Metcash Limited · ASX:MTS
Metcash — H1 FY2009 Earnings Presentation
45 slides from Metcash's earnings presentation, Dec 2, 2008
Slide 1: ASX cover letter - CEO presentation
Metcash Limited ABN 32 112 073 480 50 Waterloo Road Macquarie Park For personal use only NSW 2113 Australia PO Box 6226 Silverwater Business Centre NSW 1811 Australia Ph: 61 2 9751 8200 2 December 2008 Fax: 61 2 9741 3027 The Manager, Companies Australian Stock Exchange Company Announcements Office
Slide 2: Company Results Half Year Ending 31 October 2008
1 2009 Champion of the Independent For personal use only Company Results Half Year Ending 31 October 2008 Andrew Reitzer Chief Executive Officer
Slide 3: Group Headlines
2 2009 GROUP HEADLINES For personal use only A robust result highlighting the strength of the group’s business model in uncertain times FY09 1H FY08 1H Variance % WHOLESALE SALES ($m) 5,263 1 4,867 1 8.2% EBITA ($m) - Reported 177.7 153.7 15.6% EBITA MARGIN (%) - Reported 3.37% 2 3.16% 2 +21bps CODB
Slide 4: Financial Highlights - Group
3 2009 For personal use only FINANCIAL HIGHLIGHTS - GROUP
Slide 5: Wholesale Sales
4 2009 WHOLESALE SALES For personal use only Group wholesale sales up 8.2% driven by strong performance across all three divisions – discussed further in individual divisions results +8.2% on pcp 01% 6,000 R 13. CAG 5,263 4,867 5,000 4,573 $M 4,000 3,447 3,216 3,000 NOTES: 2,000 1. Wholesale sales e
Slide 6: Market Share
5 2009 MARKET SHARE For personal use only Market share (MAT) up 0.3% to 18.8% for the period ending Oct 08. For the quarter ended Oct 08 it was 18.9%. Market share maintained 22% 18.4% 18.5% 18.8% 18% MAT 13.5% 14% 13.0% NOTES: 1. Market share data collated by Nielsen is for defined product categori
Slide 7: EBITA
6 2009 EBITA only FY09 1H FY08 1H Variance EBITA ($m) - Reported 177.7 153.7 15.6% use Good leverage on 8.2% wholesale sales growth For personal 200.0 R 17.96% CAG 177.7 153.7 160.0 141.9 $M 120.0 91.8 95.2 80.0 40.0 2005 2006 2007 2008 2009
Slide 8: EBITA Margin
7 2009 EBITA MARGIN For personal use only EBITA margin up 21bps on 1H 08 (up 3bps from year end) reflecting: Volume increase CODB improvement +21bps on Maintained gross margins pcp 4.00% 3.37% 3.50% 3.16% 3.02% 3.00% 2.67% 2.76% 2.50% 2.00% NOTES: 1.50% 1. EBITA margin calculated on wholesale
Slide 9: Operating Cashflow After Tax
8 2009 OPERATING CASHFLOW AFTER TAX use only Metcash operations continue to realise solid cashflows, which management reinvests in the business to keep the company’s retail customers competitive with dominant chains Strong cashflow generation despite 1H FY09 net interest 140.0 Operating Cashflow PAT
Slide 10: CODB as % of GP
9 2009 CODB AS % OF GP For personal use only CODB decreases a further 3.68% compared to 1H08, benefiting from: Cycling out of retail operations and associated costs Constant focus on supply chain improvement and cost control Investment in facilities and technologies lowers the cost of wareho
Slide 11: PAT
10 2009 PAT use only FY09 1H FY08 1H Variance PAT ($m) - Pre GA & NRI 100.3 1 89.2 12.4% PAT ($m) - Pre GA 83.1 89.2 -6.8% PAT ($m) - Reported 80.1 86.2 -7.1% PAT Reported PAT- pre GA & NRI Normalised 120.0 PAT +12.4% on For personal sales growth of 100.3 8.2% 100.0 86.2 75.9 80.0 86.2 80.1 $M 60.9
Slide 12: EPS
