Wesfarmers Limited · ASX:WES
Wesfarmers — H1 FY2013 Earnings Presentation
53 slides from Wesfarmers's earnings presentation, Feb 14, 2013
Slide 1: 2013 Half-Year Results Supplementary Information
2013 Half‐Year Results Supplementary Information (To be read in conjunction with the Half‐Year Results Teleconference presentation) 14 February 2013
Slide 2: Presentation outline
2 Presentation outline Item Page 1 Coles 3 2 Home Improvement & Office Supplies 7 3 Target 15 4 Kmart 19 5 Insurance 23 6 Resources 30 7 Chemicals, Energy & Fertilisers 41 8 Industrial & Safety 47 9 Other Business & Capital Management 50
Slide 3: Coles
Coles Ian McLeod Managing Director
Slide 4: Coles network
Coles network Coles 4 As at 31 December 2012 Selling Area 6 7 15 152 212 76 85 101 5 117 68 52 32 7 43 245 263 4 206 170 753 Supermarkets 197 188 803 Liquor stores 16 15 92 Hotels 634 Convenience
Slide 5: Store network movements
Coles 5 Store network movements Open at Re- Open at 30 June 2012 Opened Closed Branded 31 Dec 2012 Supermarkets Coles 710 11 (6) 1 716 Bi-Lo 39 - (1) (1) 37 Total Supermarkets 749 11 (7) - 753 Liquor 1st Choice 84 6 (2) - 88 Vintage Cellars 80 3 (1) - 82 Liquorland 628 17 (12) - 633 Hotels 92 1 (1)
Slide 6: Revenue reconciliation
Coles 6 Revenue reconciliation 6 months ended 2012 2011 31 December Food & Food & ($m) Liquor1 Convenience Total Liquor1 Convenience Total Segment revenue 14,104 3,943 18,047 13,435 3,783 17,218 (Gregorian) Less: Other revenue 121 7 128 98 6 104 Headline sales 13,983 3,936 17,919 13,337 3,777 17,114
Slide 7: Home Improvement & Office Supplies
Home Improvement & Office Supplies
Slide 8: Bunnings network
Bunnings network Home Improvement and Office Supplies 8 As at 31 December 2012 211 Warehouse stores 62 Smaller format stores 2 37 Trade Centres 33 6 10 26 7 4 10 3 2 64 17 7 16 25 2 52 3 9 6 1 2 1 2
Slide 9: Officeworks network
Officeworks network Home Improvement and Office Supplies 9 As at 31 December 2012 Retail Stores 146 Officeworks 1 Harris Technology 1 Business 27 1 13 1 4 Fulfilment Centres 8 2 Service Centres 47 1 1 1 Print Hub 1 1 48 1 1 2
Slide 10: Store network movements
Home Improvement and 10 Office Supplies Store network movements Under Open at Open at construction at 1 Jul 2012 Opened Closed 31 Dec 2012 31 Dec 2012 Home Improvement Bunnings Warehouse 206 7 (2) 211 10 Bunnings smaller formats 58 5 (1) 62 1 Bunnings Trade Centres 36 3 (2) 37 - Office Supplies Offi
Slide 11: Capital Management
Home Improvement and 11 Capital Management Office Supplies Bunnings - Return on capital (R12) 35.0% 30.0% 25.0% 20.0% Reinvestment in the Investment for network (NSW) future growth 15.0% BBC acquisition 10.0% and integration 5.0% 0.0% Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Ju
Slide 12: Network: Bunnings Warehouse Stores
Home Improvement and 12 Office Supplies Network Bunnings Warehouse Stores • large format • cornerstone brand • 3 core footprints + multi-levels • retail & commercial customers • open 10 to 14 pa longer term
Slide 13: Network: Bunnings Stores
Home Improvement and 13 Office Supplies Network Bunnings Stores • smaller format, highly flexible • regional & metro markets • retail & commercial customers • open 2 to 4 pa longer term
Slide 14: Network: Trade Centres
Home Improvement and 14 Office Supplies Network Trade Centres • specialised ‘DIFOT’ format • narrow & deep ranging • builds customer relationships • lowest cost • commercial ‘delivered’ market • open 4 to 8 pa longer term
Slide 15: Target
AK NAS Ke KRY Target
Slide 16: Target network
Target network Target 16 As at 31 December 2012 4 64 31 28 103 73 308 Target stores (incl. 125 Target Country) 5
Slide 17: Store network movements
Target 17 Store network movements Open at Open at 1 Jul 2012 Opened Closed 31 Dec 2012 Target 179 5 (1) 183 Target Country 122 4 (1) 125
Slide 18: Revenue reconciliation
Target 18 Revenue reconciliation Half-Year ended 31 December ($m) 2012 2011 Segment revenue (Gregorian) 2,070 2,060 Less: Non sales revenue - - Headline sales (Gregorian) 2,070 2,060 Plus: Gregorian adjustment 52 37 Headline sales revenue (Retail1) 2,122 2,097 1 Retail period relates to the 27 week
Slide 19: Kmart
SES NAG MY YY AVY AY HY SAW AY NUS SUNN Kmart IRRESISTIBLY LOW PRICES. EVERYTHING. EVERY DAY. 'o Servic Oxy “Sy 7 w XV?
