Slide 1: Metcash Limited – 2015 Full Year Results Presentation
Metcash Limited ABN 32 112 073 480 50 Waterloo Road Macquarie Park NSW 2113 Australia PO Box 6226 15 June 2015 Silverwater Business Centre NSW 1811 Australia Ph: 61 2 9751 8200 Market Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Dear Sir/ Madam METCASH
Slide 2: Successful Independents: FY15 Annual Results
SUCCESSFUL INDEPENDENTS FY15 ANNUAL RESULTS, 15 JUNE 2015
Slide 3: Agenda
Agenda Group update Financials Strategy update Group outlook 2
Slide 4: Group Update
GROUP UPDATE SUCCESSFUL INDEPENDENTS
Slide 5: Group update – addressing market conditions
Group update – addressing market conditions Group Underlying EBIT of $325.1m is in line with guidance The Group reported a net loss after tax, inclusive of significant items, of $384.2m Increasing headwinds in Food & Grocery Intense competition and discount players impacting the market Con
Slide 6: Group update – early results from strategy positive
Group update – early results from strategy positive Grocery transformation initiatives implemented progressively through 2H15 Grocery transformation at early stage, but initial results are encouraging 1 DSA implemented and first year target of 50 stores achieved Competitive pricing implement
Slide 7: Financials
FINANCIALS SUCCESSFUL INDEPENDENTS
Slide 8: Financial Update – initiatives to underpin strategy
Financial Update – initiatives to underpin strategy Introducing enhanced financial disciplines and transparency Reset the Balance Sheet to acknowledge tough market conditions Goodwill impairment and asset write-downs Conservative capital management to ensure company remains well-placed to im
Slide 9: Profit & Loss
Profit & Loss FY15 FY14 Change $m $m Group Sales 13,626.2 13,392.7 1.7% MF&G 216.8 293.4 (26.1%) Liquor 57.6 52.1 10.6% Hardware & Automotive 57.9 49.9 16.0% Corporate (7.2) (5.1) (41.2%) Underlying EBIT 325.1 390.3 (16.7%) Net finance costs (55.1) (57.2) 3.7% Tax (75.6) (97.9) 22.8% Non-controlling
Slide 10: Significant items
Significant items FY15 $m Impairment of goodwill and other assets 640.0 Restructuring costs 7.0 MAH put option re-measurement gain 1 (8.2) Significant items before tax 638.8 Income tax benefit attributable to significant items (61.6) Significant items after tax 577.2 1. Re-measurement of the put opt
Slide 11: Significant items - Impairment
Significant items - Impairment FY15 $m Goodwill Food and Grocery 422.1 Hardware 19.5 441.6 Other intangibles Customer contracts 52.5 Software 12.6 65.1 Other assets and liabilities Onerous lease and other provisions 65.1 Property and investments 39.5 Impairment of retailer assets and loans 28.7 133.
Slide 12: Cashflows
Cashflows FY15 FY14 Change $m $m Cash generated from Operating Activities 231.7 388.7 (40.4%) Net cash used in Investing Activities (74.9) (211.8) 64.6% Dividends paid and other Financing Activities (57.7) (224.0) 74.2% Reduction/(increase) in net debt 99.1 (47.1) 1 Cash realisation ratio 87.5% 162.
Slide 13: Balance Sheet
Balance Sheet 30 April 30 April 2015 2014 $m $m Trade receivables and prepayments 989.1 1,009.1 Inventories 712.5 743.8 Trade payables and provisions (1,695.4) (1,697.3) Net working capital 6.2 55.6 Intangible assets 1,284.5 1,765.7 Property, plant and equipment 276.0 308.4 Equity accounted investme
Slide 14: Borrowings
Borrowings FY15 FY14 Available facilities Debt metrics FY15 FY14 $m $m Gross debt (751.1) (791.6) Weighted average debt maturity 3.7 years 3.1 years Cash and cash equivalents 83.3 24.7 Weighted average cost of debt 4.65% 4.86% Net debt (667.8) (766.9) % Fixed debt 71.1% 51.9% Guarantees & other (44.
