Slide 1: Half Year Results Presentation and Interim Dividend Announcement
A.B.N. 88 000 014 675 26 February 2010 For personal use only The Manager Companies Australian Securities Exchange Company Announcements Office Level 4 20 Bridge Street Sydney NSW 2000 Dear Sir, Re: WOOLWORTHS LIMITED HALF YEAR RESULTS PRESENTATION AND INTERIM DIVIDEND ANNOUNCEMENT Attached is a copy
Slide 2: Company Results Half Year ended 3 January 2010
For personal use only Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Half Year ended 3 January 2010
Slide 3: Highlights for Financial Half Year 2010
Highlights for Financial Half Year 2010 • A strong result overall which delivers on our long term plan to achieve For personal use only sustainable results for shareholders and customers across economic cycles • Continued focus on delivering value to customers and shareholders • Food and Liquor (Aus
Slide 4: Highlights – Half Year 2010
Highlights – Half Year 2010 For personal use only HY10 Growth Sales – Group $27.2b Ç 4.2% – ex Petrol $24.4b Ç 6.0% EBITDA $2,089.2m Ç 10.7% EBIT $1,683.2m Ç 11.1% NPAT $1,095.6m Ç 11.4% EPS 89.1¢ Ç 10.0% ROFE 17.7% Ç 23bps Delivering long term sustainable results 3
Slide 5: Highlights for the half year
For personal use only Highlights for the half year 4
Slide 6: Lower prices and greater transparency
Lower prices and greater transparency • Lower shelf prices - customers now For personal use only pay less for 3,500 grocery products than a year ago • Lower prices in addition to standard 2,000 weekly specials • Greater savings for customers improves shareholder value • 5,000 packaged grocery produc
Slide 7: Rollout of New Formats – Australia & NZ
Rollout of New Formats – Australia & NZ For personal use only • Strong customer response to all "We will continue to invest new formats in our store network" • 47% of Australian Supermarkets; "Enhanced shopping 38% of BIG W; 27% of Consumer Electronics and 33% of NZ experience for our customers" Sup
Slide 8: Private label and control brands
Private label and control brands For personal use only "All ranges continue to gain • Private label expansion continued stronger endorsement by our reflecting quality and value for customers" money offer - strong customer acceptance • Growth in product sales exceeds overall performance • Good levels
Slide 9: Now even more reasons to shop with us…
Now even more reasons to shop with us… For personal use only • Enhanced Everyday Rewards program and Qantas Frequent Flyer alliance • Understanding customers needs in a richer way • Providing customers with targeted special offers • 4.6m Everyday Rewards cards registered • 2.1m holders linked to QFF
Slide 10: Gift cards – Excellent customer acceptance
Gift cards – Excellent customer acceptance For personal use only • ‘Wish’ gift cards very successful • Gift card offer enhanced with divisional branded gift cards i.e. BIG W, Supermarkets, Petrol, Dan Murphy’s, BWS, Dick Smith • Gift Card Mall launched across Woolworths • Gift Card Mall carries both
Slide 11: BIG W Optical
BIG W Optical For personal use only • 23 optical sites in 4 states increasing to 27 by 30 June 2010 • Compelling offer in the marketplace • Strong brands e.g. Ray Ban, DKNY • Staffed with qualified optometrists Queen Victoria Village • Compliments our focus on home Melbourne and family 10
Slide 12: Continuing to invest in distribution and logistics
Continuing to invest in distribution and logistics • Successful commissioning of Melbourne and Sydney Liquor Distribution Centres. Brisbane Liquor DC commissioned in Q410 For personal use only • Construction of Tasmanian Regional Distribution Centre (RDC) begins this quarter • Investment in Sydney a
Slide 13: New Zealand Supermarkets
New Zealand Supermarkets For personal use only • Business transformation complete "Major business showing significant EBIT improvement transformation showing (up 24.3% on the prior half - NZD) benefits" • Difference between comparable store growth and inflation positive at 1.5%, reflecting volume an
Slide 14: Repositioning of Consumer Electronics
