies • Lower global ammonia prices • Continue to maximise plant operating capacity & minimise unit cost • Growing WA EGAN market • Optimise AN returns through: (1)
Slide 128: Fertilisers
Fertilisers Consecutive recent strong harvests driving solid results in Fertilisers Business Current environment Strategies • Solid farm production outlook • Strengthen channels through supporting agents • Evolving distribution model & changing • Expand direct service capabilities channels to market
Slide 129: Energy
Energy Growing relevance of natural gas & electricity earnings Current environment Strategies LPG & LNG • Challenging low energy price • Continue to lower costs of doing business & raw environment materials inputs • Declining LPG market Natural gas & • Growing market share & profitability • Continue
Slide 130: Chemicals, Energy & Fertilisers outlook
Chemicals, Energy & Fertilisers outlook • Recent capacity expansions & favourable seasonal conditions for fertilisers support strong expected result in FY16 • Expect a return to normal seasonal conditions & more subdued divisional earnings growth in FY17 & beyond • Performance continues to be depend
Slide 131: Resources
Resources Rob Scott Managing Director, Industrials
Slide 132: Two world-class coal mines
Two world-class coal mines Curragh Bengalla • 100% equity interest (QLD) • 40% equity interest (NSW) Metallurgical coal for offshore Export steaming coal for Asia steel-making • Lowest quartile producer Steaming coal for domestic power generation • Management change in FY16 following New Hope
Slide 133: Metallurgical coal market update
Metallurgical coal market update Australia to capture majority of demand growth • Spot price volatility is being driven by fluctuating Metallurgical coal exports (2016–2035) Chinese import demand & trader speculation Chinese policy intervention has increased Australia Russia short-term steel deman
Slide 134: Australian export coal market prices
Australian export coal market prices Australian export metallurgical coal market prices Australian export steaming coal market prices US$/tonne (nominal) FOB Australia (annual verse spot) US$/tonne (nominal) FOB Australia (annual verse spot) 400 250 350 200 300 250 150 200 100 150 100 50 50 0 0 2004
Slide 135: FX hedging profile
FX hedging profile • Historical materiality of Resources’ contribution to $m Currency hedge book contribution Group earnings supported FX hedging 500 400 • Forward points (AUD:USD interest rate differential) 300 previously contributed to FX gains 200 134 143 130 • During FY16, reduced hedge book siz
Slide 136: Curragh: Reinforcing cost & capital discipline
Reinforcing cost & capital discipline • Brisbane office restructure implemented in June 2016, Curragh cash costs per tonne reducing corporate support FTEs by 30 per cent (excl. carbon tax) Curragh Expert Panel Review commissioned in Q3 FY16 • An intensive mining process, productivity & market utilis
Slide 137: Resources outlook
Resources outlook • Export market conditions expected to remain challenging in the near term • Curragh’s coal supply obligations to Stanwell will continue to impact earnings whilst low export prices prevail • Short-term overcapacity in thermal coal continues to impact current pricing • Continue stro
Slide 138: Q&A - Industrials
Q&A - Industrials Rob Scott Managing Director, Industrials Anthony Gianotti Finance Director, Industrials Tom O’Leary Managing Director, Chemicals, Energy & Fertilisers
Slide 139: Close
Close Richard Goyder Managing Director, Wesfarmers Limited
Slide 140: Wesfarmers
0s Wesfarmers