Slide 15: Automotive update – impact of sale
Automotive update – impact of sale Pro-Forma impact on Funds Employed as at 30 April 2015 Trade sale to Burson Group confirmed for a consideration of $275m FY 15 Impact of FY 15 Impact on Balance Sheet Actual disposal Adjusted Sales multiple of just under 10x EBIT $m $m $m Metcash expects to
Slide 16: Divisional Result
DIVISIONAL RESULT SUCCESSFUL INDEPENDENTS
Slide 17: Results - overview by pillar
Results - overview by pillar FY15 FY14 Change Sales Revenue (%) Sales Revenue $m $m 9% Food & Grocery 9,217.8 9,072.4 1.6% Liquor 3,103.6 3,160.8 (1.8%) Food & Grocery 23% Liquor Hardware & Automotive 1,304.8 1,159.5 12.5% 68% Hardware & Automotive Metcash Group 13,626.2 13,392.7 1.7% FY15 FY14 Chan
Slide 18: MFG – Financials
MFG – Financials FY15 FY14 Change Sales Revenue MFG $m $m Total Supermarket wholesale sales down 0.2% Sales Revenue Supermarket wholesale sales (excluding tobacco) declined by 2.2%, which reflects an underlying sales decline of 3.3% Supermarkets 7,653.3 7,666.6 (0.2%) offset by a 1.1% increase i
Slide 19: MFG – Financials
MFG – Financials FY15 FY14 Change EBIT MFG $m $m Total EBIT down 26.1% predominantly from the Sales Revenue decline in Supermarkets Supermarkets 7,653.3 7,666.6 (0.2%) Convenience 1,564.5 1,405.8 11.3% Decline in sales (excluding tobacco) Total Sales 9,217.8 9,072.4 1.6% Total EBIT 216.8 293.4 (
Slide 20: ALM – Financials
ALM – Financials FY15 FY14 Sales Revenue Liquor Change $m $m Total sales declined by 1.8% Sales Revenue 3,103.6 3,160.8 (1.8%) Wholesale sales through the IBA (Retail) network increased by 3.7% reflecting both the strength of EBIT 57.6 52.1 10.6% the network and acquisitions EBIT (%) 1.9% 1.6%
Slide 21: Hardware & Automotive – Financials
Hardware & Automotive – Financials Hardware & FY15 FY14 Sales Revenue Change Automotive $m $m Hardware sales increased 11.3%, exceeding $1bn for Sales Revenue the first time LfL wholesale sales growth of 3.3% achieved in a Hardware 1,048.4 941.8 11.3% competitive environment Hardware trade sal
Slide 22: Strategy Update
STRATEGY UPDATE SUCCESSFUL INDEPENDENTS
Slide 23: Our strategic priorities
Our strategic priorities 1. TRANSFORMATION OF METCASH FOOD & GROCERY 2. CONSOLIDATION & SUSTAINABLE NETWORK GROWTH 3. WORLD CLASS SUPPLY-CHAIN 4. SUPPORTING INDEPENDENTS 22
Slide 24: Transformation of MF&G
TRANSFORMATION OF MF&G SUCCESSFUL INDEPENDENTS
Slide 25: Transformation Plan responding to market conditions
Transformation Plan responding to market conditions Retail competition intensifying Discounters continue to expand Deflationary environment likely to continue Consumer trends impacting sales mix with increasing shift to Fresh Food and Private Label Metcash is under-indexed in Fresh Food an
Slide 26: Transition to a customer focused wholesaler
Transition to a customer focused wholesaler Phase 1 Phase 2 Phase 3 Fix the Basics Invest in Growth Sustain Growth FY15 / FY16 FY15 / FY17 FY17 / FY18+ Offer competitive prices and Expand innovation in price Make every store famous as a promotions and promotions local shopper destination
Slide 27: Shopper focus through growth levers
Shopper focus through growth levers Supermarkets Convenience Shopper-led Competitive Compelling Retail Network Convenience way pricing fresh offer excellence investments reset Differentiated Competitive shelf Space and layout Store owner Launch Diamond¹ Category focused offer by prices e
Slide 28: Diamond initiatives changing shopper perceptions
Diamond initiatives changing shopper perceptions 1 Shopper-led way Price perception Overall satisfaction improved 9% up 8% Competitive Pricing Compelling fresh offer Retail excellence Willing to View of fresh 2 Network recommend stores improved 14% investment up 5% Shoppers responding to Diamond Sto
Slide 29: Initial Diamond stores delivering good results
Initial Diamond stores delivering good results DSA store results Basket data Total retail store sales Total wholesale core grocery sales ↑ basket numbers up ↑ retail up ~16% sales 1 ↑ warehouse sales also up ~16% 1 ↑ basket size up Target to complete an additional ~100 DSA stores in FY16 1. Represen
Slide 30: Competitive pricing
Competitive pricing FY15 - Focus FY15 - Results Offer competitive prices Price Match to be implemented Price Match implemented in ~600 stores 1 across the network LfL stores (~300) in Price Match program generated Prices being matched weekly a 330 basis points improvement in wholesale sales
Slide 31: Shopper-led way
Shopper-led way FY15 – Focus FY15 – Results Private Label Improve quality of Private Label Updated packaging already introduced for over ~250 B&G offer products Improve packaging with a Introduced ~30 new mid-tier private label products contemporary look ~ 500 B&G SKU’s in Price Match prog
