Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Day (June 2017)
143 slides from Wesfarmers's investor day presentation, Jun 7, 2017
Slide 1: Presentation to be given at Strategy Briefing Day – Sydney
7 June 2017 The Manager Company Announcements Office Australian Securities Exchange Dear Sir, PRESENTATON TO BE GIVEN AT STRATEGY BRIEFING DAY – SYDNEY Following is a presentation that is to be given today at a Strategy Briefing Day in Sydney which is scheduled to commence at 6:30am AWST / 8:30am AE
Slide 2: 2017 Strategy Briefing Day
2017 Strategy Briefing Day Wednesday, 7 June 2017
Slide 3: Agenda
Agenda Time Topic 8.00 – 8.30 am Registration Richard Goyder 8.30 – 9.10 am Introduction & Group Overview Terry Bowen 9.10 – 10.10 am Coles John Durkan 10.10 – 10.30 am Morning Tea break 10.30 – 11.30 am Home Improvement Michael Schneider Guy Russo 11.30 – 12.30 pm Department Stores Marina Joanou Ia
Slide 4: Group Overview
Group Overview Richard Goyder Managing Director, Wesfarmers Limited
Slide 5: Wesfarmers operating model
Wesfarmers operating model Inputs Value creating business model Outputs A portfolio of quality businesses s Robust financial capacity Superior long-term financial performance Superior people resources A strong Value adding transactions sustainable future Strong corporate infrastructure Group Overvie
Slide 6: Superior people resources
Superior people resources • Ability to attract, motivate & retain high calibre Women in senior manager roles2 % talent 30 28 • High-performance culture & strong focus on 26 team member development 24 22 • Strong talent pipeline within the Group to fill key 20 roles 18 16 • Continued focus on diversi
Slide 7: Succession management
Succession management Rob Scott Anthony Gianotti Michael Schneider Wesfarmers Deputy CEO Wesfarmers Deputy CFO1 Bunnings Group MD • Re-joined the Group in 2004 in • Joined Wesfarmers in 2004 in • More than 10 years with Bunnings Business Development Business Development • Various senior roles within
Slide 8: Strong corporate infrastructure
Strong corporate infrastructure Strong corporate infrastructure Wesfarmers’ core values underpin key corporate systems, processes & initiatives: • Lean corporate office • Divisional boards • Group wide planning, budgeting & monitoring processes • Executive talent development & key role succession pl
Slide 9: Our portfolio of businesses
Our portfolio of businesses Coles Department Stores Home Improvement Industrials Office Supplies • National full service • Australia’s largest • Leading home • World-class chemicals & • Leading Australian operator department store network improvement & outdoor fertilisers business retailer of office
Slide 10: Strong Australian presence with more than 4,000 stores
Strong Australian presence with more than 4,000 stores 2,447 3 5 24 8 63 98 301 1 606 111 33 50 60 29 291 58 22 304 43 15 32 9 28 143 47 98 133 57 445 744 93 95 163 73 118 608 51 6 9 2 74 50 31 5 7 373 Note: Number of stores as at 31 December 2016 & excludes distribution centres, manufacturing plant
Slide 11: Value creating business model
Value creating business model Long history of value adding transactions Group transaction activity $2b pre-tax gain (inflation adjusted transaction size) on divestments $b Coles Group 2.0 Acquisitions Howard Girrah coal Smith 1.8 Homebase Landmark Quadrant 1.6 IAMA Energy Coles credit 1.4 Australian
Slide 12: Superior long-term financial performance
Superior long-term financial performance Above market returns Total Shareholder Return1 TSR Index TSR since November 1984: (November 1984 = 100) Wesfarmers: 19.3% (CAGR) 35,000 All Ordinaries Accumulation Index: 10.8% (CAGR) 30,000 25,000 20,000 15,000 10,000 5,000 0 WES TSR (since listing) All Ordi
Slide 13: Superior long-term financial performance year view
Superior long-term financial performance 10 year view Annualised total shareholder return over 10 year intervals1,2 % 15 12 9 6 3 0 0 2003 1- 2013 2004 2 - 2014 2005 3- 2015 2006 4- 2016 2007 5- 2017 6 WES ASX50 Index 1 10 year intervals begin at 30 May & end at 29 May, e.g. 30 May 2003 to 29 May 20
Slide 14: Superior long-term financial performance: Returns-focused growth
Superior long-term financial performance Returns-focused growth Coles1 BANZ2 $m Officeworks $m % $m % % 2,000 12 1,500 40 160 16 10 1,500 30 120 12 8 1,000 1,000 6 20 80 8 4 500 500 10 40 4 2 0 0 0 0 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY09 FY10 FY11 F
Slide 15: Challenging Target performance
Superior long-term financial performance Challenging Target performance Target EBIT & ROC1 $m % 500 25 400 20 300 15 200 10 100 5 0 0 (100) (5) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 EBIT [LHS] ROC [RHS] 1 FY14 excludes pre-tax non-cash impairment of $967m. FY16 excludes the following pre-tax amoun
