Woolworths Group Ltd · ASX:WOW
Woolworths — FY2020 Earnings Presentation
67 slides from Woolworths's earnings presentation, August 2020
Slide 1: Company Results Full Year 2020
COMPANY RESULTS FULL YEAR 2020 1
Slide 2: Woolworths Group Purpose
Woolworths Group Purpose What we mean by ‘we’ What we mean by What we mean by Our team and our partners ‘create’ ‘experiences’ We constantly innovate to make The moments we create in store and a positive impact on the lives of online for customers, communities and our customers and team shareholders
Slide 3: Contents
Contents F20 Group Summary & Progress 4 Brad Banducci Group Financial Results 14 Stephen Harrison Business Performance Update 28 Outlook 57 Brad Banducci
Slide 4: Living our purpose and operating COVIDSafe
Living our purpose and operating COVIDSafe COMPANY RESULTS FULL YEAR 2020 4 At Woolworths Group we have adapted the way we operate in this new stage of the pandemic, making COVIDSafe a part of everything we do. Since the recent acceleration in community transmission across Victoria, we have had to l
Slide 5: Operating COVIDSafe – the detail
Operating COVIDSafe – the detail COMPANY RESULTS FULL YEAR 2020 5 • Automatic hand sanitiser stations in all stores with extra sanitiser provided in Fresh Departments and Support Offices PPE • Face masks made available to all team members (mandatory in Victoria) • Access to disposable gloves with ad
Slide 6: F20 summary
F20 summary COMPANY RESULTS FULL YEAR 2020 6 Primary focus on customer and team safety Strong customer metrics and sales growth across all Group businesses (except Hotels) Record online growth rates and penetration despite COVID-19 capacity constraints Material improvement in BIG W profitability Com
Slide 7: Woolworths Group F20 priorities
Woolworths Group F20 priorities COMPANY RESULTS FULL YEAR 2020 7 Customer 1st Team 1st Brand & Culture Build connected capabilities for the future Connected, Convenient and Safe Ways to Shop Create differentiation in all our businesses Differentiate our Evolve our Unlock Value Food Customer Drinks B
Slide 8: Progress against key priorities (i)
Progress against key priorities (i) COMPANY RESULTS FULL YEAR 2020 8 • Strong increase in Group VOC NPS and Brand NPS scores in H2. Named Australia’s second most trusted brand during COVID-19 by Roy Morgan Risk Monitor • Team recognition bonus paid to store team members reflecting their contribution
Slide 9: Progress against key priorities (ii)
Progress against key priorities (ii) COMPANY RESULTS FULL YEAR 2020 9 • Improvements in Dan’s range, convenience, and value really resonating with customers • Growth in Pinnacle sales following renewed focus, particularly in Wine • Extended Endeavour Marketplace’s service to assist small producers w
Slide 10: Woolworths Group Food and Everyday Needs Ecosystem
Woolworths Group Food and Everyday Needs Ecosystem COMPANY RESULTS FULL YEAR 2020 10 1 Providing additional services 2 Leveraging our Food and points of presence for business for B2B customers so they can shop customers and foodservice when, where & how they want adjacencies both, domestic and inter
Slide 11: eCommerce delivering strong sales growth across the Group
eCommerce delivering strong sales growth across the COMPANY RESULTS 11 Group, with material step up in F20 FULL YEAR 2020 4,000 3,000 26.1% $M 2,000 1,000 0 F15 F16 F17 F18 F19 1 F20 Australian Food New Zealand Food BIG W 2 Endeavour Drinks 1-YR GROWTH1 5-YR CAGR Australian Food 43.1% 25.2% New Zeal
Slide 12: Woolworths Group F21 priorities
Woolworths Group F21 priorities COMPANY RESULTS FULL YEAR 2020 12 Better Together for a Better Tomorrow for our customers, teams and communities Maintain trust with our customers, team and Accelerate Digital, eCom and convenience communities for connected customers Deliver store and eStore propositi
Slide 13: Contents
