Slide 1: Company Results Half Year ended 3 January 2010
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Half Year ended 3 January 2010
Slide 2: Highlights for Financial Half Year 2010
Highlights for Financial Half Year 2010 • A strong result overall which delivers on our long term plan to achieve sustainable results for shareholders and customers across economic cycles • Continued focus on delivering value to customers and shareholders • Food and Liquor (Aus & NZ) - strong sales
Slide 3: Highlights – Half Year 2010
Highlights – Half Year 2010 HY10 Growth Sales – Group $27.2b Ç 4.2% – ex Petrol $24.4b Ç 6.0% EBITDA $2,089.2m Ç 10.7% EBIT $1,683.2m Ç 11.1% NPAT $1,095.6m Ç 11.4% EPS 89.1¢ Ç 10.0% ROFE 17.7% Ç 23bps Delivering long term sustainable results 3
Slide 4: Highlights for the half year
Highlights for the half year 4
Slide 5: Lower prices and greater transparency
Lower prices and greater transparency • Lower shelf prices - customers now pay less for 3,500 grocery products than a year ago • Lower prices in addition to standard 2,000 weekly specials • Greater savings for customers improves shareholder value • 5,000 packaged grocery product prices now online to
Slide 6: Rollout of New Formats – Australia & NZ
Rollout of New Formats – Australia & NZ • Strong customer response to all "We will continue to invest new formats in our store network" • 47% of Australian Supermarkets; "Enhanced shopping 38% of BIG W; 27% of Consumer Electronics and 33% of NZ experience for our customers" Supermarkets converted to
Slide 7: Private label and control brands
Private label and control brands "All ranges continue to gain • Private label expansion continued stronger endorsement by our reflecting quality and value for customers" money offer - strong customer acceptance • Growth in product sales exceeds overall performance • Good levels of repeat purchase •
Slide 8: Now even more reasons to shop with us…
Now even more reasons to shop with us… • Enhanced Everyday Rewards program and Qantas Frequent Flyer alliance • Understanding customers needs in a richer way • Providing customers with targeted special offers • 4.6m Everyday Rewards cards registered • 2.1m holders linked to QFF • Everyday Money Cred
Slide 9: Gift cards – Excellent customer acceptance
Gift cards – Excellent customer acceptance • ‘Wish’ gift cards very successful • Gift card offer enhanced with divisional branded gift cards i.e. BIG W, Supermarkets, Petrol, Dan Murphy’s, BWS, Dick Smith • Gift Card Mall launched across Woolworths • Gift Card Mall carries both Woolworths branded ca
Slide 10: BIG W Optical
BIG W Optical • 23 optical sites in 4 states increasing to 27 by 30 June 2010 • Compelling offer in the marketplace • Strong brands e.g. Ray Ban, DKNY • Staffed with qualified optometrists Queen Victoria Village • Compliments our focus on home Melbourne and family 10
Slide 11: Continuing to invest in distribution and logistics
Continuing to invest in distribution and logistics • Successful commissioning of Melbourne and Sydney Liquor Distribution Centres. Brisbane Liquor DC commissioned in Q410 • Construction of Tasmanian Regional Distribution Centre (RDC) begins this quarter • Investment in Sydney and Melbourne NDCs - in
Slide 12: New Zealand Supermarkets
New Zealand Supermarkets • Business transformation complete "Major business showing significant EBIT improvement transformation showing (up 24.3% on the prior half - NZD) benefits" • Difference between comparable store growth and inflation positive at 1.5%, reflecting volume and market share growth
Slide 13: Repositioning of Consumer Electronics
Repositioning of Consumer Electronics • Rollout of new format across Australia "Techxpert advice at the and NZ - 117 stores converted to date; best price" 168 stores by end of FY10 • Comparable sales growth in converted stores well in excess of network • Improvements in range - repositioned to be mo
Slide 14: Home Improvement
