Slide 1: Company Results HY ended 2 Jan 2011
Company Results HY ended 2 Jan 2011 WOOLWORTHS LIMITED Michael Luscombe Chief Executive Officer Tom Pockett Finance Director
Slide 2: Highlights for Financial Half Year 2011
Highlights for Financial Half Year 2011 • A sound result overall for our shareholders and customers in a p period of challenging g g macro economic and market conditions • Continued focus on delivering value to customers and shareholders • Food and Liquor (Australia and New Zealand) - solid sales an
Slide 3: Highlights – Half Year 2011
Highlights – Half Year 2011 HY11 Growth Sales – Group p $28.3b $ Ç 4.0% – ex Petrol $25.4b Ç 3.8% EBITDA $2,227.3m Ç 6.6% EBIT $1,787.0m Ç 6.2% NPAT $1,161.7m Ç 6.0% EPS 95.2¢ Ç 6.9% DPS 57¢ Ç 7.5% ROFE 16.7% È 108 bps1 1. The decrease in ROFE reflects lower earnings in our general merchandise busin
Slide 4: Highlights for the half year
Highlights for the half year 3
Slide 5: Food and Liquor - best customer offer evolving to meet customers changing needs
Food and Liquor - best customer offer evolving to meet customers changing needs • Grown G market k t share h overall, ll particularly in Fresh and Liquor • Enhanced fresh offer to customers building on our credentials as the "Fresh Food People" • Continue to lead on service metrics from mystery shop
Slide 6: Best customer offer - 1st to reduce over 5,000 products and move to national pricing
Best customer offer - 1st to reduce over 5,000 products and move to national pricing 5
Slide 7: Best customer offer — exclusive brands
Best customer offer — exclusive brands • Continued exclusive b d expansion brand i • Focus on quality and value for money offer • "Food that is good for yyou" is a major j customer initiative underpinned by the Macro range g • Strong customer acceptance • Many new products launched 6
Slide 8: New Zealand Supermarkets
New Zealand Supermarkets • Business transformation complete showing h i significant i ifi t EBIT iimprovementt (up 13.1% on the prior half - NZD) • Achieved volume and market share growthh • Reducing price differential against equivalent offerings • Re-investment in price - gross profit margins impr
Slide 9: BIG W delivers value to customers every day
BIG W delivers value to customers every day with lowest prices on quality and day, branded products • The destination for our customers, customers their home and family • Strong growth in units sold and customer numbers • Launch of new innovative brands eg, Mambo and Man & Woman by Peter Morrissey "
Slide 10: Dick Smith — enhanced range, best price and the right techxpert advice
Dick Smith — enhanced range, best price and the right techxpert advice • Significantly increased range of computers t and d accessories i with ith improved store presentation and pricing • Improved gaming offer, enhanced customer experience and market share growth particularly through the launch of
Slide 11: Best customer offer — Online
Best customer offer — Online • Online sales up 75% in the half - high levels of customer traffic • New online site for BIG W launched • Revamped Dick Smith site • New and expanded product ranges will continue to be added • Dan Murphy's Murphy s online transaction site to launch in March 2011 • New Z
Slide 12: Engaging our customers with rewards and offers every time they shop
Engaging our customers with rewards and offers every time they shop • 5.6m Everyday Rewards cards registered • 3.2m holders linked to QFF • A compelling customer proposition p p of fuel savings g and QFF points • Our focus is on understanding customers’ needs and customers providing targeted exclusi
Slide 13: Engaging our customers with rewards and offers every time they shop
Engaging our customers with rewards and offers every time they shop Credit Cards Debit Cards Additional QFF Reloadable points for debit card acts Everyday y y as an Rewards alternative to a members. Low bank account priced platinum for general card $89 purchases purchases, annual fee travel, online
Slide 14: Quantum — following in the tradition of Project Refresh
Quantum — following in the tradition of Project Refresh • Through Project Refresh and other major initiatives Woolworths has delivered over a decade of disciplined cost management and world class supply chain capabilities • Quantum will continue to deliver reduced costs and improve efficiencies acro
Slide 15: End-to-end supply chain — moving to the next level
