Wesfarmers Limited · ASX:WES
Wesfarmers — H1 FY2016 Earnings Presentation
38 slides from Wesfarmers's earnings presentation, Feb 24, 2016
Slide 1: 2016 Half-year Results Supplementary Information
2016 Half-year Results Supplementary Information To be read in conjunction with the 2016 Half-year Results Briefing Presentation to be held on Wednesday, 24 February 2016
Slide 2: Presentation outline
Presentation outline Item Presenter Page Coles John Durkan 3 Home Improvement & Office Supplies John Gillam 7 - Home Improvement 8 - Office Supplies 11 Department Stores - Kmart Guy Russo 13 - Target Stuart Machin 17 Industrials Rob Scott 21 - Chemicals, Energy & Fertilisers 22 - Industrial & Safety
Slide 3: Coles
Coles John Durkan Managing Director
Slide 4: Coles network
Coles network as at 31 December 2015 Selling Area Supermarkets (sqm) 1,771,912 6 7 12 Liquor (sqm) – ex hotels 209,825 161 229 76 91 111 5 75 129 782 Supermarkets 57 34 7 46 865 Liquor stores 245 276 1 89 Hotels 216 188 681 Convenience 206 208 16 15 Coles 2016 Half-year Results | 4
Slide 5: Store network movements
Store network movements Open at 30 Re- Open at 31 Opened Closed June 2015 branded Dec 2015 Supermarkets Coles 771 10 (3) - 778 Bi-Lo 5 - (1) - 4 Total Supermarkets 776 10 (4) - 782 Liquor First Choice 100 - (1) - 99 Vintage Cellars 79 2 (1) - 80 Liquorland 679 17 (10) - 686 Hotels 90 - (1) - 89 Tota
Slide 6: Revenue reconciliation
Revenue reconciliation 2015 2014 Half-year ended Food & Food & Convenience Total Convenience Total 31 December ($m) Liquor Liquor Segment revenue 16,496 3,591 20,087 15,559 3,924 19,483 (Gregorian)1 Less: Other revenue (212) (7) (219) (141) (7) (148) Headline sales 16,284 3,584 19,868 15,418 3,917 1
Slide 7: Home Improvement & Office Supplies
Home Improvement & Office Supplies John Gillam Managing Director
Slide 8: Bunnings network
Bunnings network as at 31 December 2015 3 240 Warehouse stores 67 Smaller format stores 42 9 7 28 9 4 32 Trade Centres 13 3 2 71 16 7 54 10 5 19 19 5 4 1 1 6 1 Home Improvement 2016 Half-year Results | 8
Slide 9: Store network movements
Store network movements Open at Open at Under 30 June Opened Closed 31 Dec Expanded construction 2015 2015 31 Dec 2015 Home Improvement Bunnings Warehouse 236 7 (3) 240 4 13 Bunnings smaller 65 3 (1) 67 - 5 formats Bunnings Trade 33 - (1) 32 - - Centres Home Improvement 2016 Half-year Results | 9
Slide 10: Home Improvement performance summary
Home Improvement performance summary Half-year end 31 December ($m) 2015 2014 % Revenue 5,500 4,959 10.9 EBITDA 776 686 13.1 Depreciation & amortisation (75) (68) (10.3) EBIT 701 618 13.4 EBIT margin (%) 12.7 12.5 Less: Net property contribution1 33 14 135.7 Trading EBIT 668 604 10.6 Trading EBIT ma
Slide 11: Officeworks network
Officeworks network as at 31 December 2015 1 158 Officeworks Stores 3 Fulfilment Centres 28 15 1 1 Customer Service Centre 8 1 Print Hub 55 1 1 1 49 1 2 Office Supplies 2016 Half-year Results | 11
Slide 12: Store network movements
Store network movements Under Open at 30 Open at 31 Opened Closed construction June 2015 Dec 2015 31 Dec 2015 Office Supplies Officeworks 156 4 (2) 158 2 Office Supplies 2016 Half-year Results | 12
Slide 13: Kmart
Kmart Guy Russo Managing Director
Slide 14: Kmart network
Kmart network as at 31 December 2015 2 3 206 Kmart stores 249 KTAS centres 43 53 23 26 15 18 53 76 47 69 14 5 4 4 Kmart 2016 Half-year Results | 14