Slide 20: Kmart network
Kmart network Kmart 20 As at 31 December 2012 190 Kmart stores 263 KTAS centres 2 5 39 56 21 28 14 19 50 75 12 44 75 5 5 3
Slide 21: Store network movements
Kmart 21 Store network movements Open at Open at 1 Jul 2012 Opened Closed 31 Dec 2012 Kmart 185 6 (1) 190 Kmart Tyre & Auto 260 4 (1) 263
Slide 22: Revenue reconciliation
Kmart 22 Revenue reconciliation Half-Year ended 31 December ($m) 2012 2011 Segment revenue (Gregorian) 2,299 2,236 Less: Non sales revenue 1 1 Headline sales (Gregorian) 2,298 2,235 Plus: Gregorian adjustment 63 46 Headline sales revenue (Retail1) 2,361 2,281 1 Retail period relates to the 27 week p
Slide 23: Insurance
NAS NAS NAG AAC NAG% WOG% AY TSUSUSUSU SSS Insurance 7 Wesfarmers Insurance ON DROPROOPR DR
Slide 24: Insurance business overview
Insurance 24 Insurance business overview Group/ Company Wesfarmers Insurance Australian New Zealand Premium Operations Broking Underwriting Underwriting Funding Lumley WI Business Affinity & Lumley WFI Lumley Business AUS NZ UK Premium Unit Direct Solutions Funding Brands
Slide 25: Geographical presence
Geographical presence Insurance 25 As at 31 December 2012 3 1 UK 4 2 13 5 22 1 2 1 1 13 8 5 20 17 7 17 6 Lumley Insurance (Australia) 13 2 Lumley General New Zealand 13 7 WFI 87 2 6 1 OAMPS1 32 2 Crombie Lockwood 24 1 OAMPS New Caledonia location not shown.
Slide 26: Underwriting performance summary
Insurance 26 Underwriting performance summary Half-Year ended 31 December ($m) 2012 2011 % Gross Written Premium 796 732 8.7 Net Earned Premium 684 586 16.7 Net Claims1 (452) (466) 3.0 Net Commission & Expenses1 (197) (167) (18.0) Underwriting Result 35 (47) n.m. Insurance Margin 59 (22) n.m. EBITA
Slide 27: Broking performance summary
Insurance 27 Broking performance summary Half-Year ended 31 December ($m) 2012 2011 % Commission & Fee Income 124 111 11.7 Other Income 16 16 - Total Income 140 127 10.2 Expenses (102) (92) (10.9) EBITA 38 35 8.6 EBIT 32 29 10.3 EBITA Margin (%) 27.2 27.8
Slide 28: Underwriting KPIs
Insurance 28 Underwriting KPIs Half-Year ended 31 December (%) 2012 2011 % pt Gross Earned Loss Ratio1 65.9 86.4 (20.5) Net Earned Loss Ratio1 66.1 79.6 (13.5) Reinsurance Expenses (% GEP) 14.1 19.2 (5.1) Exchange Commission (% RI excl XOL) 18.5 20.5 (2.0) Commission Expense (% GWP) 12.1 12.4 (0.3)
Slide 29: Gross written premium (underwriting)
Insurance 29 Gross written premium (underwriting) Liability 14% Marine 3% Engineering 4% Personal 27% Commercial Total: $796m Motor 23% Crop 4% Commercial 25%
Slide 30: Resources
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Slide 31: Business environment
Resources 31 Business environment • Challenging global trading conditions for steel mills remain • Signs of demand stabilisation in met coal export markets – but uncertain near term metallurgical coal demand outlook – Continuing poor economic conditions in Eurozone & uncertainty for Japan – Signs of
Slide 32: January weather event: Cyclone Oswald
Resources 32 January weather event: Cyclone Oswald
Slide 33: Export pricing
Resources 33 Export pricing Australian steaming coal prices Australian hard coking coal prices US$/Tonne (Nominal) FOB Australia (Annual versus spot) US$/Tonne (Nominal) FOB Australia (Quarterly price to December 2012 versus spot) Hard Hard 42% 44% Source: Energy Publishing, Tex Report, Macquarie Re
Slide 34: Resources financial summary
Resources 34 Resources financial summary Half-year ended 31 December 2012 2011 Commentary Production tonnes – (‘000 tonnes) Increased export production achieved with expansion completions at both Curragh & Curragh & Bengalla1 7,017 5,465 Bengalla Premier - 1,620 Premier production to 31 December 201
Slide 35: Curragh costs – ongoing reduction initiatives
Resources 35 Curragh costs – ongoing reduction initiatives Sustainable • Operational efficiencies/productivities – Overburden – Coal mining – CHPP – Maintenance • Supplier & contractor rationalisation • 'Supplier Alignment' program • Resource optimisation – flow, yield & product • Minimisation of wo
Slide 36: Curragh costs – progress update
Resources 36 Curragh costs (cont.) - progress update Achieved: 90.00 Approx. 20% reduction in unit 80.00 mine cash costs since peak of 1H FY12 70.00 60.00 Targeted: $/tonne 50.00 2H FY13: Further 11% -21% -11% +10% reduction (short-term only) 40.00 FY14: Lock-in 20% reduction 30.00 from 1H FY12 peak
Slide 37: Curragh export metallurgical sales
Resources 37 Curragh export metallurgical sales PCI PCI 30% 27% Hard Hard 40% 43% Semi Hard Semi Hard 30% 30% 1H FY13 Actual FY13 Forecast 3.8 million tonnes 7.5 – 8.0 million tonnes
Slide 38: Coal production volumes
Resources 38 Coal production volumes Half Year Ended Beneficial ('000 tonnes) Mine Coal Type Interest Dec 2012 Dec 2011 Curragh, QLD 100% Metallurgical 3,867 3,087 Steaming 1,662 1,365 Bengalla, NSW1 40% Steaming 1,488 1,013 Total 7,017 5,465 1 Wesfarmers attributable production.