Slide 32: Compelling Fresh perception
Compelling Fresh FY15 - Focus FY15 - Results Improve fresh offer Category reviews across meat, seafood, deli, New Fresh ranges in stores: ‘Black Angus’ meat, par-bake artisan bakery and produce bread and specialty cheese Improving customer perception of Fresh in stores 40 Consistent range, p
Slide 33: Retail excellence + Network investment
Retail excellence + Network investment FY15 - Focus FY15 - Results Diamond Store Accelerator (DSA) program Target of 50 stores by year end 52 DSA stores at year end An additional 18 stores refurbished (adopted components of Develop DSA tool-kit for Retailers to plan and Project Diamond) impl
Slide 34: Engaging Independent Retailers
Engaging Independent Retailers Retail sales up 180bp year on year Scan Data now provided by ~1,200 stores ~1,100 stores participating in Price Investment programs Total of 70 stores refurbishments complete with next 100 planned Private Label participation now growing at high double-digits
Slide 35: Key focus – to build momentum in FY16
Key focus – to build momentum in FY16 1. Accelerate Diamond Store initiative 2. Scale up Fresh supply across the network 3. Expand Private Label program; more new products in more stores 4. Target key growth categories (e.g. health and beauty) 5. Strengthen the core business; focus on income generat
Slide 36: Group Outlook
GROUP OUTLOOK SUCCESSFUL INDEPENDENTS
Slide 37: Group outlook
Group outlook Difficult trading conditions experienced in Food & Grocery are expected to continue in FY16 Transformation Plan addresses market and business model challenges Balance Sheet has been strengthened as a result of capital initiatives Key programs such as Price Match, Private Label
Slide 38: Successful Independents
SUCCESSFUL INDEPENDENTS
Slide 39: Appendices
APPENDICES SUCCESSFUL INDEPENDENTS
Slide 40: Appendices
Appendices 1. Financial highlights 2. Restatement of historical data 3. Cashflow 4. Store numbers (MFG) 5. Store numbers (ALM) 6. Directory of Terms 39
Slide 41: Financial highlights
Financial highlights Financial Performance FY15 FY14 FY13 FY12 FY11 Sales ($m) 13,626.2 13,392.7 12,976.6 12,501.1 12,364.0 Underlying EBIT ($m)1 325.1 390.3 447.8 441.5 430.1 Finance costs, net ($m) 55.1 57.2 61.6 67.6 66.3 Underlying profit after tax ($m) 193.0 233.7 268.1 252.8 248.3 Reported pro
Slide 42: Restatement of previously disclosed data
Restatement of previously disclosed data FY10 FY11 FY12 FY13 FY14 Results reconciliation – 5 year trend $m $m $m $m $m Segment results 413.0 444.4 453.8 461.2 411.6 Share based payments and unallocated amounts (11.8) (6.4) (2.6) (0.8) (4.9) Underlying EBITA 401.2 438.0 451.2 460.4 406.7 Net finance
Slide 43: Cashflow
Cashflow FY15 FY14 Change $m $m Trading cash receipts and payments 350.0 500.5 (30.1%) Interest (35.1) (43.6) 19.5% Tax (83.2) (68.2) (22.0%) Cash provided by operating activities 231.7 388.7 (40.4%) Proceeds from sales of business assets 41.0 19.7 Payments for acquisitions of business assets and in
Slide 44: Store numbers (MFG)
Store numbers (MFG) IGA Branded Stores - Grocery April 15 April 14 Supa IGA 428 493 IGA 829 786 Xpress 198 190 IGA branded stores 1,455 1,469 Friendly Grocer / Eziway 253 248 Total Stores 1,708 1,717 Metcash also services over 450 FoodWorks stores and a number of non-bannered independents Total numb
Slide 45: Store numbers (ALM)
Store numbers (ALM) Retail (IBA) Stores – Liquor Apr 15 Apr 14 Cellarbrations 478 472 Bottle-O / Bottle-O Neighbourhood 636 644 IGA Liquor 486 492 Other 971 854 Total Retail (IBA) Stores 2,571 2,462 44
Slide 46: Directory of Terms
Directory of Terms Metcash’s Business Areas & Terms Grocery wholesaler serving ~ 2,450 independent retail grocery stores (including IGA branded stores) across Australia. Operates 5 major DCs, carrying Supermarkets dry, chilled and frozen grocery products. Supports independent retailers with a compre
Slide 47: Directory of Terms
Directory of Terms Financial Terms Cash Flow from operations/Reported NPATDA (depreciation and amortisation not tax effected). In respect of FY15 only, the ratio Cash realisation ratio was calculated using Underlying NPATDA, rather than Reported NPATDA, as the $577.2m of Significant Items expense wa
Slide 48: Contact Details
Contact Details For additional information contact: Stephen Woodhill, Group General Manager Corporate Affairs Phone: 61 2 9741 3415 E-mail: stephen.woodhill@metcash.com Merrin Hodge, Investor Relations Manager Phone: 61 2 9647 0866 Email: merrin.hodge@metcash.com Or visit our website: www.metcash.co
Slide 49: Disclaimer
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
Slide 50: Thank You
SUCCESSFUL INDEPENDENTS THANK YOU