Slide 1: 2008 Annual Results Briefing
2008 Annual Results Briefing 21 August 2008
Slide 2: Presentation Outline
Presentation Outline Group Performance Highlights Richard Goyder Home Improvement & Office Supplies John Gillam Coles Ian McLeod Resources Stewart Butel Other Divisions Richard Goyder Capital Management Gene Tilbrook Outlook Richard Goyder 2
Slide 3: Group Performance Highlights
Group Performance Highlights Richard Goyder Managing Director, Wesfarmers Limited
Slide 4: Group Performance Highlights
Group Performance Highlights • Operating revenue of $33.6bn – Increase of 15.4% excluding acquired Coles Group • Group profit after tax of $1,050 million • Earnings per share of 180.6 cents per share • Operating cash flow up 11.5% • FY08 dividends declared of $1,532 million up 77.1% – Full year divi
Slide 5: Group Performance Summary
Group Performance Summary Year ended 30 June ($m) 2008 2007 % Revenue 33,584 9,754 244.3 EBITDA 2,897 1,650 75.6 EBIT 2,243 1,305 71.9 Net profit after tax (pre non-trading items) 1,119 786 42.4 Net profit after tax (post non-trading items) 1,050 786 33.6 Operating cash flow 1,451 1,301 11.5 Earning
Slide 6: Divisional EBIT
Divisional EBIT Year ended 30 June ($m) 2008 2007 % Home Improvement & Office Supplies 625 528 18.4 Coles 474 n/a n/a Target 223 n/a n/a Kmart 114 n/a n/a Resources 423 338 25.1 Insurance 132 120 10.0 Industrial & Safety 130 115 13.0 Chemicals & Fertilisers 124 101 22.8 Energy 90 75 20.0 Other (incl
Slide 7: Non-Trading Items
Non-Trading Items Year ended 30 June ($m) 2008 Comment Redundancies and property Coles (101) impairments Kmart (4) Property writedown Home Improvement & Office Supplies (4) Redundancies Energy 8 Sale of Unigas Sale of Koukia ($9m), Centrepoint Insurance (1) Alliance impairment ($10m) Total (102) 7
Slide 8: Divisional Performance
Divisional Performance 2008 2007 Year ended 30 June EBIT* ROC ROC $m % % Home Improvement & Office Supplies^ 625 31.2 28.1 Coles 474 n.m. n/a Target 223 n.m. n/a Kmart 114 n.m. n/a Resources 423 43.0 38.8 Insurance 132 11.5 15.8 Industrial & Safety 130 16.8 15.6 Chemicals & Fertilisers 124 13.1 16.7
Slide 9: Return on Shareholders' Funds
Return on Shareholders’ Funds (rolling 12 months to 30 June) % 35 30 25 25.1 20 15 31.1 25.1 22.1 10 18.5 5 8.5 0 2004 2005 2006 2007 2008 AGAAP^ A-IFRS Excludes the sales of Landmark (2004) and ARG (2006) ^ Before goodwill amortisation 9
Slide 10: Movement in Shares on Issue
Movement in Shares on Issue m shares 15.4 1.1 800 34.2 55.5 600 152.6 152.6 400 799.4 200 388.1 0 Opening Consideration Consideration Retail Institutional DIP & Other Closing for Coles for Coles Entitlement Entitlement Underwrite acquisition acquisition Offer Offer (ordinary) (PPS) 10
Slide 11: Earnings, Cash Flow & Dividend
Earnings, Cash Flow & Dividend (cents per share) 400 350 300 250 200 150 100 50 0 2004 2005 2006 2007 2008 EPS^ Operating Cashflow* Dividend EPS and Cashflow excl. Landmark (2004) and ARG (2006) * Based on weighted average number of shares incl. employee reserved shares ^ AGAAP excl. goodwill amorti
Slide 12: Home Improvement & Office Supplies
Home Improvement & Office Supplies John Gillam Managing Director, Home Improvement & Office Supplies
Slide 13: Home Improvement
Home Improvement BUNNINGS aes warehouse Wesfarmers
Slide 14: Home Improvement Performance Summary
Home Improvement Performance Summary Year ended 30 June ($m) 2008 2007 % Revenue 5,359 4,939 8.5 EBIT 589 528 11.6 ROC (R12 %) 31.2 28.1 3.1 pt Trading Revenue* ($m) 5,265 4,677 12.6 Net property contribution^ ($m) 26 54 (51.9) Trading EBIT* 569 487 16.8 Trading EBIT / Trading Revenue (%) 10.8 10.4
