Slide 1: 2019 Full Year Results Presentation
2019 Full Year Results Presentation 22 August 2019 Sally Pearson and Coles Little Athletics Fund Community recipients. Since November 2018, Coles has provided more than $800,000 in grants to 217 Little Athletics centres nationally 2019 Full Year Results Presentation 22 August 2019
Slide 2: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its related bodies corporate (together, Coles) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not purport to be complete. It sho
Slide 3: FY19 summary
Graeme Beswick (centre), a Coles team member of 53 years, and Sabah Hermes, a Coles team member of 35 years, with store manager Steve Filianos at the launch of our recently reopened store in Prahran, Victoria FY19 summary
Slide 4: FY19 financial highlights
FY19 financial highlights Full year Supermarkets EBIT growth, final and special dividend determined Total sales revenue¹ EBIT (retail basis)¹ Supers comp sales growth $35.0bn $1.3bn 47 quarters of 3.1% vs. pcp (8.1)% vs. pcp consecutive growth Operating cash flow² Net capex Dividend3 $2.2bn $770m 35
Slide 5: Other business highlights
Other business highlights FY19 was a year of significant achievement for our team members, shareholders, suppliers and community partners ASX listed following a successful demerger from Wesfarmers Refreshed strategy to “sustainability feed all Australians to help them lead healthier, happier lives”
Slide 6: Coles’ purpose, vision and strategy
Coles’ purpose, vision and strategy Our vision. Become the most trusted retailer in Australia and grow long-term shareholder value 5
Slide 7: Coles’ strategic differentiators
Coles’ strategic differentiators ▪ Win in online food and drinks with an optimised store and supply chain network ▪ Be a great value Own Brand powerhouse and destination for health ▪ Achieve long-term structural cost advantage through automation and technology partnerships ▪ Create Australia’s most
Slide 8: Progress against strategy: Inspire customers
Progress against strategy: Inspire customers Through best value food and drink solutions to make lives easier. ▪ Increased customer engagement through successful marketing campaigns including Coles Little Shop, Fresh Stikeez and Fresh Containers and ▪ >1,200 Own Brand products introduced in FY19 wit
Slide 9: Progress against strategy: Smarter selling
Progress against strategy: Smarter selling Through efficiency and pace of change. ▪ Appointment of Group Executive Transformation to oversee multi-year program of change ▪ Wearable technology and deli easy ordering rolled out improving loss and availability ▪ Transport hubs established in WA and VIC
Slide 10: Progress against strategy: Win together
Progress against strategy: Win together With our team members, suppliers and communities. ▪ 20% reduction in TRIFR in FY19, improved team member MySay score by 3 percentage points ▪ >4,100 Indigenous team members – Australia’s largest private sector employer of Indigenous people. Further commitment
Slide 11: Coles’ strategy tracker
Coles’ strategy tracker KPIs Progress Reduced safety TRIFR ▪ 20% reduction in YoY TRIFR Increased team member ▪ Improved MySay team engagement score by 3 percentage points engagement Improved customer ▪ Customer satisfaction1 stable since Q2 at 87.8% satisfaction ▪ Supermarkets headline sales revenu
Slide 12: Group financial overview
Coles’ Own Brand range continues to lower the cost of living for our customers and now represents a $9 billion business. Wellness Road is a health focused sub-brand launched in May 2019 Group financial overview
Slide 13: FY19 results – Group
FY19 results – Group EBIT (excl. Hotels and pre-significant items) down 8.1% driven by lower Express fuel volumes and corporate costs associated with being a standalone ASX listed company Statutory result $m FY19 FY18 Change Sales revenue3 38,176 38,934 (1.9)% EBIT 1,467 1,479 (0.9)% EBIT margin 3.8
Slide 14: FY19 results – segment financials
FY19 results – segment financials Supermarket EBIT growth for the first time since FY16 Retail basis, pre-significant items FY19 FY18 $m (52 weeks) (52 weeks) Change Sales revenue Supermarkets 30,890 29,919 3.2% Liquor 3,063 3,006 1.9% Express 1,048 1,035 1.2% Group sales revenue (excl. Fuel sales a
Slide 15: Normalised cash flow
Normalised cash flow Strong cash realisation of 110% Normalised cash flow¹ Cash realisation² (non-IFRS) Coles will continue to report cash realisation excl. $m FY19 FY18 interest and tax and will target >100% in future years. Statutory EBIT pre-significant 1,343 1,479 items 110% 113% Depreciation &
Slide 16: Capital expenditure