Home Improvement • Acquired Danks in November 2009 - good progress on integration • On track to achieve target of 150 sites secured within five years. More than 40 prime retail sites in the pipeline. First store to open in 2011 • Store design, layout and merchandising well progressed. Combination of
Slide 15: Online shopping
Online shopping • Shopping online an increasingly important part of customer expectations • Continuing development to divisional websites to enhance customer useability • Total online sales up 41% with solid performances in Dick Smith and Supermarkets • Continue investment in this rapidly growing ch
Slide 16: Financial results
CALLIN] SHILIOMIOOM, Financial results
Slide 17: Report Card
Report Card In comparison with our regularly expressed goals HY06 HY07 HY08 HY09 HY10 Sales will grow in the upper single digits assisted by bolt-on acquisitions - Group 18.4% 15.9% 8.6% 8.8% 4.2% - (excluding Petrol) 16.4% 16.2% 8.9% 8.1% 6.0% EBIT will outperform sales growth assisted by cost savi
Slide 18: Profit after tax – up 11.4%
Profit after tax – up 11.4% $m 1,200 1,095.6 983.3 1,000 891.3 Ç 11.4% Ç 10.3% 800 2 695.6 Ç 28.1% 1 600 543.1 Ç 28.1% 400 Ç 22.1% 200 HY08 HY09 HY07 HY06 HY10 0 1. Includes Progressive (NZ) business and 20 Australian ex-FAL store results from 2 November 2005, BMG from 1 July 2005 and ALH, BMG and M
Slide 19: EBIT – up 11.1%
EBIT – up 11.1% EBIT growth underpinned by strong growth in Australian Food and Liquor $m 2,000 Total Group 1,600 Ç 11.1% EBIT Ç 10.2% Australian Food 1,200 Ç 11.4% and Liquor EBIT Ç 20.0% Ç 16.6% 800 Ç 27.0% Ç 19.4% Ç 31.5%1 Ç 29.4% 400 Ç 16.8% HY06 HY09 HY08 HY10 HY07 0 1. Group EBIT growth exceed
Slide 20: CODB / Sales
CODB / Sales CODB/Sales increased slightly. When we exclude the distortion of Petrol and Hotels, we delivered a solid CODB reduction. However we did not quite achieve the 20bps target due to the decline in inflation in Australian Supermarkets Percentage 20.50 20.09% 20.02% 20.00 19.83% 19.69% 19.52%
Slide 21: Gross Profit Margin
Gross Profit Margin Gross margins for the group have increased 56bps reflecting the impact of moving from a direct to store delivery model to distribution centres in liquor, the benefits of global buying, improved shrinkage rates, increasing sales of private label products and the success of the mix
Slide 22: Dividends per share — Interim
Dividends per share — Interim Cents 55 53 48 Ç 10.4% 44 45 Ç 9.1% 35 Ç 25.7% 35 28 Ç 25.0% 25 Ç 16.7% 15 HY06 HY07 HY08 HY09 HY10 5 Dividend pay-out ratio of 60% is in line with the previous half year 22
Slide 23: Australian Supermarket Division
Australian Supermarket Division HY09 HY10 Change Comparable Sales – Aust. F&L – H1 4.8% Sales ($m) - Food & Liquor 16,983 18,143 6.8% Percentage - Petrol 3,072 2,781 (9.5)% 10 8.8 7.9 8 7.1 - Total 20,055 20,924 4.3% 6.0 5.8 6 3.8 Gross margin (%) 23.69 24.41 72bps 4 2 CODB (%) 17.65 17.96 31bps 0 E
Slide 24: Petrol
Petrol • Sales of $2.8 billion, down 9.5% “Strong customer recognition and acceptance of our offer" • Comparable sales decreased by 11.2% reflecting fuel sell prices below last year (HY10:$1.22 / litre; HY09:$1.38 / litre) • Comparable volumes increased 0.9% reflecting the strength of our offer • EB
Slide 25: Liquor
Liquor • All Liquor operations (Dan Murphy’s, "We continue to expand our BWS and attached liquor) recorded range of exclusive brands strong growth in sales, profit and market share and control labels" • Liquor DC’s opening and application of systems (e.g. AutostockR, warehouse management) improved e
Slide 26: New Zealand Supermarkets
New Zealand Supermarkets NZD HY09 HY10 Change Comparable Sales – H1 4.2% Sales ($m) 2,571 2,686 4.5% Percentage Gross margin (%) 21.38 22.10 72bps CODB (%) 17.54 17.53 (1)bps 10 EBIT to sales (%) 3.84 4.57 73bps 4.5 5.5 5 3.9 Trading EBIT ($m) 98.8 122.8 24.3% 3.0 3.0 3.2 Less intercompany (6.9) (6.
Slide 27: BIG W
BIG W HY09 HY10 Change Comparable Sales – H1 0.4% Sales ($m) 2,406 2,462 2.3% Percentage 11.5 12 Gross margin (%) 28.89 29.07 18bps 8 6.4 6.7 CODB (%) 22.98 22.94 (4)bps 4.4 3.9 4 EBIT to sales (%) 5.91 6.13 22bps 0 EBIT ($m) 142.2 150.8 6.0% -4 Q1 Q2 Q3 Q4 (2.1) Funds Employed ($m)1 533.9 600.4 12.