Slide 15: Home Improvement Highlights
Home Improvement Highlights • 13.9% cash sales growth* – FY store on store cash sales growth of 11.3% – 1 March to 30 June 2008 8.7% (incl. Easter) – driving strong growth and returns from existing network – better merchandising – improved operational disciplines, and – continued network reinvestmen
Slide 16: Home Improvement Outlook
Home Improvement Outlook • Continued cash sales growth – Improved service, merchandising initiatives and network development – Challenging retail conditions will impact overall growth • Continued uplift in trade business performance • Strong focus on the team • Business effectiveness & efficiency he
Slide 17: Office Supplies
Office Supplies Officeworks YY)
Slide 18: Office Supplies Performance Summary
Office Supplies Performance Summary 23 November to 30 June 2008 ($m) 2008 Revenue 802 EBIT 36 Total Sales Growth (%) 1.6 Trading Revenue* ($m) 802 Net property contribution ($m) - Trading EBIT* 36 Trading EBIT / Trading Revenue (%) 4.5% * Excludes non-trading items 18
Slide 19: Office Supplies Highlights and Outlook
Office Supplies Highlights • Strategies reset, transitioning to EDLP • New branding and in-store look being rolled out – New concept store developed and trading well • Transaction growth 4 times sales growth • Single buying team across all channels Outlook • Difficult trading conditions – Moderate s
Slide 20: Coles
Coles Ian McLeod Managing Director, Coles 20
Slide 21: Coles Performance Summary
Coles Performance Summary 23 November to 30 June 2008 ($m) 2008 Revenue 16,876 EBITDA 714 Depreciation & Amortisation (240) EBIT 1,2 (pre Non-Trading Items) 474 Food & Liquor Revenue 4 12,825 Total store sales growth % 4.2 Comparative store sales growth % 2.8 Trading EBIT 1,2,4 422 Convenience Reven
Slide 22: Coles Highlights
Coles Highlights • Food & Liquor Q4 Sales trend (13 weeks to 29 June 2008) – Headline Sales Growth 4.2% (Incl. Easter (17 weeks to 29 June) 4.8%) – Comparative Store Sales Growth 2.4% (Incl. Easter (17 weeks to 29 June) 3.2%) – Fresh produce deflation • 4Q convenience sales – Headline Sales Growth 8
Slide 23: Coles Highlights (cont)
Coles Highlights (cont) • Meaningful and sustainable improvement will take up to 5 years – First phase: getting the business fit for purpose and fit for the customer • Actions so far – New management team recruited (in place from August 2008) – Beginning to stabilise the business – Improved operatin
Slide 24: Coles Highlights (cont)
Coles Highlights (cont) Evolution of key strategic programmes • Supermarkets: - Improving value and in-store communication - Simplifying product range for customers - Improving Fresh offer - New store model • Liquor: Brand strategy review • Convenience: Further roll-out of improved store proposition
Slide 25: Coles Outlook
Coles Outlook • Softer retail economic conditions expected • Pressure on household spending and greater value focus • Fresh produce deflation to continue through first half • Evolution of key strategic programmes • Increased focus on product availability • Strong focus on cost and capital management
Slide 26: Resources
Resources Stewart Butel Managing Director, Wesfarmers Resources
Slide 27: Resources Performance Summary
Resources Performance Summary Year ended 30 June ($m) 2008 % 2007 Revenue 1,311 1,134 15.6 EBITDA 571 520 9.8 Depreciation & Amortisation* (148) (182) 18.7 EBIT 423 338 25.1 ROC (R12 %) 43.0 38.8 4.2pt Coal Production (‘000 tonnes) 14,318 13,754 4.1 Safety (R12 LTIFR)^ 6.4 3.4 * Includes Stanwell re
