Wesfarmers Limited · ASX:WES
Wesfarmers — JPMorgan Investor Conference Edinburgh 2009
33 slides from Wesfarmers's conference presentation, October 2009
Slide 1: Philosophy, Performance and Direction
Philosophy, Performance and Direction JPMorgan Investor Conference Edinburgh October 2009
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Wesfarmers Limited. The information contained in this presentation is for information purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products, nor is it intended to constitute legal, tax or
Slide 3: Philosophy Based On A Single Focus
Philosophy Based On A Single Focus Satisfactory Returns To Shareholders
Slide 4: Long-term, consistent strategies
Long-term Long term, consistent strategies MANAGING BALANCE SHEET EFFECTIVELY 4
Slide 5: Strong long-term performance
Strong long-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 Accumulation Index
Slide 6: Portfolio of leading brands
Portfolio of leading brands Retail Businesses Industrial Businesses Hotels Ins rance Insurance 6
Slide 7: Management Team
Management Team Managing Director Richard Goyder Fi Finance Di Director t T Terry Bowen B Divisional Managing Directors Home Improvement & Office Supplies John Gillam Coles Ian McLeod T Target L Launa IInman Kmart Guy Russo Insurance Rob Scott Chemicals & Fertilisers Ian Hansen Resources Stewart But
Slide 8: Group Results
Group Results
Slide 9: Group Performance Highlights
Group Performance Highlights • Significant g increases in revenue and earnings g – Record Resources earnings – Inclusion of full period of Coles, Target, Kmart and Officeworks – Strong Retail performance • Operating revenue of $51 $51.0 0 billion • Group profit after tax of $1.5 billion, up 44% – Af
Slide 10: Group Performance Highlights (cont)
Group Performance Highlights (cont) • Coles turnaround continues to meet Wesfarmers’ expectations p • Bunnings and Target delivered strong performances • Officeworks and Kmart transformations progressing well – Kmart still at an early stage • R Record dRResources production d ti andd sales l • Other
Slide 11: Group Performance Summary
Group Performance Summary Year ended 30 June ($m) 2009 2008* % Revenue 50,982 33,584 51.8 EBITDA 4,001 2,889 38.5 EBIT 2,977 2,229 33.6 Net profit after tax (pre significant items) 1,641 1,132 45.0 Net profit after tax (post significant items) 1,535 1,063 44.4 Operating cash flow 3,044 1,451 109.8 E
Slide 12: Divisional EBIT
Divisional EBIT Year ended 30 June ($m) 2009 2008* % Coles 831 475 n.m. Home Improvement 659 589 11.9 pp Office Supplies 65 36 n.m. Target 357 221 n.m. Kmart 109 111 n.m. Resources 915 423 116 3 116.3 Insurance 91 122 (25.4) Industrial & Safety 114 130 (12.3) Ch i l & Fertilisers Chemicals F tili 52
Slide 13: Non-Trading & Significant Items
Non-Trading & Significant Items FY09 FY09 ($m) Segment Comment P t Pre-tax P tt Post-tax Property impairments partially offset Coles (52) (60) Other by write-back of store exit provision Kmart (70) (49) Other Supply chain and other restructuring Single g licence and other restructuring g Insurance &
Slide 14: Operating Divisions
Operating Divisions
Slide 15: Coles
Coles Coles Food & Liquor Comp Sales by Quarter (FY09)# 0.08 7.3% 1. Building a solid foundation 0.07 6.6% 0.06 Strategies 2. Delivering consistently well 0.05 3.8% 3. Driving the Coles difference 0.04 0.03 • Food & Liquor comp sales growth of 0 02 0.02 1.3% 4 6% (7.3% 4.6% (7 3% in 4Q09, 4Q09 Easte
Slide 16: Coles – Strategy
Coles – Strategy 5 years – 3 phases of recovery Building a Solid Delivering Driving the Coles F Foundation d ti C Consistently i t tl Well W ll Diff Difference Performance • Culture of continuous • Embed the new culture improvement • Create a strong top team • Team member development • Strong custom
Slide 17: Coles – Strategy
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, experience. new 44% of Merchandise General Managers new. Continual increase in expectations and calibre of team. Cultural change M
Slide 18: Home Improvement and Office Supplies
Home Improvement and Office Supplies Bunnings 1. Profitable sales growth • Maintain strength of focus on 2. Better stock flow customer and business Strategies 3. Engaging and developing a strong team improvements 4. Improving productivity and execution • 30 – 40 Warehouses to open 5. Sustainability
Slide 19: Home Improvement and Office Supplies