11 2009 EPS For personal use only FY09 1H FY08 1H Variance EPS - Pre GA & NRI 13.1 11.7 12.1% EPS - Pre GA 10.9 11.7 -6.8% EPS - Reported 10.5 11.3 -7.4% Normalised EPS EP S Repo rted EP S pre GA & NRI growth +12.1% & 14.0 within annualised 13.1 guidance 12.0 11.3 11.3 Cents 9.6 9.8 10.0 10.5 NOTES:
Slide 13: DPS
12 2009 DPS personal use only The Board has declared an interim dividend of 10.0 cents a share (100% franked) This represents a payout ratio of: 95% of Reported EPS (80% pcp) 76% of EPS - pre GA & NRI 12.0 10.0 10.0 9.0 8.0 7.0 For Cents 6.0 5.5 5.5 4.0 NOTES: 1. FY05 impacted by timing issues a
Slide 14: Divisional Highlights - IGA>D
13 2009 For personal use only DIVISIONAL HIGHLIGHTS – IGA>D
Slide 15: IGA>D - Financials
14 IGA>D 2009 - FINANCIALS For personal use only IGA>D delivers another great result underpinning the overall Group’s strong performance Variance 1.35x FY09 1H FY08 1H % operating leverage WHOLESALE SALES ($m) 3,190 1 2,905 1 9.8% EBITA ($m) 146.5 129.4 13.2% NOTE: EBITA MARGIN (%) 4.59% 4.45% +14bp
Slide 16: IGA>D - Operating Performance
15 IGA>D 2009 – OPERATING PERFORMANCE For personal use only Total IGA>D market share of 18.8% MAT to 26 Oct 08 (18.5% MAT last year) IGA>D growth in the market - MAT to 28 Oct 08 was 7.1% against market growing at 5.1% - For the Quarter ended 26 Oct 08 growth was 5.9% v market at 4.7% No long-
Slide 17: IGA>D - Corporate Brands Strategy Update
16 IGA>D 2009 – CORPORATE BRANDS STRATEGY UPDATE For personal use only Black & Gold 924 SKUs with 975 being developed Growing at 11% p.a. Meeting value consumer needs IGA Signature Relaunch / repositioning of first label product Tag Line: All 'IGA Signature products' are carefully selected
Slide 18: IGA>D - Retail Development
17 IGA>D 2009 - RETAIL DEVELOPMENT For personal use only FORECAST IGA COMPLETED 1H PLANNED 2H FULL YEAR NO. SQM NO. SQM NO. SQM New stores forecast to be on New Stores 21 23,685 20 33,207 41 56,892 Plan & sqm up on PY Conversions are stores Conversions 7 5,650 N/A - 7 5,650 converted to IGA from oth
Slide 19: IGA>Fresh
18 2009 IGA>FRESH For personal use only A separate focus, but still an intrinsic part of IGA>D Primary aim - providing independent retailers with a complete, consistent and quality Fresh food offer Retail Consumer Focus - to provide consistently good fresh products that meet consumer needs T
Slide 20: Divisional Highlights - ALM
19 2009 For personal use only DIVISIONAL HIGHLIGHTS - ALM
Slide 21: ALM - Financials
20 ALM 2009 - FINANCIALS For personal use only Variance FY09 1H FY08 1H (%) SALES ($m) 1,267 1,206 5.1% EBITA ($m) 14.4 13.3 8.3% Leverage EBITA MARGIN (%) 1.14% 1.10% +4bps 1.6x Strong sales growth generated by IBA store numbers and comparative store sales growth - IBA sales up + 22% including:-
Slide 22: ALM - IBA Store Growth
21 ALM 2009 - IBA STORE GROWTH For personal use only Liquor Alliance partners and IBA stores and alliance partnerships remain a focus: Liquor Alliance – 759 hotels now branded under the “Thirsty Camel” banner, up on 240 at Oct 07 and 410 at Apr 08. IBA – store numbers now 2,285 as Liquor Force
Slide 23: Divisional Highlights - Campbells Wholesale
22 2009 For personal use only DIVISIONAL HIGHLIGHTS - CAMPBELLS WHOLESALE
Slide 24: Campbells Wholesale - Financials