Slide 28: Resources Highlights
Resources Highlights • Increased coal production for the Resources Division • Record production and sales from Curragh • Strong recovery following January 2008 flood events • 25 per cent increase in divisional earnings • Ongoing strong coal demand in constrained infrastructure environment • Record p
Slide 29: Resources Outlook
Resources Outlook • High coal prices • Volatile Australian dollar • Ongoing constrained export coal chains • Availability of key inputs and industry cost pressures to continue • Impact of Government Climate Change Policy on the Coal Industry • Curragh metallurgical sales 6.5 - 6.9mt in 2008/09 • Inc
Slide 30: Other Divisions
Other Divisions Richard Goyder Managing Director, Wesfarmers Limited
Slide 31: Target & Kmart
Target & Kmart • Challenging and varied trading conditions, particularly in Q4 – Target achieved Q4 comp sales growth of 4.8%* (incl Homewares sale that took place in Q307) – Kmart’s Q4 comp sales declined 0.1%* • Costs and inventory well controlled • Plans to accelerate store refurbishments and sto
Slide 32: Insurance
Insurance • GWP underwritten increased 11.5% with EBIT up 10.0% to $132m • Underwriting margins affected by severe weather and rate pressure – COR of 98% – Signs rates in some commercial classes beginning to stabilise • Full year contribution of broking businesses following acquisitions in FY07* – E
Slide 33: Industrial Businesses
Industrial Businesses • Varanus gas disruption impacting CSBP and Energy from June 2008 • Continued improved performance from Industrial & Safety – Revenue up 8.4%, EBIT up 13.0% to $130m, ROC up to 16.8% • Strong growth in demand for chemicals & fertilisers resulting in a 23% increase in Chemicals
Slide 34: Capital Management
Capital Management Gene Tilbrook Finance Director, Wesfarmers Limited
Slide 35: Capital Management
Capital Management • Net Debt / Equity of 47.4% at 30 June 2008 • Cash Interest Cover Ratio (rolling 12 months) to 30 June 2008 of 4.9 times, 5.1 times adjusted for non-trading items • Working capital increased by $661 million • Budget capital expenditure for FY09 $2bn, up from $1.2bn in FY08 • Divi
Slide 36: Capital Management
Capital Management • Total debt averaged $9.4bn for the year • Average level of net debt for FY09 is expected to be $9.5bn to $10.0bn • Anticipated FY09 interest rate in the mid to high 8s%, including fees – ~60% of typical debt levels hedged for 3 years at average ~7.4% • $11 million of additional
Slide 37: Capital Expenditure (cash basis)
Capital Expenditure (cash basis) Actual Actual Year ended 30 June ($m) 2008 2007 Home Improvement & Office Supplies 301 196 Coles 349 n/a Target 47 n/a Kmart 42 n/a Resources 140 164 Insurance 17 15 Industrial & Safety 21 26 Chemicals & Fertiliser 201 199 Energy 118 78 Other 5 2 Total 1,241 680 37
Slide 38: Capital Expenditure History
Capital Expenditure History $m 2,400 2,000 1,600 1,200 ~2,000 800 1,241 400 680 615 466 258 0 2004 2005 2006 2007 2008 2009E 38
Slide 39: Outlook
Outlook Richard Goyder Managing Director, Wesfarmers Limited
Slide 40: Outlook
Outlook • Coles focus intensifying • Ongoing impact of downturn in consumer sentiment • High prices and strong demand prospects for coal • Continuing strong demand for our industrial products • Signs insurance premiums are improving • Ongoing capital expenditure in all businesses 40
Slide 41: Questions
Questions
Slide 42: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au 42