Contents F20 Group Summary & Progress 4 Brad Banducci Group Financial Results 14 Stephen Harrison Group financial results Key balance sheet metrics Capital management framework Cash flow summary Capital expenditure Capital management Supply Chain transformation Business Performance Update 28 Outlook
Slide 14: Financial Results and Capital Management
FINANCIAL RESULTS AND CAPITAL MANAGEMENT
Slide 15: F20 results summary
F20 results summary COMPANY RESULTS FULL YEAR 2020 15 Reported REPORTED REPORTED1 F20 F19 $ MILLION (52 WEEKS) (53 WEEKS) CHANGE Continuing operations before significant items Sales 63,675 59,984 6.2% EBIT 3,219 2,722 18.3% NPAT attributable to equity holders of the parent entity 1,602 1,751 (8.4)%
Slide 16: Strong full-year and H2 EBIT growth for all businesses, excluding Hotels
Strong full-year and H2 EBIT growth for all COMPANY RESULTS 16 businesses, excluding Hotels FULL YEAR 2020 Group EBIT/(LBIT) Post-AASB 16 F20 H2 F20 REPORTED NORMALISED1 2 3 NORMALISED1 REPORTED NORMALISED1 2 3 NORMALISED $ MILLION F20 F19 CHANGE H2 F20 H2 F19 CHANGE Continuing operations before sig
Slide 17: Working capital and ROFE impacted by COVID-19
Working capital and ROFE impacted by COVID-19 COMPANY RESULTS FULL YEAR 2020 17 Average inventory days Normalised ROFE Days Percentage Continuing operations Continuing operations – post-AASB 16 Group Continuing operations – pre-AASB 16 41.3 40.8 40.0 24.2 39.5 39.0 37.6 37.2 37.0 37.0 14.1 13.7 36.0
Slide 18: Woolworths Group capital management framework
Woolworths Group capital management framework COMPANY RESULTS FULL YEAR 2020 18 Strong market Growth One of Australia’s Strong defensive Strong cash flow position in opportunities in leading & most characteristics from AUS and NZ Investment Food, Drinks & eCom & trusted brands through the cycle busi
Slide 19: Strong free cash flow generation in F20
Strong free cash flow generation in F20 driven by COMPANY RESULTS 19 working capital benefits FULL YEAR 2020 REPORTED F20 REPORTED1 F19 $ MILLION (52 WEEKS) (53 WEEKS) CHANGE 5,677 3,944 44.0% +ve AASB 16 impact with fixed rent becoming EBITDA – continuing operations lease interest and repayment of
Slide 20: Capex is allocated to investments that sustain and grow the business
Capex is allocated to investments that sustain and COMPANY RESULTS 20 grow the business FULL YEAR 2020 Stay-in-business (SIB) - Maintenance, planned replacements, emergency and safety measures Renewals Sustaining Supply Chain capex IT Productivity - Projects related to cost reduction (e.g. Simpler f
Slide 21: Operating capex below guidance
Operating capex below guidance impacted by lower COMPANY RESULTS 21 spend on Renewals and Supply Chain FULL YEAR 2020 Operating capex Sustaining capex $ MILLION F20 F191 $ MILLION F20 F19 Continuing operations SIB 335 351 Operating capex 1,644 1,735 Renewals 364 462 Supply Chain 104 166 Property dev
Slide 22: Dividends and funding
Dividends and funding COMPANY RESULTS FULL YEAR 2020 22 94 cps full year dividend in line with F19 Sources of funding and liquidity remain strong (excluding non-recurring items) Dividends (cents per share) Debt maturity profile ($m) 10 74.0% 2,000 70.6% 70.3% Includes US$617m US144a bond & JPY20bn E
Slide 23: Supply Chain Transformation
SUPPLY CHAIN TRANSFORMATION
Slide 24: Supply Chain transformation well progressed
Supply Chain transformation well progressed COMPANY RESULTS FULL YEAR 2020 24 Operational In development Tasmania RDC Melbourne Fresh DC New Zealand Melbourne MSRDC (Temperature-controlled) (MFDC) Palmerston North RDC (Ambient) All stores transitioned from 12,335 sqm temperature- Development of a ne
Slide 25: MSRDC comparison to previous regional DC
MSRDC comparison to previous regional DC COMPANY RESULTS FULL YEAR 2020 25 Hume MSRDC F19 Total recordable injuries: 28 F20 Total recordable injuries: 3 Safety Lost hours: 12,428 Lost hours: 1,415 Team 700 371 Storage (reserve 27,000 60,000 (high bay) + 7,500 (manual rack) slots) Throughput 2.5m (de
