Metcash Limited · ASX:MTS
Metcash — Investor Day (March 2021)
108 slides from Metcash's investor day presentation, Mar 16, 2021
Slide 1: Metcash Limited Investor Day, including revised dividend policy and trading update
Metcash Limited ABN 32 112 073 480 1 Thomas Holt Drive Macquarie Park NSW 2113 Australia 16 March 2021 Market Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam METCASH LIMITED INVESTOR DAY, INCLUDING REVISED DIVIDEND POLICY AND TRADING UPDATE
Slide 2: Investor Day
INVESTOR DAY 16 March 2021
Slide 3: Group Overview
GROUP OVERVIEW Jeff Adams Group CEO 1
Slide 4: Group Overview: purpose, vision and values
GROUP OVERVIEW OUR PURPOSE & VISION OUR VALUES INDEPENDENCE IS WORTH FIGHTING FOR We believe Best store Support thriving Championing Independence is worth fighting for; in treating in town communities Successful our people, retailers and suppliers the way we like Business partner of choice A favouri
Slide 5: Our Current Position
OUR CURRENT POSITION FOOD HARDWARE LIQUOR FINANCIAL ▪ Positioned as alternative to majors – ▪ Clear #2 in market with strong Trade ▪ Clear #2 in market ▪ Strong balance sheet local independent, active in their focus ▪ Supplier to ~90% of independent ▪ Strong underlying cashflows communities, conveni
Slide 6: Our Management Team
OUR MANAGEMENT TEAM Jeff Adams Alistair Bell Scott Marshall Chris Baddock Group CEO Group CFO CEO, Metcash Food CEO, Australian Liquor Marketers Annette Welsh David Reeve Penny Coates Matt Havens Mark Laidlaw Chief Strategy & CEO, Independent Hardware Group CIO Chief People & Culture Officer Executi
Slide 7: Investment Merits
INVESTMENT MERITS Leading Well positioned Track record of Total Shareholder Returns1 market for future delivering for positions growth shareholders 150 142.3 ▪ Network of >5,000 ▪ Retail network growth ▪ Strong cash generation 130 independently owned ▪ Expansion of Total Tools ▪ Attractive returns t
Slide 8: MFuture – Our 5 Year Vision
MFUTURE – OUR 5 YEAR VISION Launched in 2019 Our strategy A balanced approach to revenue growth and cost out: GROWTH ▪ Accelerating successful current initiatives COST ▪ Improving our infrastructure to enable simpler ▪ Following the shopper into new growth and cheaper processes initiatives ▪ Ensurin
Slide 9: COVID Update
COVID UPDATE Shift in consumer behaviour MFuture has proven to be the right strategy Increased “at home” activities: Reflected in performance Helping retain new and cooking, DIY maintenance, of all pillars pre COVID returning shoppers beverage consumption Laid foundation for Market share gains stron
Slide 10: Re-focused Strategic Direction
RE-FOCUSED STRATEGIC DIRECTION OUR PURPOSE CHAMPIONING SUCCESSFUL INDEPENDENTS Customer & Community Easy to do business with Shopper-led offer Business partner of choice for suppliers Lean, low cost operating model & supply chain INCREASED RETAILER COMPETITIVENESS DRIVING SHAREHOLDER VALUE 8
Slide 11: MFuture – Next 3 Years
MFUTURE – NEXT 3 YEARS Continue supporting our retailers to further improve their competitiveness and retain new and returned customers gained through COVID, as well as attract new shoppers. GROWTH COSTS New New Store System upgrade Store Ranging Private Accelerating enhancement - programs formats a
Slide 12: Food
FOOD Scott Marshall CEO, Food 10
Slide 13: Food Overview
OVERVIEW About us Positive momentum Good growth opportunities ▪ Largest supplier to independent ▪ We have faced and overcome significant ▪ Accelerating and leveraging current initiatives supermarkets in Australia challenges and are now positioned with: ▪ Diamond Store Accelerator (DSA) program ▪ Wid
Slide 14: Our Difference
OUR DIFFERENCE Local independent Trusted partner of Partner of choice Leading logistics stores at the heart of largest network of for suppliers and our and distribution their community independent retailers customers capability 01 02 03 04 ▪ Everyday value, ▪ Right brand, format ▪ Broad range of ▪ E
Slide 15: National Store Network