Capital expenditure FY19 net capital expenditure in line with guidance of $700m to $800m, increased to drive long term growth Capital expenditure breakdown Key capital expenditure initiatives Statutory basis Store renewals ▪ 51 supermarket and 52 liquor $m FY19 FY18 renewals ▪ 259 Coles Express rene
Slide 17: Balance sheet
Balance sheet Strong balance sheet with investment grade credit metrics Balance sheet summary (non-IFRS) 30 Jun 30 Dec Net working capital $m 2019 2018 ▪ Inventory days of 25; trade payable days Cash and cash equivalents3 940 5823 of 27 2 Financial debt Inventories 1,965 2,429 ▪ Net debt of $0.5bn a
Slide 18: Capital management
Capital management Disciplined approach with attractive fully-franked dividend Dividend Bank facility maturity profile ($m) ▪ Coles Board determined a fully-franked total dividend of 35.5 cents per share, comprising a final of 24.0 cents per share and a special dividend of 2,540 11.5 cents per share
Slide 19: AASB 16 lease accounting update
AASB 16 lease accounting update ▪ Coles to apply AASB 16 from 1 July 2019 using the Estimated impact of new modified retrospective approach lease accounting standard ▪ Operating leases recognised on balance sheet as Balance sheet (1 July 2019)1 lease liabilities with corresponding right of use asset
Slide 20: Summary of significant items
Summary of significant items P&L line Item Comment $m item impact Provision for lease exit costs and redundancies Supply Chain Other expenses associated with the closure of a number of existing (146) Modernisation DCs New Alliance Cash gain in relation to payment from Viva Energy Agreement Other inc
Slide 21: Supermarkets
Fresh Stikeez and the Rainbow Challenge were loved by our customers encouraging children to eat more fresh fruit and vegetables! Supermarkets
Slide 22: Supermarkets key metrics
Supermarkets key metrics 47 consecutive quarters of comparable sales growth and positive full year Supermarkets EBIT growth for the first time since FY16 Total sales revenue Comp sales growth Sales per sqm $30.9bn 2.7% $16,704 +3.2% vs. pcp vs. pcp +1.5% vs. pcp Own Brand sales Coles Online sales Cu
Slide 23: Supermarkets FY19 results
Supermarkets FY19 results Strong sales and operating leverage FY19 results Key commentary Retail basis (52 weeks) ▪ Comparable sales growth of 2.7% driven $m FY19 FY18 Change by online and successful collectable Key P&L items campaigns Sales revenue 30,890 29,919 3.2% ▪ A continued investment in low
Slide 24: Liquor
A recently converted First Choice Liquor Market in Caroline Springs, Victoria Liquor
Slide 25: Liquor key metrics
Liquor key metrics Strong EBIT growth driven by Exclusive Liquor Brand penetration Total sales revenue Comp sales growth¹ Exclusive Liquor Brand $3.1bn 1.2% +1.9% vs. pcp vs. pcp 17.9% of sales +44bps vs. pcp Award winning FCLM renewals Number of stores¹ quality 189 30% 910 of the fleet ELB medals a
Slide 26: Liquor FY19 results
Liquor FY19 results Revenue growth driven by First Choice Liquor Market roll-out FY19 results Key commentary Retail basis (52 weeks) ▪ Comparable sales growth of 1.2% $m FY19 FY18 Change positively impacted by the First Choice Liquor Market roll-out Key P&L items Sales revenue 3,063 3,006 1.9% ▪ Slo
Slide 27: Express
Coles Express food-to-go offering has been rolled out to 93% of stores, including Windsor, Victoria Express
Slide 28: Express key metrics
Express key metrics Sales and EBIT impacted by lower fuel volumes. New Alliance Agreement to restore growth Total sales revenue C-store comp sales EBIT growth $1.0.bn 0.1% $50m excluding Fuel as per previous vs. pcp sales1 guidance Food-to-go growth 2H weekly fuel Number of sites volumes 12.4% 59.5m
Slide 29: Express FY19 results
Express FY19 results Positive trends in food-to-go category, now rolled out to 93% of stores FY19 results Key commentary Retail basis (52 weeks) ▪ Convenience store (c-store) $m FY19 FY18 Change comparable sales growth of 0.1% Key P&L items driven by declining tobacco sales and reduced traffic Sales
Slide 30: Outlook
Representatives from Coles with Neale Daniher, Bill Guest, Jamie Howden and Bec Daniher from FightMND. Coles raised almost $520,000 for FightMND donating 10 cents from every Coles brand pork product sold between 8 May and 16 June Outlook
Slide 31: FY20 outlook
FY20 outlook ▪ By way of a Q1 FY20 trading update, Little Shop 2 has again resonated with our customers and is driving strong engagement ▪ As envisaged cycling the comparable sales growth from last year’s highly successful Little Shop campaign will be challenging given competitor activity in the mar
Slide 32: Q&A
Sydney mother Sarah Miller with her nine-year-old son Cameron shop at Coles during Quiet Hour. In FY19, Coles expanded the roll-out of Quiet Hour to 261 supermarkets nationally Q&A