End-to-end supply chain — moving to the next level • Next Generation replenishment capabilities now being deployed will be completed mid-2012 • Continued development of international logistics capabilities - rationalisation of consolidation processes Benefits will and an improved flow of merchandise
Slide 16: Home Improvement — very good progress
Home Improvement — very good progress • Well underway to achieve our target of 150 sites secured within five years. First store on track to open second half of calendar year 2011 • Approximately 15-20 stores will open in the first 18 months • Development of supply chain strategy well progressed with
Slide 17: Cellarmasters expanding our liquor portfolio and capability
Cellarmasters expanding our liquor portfolio and capability • Woolworths has today announced it will acquire The Cellarmasters Group (Cellarmasters) for $340m • Cellarmasters represents a logical strategic bolt-on acquisition for our liquor portfolio and adds complementary new direct marketing chann
Slide 18: Cellarmasters overview
Cellarmasters overview • Cellarmasters is one of the largest direct-to-home wine retailers and providers of contract bottling and wine services with operations in Australia and New Zealand • The Wine Retail business caters to a broad rangeg of wine customers through g direct marketing to its large a
Slide 19: Financial results
Financial results WOOLWORTHS LIMITED
Slide 20: Report Card
Report Card In comparison with our regularly expressed goals HY07 HY08 HY09 HY10 HY11 Sales will grow in the upper single digits assisted by bolt-on acquisitions - Group 15 9% 15.9% 8 6% 8.6% 8 8% 8.8% 4 2% 4.2% 4 0% 4.0% - Excluding Petrol 16.2% 8.9% 8.1% 6.0% 3.8% EBIT will outperform sales growth
Slide 21: Profit after tax – up 6.0%
Profit after tax – up 6.0% $ million 1,200 1,161.7 1,095.6 ↑6.0% 1,000 983 3 983.3 ↑11 4% ↑11.4% 891.3 ↑10.3% 800 ↑28.1% 695 6 695.6 600 ↑28.1% 400 Y 11 Y 07 Y 08 Y 09 Y 10 200 HY HY HY HY HY 0 20
Slide 22: EBIT – up 6.2%
EBIT – up 6.2% $ million 2,000 Ç6 6.2% % Total 1 600 1,600 Ç 11.1% Group EBIT EBIT growth Ç 10.2% underpinned Ç 8.1% Australian by y solid 1,200 Ç 11.4% Food and Ç 20.0% Ç 16.6% Liquor EBIT growth in Australian 800 Ç 27.0% Ç 19.4% Food and Ç 29.4% 29 4% Liquor 400 HY07 HY08 HY09 HY10 HY11 0 21
Slide 23: CODB / Sales
CODB / Sales Percentage 20.50 20.02% In a deflationary 20.00 19 83% 19.83% environment i t 19.73% 19.69% CODB was well controlled 19.52% 19.50 HY07 HY08 HY09 HY10 HY11 H H H H H 19.00 22
Slide 24: Gross Profit Margin
Gross Profit Margin Percentage Gross margins for 27 the group have increased 16bps 26.04% reflecting the 26 25 88% 25.88% Total T t l benefits of global 25.56% GP Margin 25.21% 25.32% buying, improved shrinkage rates, 25 increasing sales of 24.81% exclusive brand 24.62% GP Margin products and the 24
Slide 25: Dividends per share — Interim
Dividends per share — Interim Cents 60 57 Ç7 5% Ç7.5% 50 53 Ç10.4% 48 44 Ç9.1% Dividend pay-out 40 Ç25.7% ratio ti off 60% iis in line with the 35 30 Ç25.0% previous half year 20 Y07 Y08 Y09 Y10 Y11 HY HY HY HY 10 HY 24
Slide 26: Australian Supermarket Division
Australian Supermarket Division HY10 HY11 Change Continued positive momentum and Sales – Food & Liquor ($m) 18,143 18,772 3.5% growth in market share and – Petrol ($ ($m)) 2,781 , 2,945 , 5.9% customer numbers – Total ($m) 20,924 21,717 3.8% • Comparable Food and Liquor sales Gross margin (%) 24.41
Slide 27: Liquor
Liquor • Group Liquor sales $3.2 billion; (HY10: $3 1 billion) $3.1 • The Liquor group continued to grow sales, profit and market share, despite challenging market conditions including low inflation and subdued consumption • Category expansion of exclusive brands into RTDs, Champagne Cider and Light
Slide 28: Petrol
Petrol • Sales of $2.9 billion, up 5.9% Price promise, • Comparable p sales increased byy 3.5% reflecting higher fuel prices match the lowest price (HY11:$1.24 / litre; HY10:$1.22 / litre) in the site’s market • Volumes increased 2.3% for the half • Both fuel and non-fuel (merchandise) market share
Slide 29: New Zealand Supermarkets
New Zealand Supermarkets NZ$ HY10 HY11 Change Sales ($m) 2,686 2,795 4.1% Pleasing result, good progress Gross margin g (%) ( ) 22.10 22.41 p 31bps • Solid sales pperformance CODB (%) 17.53 17.44 (9)bps • Comparable sales were 3.5% with food EBIT to sales (%) 4.57 4.97 40bps inflation 0.6% (HY10: 2.
