Metcash Limited · ASX:MTS

Metcash — H1 FY2020 Earnings Presentation

33 slides from Metcash's earnings presentation, Dec 5, 2019

  1. Slide 1: FY20 Half Year Results

    FY20 Half Year Results 5 December 2019 Championing Successful Independents This slide must be copied from pre-formatted slide to retain the lines and logo.

  2. Slide 2: Group update and divisional results

    Group update and divisional results Jeff Adams Group Chief Executive Officer 1 1H20 Half Year Results

  3. Slide 3: Championing Successful Independents

    Our purpose Our vision Our values Best store in town We believe: Championing Independence is worth fighting for; in treating our people, Successful Passionate about independents retailers and suppliers the way we like to be treated; and in Independents A favourite place to work giving back to the co

  4. Slide 4: Group overview

    Group overview  Group highlights:  Total Food pillar sales (including charge-through) increased 1.2%, with Supermarkets wholesale sales ex tobacco being positive1 for the first time since FY12  Liquor delivered its sixth consecutive year of earnings growth  Our Trade-focused Hardware pillar cont

  5. Slide 5: Group overview continued

    Group overview continued  Group underlying EBIT (pre AASB16) declined by $8.4m to $149.7m  Food EBIT decreased by $7.8m to $85.2m – contribution from resolution of onerous leases higher in 1H19 and ceasing to supply Drakes from 30 September 2019  Liquor EBIT increased by $0.5m to $29.6m – flow th

  6. Slide 6: Results overview by pillar

    Results overview by pillar 1H20 1H19 Change $m $m % Sales revenue (%) Sales revenue (including charge-through sales) (including charge-through) Food 4,381.1 4,330.9 1.2% Liquor 1,784.2 1,753.9 1.7% 14% Hardware 1,044.2 1,089.6 (4.2%) Food Total sales revenue (including charge-through sales) 7,209.5

  7. Slide 7: Food – sales

    Food – sales Food 1H20 1H19 Change $m $m %  Total Food sales (including charge-through) increased 1.2% to $4.4bn (1H19: $4.3bn) Food Supermarkets Supermarkets revenue (including charge-through) 3,596.5 3,568.0 0.8%  Total sales (including charge-through) increased 0.8% to $3.6bn (+1.2% ex Drakes i

  8. Slide 8: Food – EBIT

    Food – EBIT 1H20 1H19 Change Food $m $m %  Reported EBIT of $88.4m includes a positive AASB16 adjustment of $3.2m Total revenue1 (including charge-through) 4,381.1 4,330.9 1.2%  EBIT (pre AASB16) declined $7.8m (-8.4%) to $85.2m mainly due to: EBIT (Statutory Accounts) 88.4 93.0 (4.9%)  A ~$10m d

  9. Slide 9: Food – MFuture initiatives

    Food – MFuture initiatives Brand Clarity Diamond Store Accelerator Small format offer Community Co Systems & Logistics  Three year re-branding program  Program accelerated through  Trial of next generation IGA  A further ~70 products added,  Automated charge-through now (right brand, right offe

  10. Slide 10: Liquor – sales

    Liquor – sales 1H20 1H19 Change  Total sales (including charge-through) increased 1.7% to $1.8bn $m $m %  ‘Premiumisation’ trend continued to drive value growth Total revenue as per Statutory Accounts 1,781.0 1,749.9 1.8%  LfL sales to IBA network increased 1.7% (1H19: 2.0%) supported by continue

  11. Slide 11: Liquor – EBIT

    Liquor – EBIT 1H20 1H19 Change  Reported EBIT of $30.7m includes a positive AASB16 adjustment of $1.1m $m $m %  EBIT (pre AASB16) increased $0.5m (1.7%) to $29.6m Total revenue1 (including charge-through) 1,784.2 1,753.9 1.7% EBIT (Statutory Accounts) 30.7 29.1 5.5%  The contribution from increas

  12. Slide 12: Liquor – MFuture initiatives

    Liquor – MFuture initiatives Store Investment Porters expansion Private & exclusive labels On-premise Digital  Continuation of ‘Best Store in  Three-year national roll-out  Expansion of the private label  Significant opportunity to  Strategic focus on accelerating Town’ initiatives including pr

  13. Slide 13: Hardware – sales

    Hardware – sales 1H20 1H19 Change • Total sales (including charge-through) decreased 4.2% to $1.04bn, mainly $m $m % reflecting the impact of the slowdown in construction on Trade sales Total revenue as per Statutory Accounts 599.9 579.2 3.6% • Excluding the loss of a large HTH customer in QLD in 1H

  14. Slide 14: Hardware – EBIT

    Hardware – EBIT 1H20 1H19 Change  Reported EBIT of $38.9m includes a positive AASB16 adjustment of $1.6m $m $m %  EBIT (pre AASB16) decreased by $0.5m to $37.3m Total revenue 1 (including charge-through) 1,044.2 1,089.6 (4.2%) EBIT (Statutory Accounts) 38.9 37.8 2.9%  Impact of decline in Trade s

  15. Slide 15: Hardware – MFuture initiatives

    Hardware – MFuture initiatives Sapphire program Build Trade Grow Retail network Digital & Trade technology Cost efficiencies  Delivers modern leading edge  Potential to leverage IHG network  Retail joint venture/company-  Customer uptake continuing to  Strong focus on all costs in stores to gro

  16. Slide 16: Financials

    Financials Brad Soller Group Chief Financial Officer 15 1H20 Half Year Results

  17. Slide 17: AASB16 Leases

    AASB16 Leases Metcash adopted AASB16 on 1 May 2019 which has resulted in the recognition of ‘right of use’ assets, lease receivables and lease liabilities. Balance Sheet • Recognition of ‘right of use’ asset, sublease receivable and offsetting liability • Initial asset value of $936.8m (includes ‘ri

