Metcash Limited · ASX:MTS
Metcash — FY2023 Earnings Presentation
42 slides from Metcash's earnings presentation, Jun 26, 2023
Slide 1: FY23 Full Year Results
FY23 Full Year Results 26 JUNE 2023
Slide 2: Group overview and divisional results
Group overview and divisional results Doug Jones Group Chief Executive Officer 2
Slide 3: Acknowledgement of country
Care for Country, Maggie-Jean Douglas, Naidoc week 2021 winning artwork Acknowledgement of country I would like to acknowledge the Traditional Custodians of the lands from which we are all connecting today. I am connecting from Wallumedegal Country, and pay my respects to elders across Country, past
Slide 4: Group highlights
Group highlights ● Continuation of strong sales and ● Outstanding three-year growth rates earnings growth despite cycling very Another record year strong 2H22 ● Stable and attractive shareholder distributions ● All pillars continued to perform well ‒ Strong demand ● Group well positioned for continu
Slide 5: Group highlights
Group highlights Group revenue1 Group EBIT Profit after tax +5.7% vs 52 weeks 2 +8.1% vs 52 weeks 2 +4.6% vs 52 weeks 2 Continuation of growth to record $18.1bn to record $501m underlying to record $308m underlying and momentum 3 (+54.7% 3yr) (+29.0% 3yr ) (+49.5% 3yr) $259m reported +7.6% Operating
Slide 6: Transformation – larger, more diversified and stronger
Transformation – larger, more diversified and stronger A substantially larger FY20 EBIT1: $335m FY23 EBIT1: $501m earnings base 25% A balanced portfolio of businesses 50% EBIT 42% 39% (Hardware now largest EBIT contributor) 54% growth 21% 19% Retail sales doubled FY20 retail sales: $929m FY23 retail
Slide 7: Results overview by pillar
Results overview by pillar Food Hardware Liquor Sales revenue FY23 FY222 norm. 3 3yr4 19% (including charge-through sales ) 1 $m $m % % % 18% Food 9,604.3 9,522.3 0.9 2.8 16.6 53% Hardware 3,384.3 3,119.5 8.5 10.6 63.1 28% 55% 27% Liquor 5,063.8 4,763.9 6.3 8.3 37.7 Total sales revenue (including ch
Slide 8: Food – sales
Food – sales ● Continued sales growth while cycling elevated 2H22 FY23 FY22 norm.1 3yr2 ● Total Food sales (including charge-through) up 2.8% to $9.6bn on a $m $m % % % normalised1 basis (3yr normalised2+16.6%) ‒ Supermarkets +2.1% (3yr normalised2+16.1%) Revenue (including charge-through) ‒ Conveni
Slide 9: Food – EBIT
Food – EBIT FY23 FY22 norm1 3yr ● Total Food EBIT increased $7.5m or 3.8% on a normalised basis to 1 $m $m % % % $204.0m, reflecting the strong trading performance 2 Total revenue (including charge-through) 9,604.3 9,522.3 0.9 2.8 16.6 ● Gains from strategic buying opportunities largely applied to o
Slide 10: Hardware – sales
Hardware – sales ● Total sales (including charge-through) increased by 10.6% normalised1 to $3.4bn with growth in both IHG and Total Tools (3yr +63.1%) FY23 FY22 norm1 3yr ‒ Combined sales in the IHG and Total Tools retail networks increased 4.5% to $m $m % % % ~$4.5bn (+~40% 3yr LfL basis) Total re
Slide 11: Hardware – sales
Hardware – sales FY23 FY22 norm1 3yr 1 ● Total Tools sales increased 61.9% to $583.5m reflecting strong Trade $m $m % % % activity and the impact of additional majority-owned joint venture stores 1 ‒ Sales excluding acquisitions up $82.7m or 22.9% Total revenue as per Statutory Accounts 2,344.1 2,03
Slide 12: Hardware – EBIT
Hardware – EBIT FY23 FY22 norm1 3yr ● EBIT increased $31.5m or 16.8% to $219.2m on a normalised basis 1 $m $m % % % (3yr: +160.3%) ‒ Strong trading performance, particularly in retail Total revenue2 (including charge-through) 3,384.3 3,119.5 8.5 10.6 63.1 ‒ Excluding acquisitions, EBIT1 increased $1
Slide 13: Liquor – sales
Liquor – sales FY23 FY22 norm1 3yr ● Total sales (including charge-through) increased 8.3% on a normalised1 $m $m % % % basis to $5.06bn (3yr: +37.7%) ‒ Continued growth in sales to retail and on-premise customers Total revenue as per Statutory Accounts 5,049.2 4,752.4 6.2 8.3 ‒ Volume and price gro
Slide 14: Liquor – EBIT
Liquor – EBIT FY23 FY22 norm1 3yr ● EBIT increased $8.5m or 8.9% to $104.1m on a normalised basis 1 $m $m % % % (3yr: +43.0%) ‒ Contribution from strong sales growth, particularly in on-premise Total revenue2 (including charge-through) 5,063.8 4,763.9 6.3 8.3 37.7 ‒ Additional fuel, freight and labo
Slide 15: Pillar strategic initiatives
Pillar strategic initiatives Food Hardware Liquor Improved value to support Growing store and customer Investment in network growth and network competitiveness network together with enhancement retail/franchise excellence • Network of the Future – • Store network growth through • Store and cool room
Slide 16: Digital & Horizon update