Slide 26: NSW Supply Chain transformation
NSW Supply Chain transformation COMPANY RESULTS FULL YEAR 2020 26 Development of two DCs co-located Subsequent changes to the NSW network in Moorebank, NSW Airbridge eliminating Closure of Minchinbury DC Ambient National DC transport legs (SRDC) Semi automated B Closures of Melbourne NDC (Mulgrave)
Slide 27: Contents
Contents F20 Group Summary & Progress 4 Brad Banducci Group Financial Results 14 Stephen Harrison Business Performance Update 28 Outlook 57 Brad Banducci
Slide 28: Company Results Full Year 2020
COMPANY RESULTS FULL YEAR 2020 28
Slide 29: Australian Food
Australian Food COMPANY RESULTS FULL YEAR 2020 29 REPORTED NORMALISED1,2 NORMALISED1 F20 F19 CHANGE Sales ($m) 42,151 38,912 8.3% EBITDA ($m) 3,707 3,427 8.2% EBIT before significant items ($m) 2,232 2,099 6.3% Gross margin (%) 29.2 28.7 47 bps Cost of doing business (%) 23.9 23.4 57 bps EBIT to sal
Slide 30: Strong sales growth throughout F20 with bigger baskets
Strong sales growth throughout F20 with COVID COMPANY RESULTS 30 driving less frequent shops but bigger baskets FULL YEAR 2020 Total sales (% year on year) Comp transactions (% year on year) 2.8 1.4 0.7 0.5 11.3 Q4'19* Q1'20 Q2'20 Q3'20 Q4'20 9.3 7.8 4.9 4.0 -11.0 Comp items per basket (% year on ye
Slide 31: Customer metrics remain strong despite COVID disruption
Customer metrics remain strong despite material COMPANY RESULTS 31 H2 disruption to stores from COVID FULL YEAR 2020 VOC NPS - Store & Online1 Store-controllable VOC2 % promoters - % detractors % customers satisfied, 6 & 7 out of 7 +1 +2 53 80 80 80 82 52 51 49 44 0 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'
Slide 32: COVID response: safety of our teams, customers and communities
COVID response: #1 priority was the safety of COMPANY RESULTS 32 our teams, customers and communities FULL YEAR 2020 Team 75,000 Safety of our team prioritised permanent team through installation of acknowledged for 20,000 extraordinary efforts during COVID through award of plexiscreens and availabi
Slide 33: Australian Food F20 strategy
Australian Food F20 strategy COMPANY RESULTS FULL YEAR 2020 33 Customer 1st Brand, Team & Culture Build customer & Connected, Personalised and Convenient team advocacy Ways to Shop my Woolies Differentiate our core customer offer Trusted Prices and Engaging and Easy Famous for Fresh Localised Range
Slide 34: Progress against F20 priorities
Progress against F20 priorities COMPANY RESULTS FULL YEAR 2020 34 Build customer & team advocacy CUSTOMER SCORES TEAM SAFETY WOOLIES X 53 82% 18% 750 43.1% 49.6% VOC NPS Store-controllable VOC reduction Total team trained as Mental F20 Online sales Everyday Rewards +9 pts vs Q3 F20;+1 vs Q4 F19 Reco
Slide 35: Format and Network Development F20 highlights
Format and Network Development F20 highlights COMPANY RESULTS FULL YEAR 2020 35 Opened 27 (net) new stores and Launch of Smart Store 2.0 technology First eStore at Carrum Downs, VIC, completed 69 Renewals in F20 bringing enabled store enhancing customer and designed and under construction the total
Slide 36: WooliesX – three businesses powered by team, tech and data
WooliesX – three businesses powered by COMPANY RESULTS 36 team, tech and data FULL YEAR 2020 Digital & Media eCom & Fulfilment Loyalty & FinTech Front door to Woolies Easy shopping when & where you want it Seamless experiences to enjoy a little more, every day Demand generation brings eCom offers ou
Slide 37: WooliesX F20 highlights
WooliesX F20 highlights COMPANY RESULTS FULL YEAR 2020 37 Digital & Media eCom & Fulfilment Loyalty & FinTech 10.1M Home Delivery capacity doubled Contactless pick up in 86 locations 12.3 million +650,000, +5.5% Q4 78 new home delivery stores opened Everyday Rewards members weekly visits across Deli
Slide 38: Australian Food F21 strategy