NATIONAL STORE NETWORK NATIONAL NETWORK OF STORES NT Total IGA stores QLD WA 1,330 SA NSW Supported through five VIC major distribution centres & smaller regional centres TAS Wholesale customers Major Distribution centres Regional Distribution centres 13
Slide 16: Positioned with a Stronger Foundation
POSITIONED WITH A STRONGER FOUNDATION 2019 reset ▪ New operating model to drive improved retailer competitiveness ▪ New management team ▪ Better way of working with suppliers focused on driving sales Acceleration of DSA program and continued improvement in range, price and supply chain efficiency he
Slide 17: MFuture Initiatives – Progress to Date
MFUTURE INITIATIVES – PROGRESS TO DATE Network of the future Core enablers DSA BRAND NEW FORMAT SUPPLY SYSTEMS PROGRAM CLARITY TRIALS CHAIN INVESTMENT ▪ Store upgrades ▪ New suite of brands ▪ The Fresh Pantry small ▪ Continuous ▪ Launched new IGA increased from 320 to endorsed by IGA format stores i
Slide 18: COVID Update
COVID UPDATE Acceleration of shoppers rediscovering ‘local’ ▪ Shift in consumer behaviour continuing to drive strong demand across IGA network ▪ More flexible working and eating at home ▪ Increased preference for local neighbourhood shopping ▪ Move from city to regional areas ▪ Increased demand for
Slide 19: Shopper Retention
SHOPPER RETENTION ▪ Significant improvement in value perceptions amongst shoppers with positive trend continuing in Q3 FY21 ▪ Low Prices Every Day program continues to drive growth and improved value perception Overall value Satisfaction with Store quality perception $ paid at checkout perception ▪
Slide 20: Community
COMMUNITY Supporting our retailers and communities through challenging times The Drought The Bushfires COVID ▪ IGA Christmas Drought ▪ Immediate support of $1.3m for bushfire affected ▪ Being flexible, agile and creative to ensure we continued to Appeal raised ~$860,000 communities through cash dona
Slide 21: Strategy 'Sharpened' to Focus on Customer
STRATEGY ‘SHARPENED’ TO FOCUS ON CUSTOMER Purpose Championing Successful Independents To grow by ensuring our customers have a sustainable, Mission competitive offer that enables them to be different, disrupt and win share Mindset Shopper loyalty & community engagement Customer 1 st Relentlessly imp
Slide 22: Key MFuture Initiatives Going Forward
KEY MFUTURE INITIATIVES GOING FORWARD Network of the future eCommerce and Loyalty Supply Chain ▪ Network refresh with national brand ▪ Accelerate eCommerce for IGA retailers ▪ Building capability to expand ranges via Direct standards and more consistent offer by including rollout of latest eCommerce
Slide 23: Network of the Future
NETWORK OF THE FUTURE New IGA brand and channel blueprint ▪ Endorsed by retailers ▪ Tailored to target shopper preferences ▪ Brands aligned to ‘guard rails’ with a brand for every retailers’ need ▪ Transition to be completed by 2024 ▪ Store refresh supported by Metcash investment ▪ Improved shopper
Slide 24: Network of the Future DSA Program
NETWORK OF THE FUTURE DSA PROGRAM ▪ 590 store upgrades (~45% of IGA network) already completed through Diamond Store Accelerator program ▪ Targeting a further 100-130 store upgrades per year over next five years ▪ ~90% of IGA network expected to be upgraded by FY26 ▪ ~20% of future upgrades are a se
Slide 25: eCommerce – Upgraded Platform
eCOMMERCE – UPGRADED PLATFORM Rollout of the upgraded eCommerce platform to Sophisticated in-store order commence end of FY21 fulfilment solution with store specific picking App ▪ Location-based pick routing Provides store specific integrates shopper requests ranging and promotions from online order
Slide 26: Digital – IGA Rewards Loyalty Program
DIGITAL – IGA REWARDS LOYALTY PROGRAM Rollout of IGA Rewards underway Enables retailers to better compete and communicate Successful trials in Western with customers through Australia and Queensland smart-driven marketing Program live in 200 stores with ▪ Personalised shopper further rollout across
Slide 27: Supply Chain
SUPPLY CHAIN Providing our retailers with the best level of service at the lowest cost Leveraging Enhancing our our DC network network capability ▪ Delivering productivity ▪ Facility reconfiguration to benefits and expanded range expand range across Fresh from new DC in SA and Frozen and ramp up ▪ S