Digital & Horizon update Digital Horizon Stage 1 Accelerating digital progress for shoppers and Driving efficiencies, simplification and growth retailers, and suppliers – focus on both B2C and B2B through replacement of legacy systems Food • Expansion of IGA Rewards and IGA Shop Online • Steady prog
Slide 17: ESG highlights
ESG highlights FY23 significant achievements Environment Our Community and climate people and products • Alignment with TCFD • Emissions reduced 5.2% to 73,659t • Key safety measure (TRIFR) • $3.1m donated through • Alignment with GRI standards CO2e – in line with targets improved 34% to 19.9 Commun
Slide 18: Group Financials
Group Financials Alistair Bell Group Chief Financial Officer 18
Slide 19: Financial highlights
Financial highlights ● Continuation of strong sales ● Significant and growing pipeline and underlying earnings of further growth opportunities – remaining disciplined ● Disciplined capital management Continued earnings supported strong returns through momentum, financial period of investment ‒ FY23
Slide 20: Capital management
Capital management Framework FY23 outcomes $373m Operating 77% (2H:120%) Cash from Cash for Net interest operating activities investing activities & lease payments cashflow CRR Cash realisation Sustaining capex Service obligations Sustaining capex Includes Stay-In-Business and Core growth initiative
Slide 21: Profit & Loss
Profit & Loss FY23 FY22 FY22 (53 weeks) (52 weeks) % % $m $m $m (53 weeks) (52 weeks) Sales revenue including charge-through sales 18,052.4 17,405.7 17,077.3 3.7 5.7 Charge-through sales (2,249.0) (2,240.9) (2,198.6) 0.4 2.3 Sales revenue per statutory accounts 15,803.4 15,164.8 14,878.7 4.2 6.2 1 E
Slide 22: Significant items
Significant items ● Completed review of accounting classification of significant FY23 FY22 FY23 post FY22 post items $m tax $m tax ‒ Included consideration of stakeholder feedback $m $m ‒ Thorough examination of policy by Board Put/call option valuation 30.0 30.0 27.6 27.6 adjustment (TTH and JVs) ‒
Slide 23: Cashflows
Cashflows FY23 FY22 $m $m 1 Operating cash flows 372.7 432.3 Investing cashflows, net (199.6) (164.4) Capital expenditure (including Project Horizon, DC upgrades and store upgrades) (152.1) (121.7) Acquisitions of businesses and additional interest in associate (60.4) (55.4) Net loan repayments and
Slide 24: Balance Sheet
Balance Sheet 30 April 2023 30 April 2022 Capital expenditure ($m)1 $m $m Trade and other receivables and prepayments 1,764.7 1,761.2 160 19 Inventories 1,183.4 1,125.2 140 18 120 17 Trade payables and provisions (2,460.1) (2,478.2) Sales ($bn) 100 16 80 Net working capital 488.0 408.2 15 60 Intangi
Slide 25: Debt management
Debt management Debt facility maturity profile1 Group cash movements ($m) 400 300 200 $m 100 0 ( ) FY24 FY25 FY26 FY27 FY28 FY29 Working capital Bi-lateral facility Syndicated facility cashflow Exercise other ● Net debt of $349.6m (FY22: $189.0m), including cash and cash equivalents of $89.5m (1H23:
Slide 26: Shareholder distributions
Shareholder distributions ● Dividend payout policy unchanged – target payout ratio ~70% of Distributions underlying profit after tax 450 30 3yr dividend growth +80% ● FY23 final dividend 11.0 cents per share. Total FY23 dividends up 4.7% (+80% 3yr) to 22.5c fully franked (FY22: 21.5c) 400 ‒ Ex-divid
Slide 27: Group outlook
Group outlook Doug Jones Group Chief Executive Officer 27
Slide 28: Outlook
Outlook Group Pillar sales – first 7 weeks of FY24 (to 18 June) Group ● Solid sales growth has continued into 1H24 ● Total sales increased 2.3% ● Compared with 2H23, rate of growth is similar in Food and up in Hardware Food ● Cost of living pressures starting to impact consumer confidence and shoppe
Slide 29: Appendices
Appendices 01. Financial history 02. Sales revenue reconciliation 03. Earnings reconciliation 04. Put options 05. Bannered store numbers 06. Food strategy update 07. Hardware strategy update 08. Liquor strategy update 09. Project Horizon update 10. Digital strategy update 11. About Metcash 29
Slide 30: Financial history
Financial history 01. 1 FY23 FY22 FY21 FY20 FY19 Financial Performance Sales revenue ($m) 15,803.4 15,164.8 14,315.3 13,025.4 12,660.3 Sales revenue (including charge-through sales) ($m) 18,052.4 17,405.7 16,361.1 14,857.1 14,563.2 EBIT ($m) 500.8 472.3 401.4 334.9 330.0 EBIT margin (%) 2.8 2.7 2.4
Slide 31: Sales revenue reconciliation
Sales revenue reconciliation 02. Sales ($m) 1 YoY sales growth % 3yr sales growth % FY22 Normalised Actual Normalised Actual FY23 Normalised (excl. Drakes Actual 53rd week2 (as reported) (excl. 53rd week) 2 (as reported) (excl. 53rd week) 2 and 7-Eleven) 3 Supermarkets 8,596.0 8,585.1 (162.0) 8,423.