23 CAMPBELLS WHOLESALE 2009 - FINANCIALS For personal use only FY09 1H FY08 1H Variance (%) SALES ($m) 805.9 755.8 6.6% EBITA ($m) 15.8 14.6 8.5% EBITA MARGIN 1.97% 1.93% +4bps Operating leverage 1.3x Sales up 6.6% Primary categories up 10.3% Sales growth to the modern petrol and convenience s
Slide 25: Campbells Wholesale - Operating Performance
24 CAMPBELLS WHOLESALE 2009 - OPERATING PERFORMANCE For personal use only 22 metropolitan cash and carry 18 country distribution centres Specialist food service business 4 stockless DCs, 4 Specialist stores - Perth, WA based Confectionery DCs 85% business = pick, pack & Walk-in customers
Slide 26: Financials - Balance Sheet, Cashflow, Interest Expense
25 2009 For personal use only FINANCIALS - BALANCE SHEET - CASHFLOW - INTEREST EXPENSE
Slide 27: Balance Sheet - Extract
26 2009 BALANCE SHEET - EXTRACT For personal use only 30-Apr-08 31-Oct-08 $'m $'m Movement Increase is consistent with the increase in activity and increased level of inventory. Creditor days +1.7 $m % Trade and other payables -1,153.9 -1,235.3 81.4 7% Restock of Blacktown DC in May 08 and seasonal
Slide 28: Cashflow - Extract
27 2009 CASHFLOW - EXTRACT For personal use only Oct-07 Oct-08 $m $m $m $m Comments EBITDA and significant items 176.9 197.0 Net Interest Paid (24.4) (29.3) Higher average debt levels and higher interest rates over the period Taxation Paid (26.8) (11.6) 125.7 156.1 Principal reason for the increase
Slide 29: Interest Expense
28 2009 INTEREST EXPENSE For personal use only Interest expense $37.8m in1HY09 ($27.7 pcp) Increase due to higher rates and average debt in 1H09 (interest paid +$6.2m). Also reversal of MTM credit valuation of $3.8m recognised at April 08 Interest Rate Collar terminated in Nov 08 (Announceme
Slide 30: Conclusions - Key Messages, Earnings Guidance
29 2009 For personal use only CONCLUSIONS - KEY MESSAGES - EARNINGS GUIDANCE
Slide 31: Key Messages
30 2009 KEY MESSAGES For personal use only PERFORMANCE Sales +9.8% Sales +6.6% Sales +5.1% EBIT + 13.2% EBIT + 8.5% EBIT + 8.3% Operating leverage at 1.35x Operating leverage 1.3x Operating leverage 1.6x GROWTH Fresh (Teamwork) Confectionery expansion IBA and LA growth DRIVERS New Stores O
Slide 32: Earnings Guidance - FY09
31 2009 EARNINGS GUIDANCE – FY09 For personal use only Guidance provided at AGM 4 Sep 08 The trading environment remains tight with market conditions continuing to be impacted by higher fuel prices, food inflation, interest rates, emerging falling house prices and share market turbulence Despite
Slide 33: Champion of the Independent - The Third Force
32 “Champion of the Independent” 2009 For personal use only “The Third Force”
Slide 34: Appendices
33 2009 For personal use only APPENDICES 1. Segment Note – Unallocated & Corporate 2. Split of Business 3. Dividend and Capital Management Policy 4. Debt Facilities 5. Trend Metrics (Financial & Operational) 6. Metcash TSR 7. Directory of Terms
Slide 35: Segment Note - Unallocated & Corporate
34 SEGMENT NOTE 2009 - UNALLOCATED & CORPORATE For personal use only Oct-07 Oct-08 $m $m CORPORATE - Share Based Payments (2.4) (2.4) - Non-recurring Income 0.0 0.0 - Other (1.2) 3.3 Included in Group EBITA ('Above the line') (3.6) 0.9 Of the $ 3.3m unallocated ‘other’ approx $1.5m relates 'BELOW TH
Slide 36: Split of Business Analysis