Home Improvement and Office Supplies Officeworks 1. Improving the customer offer • Continued C ti d ttraction ti ffrom resett 2. Improving customer service strategic agenda Strategies 3. Building a stronger team 4 Reduced 4. R d d costs t and d complexity l it • Small business sector 5. Drive sales
Slide 20: Target
Target 1. Profitable store sales growth through • Absolute focus on the network expansion and volume mix customer and delivering Strategies 2. Product leadership supported by new what they demand and differentiated product development 3. Sustainability • Cost control continued in a • EBIT margin g s
Slide 21: Kmart
Kmart 1. Outstanding customer experience • Profitability improving 2. Ranges customers want through Renewal strategies 3. Great value everyday Strategies 4. Clear communication • Rebuilding R b ildi ffor sustainable t i bl 5. Every site a success growth will take time 6. Best people, great company •
Slide 22: Resources
Resources • Forecast Curragh 1. Maximise export sales and optimise sales l mix i metallurgical sales of 6.2 – 2. Cost reduction programmes 6.7mt in FY10 Strategies 3. Expansion opportunities • Positive signs of global steel 4. Extend product and market reach 5. Sustainability production recovery • R
Slide 23: Insurance
Insurance Underwriting • Management and licence 1. Business improvement restructuring in Aust. 2. New business – retail distribution Strategies y completed recently p Broking 1. Business improvement • Continuing consolidation of 2. Acquisitions and new businesses brokers/distribution • Earnings affe
Slide 24: Industrial & Safety
Industrial & Safety 1. Increase sales to existing customers • Challenging market 2. Target higher growth sectors conditions with business Strategies 3. Increase SME penetration activity slowdown from 2H09 4. Increase competitiveness • Strengthening capabilities • Solid result given challenging marke
Slide 25: Chemicals & Fertilisers
Chemicals & Fertilisers • Impacted by Varanus Island 1. Growth through g expansions p 2. Optimise cost and capital gas disruption Strategies 3. Sustainability • Demand D d ffor A Ammonium i 4. Improve capabilities and people development Nitrate remains strong • AN sales volumes up 52% FY09 • QNP exp
Slide 26: Energy
Energy 1 Improve – existing businesses 1. • WA LNG project j t operational Strategies 2. Expand – deliver projects 3. Evaluate - new opportunities • Impacted by Varanus Island gas disruption • Industrial gas EBIT growth despite weaker k customer d demans FY09 Trading • Gas disruption reduced earning
Slide 27: Capital Management
Capital Management
Slide 28: Capital Management
Capital Management • Net Debt to Equity of 18.3% at 30 June 2009 – Gross debt $6.2bn, Net debt $4.4bn (net of cash at bank and on deposit) • Cash Interest Cover Ratio of 5.3 times (rolling 12 month basis) • Net Debt to EBITDA of 1.11 times at 30 June 2009 • S&P rating ti BBB+ BBB (stable), ( t bl )
Slide 29: Debt Maturity Profile (at 30 June 09)
Debt Maturity Profile (at 30 June 09) • Relatively low levels of debt going forward • Cash to be used for funding upcoming dividends, seasonal working capital, debt repayments and potential growth opportunities • $4.6bn $4 6b hhedged d d iin FY10 with ith allll iin costt off d debt, bt iincluding l
Slide 30: Cashflow
Cashflow • Strong operating cash generation across most divisions • Retail strategies delivered improvements in working capital during the year, partly offset by higher working capital levels in CSBP $m % 3,500 140 3 000 3,000 120 2,500 100 2,000 80 1,500 60 1,000 40 500 20 0 0 2005 2006 2007 2008 2
Slide 31: Capital Expenditure
Capital Expenditure Actual Actual • Strong St investment i t t in i organic i growth th Y Year ended d d 30 June J ($ ($m)) 2009 2008^ opportunities across the Group Home Improvement & Office Supplies 377 301 Coles 567 349 • Retail - Store roll outs and Target 92 47 refurbishments Kmart 64 42 • Indu
Slide 32: Outlook
Outlook • Cautiously Cau ous y optimistic op s c about abou the e economic eco o c ou outlook oo in FY10 0aalthough oug cognisant of a degree of ongoing fragility • Underlying retail trading conditions remain somewhat volatile and difficult to predict despite recent signs of growing consumer confide
Slide 33: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au 33
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