Australian Food F21 strategy COMPANY RESULTS FULL YEAR 2020 38 We bring a little good to everyone, everyday Better customer and team experience for a Accelerate Digital and eCom for our connected customers better tomorrow Deliver core propositions to meet changing Personalise Value Safe, Fast & Frie
Slide 39: Company Results Full Year 2020
COMPANY RESULTS FULL YEAR 2020 39
Slide 40: New Zealand Food
New Zealand Food COMPANY RESULTS FULL YEAR 2020 40 REPORTED NORMALISED 1 NORMALISED 1 NZD F20 F19 CHANGE Sales ($m) 7,192 6,589 9.1% EBITDA ($m) 634 586 8.2% EBIT ($m) 378 342 10.7% Gross margin (%) 25.0 24.4 67 bps Cost of doing business (%) 19.8 19.2 60 bps EBIT to sales (%) 5.3 5.2 7 bps Sales pe
Slide 41: New Zealand Food F20 highlights
New Zealand Food F20 highlights COMPANY RESULTS FULL YEAR 2020 41 Customer 1st Team 1st Digital Growth & Innovative Strengthened Core Offer Transformation Shopping Experiences & Brand Differentiation Voice of Team +1 to 84% ~4,000 products on Great Price F20 eCom 44.5% sales growth Fresh offer upgra
Slide 42: New Zealand Food F21 priorities
New Zealand Food F21 priorities COMPANY RESULTS FULL YEAR 2020 42 Demonstrate care and support wellbeing Amplify value, NZ fresh, health, community Safety & Everyday Acts Diversity & Wellbeing and Care Inclusion Innovate and accelerate digital and eCom Dial up simpler, smarter foundations Availabili
Slide 43: New Zealand Food F21 priorities
New Zealand Food F21 priorities COMPANY RESULTS FULL YEAR 2020 43 Customer 1st Team 1st Innovate to create a great brand to work Innovative, Convenient and Helpful Ways to Shop for and shop Differentiate our core customer proposition Prices I Trust, Good For Me - Good for My Rewards I Value, with a
Slide 44: Company Results Full Year 2020
COMPANY RESULTS FULL YEAR 2020 44
Slide 45: BIG W
BIG W COMPANY RESULTS FULL YEAR 2020 45 REPORTED NORMALISED1 NORMALISED1 F20 F19 CHANGE Sales ($m) 4,106 3,717 10.5% EBITDA before significant items ($m) 207 147 40.3% EBIT/(LBIT) before significant items ($m) 39 (31) n.m. Gross margin (%) 31.8 31.2 60 bps Cost of doing business (%) 30.9 32.1 (117)
Slide 46: BIG W highlights
BIG W highlights COMPANY RESULTS FULL YEAR 2020 46 Much to be proud of in F20 Our F21 priorities Living our values by demonstrating ‘real care’ in our Continue to simplify our business and communities - distributing 5 million free books for 1 establish our capabilities to be data led kids to familie
Slide 47: BIG W F21 priorities
BIG W F21 priorities COMPANY RESULTS FULL YEAR 2020 47
Slide 48: Company Results Full Year 2020
COMPANY RESULTS FULL YEAR 2020 48
Slide 49: Endeavour Drinks
Endeavour Drinks COMPANY RESULTS FULL YEAR 2020 49 REPORTED NORMALISED1,2 NORMALISED1 F20 F19 CHANGE Sales ($m) 9,275 8,441 9.9% EBITDA ($m) 826 790 4.4% EBIT ($m) 569 538 5.7% Gross margin (%) 23.1 22.9 20 bps Cost of doing business (%) 17.0 16.6 45 bps EBIT to sales (%) 6.1 6.4 (24) bps Sales per
Slide 50: Dan Murphy's highlights
Dan Murphy’s highlights COMPANY RESULTS FULL YEAR 2020 50 F20 highlights Contactless service Addition of 400 small 11 new stores taking the Continued strong to boot launched suppliers and over Successful re-launch of total to 241 stores. This performance in VOC and rolled out to over 4,000 SKUs to o
Slide 51: BWS highlights
BWS highlights COMPANY RESULTS FULL YEAR 2020 51 F20 highlights 23 net new stores and 94 Launched new value Record Brand NPS and Significant 22% reduction On Demand delivery Renewals, including 2 Smart mechanics, including VOC performance in in Recordable Injuries expanded to over 950 Stores, the fi
Slide 52: Endeavour Drinks F21 priorities
Endeavour Drinks F21 priorities COMPANY RESULTS FULL YEAR 2020 52 Customer 1st Brand, Team and Culture Innovate our customer and team Deliver increasingly effortless, personal experience and inspiring experiences Differentiate our core Regain trend Offer trusted value Deliver consistent customer off
Slide 53: Broadbeach Tavern, QLD
COMPANY RESULTS FULL YEAR 2020 53 Broadbeach Tavern, QLD
Slide 54: Hotels
