Wesfarmers Limited · ASX:WES
Wesfarmers — H1 FY2006 Earnings Presentation
40 slides from Wesfarmers's earnings presentation, Feb 14, 2006
Slide 1: Teleconference
_ = _ | ——~—~— = - Lo fa a ‘Teleconference i @@C-—S—sS—msm——m3ms<UsST srs eFSeti‘i‘é—é<—été—é~é~é~S; ] —rt~w~—~—wr—~—~—~—~—"”—C“‘EEErr™r™r™~—~—~—~—~—~—~—~—~— —rr—™——COC(@ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 7 _ - - - _ - - - - - - - - - - _ COrti‘“—OéitiO—OCOCOCOCOCOCO—COCUCCC CC —_— -rrrrrrw™—w™—™—
Slide 2: Agenda and presenters
Group Performance Highlights Richard Goyder Group Financial Results Gene Tilbrook Energy David Robb Hardware John Gillam Insurance Bob Buckley Industrial and Safety. Terry Bowen Chemicals & Fertilisers Keith Gordon Other Businesses Gene Tilbrook Outlook Richard Goyder
Slide 3: Group Performance Highlights
GIESDe 2 oF Le ie CC — LI ee EU HNE o s Cay iy @==§§s Lee i Vii Se Oe To 7, 7 a7 L Be ##..#§&238=§©=©=6heth D Ce Lo ee CUO Le ee oo So ge C Te ey. a. ~—r—“‘“‘COCOCOOCOCOCOC*# LN pa ae @§=—r—srm——EhemmmfmeséeFmse a Me RUM RE: EASE UE aE ESL ONE CI OEY Co Ge LL ee ee I Wes - ee So Lo ee as Oe I Ng - L
Slide 4: Operating revenue up 9.8%
Operating revenue up 9.8% Net profit up 36.5% Operating cash flow up 36.1% Earnings per share up 34.7% to $1.21 per share Rolling 12 month ROE of 28.7%, up 4.8% on pcp Interim dividend increased to 65 cents per share, up 22.6% ults esen ation a0 0 TTT , a
Slide 5: Half Year ended December
104! Half Year ended 31 December Hardware Energy 343.2 64.2 33.4 Insurance 63.5 33.6 30.0 industrial & Safety 46.0 13.2 13.7 Chemicals & Fertilisers 26.7 17.7 19.8 * Rolling 12 months to 31 December as reported under A-IFRS *“ Rolling 12 months to 31 December reflecting adoption of A-IFRS from 1 Jul
Slide 6: OSCE oN ialte
OSCE oN ialte FE oo LL oe _ Li Lo Ron SU Le a Le a Co A 8 7 =. y hl L oe MD So | ~—see ae le Ge Lo I Mi lll RCI ELL: 2 .hlLDhLhrrrrrrt—“‘“‘_t”UCUCUDUDUDUD ~~ CC LUE ee Le 7 ee i =. ~=—s ae ge aoa ee CC a . ee Le _ Ae 8 ye #& &#&©&#=~— ea ’ . - a . cae 7 _ _ _ - _ _ _ _ _ - _ _ _ - ~~+~=~=~”—UCC. _ l
Slide 7: Group Performance Summary
oo US AN OANA OHH : Hc ne Group Performance Summary sit LE Half Year ended 31 December ($m) 200 CaM Revenue 4,447.1 4,048.7 9.8 EBITDA 829.6 601.5 37.9 _707. 1 311.5 | 38.2 sree me i om oem / a . - i ae cca Tee al aa al i a . ie . oe 34 LA Loe a a oe | oo co _. a Results Presentati jon vn Ii il Il H
Slide 8: Half Year ended December ($m)
Hal f Year en de d 34 December ( Sm) ; 5 | ; ; : ; Il ( II g Hardware 220.9 225.4 (2.0) Energy 343.2 123.8 177.2 Insurance 63.5 66.2 (4.1) Industrial and Safety 46.0 51.5 (10.7) Chemicals and Fertilisers 26.7 29.1 (8.2) Other 6.8 15.5 (56.1)
Slide 9: obey ey hal i bs : Fu Ai ni i C | Ua ue
obey ey hal i bs : Fu Ai ni i C | Ua ue eS Le MMe BOLI: LIT Lee MM == SIN marian a 2001 2002 2003* 2004 2005 =——= Target ) A-IFRS TResults’ Presentation i iii i Ui U CIN] CCCI CGI IGE
Slide 10: EPS, operating cash flow and dividend