Slide 28: Potential MFuture Investment
POTENTIAL Network of the future Digital Supply chain MFUTURE INVESTMENT ▪ Network refresh ▪ Accelerate ▪ Crestmead DC with national eCommerce for IGA expansion brand standards retailers including ▪ Far North and more rollout of latest Queensland and consistent offer by eCommerce Alice Springs DC for
Slide 29: Summary
SUMMARY Operational reset and MFuture have delivered Significant improvement in competitiveness and health of network Shift in consumer behaviour favourable for independent network Well positioned going forward with right team and plans Continued focus on retention of new and returning shoppers gain
Slide 30: Hardware
HARDWARE Annette Welsh CEO Hardware 28
Slide 31: Hardware Overview
OVERVIEW IHG is 2nd largest player in Australian Hardware market Track record of successful acquisitions and delivering synergies Strategy enables us to capitalise on opportunities Strong Trade focus, with competitive DIY offer equally important Company-owned/JV stores core to strategy Diverse portf
Slide 32: Our History
OUR HISTORY In 1959 Eight Timber & Plumbing independents joined together to form a buying group. They met Today at the Mitre Tavern Melbourne. We have a network of ~730* stores with network sales over $3.5bn. 1959 1965 2007 2012 2016 2017 2020 Mitre 10 launched Stores now Mighty helpful Metcash acqu
Slide 33: Our Business Today
OUR BUSINESS TODAY A national network of 330 153 155 6 644 stores NT 3 1 QLD 102 42 1 Sales mix 60% WA weighted SA to Trade trade 40% 30 41 1 52 29 DIY NSW 92 81 3 VIC Wide Distribution centres 70 75 1 distribution (rationalised from seven at M10 and True Value network time of HTH acquisition) HTH a
Slide 34: COVID Update
COVID UPDATE ▪ Lockdowns drove increased consumer interest in DIY ▪ Consumers rediscovered their local hardware store ▪ Government stimulus and increase in people working from home impacted positively on DIY & Trade consumer demand ▪ Stores through Sapphire refresh program have performed Call us ~18
Slide 35: COVID Has Led to a Change in DIY/Trade Mix
COVID HAS LED TO A CHANGE IN DIY/TRADE MIX Strong in Trade, growth in company owned/JV stores 2018 TODAY DIY vs DIY vs Trade 35% 65% 40% 60% Trade Corporate vs Company Stores/JV vs Independent Independent 40% 60% 45% 55% HTH and related ~10% ~10% Brand Mitre 10 ~30% ~20% Other ~60% ~70% Sapphire sto
Slide 36: MFuture Initiatives - Progress to Date
MFUTURE INITIATIVES - PROGRESS TO DATE Sapphire program Build Trade ▪ 130 store upgrades complete by April 2021 ▪ Whole of House Strategy: ▪ Stores continue to outperform non-Sapphire stores ▪ National coverage from nine Frame & Truss sites owned & operated ▪ Strong interest to invest from independe
Slide 37: Strategy to be #1 in Trade and Accelerate Digital
STRATEGY TO BE #1 IN TRADE AND ACCELERATE DIGITAL Purpose Championing Successful Independents To ensure our members can flourish through strength in volume, leadership in innovation and execution of our Mission strategies. Mindset Shopper loyalty & community engagement Consumer Driven Protect and gr
Slide 38: Market Structure
MARKET Trade focus STRUCTURE Dulux Trade Centre/Paint Spot Reece Haymes Trade Centres Taubmans Trade Centre Tradelink Wattyl / Solver Paints H&G Plumbing Plus Bretts Inspirations Paint Swan Plumbing Hume Stratco Hudsons Consolidation Hardings Nutrien Landmark Keith Banner Ag CRT Porters continues bu
Slide 39: Brand Strategy 4 Years in the Making
BRAND STRATEGY 4 YEARS IN THE MAKING 2017 2021 2024 Positions Mitre 10 as the premier IHG 51% sales 75% sales 80% sales brand Provides Members with a lower-cost 46% sales 22% sales 20% sales strong 2nd brand 2% sales 2% sales 1% sales 1% sales Members have opportunity to fold into either brand and t
Slide 40: Market Outlook
MARKET AUSTRALIAN NEW HOUSING FORECAST Houses Multi Res Forecast OUTLOOK 127.1 117.1 116.2 121.6 118.6 115.1 108.0 106.0 109.2 112.0 109.9 102.3 102.2 95.7 89.7 90.8 77.1 84.1 70.4 69.3 55.5 58.4 Number (‘000’s) 50.6 51.9 Government stimulus driving strong construction activity 2011/12 2012/13 2013/