Hotels COMPANY RESULTS FULL YEAR 2020 54 REPORTED NORMALISED 1 NORMALISED 1 F20 F19 CHANGE Sales ($m) 1,320 1,639 (19.5)% EBITDA ($m) 405 593 (31.4)% EBIT ($m) 172 351 (51.0)% Gross margin (%) 83.0 83.6 (67) bps Cost of doing business (%) 70.0 62.2 771 bps EBIT to sales (%) 13.0 21.4 (838) bps ROFE
Slide 55: Hotels performance impacted by differing operating conditions by state
Hotels performance continues to be impacted by COMPANY RESULTS 55 differing operating conditions by state FULL YEAR 2020 4 Hotels F&B: OPEN 127 Hotels EGMs: 100% 5/06 => Stage 3 F&B: OPEN 1.5m social EGMs: 100% distancing 28 Hotels F&B: OPEN 3/07 => Stage 3 Seated 1 person /4 sqm 24/06 => Stage 4 1
Slide 56: Contents
Contents F20 Group Summary & Progress 4 Brad Banducci Group Financial Results 14 Stephen Harrison Business Performance Update 28 Outlook 57 Brad Banducci
Slide 57: F21 current trading and outlook
F21 current trading and outlook COMPANY RESULTS FULL YEAR 2020 57 Current trading F21 – 8 weeks to 23 August • Trading has remained strong across the Group (except Hotels) for first 8 weeks TOTAL SALES GROWTH YEAR ON YEAR • However, COVIDSafe costs remain elevated Australian Food 11.9% New Zealand F
Slide 58: F21 current trading remains elevated and volatile
F21 current trading remains elevated and volatile, COMPANY RESULTS 58 with some softening over period FULL YEAR 2020 Australian Food New Zealand Food 24 24 20 20 16 16 12 12 8 8 4 4 0 0 W1 W2 W3 W4 W5 W6 W7 W8 W1 W2 W3 W4 W5 W6 W7 W8 YoY growth % 2-yr avg. growth % YoY growth % 2-yr avg. growth % BI
Slide 59: COVID costs significant in H2 F20
COVID costs were significant in H2 F20, with costs COMPANY RESULTS 59 ongoing at moderated levels in F21 FULL YEAR 2020 $ MILLION Q3 F20 Q4 F20 H2 F20 F21 (8 WEEKS) Cleaning and PPE 31 74 105 46 Contractors and security 15 39 54 4 Store team costs1 31 86 117 19 • COVID-19 costs have continued into F
Slide 60: Glossary
Glossary COMPANY RESULTS FULL YEAR 2020 60 Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Comparable sales Measure of sales which excludes stores that have been opened or closed in the last 12 months and demonstrable impa
Slide 61: Glossary continued
Glossary continued COMPANY RESULTS FULL YEAR 2020 61 Renewals A total store transformation focused on the overall store environment, team, range and process efficiency (including digital) Return on Funds Employed ROFE is calculated as EBIT before significant items for the previous 12 months as a per
Slide 62: Glossary continued
Glossary continued COMPANY RESULTS FULL YEAR 2020 62 Other non-IFRS measures used in describing the business performance include: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • EBIT – pre-AASB 16 • Normalised EBIT • Cash flow from operating activities before interest and t
Slide 63: Appendix
WOOLWORTHS GROUP
Slide 64: Group EBIT excluding AASB 16 impact and 53rd week impact
Group EBIT excluding AASB 16 impact in F20 and the 53rd week COMPANY RESULTS FULL YEAR 2020 64 impact in F19 Group EBIT/(LBIT) Pre-AASB 16 PRE-AASB 16 52 WEEK BASIS PRE-AASB 16 NORMALISED1 NORMALISED2 3 NORMALISED1 $ MILLION F20 F19 CHANGE Continuing operations before significant items Australian Fo
Slide 65: Key P&L lines impacted by the introduction of AASB 16
Key P&L lines impacted by the introduction of AASB 16 COMPANY RESULTS FULL YEAR 2020 65 F201 Pre-AASB 16 $ MILLION NORMALISED2 REPORTED Impact of AASB 16 EBITDA before significant items 3,949 5,677 1,728 D&A (1,300) (2,458) (1,158) EBIT before significant items 2,649 3,219 570 Interest expense (142)
Slide 66: Disclaimer
Disclaimer COMPANY RESULTS FULL YEAR 2020 66 This presentation contains summary information about Woolworths Group Limited (Woolworths Group) and its activities current as at the date of this presentation. It is sourced from and should be read in conjunction with Woolworths’ other periodic and conti
Slide 67: Thank you
COMPANY RESULTS FULL YEAR 2020 67 Thank you