Tesco Plc · LSE:TSCO
Tesco — FY2008/09 Earnings Presentation
68 slides from Tesco's earnings presentation, Apr 21, 2009
Slide 1: Preliminary Results 21 April 2009
Preliminary Results 21 April 2009
Slide 2: David Reid, Chairman
David Reid Chairman
Slide 3: Slide 3
Slide 4: Acquisitions
Acquisitions Finance Centre 10.00am- Sunday 12.00 - 6,0
Slide 5: Organic growth
Organic growth China India US
Slide 6: Community promises
Community promises • Actively supporting local communities • Buying and selling our products responsibly • Caring for the environment • Giving customers healthy choices • Creating good jobs and careers
Slide 7: Community
Community 37 green stores £6.2m raised
Slide 8: Our people
Our people
Slide 9: Laurie McIlwee, Group Finance Director
Laurie McIlwee Group Finance Director
Slide 10: Results headlines
Results headlines • Solid growth in sales, profit and earnings • Continued investment in our strategy • Substantial structural cost savings • Good, well-covered dividend growth • Strong, property-backed balance sheet • Plans to bring capex down well below cash generation
Slide 11: Group performance
Group performance * • Sales £59.4bn, up 15.1% • Trading profit rose 12.4% to £3.09bn • Trading profit rose 16.2% before initial trading losses in the U.S. and the impact of Homever • Group underlying profit £3.13bn, up 10.0% * Growth reported on a consistent basis (12 months versus 12 months) for Ch
Slide 12: Property
Property
Slide 13: Group performance
Group performance • Group pre-tax profit up 5.5% • Lower growth rate principally due to IAS 32 and IAS 39
Slide 14: Returns to shareholders
Returns to shareholders • Good underlying diluted earnings per share growth despite exceptional tax rebate last year • Underlying diluted earnings per share up 9.7%* • Proposed final dividend 8.39p, up 9.0% • Full year dividend 11.96p, up 9.7% * Using constant tax rate & based on 52 weeks
Slide 15: UK retail sales growth
UK retail sales growth including petrol Sales up 9.5% 2.1% 0.4% 2.7% 4.3% Like-for-like New stores Week 53 TPF Total sales
Slide 16: UK like-for-like sales up 3.0%
UK • Like-for-like sales up 3.0%* • Like-for-like growth in the last seven weeks of the year 2.1%* • 3.4%* like-for-like growth in first six weeks of current year • 4.4%* like-for-like growth before VAT change * Ex-petrol
Slide 17: UK trading profit
UK trading profit • UK trading profit £2,381m, up 12.7% • UK trading margin 6.2% • Small contribution from TPF • Investment in the shopping trip funded from step-change savings of £540m
Slide 18: International
International • Sales £17.9bn, up 30.6% at actual rates • Sales excluding Fresh & Easy and Homever up 26.7% • Trading profits up 26.6% at actual rates* • Trading margin unchanged* * Excluding Fresh & Easy initial losses and Homever integration costs and pre-conversion losses
Slide 19: Asia
Asia • Sales £7.6bn, up 29.4% at actual rates • Excluding Homever, sales up 23.5% at actual rates • Trading profit rose to £355m • Excluding Homever, trading profit up 28.9% at actual rates • Margins strong, driven by performances in Malaysia and Thailand
Slide 20: Europe
Europe • Sales £10.1bn, up 29.1% at actual rates • Deteriorating demand in some markets • Trading profit rose to £496m, up 24.9% at actual rates
Slide 21: US
US
Slide 22: Retailing Services
Retailing Services • Investor seminar on Services planned • Sales £3.4bn, up 11%* • Trading profits rose to £460m, up 21%* * Including TPF on a pro-forma basis
Slide 23: Tesco Personal Finance
Tesco Personal Finance • Acquisition completed in December 2008 • High quality book, no toxic assets and strong liquidity • Bad debt experience better than industry average • Underlying profit before tax £244m (pro- forma basis)
Slide 24: Tesco Personal Finance
Tesco Personal Finance • Insurance over 65% of profits • Savings products attracted over 100,000 new customers • Grown savings book to over £4.5bn • Balance sheet in net surplus • Separate balance sheet provided • Core Tier One Ratio of 12%
Slide 25: JVs and Associates
JVs and Associates • Profits were £110m, up from £75m last year • Includes a 50-week contribution from TPF
Slide 26: Tax
Tax • Tax charged at an effective rate of 26.7% • Reflects new Corporation Tax rate from April 2008 • Expected tax rate this year around 27%