Slide 41: Customer Segmentation Profile
CUSTOMER We supply a diverse group of Trades and SEGMENTATION Builders with little exposure to Multi-Dwellings PROFILE 2% Multi Dwellings 60% TRADE 28% Detached Dwellings 40% 30% Renovations & Additions DIY 40% DIY 39
Slide 42: Growth Initiatives
GROWTH INITIATIVES GROW IN DIY BUILD TRADE Expanding Sapphire Continue to open store upgrade program Trade Centre – Sapphire stores PROTECT Continued focus on & GROW shopper-led range STORE & price NETWORK THOUGH Expand our share of JV/COMPANY Whole of House Trial and rollout of OWNED emerging categ
Slide 43: Sapphire Program
SAPPHIRE PROGRAM OBJECTIVE ROLL OUT PLAN RESULTS ▪ To keep stores modern and leading ▪ 130 completed by April 21 ▪ Sapphire store sales up >17% edge – predominantly DIY focus ▪ Success of program has led to ▪ Significantly outperformed non- ▪ ~50% investment contribution by IHG expansion of target s
Slide 44: Sapphire Formats & Deliverables
SAPPHIRE TRADE ONLY MIXED TRADE & DIY SMALL DIY < 700M2 FORMATS ▪ 20 completed ▪ 74 completed ▪ 10 completed ▪ Potential for a further ~30 ▪ Potential for a further ~126 ▪ Potential for a further ~40 ▪ Greenfields & upgrades ▪ Average Metcash ▪ Average Metcash & DELIVERABLES ▪ Average Metcash invest
Slide 45: DIY – Shopper-Led Range
DIY – SHOPPER-LED RANGE Delivering positive consumer driven experience and team score growth ▪ Strong & confident in DIY ▪ Built on solid foundations FASTENERS HAND TOOLS POWER TOOLS PAINT STIHL WEBER ▪ Competitive price online & instore 227 126 104 133 125 617 ▪ Strong core range sales Stores Store
Slide 46: Emerging Categories
EMERGING CATEGORIES Growth strategies executed through rollout of Sapphire stores – 300 stores by 2025 ▪ Drives foot traffic to stores ▪ Meets customers’ aspirational needs Kitchen / Decorate ▪ High service level differentiates IHG from our competitors Laundry / Bathroom Garden Connected Centre Home
Slide 47: DIY – Digital
DIY – DIGITAL Customer uptake growing strongly – accelerated by COVID and lockdowns ▪ ~1.2m loyalty members (up 11%*) ▪ ~1.2m visitors per month (up ~70%*) ▪ Online transactions up 151%# ▪ 460+ stores per month with orders (up 10%#) ▪ Online units sold up 187%# Comparison: * Feb 21 v Feb 20; #monthl
Slide 48: Data, Analytics and Insights
DATA, ANALYTICS AND INSIGHTS Value add for Independents Scan Data Margin Optimize Range Reviews Customer Insights Inventory Benchmarking Management Provides insights that drive customer focused decisions – improving sales and margins 46
Slide 49: Build Trade – Sapphire Trade Centres
BUILD TRADE – SAPPHIRE TRADE CENTRES PORTERS MITRE 10 TM&H MITRE 10 M&B MITRE 10 DOYLES MITRE 10 Northern Beaches Moe, Vic Geraldton, WA Mitchelton, QLD Mackay, QLD Supports our goal to be #1 in Trade 47
Slide 50: Build Trade – Whole of House
BUILD TRADE – WHOLE OF HOUSE Strategy to grow categories not historically sourced through IHG Foundations Frame & Truss Lock Up Fix Fit Out Slab Hardware & Wall Frames, Roof Roofing, Facia, Gutters, Plaster, Linings, Doors, Plumbing, Appliances, Floor Systems Trusses & Engineered Insulation, Windows
Slide 51: Build Trade – Our New Design Showroom
BUILD TRADE – OUR NEW DESIGN 10 SHOWROOM Strategy to grow share of house ▪ Enables builders to showcase products to their customers ▪ Opportunity for Members to leverage floor space and drive sales ▪ Generates greater customer share of wallet ▪ Develop an omni-channel solution online and across 10 s
Slide 52: Build Trade – Trade Technology
BUILD TRADE – TRADE TECHNOLOGY Enables connectivity with builder at all levels, and underpins IHG’s goal to be #1 in trade ENGAGE CONNECT DELIVER LOYALTY INSIGHTS Umbrella for Customers can Efficient & Recognition of Customer data builders to easily transact transparent customers value and segmentat
Slide 53: Hardware Initiatives
HARDWARE INITIATIVES Continued investment to retain DIY gains and build trade GROW DIY BUILD TRADE EXPAND SAPPHIRE PROGRAM GROW RETAIL NETWORK ▪ Accelerate digital solutions ▪ Investment in ‘Whole of House’ ▪ Deliver original target of 200 ▪ Develop JV interests with growth ▪ Loyalty strategy stores