Slide 16: Strong operational focus in dynamic environments
Strong operational focus in dynamic environments BANZ performance relative to market expectations following announcement of Masters entry1 $m 1,500 1,000 500 0 FY12 FY13 FY14 FY15 FY16 1 Broker EBIT forecasts Actual EBIT outperformance 1 Reflects publically available BANZ broker EBIT forecasts for F
Slide 17: Creating wealth & adding value for all stakeholders
Creating wealth & adding value for all stakeholders $6.7b $8.4b Payments for rent, services Employees $1.5b & other external costs (salaries, wages & other benefits) Government (taxes & royalties) $0.3b Lenders (borrowed funds) $13.8b Value $2.1b Wealth distribution Value Shareholders (dividends) cr
Slide 18: Sustainability
Sustainability Safety Ethical Sourcing Diversity • Total Recordable Injury • Improved transparency of • Over 4,000 Indigenous Frequency Rate reduced our supply chain employees1 15% to 33.4 (3,211 factories audited) • Increased representation of women in management roles Community contributions Clima
Slide 19: Bunnings UK & Ireland (BUKI) update
Bunnings UK & Ireland (BUKI) update Phase 1 Phase 2 Phase 3 • Combine essential local • Retail basics focus elements with best of Bunnings • Invest in team to build new business • Invest in core business • Warehouse format activities • Lowest prices, wider choice with trusted brands, great service •
Slide 20: BUKI trading performance & work to date
BUKI trading performance & work to date • Significant disruption across all areas of the business – £16m ($26m) of restructure costs, concession exits & transition activity – Price deflation in line with expectations – Repositioning kitchen & bathroom offers • Retail basics focus: core business & cu
Slide 21: BUKI outlook
BUKI outlook • Total of four pilots by 30 June 2017 • Expect to have a total of 10 pilots by the end of 2017 • Successful pilots an absolute precursor to further investment • Concession removals to continue • Taking first steps towards introducing BUKI digital eco-system • Building trust • Long term
Slide 22: Balance sheet & cash flow
Balance sheet & cash flow Terry Bowen Finance Director, Wesfarmers Limited
Slide 23: Disciplined approach to delivering long-term shareholder returns
Disciplined approach to delivering long-term shareholder returns • Drive long-term earnings growth Cash flow generation • Manage working capital effectively • Strong capital expenditure & divestment processes • Diversify funding sources • Optimise funding costs Balance sheet strength • Maintain stro
Slide 24: Cash flow generation
Cash flow generation • Cumulative operating cash flows of $20.6b $m Cumulative cash realisation % 30,000 150 since FY12 – Long-term earnings growth 20,000 100 – Cash generative portfolio 10,000 50 – Strong focus on working capital efficiencies 0 0 FY12 FY13 FY14 FY15 FY16 1H17 • Average cash realisa
Slide 25: Capital expenditure
Capital expenditure • Strict capital disciplines Cumulative deployment of capital FY12 - 1H17 • Continued investments in improving retail store Net capex networks – Extensive refurbishment activity completed D&A across retail businesses Net capex less D&A – BUKI conversions subject to successful pil
Slide 26: Balance sheet & debt management
Balance sheet & debt management • Strong balance sheet $m 1,500 Debt maturity profile2 – Access to diverse funding markets 1,000 – Limited debt maturities in any given year 500 – Strong & stable credit ratings 0 » Moody’s: A3 (stable outlook) » Standard & Poor’s: A- (negative outlook) (500) FY17 FY1
Slide 27: Lease management
Lease management • Composition of fixed obligations weighted Fixed financial obligations (FY16) towards non-cancellable operating leases Bonds & bank • Disciplined management of off-balance sheet bilaterals 27% leases – Progressively reducing fixed lease tenure for new stores & lease renewals; focus
Slide 28: Shareholder distributions
Shareholder distributions • $13.2b in dividend payments & capital Shareholder distributions & capital returns $/share management distributions since FY12 3.5 3.00 3.0 – Includes $2.2b of capital management 2.30 2.5 1.00 associated with the Group’s dividend 2.0 1.65 0.50 0.10 2.00 1.86 investment & e
Slide 29: Q&A - Wesfarmers Group
Q&A - Wesfarmers Group Richard Goyder Managing Director, Wesfarmers Limited Terry Bowen Finance Director, Wesfarmers Limited Rob Scott Deputy Chief Executive Officer, Wesfarmers Limited
Slide 30: Coles
Coles Coles John Durkan Managing Director, Coles
Slide 31: Coles trading update
Coles trading update • Delivering a better customer offer remains the focus – Accelerated investment in the customer offer – Simplicity benefits have partially mitigated the impact of accelerated investment & fixed cost inflation • Investment in the customer offer increased in 2H17 – The vast majori