  18. Slide 18: Asset impairment

    Asset impairment 7-Eleven contract • Metcash announced on 22 November 2019 that 7-Eleven will not be renewing the current supply agreement when it concludes on 12 August 2020 • Metcash determined that it could not meet 7-Eleven’s supply requirements on an economic basis • Discussions with 7-Eleven a

  19. Slide 19: Profit & Loss

    Profit & Loss 1H20 1H20 1H19 Change (Post AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) $m $m $m % Sales revenue 6,289.8 6,289.8 6,189.2 1.6% EBITDA 234.7 179.3 186.2 (3.7%) Depreciation and amortisation (79.0) (29.6) (28.1) 5.3% EBIT 155.7 149.7 158.1 (5.3%) Net finance costs (27.0) (13.8) (14.5)

  20. Slide 20: Cashflows

    Cashflows 1H20 1H20 1H19 (Post AASB16) (Pre AASB16) (Pre AASB16) $m $m $m Net cash from operating activities 88.8 59.3 120.3 Net cash used in investing activities (29.8) (51.2) (26.8) Capital expenditure (30.5) (30.5) (24.7) Acquisitions of businesses (23.2) (23.2) (3.4) Proceeds from sale of busine

  21. Slide 21: Balance Sheet

    Balance Sheet 31 October 2019 30 April 20191 31 October 20181 (Post AASB16) (Pre AASB16) (Pre AASB16) $m $m $m Trade receivables and prepayments 1,526.2 1,472.5 1,492.5 Inventories 1,061.0 779.3 916.2 Trade payables and provisions (2,333.6) (2,051.5) (2,218.6) Net working capital 253.6 200.3 190.1 I

  22. Slide 22: Net debt

    Net debt  Net debt of $95.3m (FY19: $35.5m) 1H20 FY19 $m $m  Average net debt of ~$368m (FY19: ~$310m) Net debt1  Average tenor of debt 2.4 years Gross debt (218.5) (178.1)  Balanced debt maturity profile Cash and cash equivalents 123.2 142.6  No debt maturities until FY21 Net debt (95.3) (35.5

  23. Slide 23: Dividends

    Dividends  FY20 interim dividend  6.0 cents per share, fully franked  Ex-dividend date: 17 December 2019  Record date: 18 December 2019  Payment date: 23 January 2020  Dividend payout ratio of ~60% of underlying earnings per share 22 1H20 Half Year Results

  24. Slide 24: Group Outlook

    Group Outlook Jeff Adams Group Chief Executive Officer 23 1H20 Half Year Results

  25. Slide 25: Group outlook

    Group outlook  The growth in Supermarkets wholesale sales ex tobacco reported in 1H20 has continued in the first five weeks of 2H20, excluding the impact of Drakes  Supermarkets sales in 2H20 will, however, be negatively impacted by ceasing to supply Drakes in South Australia  While the Group wil

  26. Slide 26: Appendices

    Appendices 1. Financial history 2. AASB16 reconciliation 3. Bannered store numbers 25 1H20 Half Year Results

  27. Slide 27: Financial history

    1. Financial history 1H20 1H20 1H191 1H181 1H171 1H161 (Post AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) Financial Performance Sales revenue ($m) 6,289.8 6,289.8 6,189.2 6,054.8 5,743.7 5,698.5 EBIT ($m) 155.7 149.7 158.1 156.3 132.1 140.7 Net finance costs ($m) (27.0) (

  28. Slide 28: Impact of AASB16 – Profit & Loss

    2. Impact of AASB16 – Profit & Loss 1H20 AASB16 Pre AASB16 adjustment¹ Post AASB16 $m $m $m Food 85.2 3.2 88.4 Liquor 29.6 1.1 30.7 Hardware 37.3 1.6 38.9 Total Pillar EBIT 152.1 5.9 158.0 Corporate (2.4) 0.1 (2.3) Total underlying EBIT 149.7 6.0 155.7 Net finance costs (13.8) (13.2) (27.0) Tax (39.

  29. Slide 29: Impact of AASB16 – Balance Sheet

    2. Impact of AASB16 – Balance Sheet 30 April 2019 AASB16 AASB16 1 May 2019 (As reported) reclassifications adjustments (Post transition) $m $m $m $m Trade receivables and prepayments 1,472.5 - - 1,472.5 Inventories 779.3 - - 779.3 Trade payables and provisions (2,210.5) 159.0 - (2,051.5) Net working

  30. Slide 30: Bannered store numbers

    3. Bannered store numbers October April 2019 2019 Pillar Supermarkets 1,623 1,673 Campbells 16 17 Liquor 2,699 2,667 Hardware 653 668 Total 4,991 5,025 Supermarkets Campbells Liquor Hardware Total Store movement Number of stores at April 2019 1,673 17 2,667 668 5,025 Stores opened / joined banner gr

  31. Slide 31: Bannered store numbers

    3. Bannered store numbers October April 2019 2019 Supermarkets Supa IGA 362 373 IGA 753 792 IGA-Xpress 222 220 Total IGA bannered stores 1,337 1,385 Friendly Grocer / Eziway 286 288 Total Supermarkets 1,623 1,673 Liquor Cellarbrations 566 557 Bottle-O & Bottle-O Neighbourhood 244 237 IGA Liquor 469

  32. Slide 32: Disclaimer Contact details

    Disclaimer This presentation contains summary information about Metcash Limited (ABN 32 112 073 480) (Metcash) and its activities current as at the date of this presentation. The information in this presentation is of general background and does not purport to be complete. It should be read in conju

  33. Slide 33: Championing Successful Independents

    Championing Successful Independents

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