Slide 54: Summary
SUMMARY IHG clear #2 in Hardware market with an extensive national footprint IHG & Total Tools together targeting #1 position across Trade Strong focus on supporting Independent store owners Dual Brand Strategy to be completed by 2024 Sapphire programs expanded to 300 stores by 2025 Focus on ‘Whole
Slide 55: Total Tools
TOTAL TOOLS Mark Laidlaw Chair 53
Slide 56: Total Tools Overview
OVERVIEW Clear #1 in specialist tools Market leading loyalty market with growing national program enabling heightened footprint consumer engagement 90% of sales are to Trade Strong pipeline of ‘exclusive brand’ Strong focus on supporting expansion opportunities Independent/Franchise store owners Wel
Slide 57: Total Tools Milestones
TOTAL TOOLS MILESTONES Metcash acquires 70% of TTH A history of consistent store and sales growth Total Tools acquires 12 JV stores Pronto ERP Name changed $330m network $658m network upgrade to Total Tools completed sales reached sales reached Loyalty program Online eCommerce 2025 strategy “Insider
Slide 58: Total Tools Today
TOTAL TOOLS TODAY #1 professional tools retailer in Australia 88 stores $658m 110,000m2+ Bigger than #2 and #3 Network revenue June 2020 Retail footprint across the combined in professional network tool sector 100,000+ #1 30 SKUs available across Position in professional tools Years of operations th
Slide 59: The Total Tools Store
THE TOTAL TOOLS STORE Store format ▪ Large store format to offer ”Every Tool, Every Trade” ▪ Highly trained staff providing expert advice ▪ Modern layout, eye-catching signage for easy navigation ▪ 7,000-15,000 SKUs in each store (100,000 available across the network) ~1,250m2 10,000 $8m+ ▪ Shop siz
Slide 60: Our Target Customer
OUR TARGET CUSTOMER Tradies that use professional tools for a living and come to us for our: Range Brands Service 1.5m+ Consumer-led range, Unrivalled range of the Professional service, true to our motto “Every best professional brands solutions and advice Full-time tradies Tool, Every Trade” in the
Slide 61: Total Tools Network
TOTAL TOOLS NETWORK NT 1 QLD 19 9 88 WA SA 6 Existing NSW 19 network stores Significant expansion 1 ACT VIC opportunities 31 Revenue ▪ Potential of ~130 stores by 2025 ~40% regional ▪ Strong opportunities in NSW, ~60% metro QLD, WA and VIC TAS 2 59
Slide 62: Retailer of Choice for Major Tool Suppliers
RETAILER OF CHOICE FOR MAJOR TOOL SUPPLIERS Long-term relationship with many major tools suppliers 60
Slide 63: Market Leader
MARKET LEADER A differentiated market position that is complementary to IHG #1 in a specialised segment High 88 stores Clear category leader in professional tools Professional 35 stores 46 stores Range / specialisation Tool Retailers Leading retail channel for the best 12 stores 20 stores profession
Slide 64: COVID Update
COVID UPDATE Increased demand supported by Government stimulus Strong sales growth across all categories Strong online sales through lockdown periods Strength of loyalty program assisting targeted communication Delay in store rollouts Continued high demand impacting supply chain of Owned Brand and l
Slide 65: Vision and Mission
VISION AND MISSION Every day, delivering the right To build the Ultimate Tool Shop. range of tools and advice for Vision First choice for Trade Quality Mission our customers who are building Tools the future Create the Deliver a Accelerate roll- Working Focused Integrate Invest in building ultimate
Slide 66: Growth Drivers FY22 – FY24
GROWTH DRIVERS FY22 – FY24 Grow Store Online JV Conversions Customer Synergies Network ▪ Strong growth ▪ Website enhancement ▪ Potential for 15 stores ▪ Complete store ▪ Joint ranging and opportunities of 8-10 ▪ Endless aisle over three years, from upgrades (24 stores) sourcing opportunities stores
Slide 67: Network Growth
NETWORK GROWTH 150 Track record of network growth 121 130 111 ▪ Opened 40 stores from FY15 to FY20 Average ~9 stores per year 101 91* ▪ History of existing franchisees opening 79 81 additional stores – demonstrates 68 dedication and belief in model 59 49 41 33 Significant growth path remaining ▪ 150
