Woolworths Holdings Limited · JSE:WHL
Woolworths — FY2003 Earnings Presentation
23 slides from Woolworths's earnings presentation, August 2003
Slide 1: Investment analysts: a year of continued growth
WOOLWORTHS HOLDINGS LIMITED \ ( H [ investment analysts a year of continued growth august
Slide 2: Agenda
woolworths holdings limited agenda • Group results • Woolworths Holdings Limited • Woolworths Operating Group • Country Road Limited • Woolworths strategy • Clothing and home • Foods • Financial services • Franchise and international • Country Road Limited • Woolworths Holdings Limited • Areas of co
Slide 3: Highlights
woolworths holdings limited highlights • From continuing operations: • Revenue up 14.4% • Operating profit up 29.6% • Net profit before tax and exceptional items up 25.0% • Headline earnings per share: • Continuing operations up 40.3% • Headline earnings per share - 3 year compound annual growth 36.
Slide 4: Trading environment
woolworths holdings limited trading environment • SA strong consumer demand in summer 2002 • Deteriorated in 2003 particularly in second quarter • High interest rates • Late winter • Exchange rate impact on clothing prices • Rapidly declining food inflation from December • Australia - low consumer c
Slide 5: Portfolio strategy
woolworths holdings limited portfolio strategy Risk balancing portfolio : Geographic location South Africa and Africa, Middle East, Australia Annuity income Food Clothing (core RPL) Retail component of Woolworths Financial Services
Slide 6: Woolworths operations highlights
woolworths operations highlights • Sales up 15.4% (17.3% on 52:52 week basis) • Profit before tax and exceptional items up 26.1% • Clothing and foods market share increased • Good performance in womenswear, menswear and footwear • Roll out of food micro stores towards end of year • Financial service
Slide 7: Country Road Limited highlights
country road limited highlights • From continuing operations: • Sales level to last year • Profit before tax A$2,4m (2002 : A$1,1m) • Further sustainable cost reductions • Supply chain processes complete • More retail focussed business – David Jones decision
Slide 8: Income statement – continuing operations
woolworths holdings results income statement – continuing operations June June 2002 % Change 2003 53 weeks 52:53* 52 weeks Rm Rm Revenue 10 094,8 8 825,6 14.4 Turnover 9 500,3 8 421,4 12.8 Cost of merchandise 6 358,6 5 571,8 14.1 Gross profit 3 141,7 2 849,6 10.3 Other income 594,5 404,2 47.1 Expens
Slide 9: Income statement
woolworths holdings results income statement June 2003 June 2002 % 52 weeks 53 weeks Change Rm Rm Net profit after tax – continuing 549,5 395,6 38,9 operations Minority interests (1,2) (2,1) Discontinued operations 1,3 (135,5) Attributable earnings – all operations 549,6 258,0 113.0 Headline adjustm
Slide 10: PBTAE, HEPS and DPS (continuing operations)
woolworths holdings results PBTAE, HEPS and DPS (continuing operations) 64.8 HEPS (cents) 46.2 32.3 28.6 29.0* DPS 25.4 (cents) 20.0 14.0 14.0 15.0 R360,0 R376,6 R433,7 R640,7 R800,6 m m m m m 1999 2000 2001 2002 2003 * distribution from share premium
Slide 11: Balance sheet
woolworths holdings results balance sheet June June Change 2003 2002 Rm Rm Rm Assets Property, plant and 1 037,6 916,1 121.5 equipment Export partnerships 183,2 210,0 (26.8) Inventories 564,4 511,2 53.2 Financial services’ assets 2 230,6 1 800,5 430.1 Accounts receivable 560,3 507,5 52.8 Cash 216,0
Slide 12: Cash flow
woolworths holdings results cash flow June 2003 June 2002 Rm Rm Cash generated by operations, before 1 201 836 tax* Increase in net borrowings 154 299 1 355 1 135 Utilised by : Tax paid (192) (284) Distribution to shareholders (201) (146) Capex (370) (335) Proceeds on disposal of property, 39 147 pl
Slide 13: Cash flow (cont.) capex additions
woolworths holdings results cash flow (cont.) capex additions R414m* growth in Retail IT R182m (44%) woolworths financial development R216m (52%) services assets R424m Visa card R29m (6.8%) Personal loans R74m (17.5%) WW card Other R321m (75.7%) R16m (4%) *capex additions R414m capex spend R370m
Slide 14: Return on equity / WACC
woolworths holdings results return on equity / wacc 21.0% 19.0% 17.0% 16.0% 13.0% 14.3% 11.6% 12.9% 18.3% 23.7% 1999 2000 2001 2002 2003 ROE (headline earnings basis) WACC
Slide 15: Woolworths operations income statement
woolworths operations results income statement June June % 2003 52 2002 Change weeks 53 52:53* weeks Rm Rm Revenue 9 012,9 7 700,8 17.0 Turnover 8 430,0 7 302,0 15.4 Cost of merchandise 5 845,9 5 010,8 16.7 Gross profit 2 584,1 2 291,2 12.8 Interest received and other 582,9 398,7 46.2 revenue Operat
Slide 16: Woolworths operations performance
woolworths operations performance June 2003 June % 52 weeks 2002 Change Rm 53 weeks Rm Turnover 8 430,0 7 302,0 15.4 Textiles 4 280,4 3 834,1 11.6 Corporate (retail) 3 768,0 3 435,9 9.7 Franchise 512,4 398,2 28.7 (wholesale) Foods 3 980,8 3 302,1 20.6 Corporate (retail) 3 876,2 3 255,4 19.1 Franchis
Slide 17: Country Road income statement – continuing operations
country road limited results income statement – continuing operations June 2003 June 2002 % Change A$m A$m Revenue 207,1 206,5 0.3 Turnover 204,8 205,0 (0.1) Cost of merchandise 97,8 103,5 (5.5) Gross profit 107,0 101,5 5.4 Other revenue 2,3 1,5 53.3 Operating expenses 105,8 101,0 4.8 Operating prof
Slide 18: Woolworths: the difference
W WOOLWORTHS the difference
Slide 19: Strategy 2003/04
woolworths operations strategy 2003/04 Strategic intent : We aspire to being the most trusted and respected African retail brand We will achieve this by nurturing and building lifetime relationships with our customers These relationships will be earned by us all making the Woolies difference
Slide 20: Integrating our strategies
woolworths operations integrating our strategies 2003/04shareholder value exceptional customer focused shopping experience, every time growth •clothing & home • foods • financial services • international operational efficiency through simplifying our business be passionate, committed & talented reta
Slide 21: Strategy 2003/04: the opportunity area
woolworths operations strategy 2003/04 The opportunity area Foods Homeware Lingerie Ladieswear Menswear The opportunity area Childrensw ear WFS6 LSM LSM 6 LSM 7 LSM 8 LSM 9 LSM 10
Slide 22: Store expansion plan
woolworths operations 4 year store expansion plan stores Current storesIntended June 2003 June 2007 Full line stores 69 79 Food stand alone and micro stores including Engen 48 141 Franchise – local and international 110 176 Textiles only 8 6 Total 235 402
Slide 23: Strategy 2003/04 – operation efficiency
woolworths operations strategy 2003/04 - operation efficiency • Replenishment programme replacements • RETEK implementation Benefits • Better availability • Reduction in operating costs – waste, stock levels, markdowns • Better management control – pipeline stock and margins Costs • R150m