Repositioning of Consumer Electronics For personal use only • Rollout of new format across Australia "Techxpert advice at the and NZ - 117 stores converted to date; best price" 168 stores by end of FY10 • Comparable sales growth in converted stores well in excess of network • Improvements in range -
Slide 15: Home Improvement
Home Improvement • Acquired Danks in November 2009 - good progress on integration For personal use only • On track to achieve target of 150 sites secured within five years. More than 40 prime retail sites in the pipeline. First store to open in 2011 • Store design, layout and merchandising well prog
Slide 16: Online shopping
Online shopping For personal use only • Shopping online an increasingly important part of customer expectations • Continuing development to divisional websites to enhance customer useability • Total online sales up 41% with solid performances in Dick Smith and Supermarkets • Continue investment in t
Slide 17: Financial results
16 For personal use only Financial results
Slide 18: Report Card
Report Card In comparison with our regularly expressed goals For personal use only HY06 HY07 HY08 HY09 HY10 Sales will grow in the upper single digits assisted by bolt-on acquisitions - Group 18.4% 15.9% 8.6% 8.8% 4.2% - (excluding Petrol) 16.4% 16.2% 8.9% 8.1% 6.0% EBIT will outperform sales growth
Slide 19: Profit after tax – up 11.4%
Profit after tax – up 11.4% For personal use only $m 1,200 1,095.6 983.3 1,000 891.3 Ç 11.4% Ç 10.3% 800 2 695.6 Ç 28.1% 1 600 543.1 Ç 28.1% 400 Ç 22.1% 200 HY08 HY09 HY07 HY06 HY10 0 1. Includes Progressive (NZ) business and 20 Australian ex-FAL store results from 2 November 2005, BMG from 1 July 2
Slide 20: EBIT – up 11.1%
EBIT – up 11.1% EBIT growth underpinned by strong growth in Australian Food and Liquor For personal use only $m 2,000 Total Group 1,600 Ç 11.1% EBIT Ç 10.2% Australian Food 1,200 Ç 11.4% and Liquor EBIT Ç 20.0% Ç 16.6% 800 Ç 27.0% Ç 19.4% Ç 31.5%1 Ç 29.4% 400 Ç 16.8% HY06 HY09 HY08 HY10 HY07 0 1. Gr
Slide 21: CODB / Sales
CODB / Sales CODB/Sales increased slightly. When we exclude the distortion of Petrol and Hotels, we delivered a solid CODB reduction. However we did not quite achieve the 20bps target due to the For personal use only decline in inflation in Australian Supermarkets Percentage 20.50 20.09% 20.02% 20.0
Slide 22: Gross Profit Margin
Gross Profit Margin Gross margins for the group have increased 56bps reflecting the impact of moving from a direct For personal use only to store delivery model to distribution centres in liquor, the benefits of global buying, improved shrinkage rates, increasing sales of private label products and
Slide 23: Dividends per share — Interim
Dividends per share — Interim Cents For personal use only 55 53 48 Ç 10.4% 44 45 Ç 9.1% 35 Ç 25.7% 35 28 Ç 25.0% 25 Ç 16.7% 15 HY06 HY07 HY08 HY09 HY10 5 Dividend pay-out ratio of 60% is in line with the previous half year 22
Slide 24: Australian Supermarket Division
Australian Supermarket Division HY09 HY10 Change Comparable Sales – Aust. F&L – H1 4.8% For personal use only Sales ($m) - Food & Liquor 16,983 18,143 6.8% Percentage - Petrol 3,072 2,781 (9.5)% 10 8.8 7.9 8 7.1 - Total 20,055 20,924 4.3% 6.0 5.8 6 3.8 Gross margin (%) 23.69 24.41 72bps 4 2 CODB (%)
Slide 25: Petrol
Petrol For personal use only • Sales of $2.8 billion, down 9.5% “Strong customer recognition and acceptance of our offer" • Comparable sales decreased by 11.2% reflecting fuel sell prices below last year (HY10:$1.22 / litre; HY09:$1.38 / litre) • Comparable volumes increased 0.9% reflecting the stre
Slide 26: Liquor
Liquor For personal use only • All Liquor operations (Dan Murphy’s, "We continue to expand our BWS and attached liquor) recorded range of exclusive brands strong growth in sales, profit and market share and control labels" • Liquor DC’s opening and application of systems (e.g. AutostockR, warehouse
Slide 27: New Zealand Supermarkets
For personal use only New Zealand Supermarkets NZD HY09 HY10 Change Comparable Sales – H1 4.2% Sales ($m) 2,571 2,686 4.5% Percentage Gross margin (%) 21.38 22.10 72bps CODB (%) 17.54 17.53 (1)bps 10 EBIT to sales (%) 3.84 4.57 73bps 4.5 5.5 5 3.9 Trading EBIT ($m) 98.8 122.8 24.3% 3.0 3.0 3.2 Less