Slide 68: JV Growth Program
JV GROWTH PROGRAM Background Revenue by store ▪ One of the key objectives of the transaction for the TTH Shareholders, was to provide a path for succession for its network of franchise stores over time, and to partner with retailers to support future growth ▪ MTS provided a $40m debt facility to TTH
Slide 69: Customer & Digital
CUSTOMER & DIGITAL A step ahead of the pack 1.3m+ loyalty members (up 27%) Insider Rewards Full Omni-channel eCommerce Long Tail Range Loyalty Program Offering +186% online transactions 1m+ online sessions/month (up 77%) Digital Marketing Social Media AI Driven Order Tracking Personalisation 90%+ cu
Slide 70: Store Upgrades – Generation 2
STORE UPGRADES – GENERATION 2 64 stores completed Enhanced customer experience Sales out performance Targeting additional 24 refurbishments within 3 years Average store sales growth post refurbishment >15% 68
Slide 71: Best in Class Loyalty Program
BEST IN CLASS LOYALTY PROGRAM Loyalty Penetration 90% Insider Loyalty Program 80% 70% 60% 50% FY14 FY15 FY16 FY17 FY18 FY19 FY20 1.3m Insider loyalty Relaunched in Strong penetration of members 2017, experiencing 86%+ across network significant growth sales Total Members 1135k 1192k 1078k 956k 1000k
Slide 72: Synergies
SYNERGIES Network Supply Optimisation Chain Management has identified synergies of ~$5m over three years People Marketing Supplier Trading Terms 70
Slide 73: Summary
SUMMARY Strategically an excellent deal for IHG as it aligns with becoming #1 in Trade Allows Total Tools to retain the #1 position in the Professional Tools segment Strong business with a long history of sustainable growth Large and loyal trade customer base 12 Joint Venture stores in the network w
Slide 74: Liquor
LIQUOR Chris Baddock CEO Liquor 72
Slide 75: Liquor Overview
OVERVIEW Strong market position Competitive advantage Attractive growth opportunities ▪ Second largest player in Australian liquor ▪ Local and convenient stores ▪ Good growth opportunities despite mature market market ▪ Local ranging tailored for each location / ▪ Supply ~90% of independent liquor s
Slide 76: Our Business
OUR BUSINESS IBA network of stores ALM (Australian Liquor Marketers) supplies ~12,000 hotels, liquor NT stores, restaurants & other licensed premises throughout Australia and NZ 24 The marketing & buying banner group IBA (Independent Brands Australia) retail network consists of ~1,950 Tier 1 bannere
Slide 77: IBA Brands
IBA BRANDS 553 474 248 152 45 27 1,499 IBA national network of stores An additional 449 stores are supported in NZ and under other banners A wide portfolio of brands to suit each retailer and community 75
Slide 78: Market Position
MARKET POSITION Metcash sales mix Market Share* ~3% Other 92% 8% MAT to Jan 2021 ~27% Metcash & contract customers 86% 14% MAT to Jan 2020 100% Retail Sales ~70% On Premise Sales Chains IBA network well positioned with competitive tailored offers in convenient local locations * Metcash estimates 76
Slide 79: COVID Update
COVID UPDATE Continued growth in retail sales 40% Continued strong sales growth supported by shift to ‘local’ and competitiveness of stores 20% ▪ Strong sales growth in IBA and contract customers has continued ▪ Increased preference for local neighbourhood shopping 0% ▪ Home consumption substituting
Slide 80: Progress on MFuture Initiatives
PROGRESS ON MFUTURE INITIATIVES BEST STORE IN TOWN 01 CORPORATE STORE TRIAL 02 ON-PREMISE 03 ▪ Store refreshes increased from 290 to ▪ Network of eight corporate trial stores ▪ Dedicated team established and well 430 stores ▪ Further expansion placed on hold to entrenched in business, now considered
Slide 81: Strategy Sharpened to Focus on Customer
STRATEGY SHARPENED TO FOCUS ON CUSTOMER Purpose Championing Successful Independents; they are worth fighting for! Mission To be the best broad range liquor wholesaler offering cutting edge, consumer driven retail solutions Mindset Customer Centric How we win Shoppers have a choice Retailers & Suppli
