Slide 1: Wesfarmers Limited May 2002
Wesfarmers Limited May 2002 www.wesfarmers.com.au
Slide 2: Background and Corporate Strategy
Background and Corporate Strategy
Slide 3: Capital Employed by Division
Capital Employed by Division Rolling 12 months to 31 March 2002 (A$ million) Fertilisers & Chemicals Rural Services $497m $523m Industrial & Safety Coal $512m $676m Gas $164m Hardware $1,512m
Slide 4: Objective – Philosophy – Strategies
Objective – Philosophy – Strategies Objective Growth Philosophy To provide a Growth Strategies satisfactory return to shareholders 1. Improve Logical performance of Incrementalism existing businesses 2. Expand existing businesses 3. Portfolio Management
Slide 5: Capital Expenditure and Depreciation
Capital Expenditure and Depreciation $m 500 400 300 200 100 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 (F) Capex Acquisitions Depreciation
Slide 6: Divisional Performance Requirements
Divisional Performance Requirements ROC % >18 A B 10-18 C <10 1 2 3 4 5 Years
Slide 7: Integrated Shareholder-Focused Systems
Integrated Shareholder-Focused Systems ! Objective setting ! Performance measures ! Performance targets ! Management accounts ! Cash management ! Corporate planning ! Project evaluation ! Remuneration
Slide 8: Divisional ROC and Capital Employed After Amortisation of Goodwill
Divisional ROC and Capital Employed After Amortisation of Goodwill Capital Results for 12 Months Ended ROC ROC EBIT ($m) Employed % % 31 March 2002 ($m) 2001 2002 Hardware 211.9 1511.3 25.0 14.0 Energy 221.0 840.4 23.0 26.3 Industrial and Safety 44.4 511.7 - 8.7 Rural Services and Insurance 57.2 522
Slide 9: Key Success Factors
Key Success Factors ! Financial focus ! Strict disciplines ! Building growth-enabling competencies ! Culture
Slide 10: Share Price vs Operating Profit After Tax
Share Price vs Operating Profit After Tax $m 400 40 350 35 300 30 250 25 200 20 150 15 100 10 50 5 0 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 Share Price Operating Profit After Tax Forecast
Slide 11: Financial Performance
Financial Performance Nine Months to 31 March 2002
Slide 12: Performance Summary
Performance Summary 9 Months to 31 March ($m) 2001 2002 Operating Revenue 3,008 5,386 Net Profit (before Goodwill Amortisation) 180.8 340.3 Goodwill Amortisation 6.4 59.0 Net Profit (after Goodwill Amortisation) 174.4 281.3
Slide 13: Divisional EBITA
Divisional EBITA 9 Months to 31 March ($m) 2001 2002 Hardware 111.3 222.1 Energy 139.5 173.0 Rural Operations & Insurance 37.1 49.3 Industrial & Safety - 60.9 Fertilisers and Chemicals 23.4 34.5 Other 36.2 42.6 Total 347.5 582.4
Slide 14: Return on Shareholders' Funds
Return on Shareholders’ Funds Rolling 12 months to December (before goodwill amortisation) % 20 Target 15 10 5 0 1997 1998 1999 2000 2001
Slide 15: Net Debt / Equity (at 31 December)
Net Debt / Equity (at 31 December) % 90 80 70 60 Target 50 40 30 20 10 0 1997 1998 1999 2000 2001
Slide 16: Interest Cover (at 31 December)
Interest Cover (at 31 December) times 35 30 25 20 15 10 5 Minimum 0 1997 1998 1999 2000 2001
Slide 17: Outlook by Major Business Activity
Outlook by Major Business Activity
Slide 18: Rural Operations and Insurance
Rural Operations and Insurance ! Over 400 branches and agencies across Australia ! Recent acquisition of IAMA ! Strong revenue growth in 2002 ! Rural and regional general insurer
Slide 19: Integration of IAMA Business
Integration of IAMA Business ! Substantially completed ! Project synergy complete ! One national IT system ! Procurement & logistics strategy implemented ! Members retained ! New agreements ! Sale of non-core businesses/assets ! Closure of duplicated offices/warehouses ! Standardised HR policies & i
Slide 20: Market Positioning
Market Positioning ! Brand theme: Knowledge. Know-How. Can do! ! Emphasis on ‘knowledge’ through agronomy, R&D, livestock genetics, etc.