Slide 27: Net debt
Net debt • Increased to £9.6bn from £6.2bn – total capital outlay of £6.6bn in year – significant depreciation in Sterling – managed flow of property deals • Plan to reduce debt in current year • Average debt maturity of 11 years • 75% of debt at fixed rates • Weighted average coupon of 5.6% • No li
Slide 28: Net finance costs
Net finance costs • Net finance costs increased to £362m* • Underlying interest charge increased to £309m, up from £159m • Increase driven by rise in net debt * Includes the net return on our pension scheme’s assets and liabilities and the impacts of IAS 32 and 39
Slide 29: Pensions
Pensions • Award-winning defined-benefit pension scheme • Triennial valuation showed a small deficit of £275m* • Member and company contribution rates increased by an average of 0.7% of salary • Post-tax IFRS pension deficit is £1.1bn * As at 31 March 2008
Slide 30: Capital expenditure
Capital expenditure £bn 5.0 4.7 4.5 US 4.0 3.9 Europe 3.5 3.0 Asia 3.0 2.8 2.5 2.4 Group 2.0 1.5 UK 1.0 0.5 04/05 05/06 06/07 07/08 08/09
Slide 31: Capital expenditure
Capital expenditure £bn 5.0 4.7 4.5 4.0 3.9 3.5 3.5 3.0 3.0 2.8 2.5 2.4 2.0 1.5 1.0 0.5 04/05 05/06 06/07 07/08 08/09 09/10(F)
Slide 32: Operating cash flow
Operating cash flow • Operating cash flow of £5.0bn • Up from £4.1bn last year and £0.3bn higher than capex
Slide 33: Returns
Returns • On a 53 week basis, ROCE up to 13.0%* * Adjusting for new investment in TPF and Homever
Slide 34: Slide 34
Slide 35: Terry Leahy, Chief Executive
Terry Leahy Chief Executive
Slide 36: Slide 36
Slide 37: International
International
Slide 38: Growing market share
Growing market share Q4 Q4 07/08 08/09 Hungary 16.7 16.9 Slovakia 15.0 15.7 Czech Republic 7.7 8.3 Poland 4.8 5.3 Source: GFK
Slide 39: Non-food: clothing
Non-food: clothing Clothing up 11%
Slide 40: Central Europe
Central Europe Hungary Small Hungary formats
Slide 41: Europe
Europe Ireland Turkey
Slide 42: Asia
Asia Korea Thailand
Slide 43: Malaysia
Malaysia
Slide 44: Clubcard
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Slide 45: Asia
TESCO | vey vite holps
Slide 46: Focus
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Slide 47: New space
New space
Slide 48: International returns
International returns LFL cash return on investment (CROI)* % 13.1 13.0 12.8 12.7 12.5 12.2 12.0 11.4 11.0 03/04 04/05 05/06 06/07 07/08 08/09 Note: Excludes China * CROI is measured as earnings before interest, tax, depreciation and amortisation, expressed as a percentage of net invested capital.
Slide 49: Fresh & Easy
Fresh & Easy
Slide 50: Slide 50
Slide 51: UK
UK
Slide 52: Price
Price
Slide 53: Clubcard
Clubcard
Slide 54: Range
Range 30 washes* washing powder designed with power in mind Kam TOMATO
Slide 55: Service
Service
Slide 56: Availability
Availability NY y Ife. ova ™ TESCO | vey vite holps
Slide 57: Step-change
Step-change Reduced distribution costs Energy consumption down 8%
Slide 58: Non-food
Non-food
Slide 59: Tesco direct
Tesco direct Q TESCO | vey vite holps Order now, collect
Slide 60: Retailing services
Retailing services • Tesco Personal Finance • tesco.com • Telecoms
Slide 61: Tesco Personal Finance
Tesco Personal Finance Breakdown cower
Slide 62: tesco.com
tesco.com
Slide 63: Telecoms
Telecoms
Slide 64: Community
Community | a | -».. >. 4 4 4 4 42 aD Proud to be working with our local & community TESCO Proud to be working with our local community TESCO | Evey Little bolps
Slide 65: Summary
Summary • Strategy giving us momentum through the downturn • Our success is based on listening to customers • Adjusting our business and approach successfully • Step-change on community and climate change • Investing in our strategy • Platforms for growth internationally, in non-food and in services
Slide 66: Q&A
Q&A
Slide 67: Preliminary Results 21 April 2009
Preliminary Results 21 April 2009
Slide 68: International returns – 2008/09
International returns – 2008/09 £m capital invested 3,000 Korea 2,500 2,000 ROI 1,500 Poland Thailand Czech Republic 1,000 China Hungary Turkey Slovakia 500 Malaysia Japan 0 -2.0% 0.0% 2.0% c.7-10% 4.0% 6.0% c.10% 8.0% 10.0% 12.0% c.15% 14.0% 16.0% c.20%20.0% 18.0% LFL CROI