Slide 32: Market context
Market context Real wage growth • Household budgets are under pressure 6.0% 5.0% 1.2% 1.0% 4.0% 0.8% • Australia remains an attractive market 3.0% 0.6% 2.0% 0.4% – Market growth, while lower, remains above 1.0% 0.2% 0.0% other developed countries (1.0%) 0.0% (0.2%) – Moderate space growth relative t
Slide 33: Progress this year
Progress this year • Over 1,400 SKUs moved to stockless • High single-digit growth in supply channels produce sales • Customer-led range simplification • Continued investment with suppliers • Moved to net pricing with all suppliers to improve quality • OneShop now in 637 stores • OneTeam now in 56 s
Slide 34: Opportunities for further improvement
Opportunities for further improvement Price Service 1 in 3 Customers dissatisfied 1 in 5 Customers dissatisfied Range & Availability Fresh Quality 1 in 5 Customers dissatisfied 1 in 6 Customers dissatisfied Note: Dissatisfaction measured on a 12 week rolling basis as at May 2017 Coles 2017 Strategy
Slide 35: Improving our Supermarkets offer
Improving our Supermarkets offer Focus on freshness Better Customer Offer Coles Brand as a differentiator Simplicity as an enabler Coles 2017 Strategy Briefing Day | 34
Slide 36: Focus on freshness
Focus on freshness Further service investment Market leading prices More strategic Fresh partnerships All stores to have fresh bread Coles 2017 Strategy Briefing Day | 35
Slide 37: Better Customer Offer – giving range choice
Better Customer Offer – giving range choice • Coles is on a journey to simplify range Sales impact from range rationalisation Garbage bags Pasta Sauce • Three keys of customer-led range simplification +5% +6% – Major category resets – More product innovation on shelf – Range hygiene i.e. removing po
Slide 38: Coles Brand – the differentiator
Coles Brand – the differentiator • In a more competitive market Coles Brand will be an important differentiator • Step-changing Coles Brand is reliant on building trust with customers – Outstanding value & quality – A consistent experience across every aisle – A platform for innovation Coles Brand C
Slide 39: Simplicity as an enabler
Simplicity as an enabler • Step-change of in-store simplicity initiatives Moving from this – OneTeam, OneShop, In-aisle efficiencies, Simpler Tools, HR Reset, & Stockless Stockrooms • Investment in smarter systems – Streamlines the flow of stock – Enhances the capacity of the network • Focus on end-
Slide 40: New channels & services: customer-led, data driven & digitally enabled
New channels & services: customer-led, data driven & digitally enabled • Tailor-made customer offer • Investment in Coles app & Coles website to enhance mobile customer experience • Integration of digital into in-store experience • Process reengineering to enable rapid innovation & lean practices •
Slide 41: A better store network
A better store network • Continue to optimise existing space – 45 to 49 renewals in FY17 Index Continued sales density improvements (FY10 = 100) – 20 to 30 renewals in FY18 130 +25.0% 125 – Entire store fleet to receive a Simplicity upgrade 120 over the next 3 years 115 • Continue high quality net s
Slide 42: Liquor & Coles Express
Liquor & Coles Express • Liquor business – Liquor continues to execute on its five year turnaround strategy – Continued growth in sales & volume trends – Plenty of opportunity remains in value investment, range simplification, exclusive brand penetration & Liquor Direct • Coles Express – Committed t
Slide 43: Outlook
Outlook • Decisions taken to accelerate investment in the customer are the right decisions for the long term • Substantial opportunities for fresh food market share growth remain • Coles Brand sales under index, providing room for ongoing margin accretive growth • The pipeline for quality new stores
Slide 44: Q&A - Coles
Q&A - Coles John Durkan Managing Director, Coles Chris Nicholas Merchandise Director, Coles
Slide 45: Home Improvement
Home Improvement Michael Schneider Managing Director, Bunnings Group
Slide 46: Agenda
Agenda • Long-term value creation • Market evolution • Strategic agenda • Outlook Home Improvement 2017 Strategy Briefing Day | 45
Slide 47: Long-term value creation
<b) = oe} > LS & (<b) —_ c Tike Oo © Cc of JO
Slide 48: Long-term value creation
Long-term value creation Home Improvement 2017 Strategy Briefing Day | 47
Slide 49: Long-term value creation: Consistent strategy for growth
Long-term value creation: Consistent strategy for growth PRICE. RANGE. SERVICE. BANZ Home Improvement 2017 Strategy Briefing Day | 48
Slide 50: Long-term value creation: Achieving long-term growth & sustainable returns