Slide 28: Consumer Electronics – Australia & NZ
Consumer Electronics – Australia & NZ Australia (AUD) HY09 HY10 Change New Zealand (NZD) HY09 HY10 Change Sales ($m) 681 710 4.3% Sales ($m) 191 187 (2.1)% Gross margin (%) 25.72 27.50 178 bps Gross margin (%) 25.10 26.42 132 bps CODB (%) 18.56 21.61 305 bps CODB (%) 22.58 23.63 105 bps EBIT to sale
Slide 29: Consumer Electronics – India
Consumer Electronics – India • Business venture with TATA now services 40 ‘Croma’ retail stores • Woolworths Limited provides buying, wholesale, supply chain and general consulting services to TATA Mumbai • Wholesale operations are meeting expectations with sales of $124 million during the half year
Slide 30: Hotels
Hotels HY09 HY10 Change Comparable Sales Sales ($m) 592 591 (0.2)% Percentage 5.0 Gross margin (%) 83.17 82.39 (78)bps 3.0 2.3 0.9 0.6 1.0 CODB (%) 62.03 63.00 97bps (1.0) (3.0) (0.8) (1.2) EBIT to sales (%) 21.14 19.39 (175)bps (5.0) (4.0) Q1 Q2 Q3 Q4 EBIT ($m) 125.1 114.6 (8.4)% 2009 2010 A challe
Slide 31: Cash Flow – Strong operating cashflows
Cash Flow – Strong operating cashflows $m HY09 HY10 Comments EBITDA 1,887.7 2,089.2 +10.7% Net interest paid (including cost of income notes) (123.7) (125.9) Interest paid is flat reflecting good cash management Taxation paid (456.8) (462.6) 1,307.2 1,500.7 +14.8% Net (decrease)/increase in Creditor
Slide 32: Balance Sheet
Balance Sheet $m FY09 HY09 HY10 • Reduction of $335m primarily reflecting timing of creditor payments last year. Inventory 3,292.6 3,488.5 3,718.9 Creditor days HY10 51.2; HY09 47.8; HY08 Trade Payables (4,055.1) (4,270.3) (4,836.1) 52.4 Net investment in inventory (762.5) (781.8) (1,117.2) • Receiv
Slide 33: Average Inventory Days
Average Inventory Days Inventory days increased 1.5. When we exclude the impact of incremental imported inventory, additional inventory associated with our new liquor DC's and petrol, inventory days decreased by 0.8 days Number of Days 33.9 34.00 33.1 33.00 32.5 32.4 32.00 31.00 30.00 HY07 HY08 HY09
Slide 34: Shareholder Payouts
Shareholder Payouts Profit growth, coupled with balance sheet management, delivered over $7 billion payout to shareholders since July 2001 $m Buy Back 1,400 1,280 Dividend 400 1,200 1,121 1,057 1,000 941 894 400 534 800 534 693 604 538 600 141 400 346 463 407 657 HY10 FY02 FY04 FY05 FY06 FY07 FY08 F
Slide 35: Capital Management
Capital Management • Capital structure objective to enhance shareholder value through optimising weighted average cost of capital whilst retaining flexibility to pursue growth and capital management opportunities • Capital management activity over the recent past not pursued due to various acquisiti
Slide 36: Return on funds employed
Return on funds employed1 Percentage 20.00 17.85% 17.74% 18.00 17.51% 16.00 15.71% 14.87% 14.00 12.00 HY08 HY09 HY07 HY06 HY10 10.00 1. Based on average of opening and closing funds employed 36
Slide 37: Return on equity
Return on equity1 Percentage 16.00 14.97% 15.08% 14.63% 14.18% 2 14.00 13.74% 12.00 HY08 HY09 HY07 HY06 HY10 10.00 1.Based on closing Shareholders Funds 2.Decline in ROE due to impact of 81.6 million shares issued to acquire Foodland, equity issued with the Dividend Reinvestment Plan and the impact
Slide 38: Strategy and Growth
CALLIN] SHILIOMIOOM, Strategy and Growth
Slide 39: Strategy and growth
Strategy and growth Consistent and clear strategies that leverage our core strengths Woolworths targets the following key areas of performance measurement in the long term, namely • Sales (excluding Petrol Sales) to grow in the upper Clearly stated single digits assisted by bolt-on acquisitions long
Slide 40: Key growth initiatives
Key growth initiatives Continuing to Continuing to re-invigorate our offer drive our core through investment business focusing in price, range, on our customers merchandise and quality Leveraging our Expansion of Expansion of supply chain Global Sourcing private label capabilities activities Develop