Slide 82: Key MFuture Initiatives Going Forward
KEY MFUTURE INITIATIVES GOING FORWARD Digital Drive brand awareness Owned & Supply chain flexibility transformation and appeal Exclusive brands and efficiency ▪ Integrated POS – enabling closed ▪ Brand positioning – giving ▪ Leverage acquisition of Kollaras ▪ Partner with key suppliers to loop syste
Slide 83: Digital Transformation
DIGITAL TRANSFORMATION An untapped Liquor eCommerce channel for our retailers and ALM Social Media Mobile Point of sale integration Accelerated eCommerce Banner led Loyalty eCommerce management launch Program ▪ Enables eCommerce & Loyalty (product, pricing, inventory, ▪ COVID has led to retailer ▪ W
Slide 84: Brand Awareness and Appeal
BRAND AWARENESS AND APPEAL Driving store foot traffic, shopper retention and increased efficiencies 01 02 03 04 05 Humanise our Brand Short & Long Through the Eliminate Media brands to Positioning to build Line to build spray & pray to drive appeal to drive effectiveness consistency drive efficiency
Slide 85: Owned and Exclusive Labels
OWNED AND EXCLUSIVE LABELS IBA has historically under-indexed – good sales and gross margin opportunity Leverage acquisition Expand range to Grow O&E team of Kollaras brand address specific score portfolio consumer needs ▪ Managing quality ▪ 26 owned & 35 ▪ IBA Owned & & value; building exclusive br
Slide 86: Supply Chain Flexibility and Efficiency
SUPPLY CHAIN FLEXIBILITY AND EFFICIENCY Greater retailer choice and efficiency driving increased competitiveness Partner with key suppliers to Evolve supply chain capability Enhance customer experience realise operational efficiencies to support ‘One Delivery, through: One Invoice’ ▪ Development of
Slide 87: Summary
SUMMARY Position of strength – 2nd largest player in Australia Strong retail network with local and convenient stores Driving ‘Best Store in Town’ through investment in store refreshes Sales and gross margin growth opportunity in ‘Owned and Exclusive’ brands (Kollaras acquisition) ‘One invoice, one
Slide 88: Accelerating Digital
ACCELERATING DIGITAL Jeff Adams Group CEO 86 1
Slide 89: Expansion of Digital Capability
EXPANSION OF DIGITAL CAPABILITY A largely untapped Digital channel for our retailers and Metcash Digital was a low IHG and Total Tools were In Food and Liquor, Hence, Metcash’s Legacy, not aligned priority for our the exception with market a small percentage digital focus was at and aged Group retai
Slide 90: The 'Size of Prize' Is Large for Our Retailers and Metcash
THE ‘SIZE OF PRIZE’ IS LARGE FOR OUR RETAILERS AND METCASH MARKET SIZE AND % DIGITAL BY 2024 Digital sales growing rapidly in all our markets, $108bn accelerated by COVID Food Estimated combined $18bn annual digital sales of 11% ~$13bn by 2024 in Food, 9% 10% $12bn Liquor and Hardware Liquor Digital
Slide 91: Why We Believe Now Is the Right Time to Invest
WHY WE BELIEVE NOW IS THE RIGHT TIME TO INVEST Our retailers have the foundation and interest to grow in Digital Our retailers are well positioned They are now seeking digital This requires Metcash to invest to compete in digital with the solutions and we have the in expanding its digital locations,
Slide 92: The 'Metcash Digital Accelerator'
THE ‘METCASH DIGITAL ACCELERATOR’ Accelerating and improving our delivery of Digital solutions to our retailers and shoppers METCASH DIGITAL ACCELERATOR KEY PRINCIPLES Drive Digital sales Investment in Group-wide Digital capability to expedite Clear visibility to opportunities available to us and ou
Slide 93: Incremental Group Capex Investment – New Capability
INCREMENTAL GROUP CAPEX INVESTMENT – NEW CAPABILITY $8.0m $5.0m $1.0m <$1.0m FY21 FY22 FY23 FY24 ESTABLISH INNOVATE & SCALE BROADEN & DEEPEN CONTINUE TO GROW Establish a new way of Further rollout of new way of Exploiting new digital Further expansion of working and accelerate working across Group a
Slide 94: Cost Management: Introducing Project Horizon
COST MANAGEMENT INTRODUCING PROJECT HORIZON Jeff Adams Group CEO 92
Slide 95: Cost Management