Flo le a d | ‘ (He 2001 2002 2003* 2004* 2005* EPS (before goodwill)** Operating Cash Flow @Dividend * Excludes sale of Landmark “ Restated for impact of A-IFRS in 00000000 TTT , a
Slide 11: Net Debt/Equity of 74.1% at December 2005
e Net Debt /Equity of 74.1% at 31 December 2005 e Cash Interest Cover Ratio (rolling 12 months) of 13.3 times ° Capital expenditure was $302.4 million, lower than budget due to timing delays
Slide 12: aie ibe ENS AR SEDER rtp AL SNR SUAS Mest ioes ie
aie ibe ENS AR SEDER rtp AL SNR SUAS Mest ioes ie a Bs 7 i, ee aR ET Le Me _ LE Ae COE. i eo ie Lo Meee Co Ey, Le Ue Le yj Ve He CC BI 7 MG pe i ~~~ UC °° ~~. ice | Le Ee I a. a ee i Ia EEL) ER OO yy KA TO oe Le Lo L oo ae y = -_ q Ve Te i oe a rt—“i—t—™—O—O—O—O—C—COCOCCC 0 ae Co VO LIE oe Ce ee ~—r
Slide 13: Energy Performance Summary
LW i Half Year ended 31 December ($m) 05 0004 Revenue EDITDA 407.7 158.4 157.4 Depreciation & Amortisation of PPE (64.5) (34.6) 86.4 343. 2 123. 8 177.2 zai nome oo _ : Co - - _o / _ ; . : . 2 —- / Cod : i. _ ——— 8. . : a a - a 1 _— i oe c : cc oe oo ie : eG _ : _ a Ee (a ee oe il on oe * Reflects a
Slide 14: Record earnings
e Record earnings e Premier long term supply agreement e Curragh North development - Train Load Out Upgrade - Materials Handling Project
Slide 15: Curragh export production 6.4 - 6.8 mt
Curragh export production 6.4 - 6.8 mt CHPP and infrastructure performance critical Curragh Materials Handling Project continues Lower export metallurgical coal prices Lower LPG production and exports High CP continues and pressures KHG margins
Slide 16: LO ee Ve
LO ee 8 Ve Me . 7 Lo , ie v7 Chl ~~ . ee .@2@=——r—e___ | +=—“T—...—hS—( _eeseses(—(sesesseséséSé=—SF ~~ — ~=—S—rr—“—eO——..-CSsas‘ (wt L a # = BF —r™rtr—“‘—™OCOC*C*C*C*C*C*C~C—C~C*C*Cs*SCtitits -.hhLrrrrrrrrC—“‘“‘“‘“C ‘CORNCOCO*COC*C*C*tétés*é‘(‘(:Ci(‘(SRSCOCOCéC(‘(‘(C‘COUOU;~*C*é‘(;‘CC#C(O#C(j} i
Slide 17: Hardware Performance Summary
Half Year ended 31 December ($m) Revenue EBIT 220.9 225.4 (2.0) Share Plan & Store Refit Expense 23.3 4.3 Comparative EBIT 244.2 229.7 6.3 ee . . . ol Trading Revenue”* ($m) 2,198.6 2,120.7 Profit from disposal of Property ($m) 3.0 3.6 (16.7) * Reflects adoption of A-IFRS from 1 July 2004 “ Excludes
Slide 18: 4.7% cash sales growth
4.7% cash sales growth (2.7% store on store) 0.2% decline in trade sales 4 warehouse openings and 12 warehouse upgrades Good progress on major strategies - merchandising, advertising, systems, supply chain
Slide 19: Continued cash sales growth
Continued cash sales growth - tight, competitive retail conditions Improving trade performance - housing market expected to stabilise Network development and consistency work continues Ongoing effectiveness and efficiency gains io |
Slide 20: Bee
eG Bee Ke i Bay =. g Oe PIRI EE cr — —rt—“‘—‘—™—O”COCOCOCOC:Ctiti‘(C‘®’YSCS(COCOCOC( ‘i‘(CR(OtC(C(C(‘(SCOC#N — =—h—h—<VUC C)C.C2S—CON—CCT—————CCOC__ I ODE MOLI: Le, ee LS Le » ~=—COrt—“—t—eOOO—O—O—*C“‘“=#*REECWZ’S CC L007 Le a SO IE a Va ss . VI eee Ae =—r—e—es—s—sé—M—<S—sheh 2 Ee 0 ... ati eee, Tl
Slide 21: Insurance Performance Summary