Slide 30: BIG W
BIG W HY10 HY11 Change Well positioned discount department Sales ($m) 2,462 2,392 (2.8)% store which continues to offer its Gross margin g (%) ( ) 29.07 29.52 45bps p customers great value with low prices i on the th widest id t range off quality lit and d CODB (%) 22.94 24.29 135bps branded product
Slide 31: Consumer Electronics – Australia
Consumer Electronics – Australia A$ HY10 HY11 Change Australia - Repositioning underway Sales ($m) 710 726 2.3% • Comparable sales growth for Australia 4.1% Gross margin (%) 27 50 27.50 26 35 26.35 (115)bps – Excludingg Tandy y and ex-Powerhouse stores, comparable sales up 6.5%. Sales in new CODB (%
Slide 32: Consumer Electronics – NZ and India
Consumer Electronics – NZ and India NZ$ HY10 HY11 Change Sales ($m) 187 179 (4.3)% Gross margin (%) 26.42 24.41 (201)bps CODB (%) 21.61 22.68 107bps EBIT to sales (%) 4.81 1.73 (308)bps EBIT ($m) 9.0 3.1 (65.6)% New Zealand – Weak economy India – Good growth • Consumer Electronics in New Zealand • B
Slide 33: Hotels
Hotels HY10 HY11 Change Sales ($m) 591 612 3.6% Proving resilient Gross margin g (%) ( ) 82.39 81.60 ((79)bps ) p CODB (%) 63.00 63.32 32bps • Sales increased 3.6% with gaming comparable sales up 2.3% EBIT to sales (%) 19.39 18.28 (111)bps • EBIT slightly below last year but ahead EBIT ($m) 114 6 11
Slide 34: Balance Sheet
Balance Sheet $m FY10 HY10 HY11 • Inventory growth of 7.3% in December Inventory 3,438.8 3,718.9 3,989.6 reflects the impact of lower than Trade Payables (4,211.2) (4,836.1) (4,917.8) expected December trading and will be reduced by June 2011 Net investment in inventory (772.4) (1,117.2) (928.2) Rec
Slide 35: Average Inventory Days
Average Inventory Days IInventory t days d d decreasedd 0.1 0 1 days. d When Wh we excludel d the th impact i t off incremental i t l imported i t d inventory, additional inventory associated with our liquor DCs and petrol, inventory days decreased by 0.5 days Number of Days 33.9 33.8 34 00 34.00 33
Slide 36: Cash Flow
Cash Flow $ $m HY10 HY11 Change EBITDA 2,089.2 2,227.3 6.6% Net (decrease) / increase in creditors 712.2 741.7 Net decrease / (increase) in inventory1 (388.0) (553.0) Net change in other working capital and non cash2 18.4 24.4 Cash from Operating Activities before interest and tax 2,431.8 2,440.4 0.