Slide 39: Coal sales volumes
Resources 39 Coal sales volumes Half Year Ended Beneficial ('000 tonnes) Mine Coal Type Interest Dec 2012 Dec 2011 Curragh, QLD1 100% Metallurgical 3,770 2,976 Steaming 1,629 1,409 Bengalla, NSW2 40% Steaming 1,504 1,049 Total 6,903 5,434 1 Curragh metallurgical coal sales excludes traded coal. 2 We
Slide 40: Hedging summary
Resources 40 Hedging summary Curragh Bengalla Current US$ Average Current US$ Average Year end Year end sold forward A$ / US$ sold forward A$ / US$ 30 Jun 30 Jun (US$m) hedge rate (US$m) hedge rate 20131 372 0.89 20131 99 0.93 2014 505 0.87 2014 153 0.89 2015 334 0.85 2015 120 0.87 2016 192 0.90 201
Slide 41: Chemicals, Energy & Fertilisers
Chemicals, Energy & Fertilisers
Slide 42: Fertiliser sales
Chemicals, Energy 42 & Fertilisers Fertiliser sales kt 2nd Half 1st Half 1,200 1,000 800 600 649 714 610 513 400 200 226 264 244 227 220 0 FY2009 FY2010 FY2011 FY2012 FY2013 1H13 volumes 3.1% lower than previous corresponding period
Slide 43: Global fertiliser & ammonia pricing
Chemicals, Energy 43 & Fertilisers Global fertiliser & ammonia pricing US$/t Urea (FOB Middle East) DAP (FOB US Gulf) Ammonia (FOB Middle East) 1,400 1,200 1,000 800 600 400 200 0 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Prices have recently begun to soften
Slide 44: PVC-VCM Spread
Chemicals, Energy 44 & Fertilisers PVC-VCM Spread The ‘PVC – VCM Spread’ refers to the difference between the Asian PVC selling price & VCM input cost $/t FY Average US$/t FY Average A$/t 300 250 200 150 100 50 0 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun
Slide 45: World LPG prices – Saudi CP
Chemicals, Energy 45 & Fertilisers World LPG prices – Saudi CP $/tonne Saudi CP US$/t (propane) Saudi CP A$/t (propane) 1,400 1,200 1,000 800 600 400 200 0 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Saudi CP price inc
Slide 46: LPG production
Chemicals, Energy 46 & Fertilisers LPG production kt Ave t/TJ 200 1.2 1.1 150 1.0 0.9 100 0.8 0.7 50 0.6 0 0.5 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 H1 WLPG production [LHS] H2 WLPG production [LHS] H1 average LPG content [RHS] FY average LPG content [RHS] Production lower than previous year due
Slide 47: Industrial & Safety
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Slide 48: Three Business Streams
Industrial & Safety 48 Three Business Streams Generalists Safety specialists Industrial specialists
Slide 49: Distribution network
Distribution network Industrial & Safety 49 As at 31 December 2012 223 owned branches & 132 additional gas distribution points Generalists 99 1 Indonesia 73 26 2 3 Safety Specialists 68 1 16 10 19 9 4 9 7 43 7 2 1 49 24 4 4 1 5 2 1 16 7 Industrial Specialists 56 1 25 4 3 5 38 8 + 132 12 7 26 24 26 2
Slide 50: Other Business & Capital Management
Other Business & Capital Management
Slide 51: Overview of the Group balance sheet
51 Overview of the Group balance sheet ($m)1 1H12 FY12 1H13 Commentary Inventories 5,359 5,006 5,517 Receivables & prepayments 2,404 2,564 2,337 Trade & other payables (5,957) (5,445) (6,029) Detailed working capital discussion provided on slide 52 Other 501 417 551 Net working capital 2,307 2,542 2
Slide 52: Balance sheet – working capital
52 Balance sheet – working capital ($m) 1H12 FY12 1H13 Commentary Inventories 5,359 5,006 5,517 • Retail divisions seasonally higher against June • Inventory increased by $158 million (1H FY13 v 1H FY12) Target: Higher inventory reflecting investment in improved availability HIOS: Higher inventory f
Slide 53: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au