35 2009 SPLIT OF BUSINESS ANALYSIS For personal use only EBITA by division $M Food Distribution Liquor Distribution Cash & Carry Distribution 200.0 $176.7 180.0 $157.3 15.8 (8.9%) 160.0 $143.9 14.4 (8.2%) 14.6 (9.3%) 140.0 14.5 (10.1%) 13.3 (8.4%) 146.5 (82.9%) 12.5 (8.7)% 129.4 (82.3%) 120.0 116.9
Slide 37: Dividend & Capital Management
36 2009 DIVIDEND & CAPITAL MANAGEMENT For personal use only The Board’s intention is to return earnings to shareholders whilst retaining adequate funds within the business to invest in future growth opportunities The proposed FY09 half year dividend of 10.0 cents per share represents approximate
Slide 38: Debt Facilities
37 2009 DEBT FACILITIES For personal use only Syndicated Loan - $700m Secured until 17 September 2010 Presently $400m drawn Monthly rollover at BBSY plus margin (depending on senior leverage ratio) Debtors Securitisation - $400m Presently $200m drawn $250m on 365 days notice $150m on
Slide 39: Trend Metrics - Financial
38 TREND METRICS 2009 – FINANCIAL For personal use only HALF YEAR HY 2005 HY 2006 HY 2007 HY 2008 HY 2009 CAGR* Oct 04 Oct 05 Oct 06 Oct 07 Oct 08 Revenue (all sources) $ millions 3,542 3,482 4,764 4,952 5,311 10.66% Sales (wholesale) $ millions 3,216 3,447 4,573 4,867 5,263 13.10% EBITA - Reported
Slide 40: Trend Metrics - Financial (Full Year)
39 TREND METRICS 2009 - FINANCIAL For personal use only FULL YEAR 2004 2005 2006 2007 2008 Apr 04 Apr 05 Apr 06 Apr 07 Apr 08 Return on Capital Employed % 38.0% 29.6% 16.9% 20.3% 27.7% Return on Equity % 21.0% * 11.9% 15.0% 15.6% Debt / EBITDA (pre NRI) Times 0.33 2.92 2.73 1.72 1.64 Gearing % 51.2%
Slide 41: Trend Metrics - Operational
40 TREND METRICS 2009 - OPERATIONAL For personal use only Stores Stores Stores IGA Stores Oct 07 Apr 08 Oct 08 Supa IGA 416 418 425 IGA 719 717 720 Xpress 249 153 129 IGA branded stores 1,384 1,288 1,274 Friendly Grocer / Eziway 298 323 Total Stores 1,586 1,597 Note: Metcash also services ~ 700 Food
Slide 42: Metcash TSR
41 2009 METCASH TSR For personal use only TSR under current management v competitors and market 6.00 5.00 Share price (rebased) MTS TSR: 40% 4.00 3.00 2.00 WOW TSR: 19% 1.00 CML TSR: 13% ASX 200 TSR: 4% 0.00 Oct-02 Oct-04 Oct-06 Oct-08 MTS WOW CML ASX 200 Note: Total Shareholder Returns (TSR) repres
Slide 43: Directory of Terms
42 2009 DIRECTORY OF TERMS For personal use only ALM - Australian Liquor Marketers is Australia and New Zealand's leading broad range liquor wholesaler. ALM operates from 18 distribution locations across the country. Larger ‘off-premise’ customers are supplied through the main distribution system;
Slide 44: Directory of Terms
43 2009 DIRECTORY OF TERMS Goodwill Amortisation (GA) – Amortised costs of customer relationships, calculated on a straight line basis over 25 years For personal use only Half Year Split - Estimated split of earnings per share for first and second halves of financial year. Recognises seasonality
Slide 45: For additional information contact
44 2009 For personal use only For additional information contact: Adrian Gratwicke, GM Finance Phone: 61 2 9741 3248 Fax 61 2 9741 3031 E-mail adrian.gratwicke@metcash.com Or visit our website: www.metcash.com Disclaimer This presentation is for the general information of investors. Metcash Limited