Slide 41: Sales and Earnings Guidance FY10
Sales and Earnings Guidance FY10 The second half of the year is expected to be impacted by low price inflation and the cycling of the government stimulus packages. Discretionary spending levels will continue to be influenced by macro- economic factors, such as interest rates, petrol prices, confiden
Slide 42: Appendices
CALLIN] SHILIOMIOOM, Appendices
Slide 43: Half Year Sales of $27.2b – up 4.2%
Half Year Sales of $27.2b – up 4.2% – up 6.0% excl Petrol Prior Year 2 Year Half Year $m HY09 HY10 Increase Increase CAGR1 Comp Sales Australian Food and Liquor 16,983 18,143 6.8% 9.0% 7.9% 4.8% New Zealand Supermarkets (NZD) 2,571 2,686 4.5% 3.5% 4.0% 4.2% New Zealand Supermarkets (AUD) 2,132 2,162
Slide 44: EBIT – up 11.1% growing faster than sales
EBIT – up 11.1% growing faster than sales $m HY09 HY10 Change Australian Food and Liquor 1,166.6 1,299.4 11.4% New Zealand Supermarkets (NZD) 91.9 116.6 26.9% New Zealand Supermarkets (AUD) 68.4 96.9 41.7% Petrol 45.7 51.2 12.0% Supermarkets Division 1,280.7 1,447.5 13.0% BIG W 142.2 150.8 6.0% Cons
Slide 45: Earnings per share – up 10.0%
Earnings per share – up 10.0% Cents 100 89.05 80.93 Ç10.0% 80 74.06 Ç9.3% Ç25.9% 58.83 60 50.46 Ç16.6% Ç16.1% 40 20 HY07 HY08 HY09 HY06 HY10 0 45
Slide 46: Capital Expenditure – Half Year
Capital Expenditure – Half Year New Stores2 Refurbs HY09 HY10 $m Actual Actual Store numbers 2010 2009 2010 2009 New Stores 132 118 Australian Supermarkets3 21 15 42 98 Refurbishments 376 327 Growth Capex 508 445 Liquor 34 49 35 53 Stay in Business 185 111 PEL - NZ Supermarkets 2 - 19 9 Supply chain
Slide 47: Capital Expenditure – Full Year
Capital Expenditure – Full Year Current Previous $m – Full Year 2008 2009 2010 $m – 2010 Actual Actual Fcast Fcst Fcst Var New Stores 254 248 6 New Stores 262 254 254 Refurbishments 627 767 (140) Refurbishments 643 652 627 Growth Capex 881 1,015 (134) Growth Capex 905 906 881 Stay in Business 255 33
Slide 48: Capital Expenditure – Notes
Capital Expenditure – Notes • Reflects the continued rollout of new stores across all our brands. New Stores • Reflects the accelerated rollout in 2009 to achieve an initial critical mass of new formats across the brands. In 2010 we have resumed more normal levels of Refurbishment refurbishment acti
Slide 49: Key growth initiatives
Key growth initiatives • We have completed a substantial portion of the end-to- end supply chain program in Australian Supermarkets Leveraging our • The financial benefits of this world class supply chain supply chain will continue over future years expertise • The intellectual property is being lev
Slide 50: Key growth initiatives
Key growth initiatives • We continue to expand our global sourcing activities. As we increase our capabilities in this area we continue to secure cost price savings and improvements in both Expansion of quality and range Global Sourcing • Focus on improving international logistics activities • We ha
Slide 51: Key growth initiatives
Key growth initiatives • We continue to invest in our financial services capabilities with a well developed product roadmap that leverages our cards program Financial • Financial switch provides very high reliability for Services processing of financial transactions (at a lower cost) capabilities •
Slide 52: Key growth initiatives
Key growth initiatives • Woolworths is focussed on our core businesses in Australia and New Zealand and continues to re-invest in each of the businesses. Woolworths will continue to Measured and assess growth opportunities as they arise and has a disciplined disciplined and targeted approach to eval
Slide 53: Key growth initiatives
Key growth initiatives We have defined plans for space growth, with minimal cannibalisation expected • Adding 15-25 new supermarkets each year and expanding existing stores (greater than 3% space Defined rollout pa) plans for • Targeting 200+ BIG W stores space growth • Hotels will be acquired selec