Slide 15: Store network movements
Store network movements Open at Open at Opened Closed 30 June 2015 31 Dec 2015 Kmart 203 3 - 206 Kmart Tyre & Auto 246 4 (1) 249 Kmart 2016 Half-year Results | 15
Slide 16: Revenue reconciliation
Revenue reconciliation Half-year end 31 December ($m) 2015 2014 Segment revenue (Gregorian) 2,750 2,442 Less: Non sales revenue (1) (2) Headline sales (Gregorian) 2,749 2,440 Add: Gregorian adjustment1 50 50 Headline sales revenue (Retail2) 2,799 2,490 1 Adjustment to headline sales revenue to refle
Slide 17: Target
Target Stuart Machin Managing Director
Slide 18: Target network
Target network as at 31 December 2015 2 1 185 Large 121 Small 33 30 21 12 18 10 57 41 49 26 5 1 Target 2016 Half-year Results | 18
Slide 19: Target network
Target network Open at Open at Opened Closed 30 June 2015 31 Dec 2015 Large 183 5 (3) 185 Small 122 - (1) 121 Total 305 5 (4) 306 Target 2016 Half-year Results | 19
Slide 20: Revenue reconciliation
Revenue reconciliation Half-year end 31 December ($m) 2015 2014 Segment revenue (Gregorian) 1,972 1,935 Less: Non sales revenue - - Headline sales (Gregorian) 1,972 1,935 Add: Gregorian adjustment1 36 42 Headline sales revenue (Retail2) 2,008 1,977 1 Adjustment to headline sales revenue to reflect r
Slide 21: Industrials
Industrials Rob Scott Managing Director
Slide 22: Chemicals, Energy & Fertilisers - Business overview
Chemicals, Energy & Fertilisers - Business overview Business Geography Sector Key Customers Nickel, BHPB, Minara, AN, AGR, Ammonia WA internal Fertilisers Ammonium Dyno Nobel, Downer, Rio Tinto, WA/Global Iron ore, gold nitrate (AN) Orica, Fertilisers Ammonium (50%) Qld Coal BMA, Curragh, Rio Tinto
Slide 23: Chemicals, Energy & Fertilisers - Sales, pricing & production
Chemicals, Energy & Fertilisers - Sales, pricing & production Solid nitrogen sales in first half Decline in US$ ammonia pricing only partially offset kt $/t by lower A$ 1,200 2nd Half 1st Half 800 700 1,000 600 800 500 776 600 714 713 400 779 300 400 200 200 Ammonia (US$, FOB Middle East) 227 260 10
Slide 24: Industrial & Safety - Business overview
Industrial & Safety - Business overview Execution through four new business streams Blackwoods New Zealand1 Workwear Group1 Gas & Services Workwear & Maintenance, Repair & Operations, Safety Gas & Services uniforms 1 Improvement plans for New Zealand and Workwear Group to be finalised in 2H FY16. In
Slide 25: Industrial & Safety - Distribution network
Industrial & Safety - Distribution network As at 31 December 2015 458 locations with 233 branches, 169 gas distribution points & 56 Workwear franchises 1 Indonesia UAE 117 Blackwoods 1 1 UK 49 New Zealand 4 3 1 1 30 3 59 37 Workwear Group (+ 56 franchised) 31 1 16 11 14 3 3 13 1 8 1 34 Coregas (+ 16
Slide 26: Industrial & Safety - Demand driver
Industrial & Safety - Demand driver Private capital expenditure growth Coal, petrol & gas export price movements 100% 150.0% 70% 100.0% 40% 50.0% 10% 0.0% -20% -50% -50.0% 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 All industries Mining Source: ABS 5625.0, Privat
Slide 27: Resources - Global environment: current & short-term trends