Long-term value creation: Achieving long-term growth & sustainable returns • Continuing to invest capital for growth – Investing in ‘winning offer’ – More stores, new formats – Using capital even more efficiently • As always, focused on achieving market leading returns … over the long term New outdo
Slide 51: Market evolution
Market evolution
Slide 52: Market evolution: Addressable market expanded by evolution & innovation
Market evolution: Addressable market expanded by evolution & innovation Home Market size Improvement & Outdoor Living Home Aust market Improvement Today ~$50b Traditional Bunnings 20% Hardware 1980 2017 Note: $50b market relates to Australia only; New Zealand market size estimated at $NZ9b Home Impr
Slide 53: Market evolution: Current home improvement & outdoor living market
Market evolution: Current home improvement & outdoor living market $50B Note: $50b market relates to Australia only; New Zealand market size estimated at $NZ9b Home Improvement 2017 Strategy Briefing Day | 52
Slide 54: Market evolution: Addressable market wider than home improvement & outdoor living
Market evolution: Addressable market wider than home improvement & outdoor living $50B $50B Note: $50b market relates to Australia only; New Zealand market size estimated at $NZ9b Home Improvement 2017 Strategy Briefing Day | 53
Slide 55: While the market is evolving … so too are customer needs & our offer
While the market is evolving … so too are customer needs & our offer Electronic security Home automation Assisted living LED lighting Home Improvement 2017 Strategy Briefing Day | 54
Slide 56: HIOL market structure & drivers
HIOL market structure & drivers Home Improvement 2017 Strategy Briefing Day | 55
Slide 57: HIOL market structure & drivers
HIOL market structure & drivers Multiple Drivers Varied Formats note: online activity prevalent in all formats • Household disposable • Category specialists income • Hard goods mass • Renovation activity merchants • Housing • Traditional hardware – Churn, value & formation • Suppliers direct-to-mark
Slide 58: Market evolution: Continuous change to the competitive landscape
Market evolution: Continuous change to the competitive landscape • Strength of category specialists • International retailers well established, more will come – Varied formats including online • In-store experience & convenience remains important for customers • Masters closure has been disruptive;
Slide 59: Strategic agenda
Strategic agenda
Slide 60: Strategic agenda: Our strategic framework remains the same
Strategic agenda: Our strategic framework remains the same PRICE. RANGE. SERVICE. • Focusing on customers, team & community • Growing the market & our share • Long-term value creation Home Improvement 2017 Strategy Briefing Day | 59
Slide 61: Strategic agenda: Conscious choices across all activities giving customers best offer
Strategic agenda: Conscious choices across all activities giving customers best offer Home Improvement 2017 Strategy Briefing Day | 60
Slide 62: Strategic agenda
Strategic agenda Home Improvement 2017 Strategy Briefing Day | 61
Slide 63: Strategic agenda: Creating Better Experiences
Strategic agenda: Creating Better Experiences • More meaningful service; customer & community • Investing to improve processes – Easier & faster for customers; productivity gains • Continue expanding & improving services offer • Even more happening in store – Learning, sharing & fun • More community
Slide 64: Strategic agenda: Strengthening The Core
Strategic agenda: Strengthening The Core • Stronger Team – Continue improving safety – Build team diversity & effectiveness – Continue investing in knowledge & skills • Lift Productivity – Reduce touch points & less process … ‘simple & easy’ – Using technology to lower costs – Better information & i
Slide 65: Strategic agenda: Driving Stronger Growth (i)
Strategic agenda: Driving Stronger Growth (i) • Even More Customer Value – Reward customers every day – Create more breathtaking value – Be more local • Accelerate Digital Activities – More digital eco-system investment » Pre & post shop » Stock availabilities » Transaction capability for adjacent c
Slide 66: Strategic agenda: Driving Stronger Growth (ii)
Strategic agenda: Driving Stronger Growth (ii) • Deeper Commercial Engagement – Stronger customer relationships; higher engagement – Better experiences; all channels & customer segments – Wider product solutions by segment • More Merchandise Innovation – Wider ranges & new products – Focus on ‘easie
Slide 67: Strategic agenda
Strategic agenda Home Improvement 2017 Strategy Briefing Day | 66
Slide 68: Outlook
Outlook VEST PRICES YUST THE NNING... AR WUST i | | XGINNING... a
Slide 69: Outlook: Positioned for continued growth
Outlook: Positioned for continued growth Exciting market with strong long-term growth opportunities Mega Trends Positioned for Growth • Population growth & urbanisation • Partnerships with world’s best & Australia’s leading brands • Sustainability & energy efficiency ‒ innovation capabilities highly