Slide 37: Shareholder Payouts
Shareholder Payouts Franking credits available for distribution (after the final dividend) = $1,263m $ million Dividend 1,749 Buy-Back 325 1,397 Profit growth, 1,424 coupled with 1,280 balance sheet management, t 1,121 704 941 will have 894 delivered over $9 5 billi $9.5 billion 534 604 693 693 payo
Slide 38: Capital Management
Capital Management • Capital structure objective to enhance shareholder value through optimising weighted average cost of capital whilst retaining flexibility to pursue growth and capital management g opportunities pp • Completed a $704m off-market share buy-back in October 2010. The off-market shar
Slide 39: Return on funds employed
Return on funds employed1 Percentage 20.00 17 85% 17.85% 17 74% 17.74% 18.00 17.51% 16.66%¹ 16.00 14.87% 14.00 12.00 HY07 HY09 HY08 HY10 HY11 10.00 H H H H H 8.00 1. Based on average of opening and closing funds employed. The decrease in ROFE reflects lower earnings in our general merchandise busine
Slide 40: Return on equity
Return on equity1 Percentage 18.00 16.05% 16.00 14.97% 15.08% 14.63% 2 13.74% 14 00 14.00 12.00 10.00 HY07 HY09 HY08 HY10 HY11 H H 8.00 1. Based on closing Shareholders Funds 2. Lower ROE due to impact of 81.6 million shares issued to acquire Foodland, equity issued with the Dividend Reinvestment Pl
Slide 41: Strategy and Growth
Strategy and Growth WOOLWORTHS LIMITED
Slide 42: Strategy and growth
Strategy and growth Consistent and clear strategies that leverage our core strengths Woolworths targets the following key areas of performance measurement in the long term, namely Clearly stated • Sales (excluding Petrol Sales) to grow in the upper single digits assisted byy bolt-on acquisitions q l
Slide 43: Key growth initiatives
Key growth initiatives Continuing to Continuing to re-invigorate our offer drive our core through investment business focusing in price, range, on our customers merchandise h di and d quality lit Leveraging our Expansion of Expansion of supply chain Global Sourcing Exclusive brands capabilities acti
Slide 44: Sales and Earnings Guidance FY11
Sales and Earnings Guidance FY11 • As advised on 24 January 2011, whilst Woolworths has continued to experience growth in the first 6 months of the trading year, the extent of the negative impact of consumer confidence levels levels, inflation inflation, interest rates and global economic conditions
Slide 45: WOOLWORTHS LIMITED
WOOLWORTHS LIMITED Company Results HY ended 2 Jan 2011 Michael Luscombe Chief Executive Officer Tom Pockett Finance Director
Slide 46: Appendices
Appendices WOOLWORTHS LIMITED
Slide 47: Half Year Sales of $28.3b – up 4.0%
Half Year Sales of $28.3b – up 4.0% – up 3.8% 3 8% excl Petrol Half Year $m HY10 HY11 Increase Comp Sales A t li F Australian Food d and d Li Liquor 18 143 18,143 18 772 18,772 3 5% 3.5% 2 2% 2.2% New Zealand Supermarkets (NZD) 2,686 2,795 4.1% 3.5% New Zealand Supermarkets (AUD) 2,162 2,183 1.0% 3.
Slide 48: EBIT – up 6.2% growing faster than sales
EBIT – up 6.2% growing faster than sales $m HY10 HY11 Change Australian Food and Liquor 1,299.4 1,404.8 8.1% New Zealand Supermarkets (NZD) 116.6 134.3 15.2% New Zealand Supermarkets (AUD) 96 9 96.9 108 6 108.6 12 1% 12.1% Petrol 51.2 63.4 23.8% Supermarkets Division 1,447.5 1,576.8 8.9% BIG W 150.8
Slide 49: Earnings per share – up 6.9%
Earnings per share – up 6.9% Cents 100.00 95.20 89.05 Ç6.9% 80.93 Ç10.0% 80.00 74.06 Ç9.3% Ç25.9% 58 83 58.83 60.00 Ç16.6% 40.00 20.00 HY10 HY07 HY09 HY11 HY08 H H H H H 0.00 48
Slide 50: Capital Expenditure – Half Year
Capital Expenditure – Half Year New Stores1 Refurbs HY10 HY11 $m Actual Actual Store numbers 2011 2010 2011 2010 New Stores 118 164 Australian Supermarkets2 12 21 41 42 Refurbishments 327 309 Growth Capex 445 473 Li Liquor 41 34 31 35 Stay in Business 111 106 PEL - NZ Supermarkets 8 2 13 19 Supply c
Slide 51: Capital Expenditure – Full Year
Capital Expenditure – Full Year Current Previous 2009 2010 2011 $m – 2011 Fcst Fcst Var $m – Full Year Actual Actual Fcst New Stores 307 231 76 New Stores 254 225 307 Refurbishments 542 666 (124) Refurbishments 652 622 542 Growth Capex 849 897 (48) Growth Capex 906 847 849 Stay in Business 266 290 (
Slide 52: Capital Expenditure – Notes
Capital Expenditure – Notes • Reflects the continued rollout of new stores across all our brands. Capital spend increased in HY11 as a result of more new stores being completed (115: HY11 vs 89: New Stores HY10).) The full yyear forecast increase is mainlyy driven byy a continuation of this trend in
Slide 53: Capital Expenditure – Notes
Capital Expenditure – Notes • Includes capital for the fit-out of new stores, IT and Supply Chain. The reduction in FY11 Home spend is a timing issue as the construction of the new stores has been slightly slowed Improvement due to the recent bad weather • Includes investment in property pipeline, c