Resources - Global environment: current & short-term trends • World blast furnace iron production trending downwards – Volatile Chinese import metallurgical coal demand – Chinese excess steel capacity being placed into global markets impacting price • Metallurgical coal market continues to be in ove
Slide 28: Resources - Australian coal market prices
Resources - Australian coal market prices Australian steaming coal prices Australian hard coking coal prices US$/tonne (nominal) FOB Australia (annual versus spot) US$/tonne (nominal) FOB Australia (annual versus spot) JPU Reference Price Spot Price Annual Reference Price Quarterly Benchmark Referen
Slide 29: Resources - Curragh productivity & mine optimisation
Resources - Curragh productivity & mine optimisation Mine cash costs per tonne • Continued focus on cost control & productivity (excl. carbon tax) improvements • 1H FY16 cash cost ~35% below 1H FY12 peak • Cost performance sustained by – Optimisation of mine operations – Ongoing supplier negotiation
Slide 30: Resources - Curragh export metallurgical sales product mix
Resources - Curragh export metallurgical sales product mix 1H FY16 Actual FY16 Forecast 4.2 million tonnes 7.3 – 7.8 million tonnes Stanwell Rebate $35m $55m - $65m Resources 2016 Half-year Results | 30
Slide 31: Resources - Coal production volumes
Resources - Coal production volumes Half-year ended (‘000 tonnes) Mine Ownership Coal Type Dec 2015 Dec 2014 Curragh, QLD 100% Metallurgical 3,986 4,580 Steaming 1,791 1,543 Bengalla, NSW1 40% Steaming 1,680 1,658 Total1 7,457 7,781 1 Wesfarmers attributable production. Resources 2016 Half-year Resu
Slide 32: Resources - Coal sales volumes
Resources - Coal sales volumes Half-year ended (‘000 tonnes) Mine Ownership Coal Type Dec 2015 Dec 2014 Curragh, QLD1 100% Metallurgical 4,175 4,271 Steaming 1,819 1,542 Bengalla, NSW2 40% Steaming 1,733 1,726 Total1 7,727 7,539 1 Curragh metallurgical coal sales excludes traded coal. 2 Wesfarmers a
Slide 33: Resources - FX hedging profile
Resources - FX hedging profile Hedge book - history Hedge book - current • Following a number of years of positive contribution, Remaining forward contracts more recent years impacted by currency hedge book Current US$ sold Average A$/US$ losses forward – open (US$m)1 hedge rate Curragh Bengalla $m
Slide 34: Resources financial summary
Resources financial summary Half-year ended 31 December1 2015 2014 Commentary Export revenue ($m) Produced – Realised 587 622 • Significant fall in export coal prices with benefit of a lower Australian dollar largely offset by hedge book losses – Hedge book gains/(losses) (70) 6 Total 517 628 Export
Slide 35: Group Balance Sheet & Cash Flow
Group Balance Sheet & Cash Flow Terry Bowen Finance Director Wesfarmers Limited
Slide 36: Group management balance sheet - overview
Group management balance sheet - overview ($m)1 1H15 FY15 1H16 Commentary Inventories 6,080 5,497 6,580 Receivables & prepayments 1,644 1,658 1,810 Detailed working capital discussion provided on Trade & other payables (6,383) (5,764) (7,063) slide 37 Other 501 393 520 Net working capital 1,842 1,78
Slide 37: Balance sheet – working capital
Balance sheet – working capital ($m)1 1H15 FY15 1H16 Commentary Inventories 6,080 5,497 6,580 • Retail divisions & WesCEF seasonally higher against FY15 • Inventory increased by $500m (1H FY16 v 1H FY15) mainly due to network expansion (Bunnings & Coles) & higher unit purchase costs due to a lower A
Slide 38: Wesfarmers
0s Wesfarmers