Slide 70: Outlook: Positioned for continued growth
Outlook: Positioned for continued growth • Lots of runway in +$50b Australian HIOL market – By 2021 ~1.5m households will have >20 min drive to a Bunnings store – Similar opportunities in New Zealand • Ongoing opportunities in categories with low market share • Strong customer loyalty & brand trust
Slide 71: Q&A – Home Improvement
Q&A – Home Improvement Michael Schneider Managing Director, Bunnings Group Justin Williams Chief Financial Officer, Bunnings Australia & NZ
Slide 72: Department Stores
Department Stores Guy Russo Chief Executive Officer, Department Stores Marina Joanou Chief Financial Officer, Department Stores
Slide 73: Department Stores structure
Department Stores structure Department stores ‘Quality fashion & ‘Where families come ‘Fixing cars, the right basics for everyone first for the lowest prices way, for the right at low prices.’ on everyday items.’ price every time.’ Department Stores 2017 Strategy Briefing Day | 72
Slide 74: Addressable market opportunity – $80b
Addressable market opportunity – $80b Department Stores 2017 Strategy Briefing Day | 73
Slide 75: Differentiation through pricing & volume mix
Differentiation through pricing & volume mix Department Stores 2017 Strategy Briefing Day | 74
Slide 76: Working together commercially
Working together commercially • Network optimisation • Integrated ethical sourcing • Collaboration on sourcing • Joint procurement initiatives • Commercial alignment Steering Committee Finance Property Corporate Affairs & Sustainability Procurement Department Stores 2017 Strategy Briefing Day | 75
Slide 77: Department Stores network
Department Stores network 217 Kmart 251 KTAS 185 Target Large 2 3 45 55 119 Target Small 2 1 34 29 24 26 21 12 15 17 18 10 57 77 57 41 50 69 19 • Space optimisation 48 25 • Consolidated landlord negotiations 5 4 5 1 Department Stores 2017 Strategy Briefing Day | 76
Slide 78: Integration of sustainability & sourcing
Integration of sustainability & sourcing • Single Department Stores ethical sourcing program integrated across both brands • Partnership with global apparel textile brands & trade unions (ACT) • Development of sustainable factories & materials strategy • Implementation of LED lighting across all sto
Slide 79: Strategy life cycle
Strategy life cycle Grow Reset Fix Discovery Department Stores 2017 Strategy Briefing Day | 78
Slide 80: Target
Target Guy Russo Chief Executive Officer, Department Stores Managing Director, Target
Slide 81: Our vision
Our vision Target 2017 Strategy Briefing Day | 80
Slide 82: Our values
Our values Target 2017 Strategy Briefing Day | 81
Slide 83: Our strategy
Our strategy FIX RESET GROW FY17-19 FY19-20 FY21+ • Sequenced plan guiding transformation Target 2017 Strategy Briefing Day | 82
Slide 84: Volume, quality, fashion & basics
Product Volume, quality, fashion & basics • Improve merchandise disciplines • Increase direct sourcing • Reduce SKUs • Improve range architecture • Source at lowest end-to-end cost • Unrivalled value in quality & fashion Target 2017 Strategy Briefing Day | 83
Slide 85: Low prices every day
Price Low prices every day • Prices lowered • Transition to EDLP • Set prices commercially • Clear & consistent price architecture Target 2017 Strategy Briefing Day | 84
Slide 86: Brand love with mass reach
Promotion Brand love with mass reach • Reset marketing spend • Increase use of customer insights • Clear brand strategy & communication plan • Continue to evolve marketing mix • Engage customers at all touchpoints Target 2017 Strategy Briefing Day | 85
Slide 87: We’re back on TV…
We’re back on TV… TV commercials shown during presentation (Winter & Easter) Target 2017 Strategy Briefing Day | 86
Slide 88: Easiest customer experience
Customer Easiest customer experience • Improve store presentation • Lift store productivity • Improve supply chain efficiency • Simplify store processes • Implement consistent store layout • Drive an inspiring customer experience Target 2017 Strategy Briefing Day | 87
Slide 89: Great online experience
Online Great online experience • Establish commercially viable online range • Exit unprofitable lines • Improve click & collect offer • Focus on convenient customer experience • Drive sustainable model Target 2017 Strategy Briefing Day | 88
Slide 90: Great stores & locations
Place Great stores & locations • Define network plan • Renewal trials • Advance space & range trials Target 2017 Strategy Briefing Day | 89
Slide 91: Inspired team, living our values