Slide 28: BIG W
BIG W HY09 HY10 Change Comparable Sales – H1 0.4% For personal use only Sales ($m) 2,406 2,462 2.3% Percentage 11.5 12 Gross margin (%) 28.89 29.07 18bps 8 6.4 6.7 CODB (%) 22.98 22.94 (4)bps 4.4 3.9 4 EBIT to sales (%) 5.91 6.13 22bps 0 EBIT ($m) 142.2 150.8 6.0% -4 Q1 Q2 Q3 Q4 (2.1) Funds Employed
Slide 29: Consumer Electronics – Australia & NZ
Consumer Electronics – Australia & NZ Australia (AUD) HY09 HY10 Change New Zealand (NZD) HY09 HY10 Change For personal use only Sales ($m) 681 710 4.3% Sales ($m) 191 187 (2.1)% Gross margin (%) 25.72 27.50 178 bps Gross margin (%) 25.10 26.42 132 bps CODB (%) 18.56 21.61 305 bps CODB (%) 22.58 23.6
Slide 30: Consumer Electronics – India
Consumer Electronics – India For personal use only • Business venture with TATA now services 40 ‘Croma’ retail stores • Woolworths Limited provides buying, wholesale, supply chain and general consulting services to TATA Mumbai • Wholesale operations are meeting expectations with sales of $124 millio
Slide 31: Hotels
Hotels HY09 HY10 Change Comparable Sales For personal use only Sales ($m) 592 591 (0.2)% Percentage 5.0 Gross margin (%) 83.17 82.39 (78)bps 3.0 2.3 0.9 0.6 1.0 CODB (%) 62.03 63.00 97bps (1.0) (3.0) (0.8) (1.2) EBIT to sales (%) 21.14 19.39 (175)bps (5.0) (4.0) Q1 Q2 Q3 Q4 EBIT ($m) 125.1 114.6 (8.
Slide 32: Cash Flow – Strong operating cashflows
Cash Flow – Strong operating cashflows For personal use only $m HY09 HY10 Comments EBITDA 1,887.7 2,089.2 +10.7% Net interest paid (including cost of income notes) (123.7) (125.9) Interest paid is flat reflecting good cash management Taxation paid (456.8) (462.6) 1,307.2 1,500.7 +14.8% Net (decrease
Slide 33: Balance Sheet
Balance Sheet $m FY09 HY09 HY10 • Reduction of $335m primarily reflecting For personal use only timing of creditor payments last year. Inventory 3,292.6 3,488.5 3,718.9 Creditor days HY10 51.2; HY09 47.8; HY08 Trade Payables (4,055.1) (4,270.3) (4,836.1) 52.4 Net investment in inventory (762.5) (781
Slide 34: Average Inventory Days
Average Inventory Days Inventory days increased 1.5. When we exclude the impact of incremental imported inventory, additional inventory associated with our new liquor DC's and petrol, inventory days decreased by For personal use only 0.8 days Number of Days 33.9 34.00 33.1 33.00 32.5 32.4 32.00 31.0
Slide 35: Shareholder Payouts
Shareholder Payouts Profit growth, coupled with balance sheet management, For personal use only delivered over $7 billion payout to shareholders since July 2001 $m Buy Back 1,400 1,280 Dividend 400 1,200 1,121 1,057 1,000 941 894 400 534 800 534 693 604 538 600 141 400 346 463 407 657 HY10 FY02 FY04
Slide 36: Capital Management
Capital Management • Capital structure objective to enhance shareholder value through optimising weighted average cost of capital whilst retaining flexibility to pursue growth and For personal use only capital management opportunities • Capital management activity over the recent past not pursued du
Slide 37: Return on funds employed
Return on funds employed1 For personal use only Percentage 20.00 17.85% 17.74% 18.00 17.51% 16.00 15.71% 14.87% 14.00 12.00 HY08 HY09 HY07 HY06 HY10 10.00 1. Based on average of opening and closing funds employed 36
Slide 38: Return on equity
Return on equity1 For personal use only Percentage 16.00 14.97% 15.08% 14.63% 14.18% 2 14.00 13.74% 12.00 HY08 HY09 HY07 HY06 HY10 10.00 1.Based on closing Shareholders Funds 2.Decline in ROE due to impact of 81.6 million shares issued to acquire Foodland, equity issued with the Dividend Reinvestmen
Slide 39: Strategy and Growth
For personal use only Strategy and Growth 38
Slide 40: Strategy and growth
Strategy and growth Consistent and clear strategies that leverage our core strengths For personal use only Woolworths targets the following key areas of performance measurement in the long term, namely • Sales (excluding Petrol Sales) to grow in the upper Clearly stated single digits assisted by bol
Slide 41: Key growth initiatives
