Wesfarmers Limited · ASX:WES
Wesfarmers — H1 FY2014 Earnings Presentation
48 slides from Wesfarmers's earnings presentation, Feb 19, 2014
Slide 1: 2014 Half-Year Results Supplementary Information
2014 Half-Year Results Supplementary Information 19 February 2014 (To be read in conjunction with the 2014 Half-Year Results Briefing Presentation) 2014 Half-Year Results | 1
Slide 2: Presentation Outline
Presentation Outline Item Page Coles 3 Home Improvement & Office Supplies 7 Kmart 11 Target 15 Insurance 19 Resources 26 Chemicals, Energy & Fertilisers 37 Industrial & Safety 43 Balance Sheet & Cash Flow 45 2014 Half-Year Results | 2
Slide 3: Coles
Coles 2014 Half-Year Results | 3
Slide 4: Coles network
Coles network As at 31 December 2013 Selling Area Supermarkets (sqm) 1,678,813 Liquor (sqm) – ex hotels 204,449 6 7 10 156 218 76 762 Supermarkets 85 103 5 68 119 824 Liquor stores 54 33 7 43 92 Hotels 243 269 4 210 637 Convenience 172 202 194 16 15 2014 Half-Year Results | 4
Slide 5: Store network movements
Store network movements Open at Open at 30 June Re- 31 Dec 2013 Opened Closed branded 2013 Supermarkets Coles 722 11 (4) 4 733 Bi-Lo 34 - (1) (4) 29 Total Supermarkets 756 11 (5) - 762 Liquor 1st Choice 92 6 - - 98 Vintage Cellars 79 - (1) - 78 Liquorland 639 14 (5) - 648 Hotels 92 - - - 92 Total Li
Slide 6: Revenue reconciliation
Revenue reconciliation 2013 2012 6 months ended 31 Food & Food & December ($m) Liquor1 Convenience Total Liquor1 Convenience Total Segment revenue 14,770 4,176 18,946 14,104 3,943 18,047 (Gregorian) Less: Other revenue 129 6 135 121 7 128 Headline sales (Gregorian) 14,641 4,170 18,811 13,983 3,936 1
Slide 7: Home Improvement & Office Supplies
Home Improvement & Office Supplies 2014 Half-Year Results | 7
Slide 8: Bunnings network
Bunnings network As at 31 December 2013 3 218 Warehouse stores 65 Smaller format stores 36 6 9 35 Trade Centres 27 9 4 11 3 2 64 17 7 18 23 3 51 6 7 2 1 2 6 1 2014 Half-Year Results | 8
Slide 9: Officeworks network
Officeworks network As at 31 December 2013 Retail Stores 152 Officeworks 1 1 Harris Technology Business 27 1 4 Fulfilment Centres 15 1 1 Service Centres 8 1 Print Hub 50 1 1 1 1 49 1 2 2014 Half-Year Results | 9
Slide 10: Store network movements
Store network movements Under Open at Open at construction 1 July 2013 Opened Closed 31 Dec 2013 at 31 Dec 2013 Home Improvement Bunnings Warehouse 210 11 (3) 218 14 Bunnings smaller 67 2 (4) 65 1 formats Bunnings Trade 36 1 (2) 35 Centres Office Supplies Officeworks 149 61 (3)1 152 2 Harris Technol
Slide 11: Kmart
Kmart 2014 Half-Year Results | 11
Slide 12: Kmart network
Kmart network As at 31 December 2013 191 Kmart stores 2 3 251 KTAS centres 39 53 21 27 14 17 51 75 12 43 71 5 5 4 2014 Half-Year Results | 12
Slide 13: Store network movements
Store network movements Open at Open at 1 July 2013 Opened Closed 31 Dec 2013 Kmart 190 3 (2) 191 Kmart Tyre & Auto 263 1 (13) 251 2014 Half-Year Results | 13
Slide 14: Revenue reconciliation
Revenue reconciliation Half-Year ended 31 December ($m) 2013 2012 Segment revenue (Gregorian) 2,321 2,299 Less: Non sales revenue 3 1 Headline sales (Gregorian) 2,318 2,298 Plus: Gregorian adjustment 47 28 Headline sales revenue (Retail1) 2,365 2,326 1 Retail period relates to the 27 week period 1 J
Slide 15: Target
Target 2014 Half-Year Results | 15
Slide 16: Target network
Target network As at 31 December 2013 191 Target stores 3 1 123 Target Country 37 29 19 12 21 10 57 47 49 23 5 1 2014 Half-Year Results | 16
Slide 17: Store network movements
Store network movements Open at Open at 1 July 2013 Opened Closed 31 Dec 2013 Target 183 8 - 191 Target Country 125 - (2) 123 1 30 June 2013 includes three Target Urban stores & six Target Outlet stores. 2 Target store numbers include one replacement store. 2014 Half-Year Results | 17
Slide 18: Revenue reconciliation
Revenue reconciliation Half-Year ended 31 December ($m) 2013 2012 Segment revenue (Gregorian) 1,965 2,070 Less: Non sales revenue - - Headline sales (Gregorian) 1,965 2,070 Plus: Gregorian adjustment 48 52 Less: Retail weeks adjustment - (16) Headline sales revenue (Retail1) 2,013 2,106 1 Retail per