Slide 32: Earnings reconciliation
Earnings reconciliation 03. ($m) YoY growth 3yr growth FY22 Excluding FY22 53rd Actual FY23 (excluding 53rd week Actual Week1 % % 53rd week) 1 % Food EBIT 204.0 200.3 (3.8) 196.5 1.8 3.8 11.7 Hardware EBIT 219.2 191.3 (3.6) 187.7 14.6 16.8 160.3 Liquor EBIT 104.1 97.4 (1.8) 95.6 6.9 8.9 43.0 Corpora
Slide 33: Put options
Put options 04. 2023 2022 Put option Put option Financial Number Number Put option maturity value value Year of stores of stores $m $m Total Tools Holdings Pty Ltd – Franchisor (remaining 15%) Between November 2023 and January 2024 FY24 na 95.8 na 79.3 Total Tools JV Stores Between May 2024 and July
Slide 34: Bannered store numbers
Bannered store numbers 05. Store movement in period opened/joined closed/left April 2023 banner group banner group April 2022 Supermarkets Supa Valu IGA 3 3 Core IGA 997 1,016 Small Format IGA 324 322 2 Total IGA bannered stores 1,324 39 (41) 1,3411 Village Grocer/Friendly Grocer/Eziway 295 (2) 282
Slide 35: Food – strategy update
Food – strategy update 06. 1 Network of the future Supply chain IGA price gap decline ● National brand standards and consistent offer by ● Logistics operations format being implemented, with full transition ‒ Strong service levels maintained despite expected by 2024 transport shortages, labour and p
Slide 36: Hardware – strategy update
Hardware – strategy update 07. IHG Total Tools ● Grow store network ● Grow store network ‒ 10 new sites completed during the year ‒ 110 stores with 10 new stores opened in FY23 (additional store opened May 23) ‒ 3 new stores opened by Independents ‒ On track to build network of ~140 stores by 2026 –
Slide 37: Liquor – strategy update
Liquor – strategy update 08. Shoppers Value Efficiency ● Continued to enhance the network ● O&E portfolio suitable for shoppers seeking ● DIFOT approaching pre-COVID levels through investment in stores and cool increased ‘value’ in current environment ● Transport management solution being room upgra
Slide 38: Project Horizon Stage update
Project Horizon Stage 1 update 09. = MFuture initiative Progress Sig. Item Sig. Item Key Deliverables Capex Costs (pre tax) (post tax) • Core finance phase 1 live, system upgraded, $m • Core finance (D365) stable and performing well $m $m • Integrated supply chain control tower - Inventory forecasti
Slide 39: Digital – strategy update
Digital – strategy update 10. = MFuture initiative Food Hardware Liquor B2C B2C B2C ● IGA Rewards live in 434 stores with a further 64 ● Strong omni-channel shopping experience (stores, imminent online and App) ● Branded eCommerce platform for Cellarbrations, The Bottle-O and Porters ‒ New app ‘Life
Slide 40: About Metcash
About Metcash 11. Our Purpose Our Values Our Vision Championing successful We believe independence is worth We are passionate about independents independents fighting for; and support them to be the best store in treating our people, retailers and in their town and their communities to suppliers the
Slide 41: Contact details
Contact details For additional information contact: Steve Ashe Merrin Hodge GM Corporate Affairs & Investor Relations Investor Relations Manager Visit our website: +61 408 164 011 steve.ashe@metcash.com +61 429 235 104 merrin.hodge@metcash.com metcash.com Disclaimer This presentation contains summar
Slide 42: Championing successful independents
Championing successful independents