People Inspired team, living our values • Embed vision & values • Build on safety culture • Develop clear accountabilities • Implement reward & recognition program • Relocate store support office • Create talent pipeline • Develop diversity strategy Target 2017 Strategy Briefing Day | 90
Slide 92: Outlook
Outlook • Business transformation will take time − Improve fashionability & quality of sales − Further focus on end-to-end costs − Progress renewal trials − Relocate store support office − Continue to focus on working capital Target 2017 Strategy Briefing Day | 91
Slide 93: Kmart
Kmart Ian Bailey Managing Director, Kmart
Slide 94: Business overview
Business overview • Revenue in excess of $5.1b (FY16) EBIT $m 500 • Sustained earnings growth 400 – Five year EBIT CAGR of 18.2% to 30 June 20161 300 200 • Strong return on capital 100 – 41.5% at 31 December 2016, up 4.9% 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 • 217 Kmart stores across Australia
Slide 95: Strategic framework
Strategic framework Kmart 2017 Strategy Briefing Day | 94
Slide 96: Purpose
Purpose Kmart 2017 Strategy Briefing Day | 95
Slide 97: Vision
Vision Kmart 2017 Strategy Briefing Day | 96
Slide 98: Pillars
Pillars Kmart 2017 Strategy Briefing Day | 97
Slide 99: Pillar 1: A great place to shop that is simple to run
Pillar 1: A great place to shop that is simple to run • Creating a store that is engaging & easy to shop for customers • An emphasis on self service • Creating innovative payment options • Simplifying store processes & continuing to improve culture • Improving product availability while reducing inv
Slide 100: Pillar 2: Better products at even lower prices
Pillar 2: Better products at even lower prices • Providing products that are ‘on trend’ at a low price • Product co-ordination across our stores • Delivering consistent quality product that is fit for purpose & exceeds customer expectations • Building committed relationships with our suppliers • Kee
Slide 101: Values
Values Kmart 2017 Strategy Briefing Day | 100
Slide 102: Aspiration
Aspiration Kmart 2017 Strategy Briefing Day | 101
Slide 103: Outlook
Outlook • Focus on driving sustainable growth through: – A great place to shop that is simple to run – Better products at even lower prices • Ongoing price investment to drive volume • Focus on reducing costs • Continued investment in the store network through new store openings & refurbishments Kma
Slide 104: Q&A - Department Stores
Q&A - Department Stores Guy Russo Chief Executive Officer, Department Stores Managing Director, Target Ian Bailey Managing Director, Kmart Marina Joanou Chief Financial Officer, Department Stores
Slide 105: Officeworks
Officeworks Mark Ward Managing Director, Officeworks
Slide 106: Agenda
Agenda • Ongoing value creation through clearly defined vision, purpose & strategy • Financial performance • Market overview • Our offer – Customer, Category, Channel • Strategic agenda • Outlook Officeworks 2017 Strategy Briefing Day | 105
Slide 107: Ongoing value creation through clearly defined vision, purpose & strategy
Ongoing value creation through clearly defined vision, purpose & strategy Place customers at the core of ‘To help make bigger things Basing every business decision our decision making in order to happen’ for customers in a way on how we support our ability to meet their needs & wants that supports &
Slide 108: Long-term financial performance
Long-term financial performance Headline sales EBIT $b 8.1% $m 13.6% 2.0 8.8% 140 14.6% 0.7% 1.6% 4.7% 10.8% 8.0% 4.4% 120 9.4% 8.1% 6.3% 1.5 100 13.8% 80 1.0 1.9 134 1.7 60 118 1.4 1.5 1.5 1.5 1.6 103 1.3 40 85 93 0.5 74 80 65 FY09-16 CAGR: 5.1% 20 FY09-16 CAGR: 10.9% 0.0 0 FY09 FY10 FY11 FY12 FY13
Slide 109: Officeworks
Officeworks 2017 Strategy Briefing Day | 108
Slide 110: Current addressable market is $19.8b with potential to increase further
Current addressable market is $19.8b1 with potential to increase further Current addressable Total market market opportunity 1 ~ $55b Market size 1 ~ $20b ~ $14b ~ $6b 2 2 Office Office Supplies Office Supplies, Technology, Print Broader market opportunity incl. Supplies & Technology & Copy, Furnitu
Slide 111: Market is highly fragmented with no single ‘like’ competitor
Market is highly fragmented with no single ‘like’ competitor • More than 50 major market participants • Offer targeted at fastest growing customer segments in the market • No shortage of competition but no ‘one-stop shop, every channel’ competitor – Competitors are category (or even subcategory) spe
Slide 112: Our offer: Disciplined focus on specific customer segments & product categories
Our offer: Disciplined focus on specific customer segments & product categories Category Description Office Includes writing instruments, office consumables, filing & supplies presentation equipment, paper products, art supplies, mailroom supplies, education resources & catering & cleaning supplies.