Slide 19: Insurance
Insurance 2014 Half-Year Results | 19
Slide 20: Insurance performance summary
Insurance performance summary Group/ Company Wesfarmers Insurance Australian New Zealand Premium Operations Broking Underwriting Underwriting Funding Lumley WI Business Affinity & Lumley WFI Lumley Business AUS NZ UK Premium Units Direct Solutions Funding Brands 2014 Half-Year Results | 20
Slide 21: Geographical presence
Geographical presence As at 31 December 2013 UK 1 3 5 1 11 4 1 22 1 1 16 1 6 19 8 13 Lumley Insurance (Australia) 7 17 13 Lumley General New Zealand 2 18 6 89 WFI 31 OAMPS1 1 3 2 6 6 23 Crombie Lockwood 1 OAMPS New Caledonia location not shown. 2014 Half-Year Results | 21
Slide 22: Underwriting performance summary
Underwriting performance summary Half-Year ended 31 December ($m) 2013 2012 % Gross Written Premium 857 796 7.7 Net earned premium 771 684 12.7 Net claims (513) (452) (13.5) Net commission & expenses (227) (197) (15.2) Underwriting result 31 35 (11.4) Insurance margin 52 59 (11.9) EBITA 64 72 (11.1)
Slide 23: Underwriting KPIs
Underwriting KPIs Half-Year ended 31 December 2013 2012 pt Gross earned loss ratio (%) 67.8 65.9 1.9 Gross earned loss ratio (excluding EQ2)1 (%) 62.6 65.9 (3.3) Net earned loss ratio (%) 66.5 66.1 0.4 Net earned loss ratio (excluding EQ2)1 (%) 60.7 66.1 (5.4) Reinsurance expenses (% GEP) 11.4 14.1
Slide 24: Broking performance summary
Broking performance summary Half-Year ended 31 December ($m) 2013 2012 % Commission & fee income 135 124 8.9 Other income 17 16 6.3 Total income 152 140 8.6 Expenses (111) (102) (8.8) EBITA 41 38 7.9 EBIT 34 32 6.3 EBITA Margin (%) 27.0 27.2 2014 Half-Year Results | 24
Slide 25: Gross written premium (underwriting)
Gross written premium (underwriting) Engineering Marine 4% 3% Commercial motor Liability 22% 14% 1 Total: $857m Personal 29% Commercial 24% Crop 4% 1 Six months to 31 December 2013. 2014 Half-Year Results | 25
Slide 26: Resources
Resources 2014 Half-Year Results | 26
Slide 27: Business environment
Business environment • Continued challenging global trading conditions for steel mills • Metallurgical coal supply currently exceeds steel production levels – Spot prices into China deteriorated ahead of Chinese New Year – Japan benefitting from weaker Yen – Growth in China & India moderating – Sign
Slide 28: Australian coal market prices
Australian coal market prices Australian steaming coal prices Australian hard coking coal prices US$/tonne (nominal) FOB Australia (annual versus spot) US$/tonne (nominal) FOB Australia 250 400 350 200 300 250 150 200 100 150 100 50 50 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 29: Curragh export metallurgical sales product mix
Curragh export metallurgical sales product mix 1H FY14 Actual FY14 Forecast 4.1 million tonnes 7.5 - 8.5 million tonnes Semi Semi 31% 34% Hard 34% Hard 41% PCI PCI 32% 28% 2014 Half-Year Results | 29
Slide 30: Coal production volumes
Coal production volumes Equity Half-Year Ended (‘000 tonnes) Mine Interest Coal Type Dec 2013 Dec 2012 Curragh, QLD 100% Metallurgical 4,029 3,867 Steaming 1,740 1,662 Bengalla, NSW1 40% Steaming 1,685 1,488 Total1 7,454 7,017 1 Wesfarmers attributable production. 2014 Half-Year Results | 30
Slide 31: Coal sales volumes
Coal sales volumes Equity Half-Year Ended (‘000 tonnes) Mine Interest Coal Type Dec 2013 Dec 2012 Curragh, QLD1 100% Metallurgical 4,053 3,770 Steaming 1,829 1,629 Bengalla, NSW2 40% Steaming 1,787 1,504 Total1 7,669 6,903 1 Curragh metallurgical coal sales excludes traded coal. 2 Wesfarmers attribu
Slide 32: Curragh mine cash costs – progress update
Curragh mine cash costs – progress update • Continued focus on cost control & Mine cash costs (excl. carbon tax) $/t productivity improvements • Sustained ~28% cash cost reduction from 1H FY12 peak • Cost performance sustained by: – Reduced contractor activity -20% -1% -9% +~1% – Optimised mine desi
Slide 33: FX hedging profile: 31 December 2013