COST MANAGEMENT A good history of delivering cost-out targets Working Smarter ~$125m Cost reductions of ~$125m Aim under MFuture is to continue 60 delivered under Working to offset the impact of inflation MFuture 50 Smarter in FY17 – FY19 (initial ~$50m target ~$100m) 40 30 20 On track to deliver ~$
Slide 96: Project Horizon – A Staged Program
PROJECT HORIZON – A STAGED PROGRAM A business (not IT) led program to build a better Metcash for our retailers, suppliers and people WHY WHAT HOW To simplify Metcash, whilst building A modern platform aligned across Metcash that Establish key principles on a better future operating platform drives e
Slide 97: Project Horizon – Investment
PROJECT HORIZON – INVESTMENT Stage 01 Key Deliverables ▪ Group technical infrastructure consolidation & replacement ▪ Process efficiency foundations ▪ Ease of doing business with retailers & suppliers Stage 1 Stage 2 TBD (beyond FY23) Significant item ▪ Better alignment across Estimated capex Buildi
Slide 98: Capital Management
CAPITAL MANAGEMENT Alistair Bell Group CFO 96
Slide 99: Capital Management Overview
CAPITAL MANAGEMENT OVERVIEW Our track record: Going forward: ▪ Reliable operating cashflows ▪ Continuation of our disciplined approach to capital allocation ▪ Free cashflow generation and working capital ▪ A conservative approach to funding management ▪ Estimated MFuture capital requirements of ~$37
Slide 100: Our Framework
OUR FRAMEWORK Cash from Cash for Net interest & lease operating activities investing activities payments Our objectives: 01 02 03 Cash generation Strict return hurdles Service obligations Maximising returns Maintaining Retain flexibility for Free Cash Flow for shareholders financial strength portfol
Slide 101: A Disciplined Investment Process
A DISCIPLINED INVESTMENT PROCESS Governance 01 Investment evaluation 02 Managing risk 03 All investment Each business Investment Metcash Group Disciplined gate All investments decisions must case must satisfy evaluation and has capacity to based approach are regularly follow Metcash ▪ Its fit with a
Slide 102: Potential Capital Investment FY22 – FY24
POTENTIAL CAPITAL INVESTMENT FY22 – FY24 MFuture growth funding ($m) Capital Expenditure ($m) Food ~70 300 Hardware (includes Total Tools1) ~225 250 200 Liquor ~10 150 100 Group-wide2 ~70 50 Total potential growth capex3 ~375 0 FY16 FY17 FY18 FY19 FY20 1H21 Stay-in-business capex ~55 p.a. Payments f
Slide 103: Debt Management
DEBT MANAGEMENT Debt Facility Maturity Profile1 ▪ Continued optimisation of debt book ▪ Maintain financing flexibility at competitive average cost of debt ▪ Maintain a solid credit profile 400 350 ▪ A balanced maturity profile – average debt term to maturity 300 >2.0 years 250 150 ▪ Accommodation of
Slide 104: Working Capital
WORKING CAPITAL Inventory and Inventory Days ▪ Continue to generate strong operating cash through focus on managing working capital fluctuations from seasonal sales 1200 30.8 28.7 35 and buying opportunities 29.5 29 1000 26.6 27.1 30 ▪ Cash realisation rates at high levels 21 22 22.4 22.5 25 800 ▪ I
Slide 105: Shareholder Returns
SHAREHOLDER RETURNS ▪ Track record of capital management to improve shareholder returns ▪ Average dividend payout ratio of ~60% Distributions ▪ ~$500m of cash distributions and buy backs over past 3 years ▪ Dividend yield of 4.02%1 300 20 ▪ Target dividend payout ratio increased from 60% to 70% of 2
Slide 106: Summary and Trading Update
SUMMARY AND TRADING UPDATE Jeff Adams Group CEO 104
Slide 107: Summary
SUMMARY Making our retailers more competitive through MFuture has proven to be the right strategy for Metcash ▪ Helping our retailers to retain new and returning customers gained during COVID ▪ Driving continued strong trading through the first four months of 2H21 Our Pillars have ‘sharpened’ their
Slide 108: Trading Update – First 4 Months 2H21
TRADING UPDATE – FIRST 4 MONTHS 2H21 ▪ Strong sales momentum has continued in all Pillars from a shift in consumer behaviour, improved competitiveness of our retailers, additional Group investment in shopper retention, and a favourable Christmas/New Year period ▪ March and April 2021 will include cy