Half Year ended 31 December ($m) Gross Written Premium* Net Earned Premium 376.6 343.2 9.7 Net Claims (229.6) (205.7) 11.6 Net Commission and Expenses (105.0) (88.5) 18.6 Underwriting Result 42.0 49.0 (14.3) Insurance Margin 54.3 60.2 (9.8) EBIT 63.5 66.2 *Includes an adjustment for changes to unclo
Slide 22: Significant WFI Crop claims due to major hail events
Significant WFI Crop claims due to major hail events LGA claims provision increase of $8 million Premium rates softening since 2004 Further reductions in reinsurance expense
Slide 23: All business units experiencing increased competition
lA All business units experiencing increased competition Continued pressure on rates impacting revenue growth Reversion to long term claim patterns Businesses performing well in challenging environment
Slide 24: LO Le e ee Sey
LO Le e ee Sey ie A LEE EE le YEO ©. BI MEE ie _ ee Loe Pe oe VU ee Hy ae CC SA ROMA ER _ _ —=—r—eee Be Ri) We _.. 7 | Oe a on ie pe LI oe Be Le. a Wn i Y LC” Lg CC =. er ke Vie se oe Boe De eee RIO PR A CU Egy oe Lay _ Co rr | ~=——rt—“aeS—SssS PEL ~~ Eo) oy I Oe RO ee GC ee Hes Le i a a ER ee ee VT
Slide 25: Industrial & Safety Performance
Industrial & Safety Performance m ie LL LEELA MMM i i il iM) Mh H alf Year en de d 31 Decem be r (Sm ) 105 oo : i 20 U. a 1 Revenue EBITDA 53.1 59.6 (10.9) Depreciation & Amortisation of PPE (7.1) (8.1) (12.3) 46.0 51.5 Tk oa ia ie Coss a. | . oo ToT nic al Tene) : ca ie a — a feat Results Presentat
Slide 26: Sales growth in Industrial Products (Blackwoods)
Sales growth in Industrial Products (Blackwoods) - Strong market conditions continue in Qld & WA (mining) - Declines in manufacturing, particularly NSW & VIC Protector Alsafe improved profitability Increased sales Packaging House (NZ) Blackwoods Paykels (NZ) difficulties continue NZ Safety and Prote
Slide 27: Continued sales growth in Australia
Continued sales growth in Australia (mining & infrastructure segments) Sales in New Zealand businesses expected to remain subdued Second half focus - restructure business model around trading streams - improve customer service in each business - review product ranges - improve internal efficiencies
Slide 28: LULL CF”
LULL CF” a oe s ee oe Hy Ce Lo _ VLE EE oe of Lo LU CC Se ea i EG MIE NG ROMO IN 0 UME ELE IE oF Toe Ce ee ay II Oe Bey _ OE LUI Ls CEE Le Lo ee Ln i WG a Uo TOO A Ee MG pe, Le DUM i a La _ Ty ~=—rt—“a—e™OOOSsS—S LOR RG Lor SEE ROIE: VPA ay LI Ee ee — - Ch ie Oe ie 0 RIE Hee Lg LON ee Re ee iy Cl -
Slide 29: Chemicals & Fertilisers Performance Summary
oi cals & Fertilisers Performance Summary LIE Ls Half Year ended 31 December ($m) 200 cpecee ter AEE Revenue Chemicals Fertilisers “43 17 Ey | 116. ys ee EBITDA 48.5 48.4 0.2 Depreciation & Amortisation of PPE (21.8) (19.3) 13.0 26.7 — 29. 1 eae oe Poe || ul Mi ee : on ce / _ L L oo ae oe - ae 1a co
Slide 30: Safety performance
Safety performance Kwinana ammonium nitrate expansion Sodium cyanide business Gas curtailment issues QNP performance and expansion update Albany superphosphate manufacturing facility