FX hedging profile: 31 December 2013 Curragh Bengalla Current US$ Average Current US$ Average Year end sold forward A$ / US$ Year end sold forward A$ / US$ 30 Jun (US$m) hedge rate 30 Jun (US$m) hedge rate 20141 257 0.91 20141 52 0.89 2015 502 0.87 2015 166 0.88 2016 340 0.89 2016 134 0.90 2017 198
Slide 34: Resources financial summary
Resources financial summary Half-Year ended 31 December 2013 2012 Commentary Production tonnes – (‘000 tonnes) Increased export production due mainly to the previous half-year being constrained by a scheduled shutdown during the Christmas Curragh & Bengalla1 7,454 7,017 period at Curragh Revenue ($m
Slide 35: Acquisition – MDL 162
Acquisition – MDL 162 • Acquisition of MDL 162 adjacent to Curragh mine Curragh North from Peabody Energy Australia for $70 million Coal Mine – Contains 67 million tonnes coal reserves1,3 – Additional 188 million tonnes of coal resource2,3 – Approximate 29% increase in coal reserves4 Jellinbah • Opp
Slide 36: Coal Reserves and Resources Notes
Coal Reserves and Resources Notes • Note 1: Coal Reserves in MDL 162: The estimates of Coal Reserves for MDL 162 have been carried out under the guidelines of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the “JORC Code 2012”), and comprise 39 mi
Slide 37: Chemicals, Energy & Fertilisers
Chemicals, Energy & Fertilisers 2014 Half-Year Results | 37
Slide 38: Fertiliser sales
Fertiliser sales kt 1H14 volumes 27% lower than previous period 1,000 900 800 700 600 649 714 713 610 500 400 300 200 264 244 227 100 220 160 0 FY10 FY11 FY12 FY13 FY14 1st half 2nd half 2014 Half-Year Results | 38
Slide 39: Global fertiliser & ammonia pricing
Global fertiliser & ammonia pricing US$/t DAP & ammonia prices continued to fall in 1H14 800 700 600 500 400 300 200 100 0 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Urea (FOB Middle East) DAP (FOB US Gulf) Ammonia (FOB Middle East) 2014 Half-Year Results | 39
Slide 40: PVC-VCM spread
PVC-VCM spread • The ‘PVC – VCM spread’ refers to the difference between the Asian PVC selling price & VCM input cost $/t PVC-VCM spread improved in 1H14 300 250 200 150 100 50 0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 FY Average US$/t FY Average A$/t Source: Har
Slide 41: World LPG prices – Saudi CP
World LPG prices – Saudi CP $/t Saudi CP price increased during 1H14 1,400 1,200 1,000 800 600 400 200 0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Saudi CP US$/t (propane) Saudi CP A$/t (propane) 2014 Half-Year Results | 41
Slide 42: LPG production
LPG production Production in 1H14 lower than 1H13 due to reduced content kt Avg. t/TJ 200 1.2 180 1.0 160 140 0.8 120 100 0.6 80 0.4 60 40 0.2 20 0 0.0 FY10 FY11 FY12 FY13 FY14 H1 WLPG production (kt) H2 WLPG production (kt) H1 average LPG content (t/TJ) FY average LPG content (t/TJ) 2014 Half-Year
Slide 43: Industrial & Safety
Industrial & Safety 2014 Half-Year Results | 43
Slide 44: Distribution network
Distribution network As at 31 December 2013 221 owned branches & 154 additional gas distribution points Generalists 102 1 1 Indonesia 77 Blackwoods 25 Blackwoods Protector 2 3 1 Safety Specialists 75 20 8 2 4 1 40 Protector Alsafe 51 1 8 18 9 1 23 NZ Safety 4 7 4 4 1 10 Greencap 34 1 2 17 7 3 2 Safe
Slide 45: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow 2014 Half-Year Results | 45
Slide 46: Overview of the Group balance sheet
Overview of the Group balance sheet ($m)1 1H13 FY13 1H14 Commentary Inventories 5,517 5,047 5,781 Receivables & 2,337 2,571 2,666 prepayments Detailed working capital discussion Trade & other payables (6,029) (6,007) (6,486) provided on slide 47 Other 551 614 521 Net working capital 2,376 2,225 2,48
Slide 47: Balance sheet – working capital
Balance sheet – working capital ($m)1 1H13 FY13 1H14 Commentary • Retail divisions seasonally higher against June • Inventory increased by $264m (1H FY14 v 1H FY13) Coles & HIOS: Higher inventory following network Inventories 5,517 5,047 5,781 expansion Kmart: Increase due to further overseas (direc
Slide 48: 2014 Half-Year Results
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