Slide 113: Our offer: Integrated multi-channel proposition to market
Our offer: Integrated multi-channel proposition to market Store team Apps members Sales growth in stores & online1 Stores $b % 1.8 18 Traditional Digital 1.7 16 media media 1.6 14 1.5 12 Phone 1.4 Online /fax 10 1.3 8 1.2 Social 1.1 6 media Internet 1.0 4 0.9 2 0.8 0 FY09 FY10 FY11 FY12 FY13 FY14 FY
Slide 114: A differentiated proposition that is difficult to replicate
A differentiated proposition that is difficult to replicate Widest Range Lowest Prices Great Service • ‘One stop shop’ • Single national price across • Multi-channel offer – clicks & bricks every state & territory of • > 30k products available in-store • Free ‘click & collect’ Australia & online • F
Slide 115: A clear strategic agenda for profitable long-term growth
A clear strategic agenda for profitable long-term growth 1 2 3 Strengthen & expand the Enhance productivity & Extend our reach customer offer efficiency 4 Invest in talent, diversity & safety 5 Make a positive difference in the community Officeworks 2017 Strategy Briefing Day | 114
Slide 116: Strengthen & expand the customer offer
Strengthen & expand the customer offer • Give customers more choice – New products that are differentiated through style, fashion & quality • Expand into new categories – Where customers give us permission to be, to maintain our ‘one stop shop’ proposition – Where we want to be, to continue driving
Slide 117: Extend our reach
Extend our reach Expanding the store network Enhancing the online experience • 5 to 7 new stores p.a. • Make it easy for customers • Refine the CBD store concept • Improve mobile experience • Regional expansion • Enhanced information / recommendations • Explore opportunity for alternative / new stor
Slide 118: Enhance productivity & efficiency
Enhance productivity & efficiency Working capital improvement Improve space utilisation • System investment to enhance stock turn • Disciplined range review process • Continued focus on managing cash flow • Optimise in-store layouts • Add / expand categories • Utilise print & copy space more effecti
Slide 119: Invest in talent, diversity & safety
Invest in talent, diversity & safety • Ongoing investment in leadership development 80.0 12.5% All injury frequency rate (R12) programs 2.8% 23.9% 60.0 • Continue to enhance the diversity of the team 23.7% 0.3% – Optimise recruitment practices 40.0 72.9 5.6% 35.4% 63.8 62.0 – Good progress being mad
Slide 120: Make a positive difference in the community
Make a positive difference in the community Environment • Major new initiative – Restoring Australia with Officeworks • LED lighting & BEMS1 in stores • 7m ink & toner cartridges recycled to-date Community partnerships • National & local - ‘We live here too’ • Aust. Literacy & Numeracy Foundation •
Slide 121: Outlook
Outlook • Continued focus on disciplined execution of strategic agenda Driving ‘every channel’ improvement Providing customers with a compelling offer – ‘one stop shop’ Delivering great customer service through an engaged team Providing best value Building strong relationships with stakeho
Slide 122: Q&A – Officeworks
Q&A – Officeworks Mark Ward Managing Director, Officeworks Michael Howard Chief Financial Officer, Officeworks
Slide 123: Industrials
Industrials Rob Scott Managing Director, Industrials
Slide 124: Industrials overview
Industrials overview Key deliverables in last year: Chemicals, Energy & Fertilisers • Operational efficiencies & cost reduction • Turnaround of underperforming businesses • Building capabilities to support growth Current focus areas: Wesfarmers Industrial & Safety • Leverage capabilities to grow mar
Slide 125: Our safety record: LTIFR (R12)
Our safety record: LTIFR (R12) WesCEF WIS Resources (Curragh) 7.0 7.0 7.0 6.0 6.0 6.0 5.0 5.0 5.0 4.0 4.0 4.0 3.0 3.0 3.0 2.0 2.0 2.0 1.0 1.0 1.0 0.0 0.0 0.0 Apr-17 Jun-14 Apr-17 Apr-17 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-11 Jun-12 Jun-13 Jun-15 Ju
Slide 126: The WesCEF portfolio
The WesCEF portfolio Chemicals PVC, Specialty Chemicals & Ammonium Nitrate Ammonia Sodium Cyanide Decking Energy Fertilisers Natural Gas & Electricity LPG & LNP Oil & Gas Fertilisers Note: Interests of less than 100% are held in AGR (75%), QNP (50%) & Quadrant Energy (13.7%) Industrials 2017 Strateg
Slide 127: Market position & dynamics
Market position & dynamics • Chemicals – Ammonium nitrate: Quality contracts in place. WA EGAN1 market moving to over-supply, although continues to grow – Ammonia: Low, but increasing global prices. Plant operating at full capacity – Sodium cyanide: Strong domestic position. Input costs increasing;
Slide 128: Current priorities