Slide 21: Cattle Prices - Eastern States Young Cattle Price Index
Cattle Prices - Eastern States Young Cattle Price Index 400 350 Indicator 300 250 200 150 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02
Slide 22: Wool Prices - Eastern Market Indicator and Micron Price Guide
Wool Prices - Eastern Market Indicator and 19 Micron Price Guide July 1998-May 2002 1450 19 MPG 1250 c/kg clean 1050 850 EMI 650 450 Jul-98 Nov-98 Mar-99 Jul-99 Nov-99 Mar-00 Jul-00 Nov-00 Mar-01 Jul-01 Nov-01 Mar-02
Slide 23: Farm Inputs
Farm Inputs ! April rains in WA over cropping areas ! Dry in Queensland, SA & Wimmera/Mallee ! Cotton plantings down (low prices/season) ! Reasonable conditions elsewhere ! Large wheat crop expected ! Sugar prices flat ! Horticulture
Slide 24: Rural Operations and Insurance Outlook
Rural Operations and Insurance Outlook ! Positive outlook for rural business, subject to seasonal conditions ! Insurance – in line with budget ! Overall profit higher for 2002
Slide 25: Fertilisers and Chemicals
Fertilisers and Chemicals ! Fertiliser production for WA agricultural market ! Ammonia, ammonium nitrate, sodium cyanide and industrial chemicals production ! Strong market position
Slide 26: Fertilisers and Chemicals Outlook
Fertilisers and Chemicals Outlook ! Fertiliser – business improvement / new product range ! Strong demand for chemicals ! Profit above last year & budget
Slide 27: Key Issues
Key Issues ! Erosion of fertiliser margins ! Consolidation of rural distributors ! Consolidation of mining customers ! Improving cost position ! Improving plant efficiency ! Uncertain global economy ! Improving rural conditions ! Improving mining conditions
Slide 28: Hardware
Hardware ! Bunnings – BBC combination ! 248 stores in Australia and New Zealand ! Including 111 warehouse stores ! Sales of $3.0 billion
Slide 29: BBC/Hardwarehouse Integration Outstanding Issues to Complete
BBC/Hardwarehouse Integration Outstanding Issues to Complete ! Trade business and support systems review ! Frame & Truss Plant operations ! Wholesaling operations (Timber and Panel) ! New Zealand integration ! Modifications to POS system ! Audit of synergy benefits
Slide 30: Store Numbers - 2002
Store Numbers - 2002 2 Totals 111 Warehouses Other Outlets 21 (inc WA 18 137 16 Salvage) 28 3 36 4 41 30 7 3 36 2 1 * Internal estimate for 30 June 2002
Slide 31: Hardware Outlook
Hardware Outlook ! Full integration of Bunnings and BBC Hardware businesses ! Continued store-on-store growth ! Annual development of approximately 10 new stores
Slide 32: Energy - Coal
Energy - Coal ! 3.7mt domestic steaming at Collie, WA ! 5.8mt domestic steaming and export coking at Curragh, QLD ! 4.5mt export steaming at Bengalla, NSW (40% owned) Outlook ! Coking coal outlook positive ! Weakness in steaming coal prices & volumes
Slide 33: Hard Coking Coal Price
Hard Coking Coal Price 60 55 50 45 40 35 30 Mar-00 Mar-00 Mar-00 Mar-00 Mar-00 Apr-00 Apr-00 Apr-00 Apr-00 Jan-00 JRP US$/Tonne FOB Nominal
Slide 34: Uncertainty – Thermal Coal Price
Uncertainty – Thermal Coal Price 1.0000 $80.00 0.9000 $70.00 0.8000 $60.00 0.7000 $50.00 0.6000 0.5000 $40.00 0.4000 $30.00 0.3000 $20.00 0.2000 $10.00 0.1000 Source: Barlow Jonker 0.0000 $- A-87 D-87 A-88 A-89 D-89 A-90 A-91 D-91 A-92 A-93 D-93 A-94 A-95 D-95 A-96 A-97 D-97 A-98 A-99 D-99 A-00 M-01
Slide 35: Days of Stocks on Hand
Days of Stocks on Hand (Stocks/average daily exports for previous 12 months*) 50 45 40 35 30 No of Days 25 20 15 10 5 Metallurgical Thermal © DITR April '02 0 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Jul-97 Oct-97 Jul-98 Oct-98 Jul-99 Oct-99 Jul-00 Oct-00 Jul-01 Oct-01 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 J
Slide 36: Energy - Gas
Energy - Gas ! 330,000t LPG extraction plant in WA, for domestic and export ! 400,000t Australia-wide LPG distribution business (Kleenheat) ! 40% interest in Air Liquide WA industrial gases Outlook ! Dependent on international price trends and local demand in the winter months
Slide 37: LPG Prices
LPG Prices 100 150 200 250 300 350 USD/m t 50 Jan-98 Mar-98 May-98 Jul-98 Sep-98 Nov-98 Jan-99 Mar-99 May-99 Jul-99 Sep-99 Propane Nov-99 Jan-00 Mar-00 May-00 Butane Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02
Slide 38: Industrial and Safety Products Operations
Industrial and Safety Products Operations ! Blackwoods / Alsafe / Protector ! Largest MRO & safety supplier in Australasia ! Revenue around $1 billion ! EBIT around $85 million (pre-goodwill) ! 264 outlets (Australia and New Zealand) Outlook ! Subdued trading conditions ! Positive earnings outlook
Slide 39: WIS Strategies
WIS Strategies ! Organic sales & margin growth ! Operation deliver - rollout ! Improve or divest underperforming assets ! Establish common support functions ! Leverage supply chain benefits ! Branch / trading stream rationalisation Support Activities ! IT systems & investment ! HR management systems
Slide 40: www.wesfarmers.com.au
www.wesfarmers.com.au