Slide 31: Continued strong demand for chemical products
Continued strong demand for chemical products Potential impact of gas curtailments Decision on QNP expansion Cautious fertiliser outlook
Slide 32: CR CLARE iG lL Be
CR CLARE iG 7 lL Be ie A Lo LO ML Eo Le Le 5 My LO I a a 7. Bie Ul Me ae ee | a Ce Toe a TR a i Le Ie Le HOO Ae oo MAO Lo LLIN Oe I Bey A i -— ~~ #&3§&»§&=——_l Ge Ce LO ea POE LE EL Le ee, - .@2=©——r—NSsSsS DO Ll i CU Cr LlLrrrOC CO” Me Fey YEN REI MC ENE -. a a ~—r—es—eSe COC Ss OSI EEE Go ee oe LO
Slide 33: Other businesses: contribution to Group EBIT
Lommel: Contribution to Group EBIT H 2005 2 Half Year ended 31 December (Sm) Associates: ARG 50 9.4 12.6 Gresham Private Equity - Fund 1 50 9.4 1.5 Gresham Private Equity - Fund 2 67 (0.9) (0.8) Gresham Partners 50 1.3 2.1 Wespine 50 5.1 5.1 Tax on ARG, Gresham and Wespine (4.6) (4.6) Corporate Over
Slide 34: Results down from pcp
e Results down from pcp * lron ore tonnages up, grain tonnages down, $3.5m charge largely for prior period e Good grain harvest should underpin better second half
Slide 35: Wesfarmers and G&W agreed to sell 100% for $1.3bn
Wesfarmers and G&W agreed to sell 100% for $1.3bn enterprise value - Queensland Rail: above rail - Babcock & Brown: below rail - South Australia disaggregated (“ASR”) Wesfarmers agreed to sell its 50% of ASR to G&W for $20m Subject to approvals, licences etc. Profit before tax for Wesfarmers, approx
Slide 36: Investment in Virgin Active sold in November 2005
yy) e Investment in Virgin Active sold in November 2005 achieving a gross IRR of 34.5% e Partial exit of EROC (completed January 2006 achieving over 4 times multiple) e Three investments remaining: Norcros; Riviera and Raywood * Current commitment A$323m (Wesfarmers A$150m) e Acquisition of 50% inte
Slide 37: we os ie Mie ae Ye
we os ie Mie ae Ye Te Ke a - Bey ey i e Lo Ly, BEE us LLL eT eee eo CD Te eae UC GE A - ~—hEese a _ 7 ee ee oe 7 Hee MON OE SE Wee | ==. Co ——r—“*#EU Lay oe ME III CS IE. RUM RE: Le Lo, . cl Wo Oe a a &§=FS—Ers—e—™——MhehaCeFes—stfessesé—éSsS—h De . _ oy. De SED CELE - BA yen MUR Le ee TTI OI See Co
Slide 38: Outlook
nici e Full year result significantly above 2004/05 e Challenging domestic environment but all businesses in good shape e Impact of commodity prices e Business development
Slide 39: ass USA hee MA GON RO Ee BG Tey SEU EOD Pods CRMC O
ass USA hee MA GON RO Ee BG Tey SEU EOD Pods CRMC O MOD ERE STEREO DEE LOE EEE ELEEGOSE LLL ,lLhmrFU—”—”C—OC—“‘“‘“#R;RSNOCOOOUUU}ULUhUDLU Le I On i Cs Ry oe IR eS EEA EEE EE EEE EEE ELE EES yy ...-©—=—=—CCCOUOCuCUhUehe I EE EEE EEE TS -—rt—“‘“‘_O#OONONOOOCrszstS—isrsti«stsiti‘i‘NCSC‘iCSCOi‘iCOiaCi‘‘
Slide 40: S098 oe LP IEG
S098 oe LP IEG a Le hhh LI : hee y ie Co. oe ae Gee Ee ee Lo pe ay He LC rr == rtrt—“‘“= FINO EEE ~=~—hEhres—ses——”—“‘=F>nWZW J ER AUS CS OE MEL EM OEE CE ELE Le LAURIE EAE EE CCC" zy —rti“COéiOCO—OO—O—C—~—~Ssrstséti‘i‘COCS‘C iC U‘SNWizCVCiCN eee oo Ly Lo Li I Oo IMEI RMA RON 7 Le Bey BSG ia Ce 7 _