Current priorities • Chemicals Kleenheat Natural Gas – Upcoming expiry of EGAN contract partially offset by new contracts & exports – Ammonium nitrate emulsion plant to be commissioned in FY18 – Transition of PVC to import model complete – Plant & operating efficiencies improving raw material consum
Slide 129: Driving business improvement through technology
Driving business improvement through technology Automation Connected Operations Analytics Robotic Process Automation Low Cost Innovation Cloud Security Industrials 2017 Strategy Briefing Day | 128
Slide 130: The WIS portfolio
The WIS portfolio Blackwoods Workwear Group Coregas Supplier of industrial Industrial & corporate Industrial gas & safety products work wear distributor Industrials 2017 Strategy Briefing Day | 129
Slide 131: Strategic roadmap FY17 – FY18: ‘Grow, extend, improve’
Strategic roadmap FY19+: Grow FY17 – FY18: Transformation FY16: Fit for Growth ‘Grow, extend, improve’ Complete • Differentiating capabilities ‘Build capability’ – Technical expertise – Customised offers • Build the platform – Own-label ‘Reset the business’ • Right product at the right price • Fur
Slide 132: Significant progress to build the Blackwoods platform
Significant progress to build the Blackwoods platform • Sales channel focus on delivering tailored solutions to customer segments Sales & specialist • Integration of technical specialists within sales channels services • NZ businesses consolidated & rebranded to NZ Safety Blackwoods • Rollout of new
Slide 133: Enhancing customer experience & operations through digital & technology
Enhancing customer experience & operations through digital & technology • Simplifying Blackwoods: Automated decision tools – 200,000+ active SKUs – 110,000+ buy-ins – 2.5m+ orders p.a. – 145,000+ delivery locations • Digital & technology is being used to enhance business processes & customer interac
Slide 134: Leveraging the platform: Examples of recent activity
Leveraging the platform: Examples of recent activity Streamline range & suppliers • Review of first four categories complete: • Across these categories: – SKUs reduced 49% – Suppliers reduced 85% Relaunch flagship categories • Launch campaign for Power Tools currently in market • DeWalt, Milwaukee &
Slide 135: Workwear Group: Repositioning & reducing complexity
Workwear Group: Repositioning & reducing complexity Sales channels Recent contracts • Go-to-market channels realigned to better meet customer needs & target growth opportunities Supply chain • DC consolidation underway • Changes to product specifications & manufacturing sources have reduced costs Di
Slide 136: Coregas: The ‘challenger’ brand in industrial gases
Coregas: The ‘challenger’ brand in industrial gases • Increasing market share • Leveraging distribution of Blackwoods (gas) & Bunnings (Trade N Go Gas) in Australia & New Zealand (via recent acquisition of Supagas NZ) • Coregas Healthcare brand launched • Developing new markets opportunities e.g. CO
Slide 137: The Resources portfolio
The Resources portfolio Curragh Bengalla • 100% equity interest • 40% equity interest • Metallurgical coal for off-shore steel • Managed by Bengalla Mining Company manufacture (8.5mtpa capacity) • Steaming coal for Stanwell Power Station • High quality export steaming coal for Asia (3.5mtpa) • 10.7m
Slide 138: Export price uncertainty continues
Export price uncertainty continues • Chinese policy led to significant price volatility in Australian export coal market prices 1H17. Policy in 2H17 has aimed to stabilise (US$/t nominal FOB Australia) pricing Metallurgical coal • Cyclone Debbie temporarily restricted Australian 400 350 export suppl
Slide 139: We continue to seek operational improvements
We continue to seek operational improvements • At Curragh, a revised mine plan has been developed to target opportunities identified by the 2016 Expert Panel Review: • Improve coal recovery Coal flow • Optimise metallurgical coal products Optimise revenue • Flexibility to increase production when pr
Slide 140: Industrials outlook
Industrials outlook Chemicals Energy & Fertilisers • Chemicals: commissioning of AN emulsion plant, reducing gas input costs, production efficiencies & optimising the sales mix • Energy: growth in natural gas retail, preparing for full retail contestability in WA electricity & reducing costs • Ferti
Slide 141: Q&A - Industrials
Q&A - Industrials Rob Scott Managing Director, Industrials Anthony Gianotti Deputy Managing Director, Industrials Ian Hansen Chief Operating Officer, Chemicals, Energy & Fertilisers
Slide 142: Close
Close Richard Goyder Managing Director, Wesfarmers Limited
Slide 143: Wesfarmers
0s Wesfarmers