Key growth initiatives For personal use only Continuing to Continuing to re-invigorate our offer drive our core through investment business focusing in price, range, on our customers merchandise and quality Leveraging our Expansion of Expansion of supply chain Global Sourcing private label capabilit
Slide 42: Sales and Earnings Guidance FY10
For personal use only Sales and Earnings Guidance FY10 The second half of the year is expected to be impacted by low price inflation and the cycling of the government stimulus packages. Discretionary spending levels will continue to be influenced by macro- economic factors, such as interest rates, p
Slide 43: Appendices
42 For personal use only Appendices
Slide 44: Half Year Sales of $27.2b – up 4.2%
Half Year Sales of $27.2b – up 4.2% For personal use only – up 6.0% excl Petrol Prior Year 2 Year Half Year $m HY09 HY10 Increase Increase CAGR1 Comp Sales Australian Food and Liquor 16,983 18,143 6.8% 9.0% 7.9% 4.8% New Zealand Supermarkets (NZD) 2,571 2,686 4.5% 3.5% 4.0% 4.2% New Zealand Supermar
Slide 45: EBIT – up 11.1% growing faster than sales
For personal use only EBIT – up 11.1% growing faster than sales $m HY09 HY10 Change Australian Food and Liquor 1,166.6 1,299.4 11.4% New Zealand Supermarkets (NZD) 91.9 116.6 26.9% New Zealand Supermarkets (AUD) 68.4 96.9 41.7% Petrol 45.7 51.2 12.0% Supermarkets Division 1,280.7 1,447.5 13.0% BIG W
Slide 46: Earnings per share – up 10.0%
Earnings per share – up 10.0% For personal use only Cents 100 89.05 80.93 Ç10.0% 80 74.06 Ç9.3% Ç25.9% 58.83 60 50.46 Ç16.6% Ç16.1% 40 20 HY07 HY08 HY09 HY06 HY10 0 45
Slide 47: Capital Expenditure – Half Year
Capital Expenditure – Half Year New Stores2 Refurbs For personal use only HY09 HY10 $m Actual Actual Store numbers 2010 2009 2010 2009 New Stores 132 118 Australian Supermarkets3 21 15 42 98 Refurbishments 376 327 Growth Capex 508 445 Liquor 34 49 35 53 Stay in Business 185 111 PEL - NZ Supermarkets
Slide 48: Capital Expenditure – Full Year
Capital Expenditure – Full Year Current Previous $m – Full Year 2008 2009 2010 $m – 2010 Actual Actual Fcast Fcst Fcst Var For personal use only New Stores 254 248 6 New Stores 262 254 254 Refurbishments 627 767 (140) Refurbishments 643 652 627 Growth Capex 881 1,015 (134) Growth Capex 905 906 881 S
Slide 49: Capital Expenditure – Notes
Capital Expenditure – Notes • Reflects the continued rollout of new stores across all our brands. For personal use only New Stores • Reflects the accelerated rollout in 2009 to achieve an initial critical mass of new formats across the brands. In 2010 we have resumed more normal levels of Refurbishm
Slide 50: Key growth initiatives
Key growth initiatives • We have completed a substantial portion of the end-to- For personal use only end supply chain program in Australian Supermarkets Leveraging our • The financial benefits of this world class supply chain supply chain will continue over future years expertise • The intellectual
Slide 51: Key growth initiatives
Key growth initiatives • We continue to expand our global sourcing activities. As For personal use only we increase our capabilities in this area we continue to secure cost price savings and improvements in both Expansion of quality and range Global Sourcing • Focus on improving international logist
Slide 52: Key growth initiatives
Key growth initiatives • We continue to invest in our financial services For personal use only capabilities with a well developed product roadmap that leverages our cards program Financial • Financial switch provides very high reliability for Services processing of financial transactions (at a lower
Slide 53: Key growth initiatives
Key growth initiatives • Woolworths is focussed on our core businesses in For personal use only Australia and New Zealand and continues to re-invest in each of the businesses. Woolworths will continue to Measured and assess growth opportunities as they arise and has a disciplined disciplined and tar
Slide 54: Key growth initiatives
Key growth initiatives We have defined plans for space growth, with minimal For personal use only cannibalisation expected • Adding 15-25 new supermarkets each year and expanding existing stores (greater than 3% space Defined rollout pa) plans for • Targeting 200+ BIG W stores space growth • Hotels