Woolworths Holdings Limited · JSE:WHL
Woolworths — H1 FY22 Earnings Presentation
50 slides from Woolworths's earnings presentation, March 2022
Slide 1: Interim Results H1/FY22
WOOLWORT HS HOL DI NG S L I M IT ED I N T E R I M R E S U LT S H1/ F Y22
Slide 2: Presentation Outline
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION PRESENTATION OUTLINE 01 02 03 OVERVIEW OF FINANCIAL STRATEGIC THE PERIOD OVERVIEW UPDATE WHL 2 / 2022
Slide 3: Overview of the Period
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OVERVIEW OF THE PERIOD Roy Bagattini Group CEO WHL 3 / 2022
Slide 4: Overview of H1 FY22
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OVERVIEW OF H1 FY22 We profitably traded our businesses and strengthened our balance sheet, notwithstanding external headwinds • South Africa impacted by further Covid waves and the knock-on effects of the civil unrest in July • A
Slide 5: Overview of H1 FY22 (cont'd.)
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OVERVIEW OF H1 FY22 (cont’d.) • Repatriating c.R1bn from David Jones to South Africa through a special dividend • Declared interim dividend of 80.5 cps • Up-weighted focus on robust capital allocation • Interrogated principles and
Slide 6: Our People, Partners, and Customers
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OUR PEOPLE, PARTNERS, AND CUSTOMERS The collective commitment of our people, and how they continue to show up for each other, our customers, and our communities, is what sets us apart • Recently celebrated 90th birthday – 90 years
Slide 7: Financial Overview
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION FINANCIAL OVERVIEW Reeza Isaacs Group Finance Director WHL 7 / 2022
Slide 8: Financial Overview
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION FINANCIAL OVERVIEW • Challenging start to the half Turnover and concession sales aEBIT with Aus store closures and SA unrest R42.1bn R3.2bn • Strong Aus rebound post lockdown; improved Food -18.2% on LY -0.3% on LY* run rate over
Slide 9: WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION WHL 9 / 2022
Slide 10: Adjusted EBIT
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION ADJUSTED EBIT Group aEBIT non comparable to 2021 due to Aus store closures and Jobkeeper and rent relief in the base Rm -18% 3 926 4 000 3 213 3 000 -8% 2 000 1 531 1 409 -49% 94 +34% -45% 1 000 780 582 56 48 -4% 31 89 85 – Group
Slide 11: WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION WHL 11 / 2022
Slide 12: Adjusted HEPS, HEPS and EPS
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION ADJUSTED HEPS, HEPS AND EPS Adjusted diluted HEPS of 162.2cps ahead of earnings guidance provided at 20-week update cps 300 284.3 257.0 -16% 200 193.7 162.2 4.8 165.8 165.5 (1.2) (0.3) 100 – AdHEPS Lease exit and SA civil unrest D
Slide 13: Woolworths Fashion, Beauty and Home results
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION Improvement in underlying financial health with deliberate focus on full-price sales, optimising clearance calendar, and productivity metrics Dec 2021 Dec 2020 % Rm Rm change Turnover and concession sales 6 697 6 426 4.2 Gross pro
Slide 14: Woolworths Food results
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION Accelerating trading momentum over critical festive season notwithstanding demanding prior-year base Dec 2021 Dec 2020 % Rm Rm change Turnover and concession sales 19 630 18 903 3.8 Gross profit margin 24.1% 24.8% Expenses 3 322 3
Slide 15: Woolworths Financial Services results
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION Key metrics have stabilised and lead indicators are improving; business is well positioned for growth Dec 2021 Dec 2020 % Rm Rm change Average total financial services assets 12 919 13 003 (0.6) % % Income statement to book to boo
Slide 16: David Jones results
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION A$100m of EBITDA notwithstanding 70% of stores unable to trade for over three months Dec 2021 Dec 2020 % A$m A$m change Turnover and concession sales 973 1 072 (9.2) Gross profit margin 35.0% 34.8% Expenses 320 326 (1.8) Financial
Slide 17: Country Road Group results
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION Strong performance underpinned by Country Road brand, Trenery and a recovery in Witchery Dec 2021 Dec 2020 % A$m A$m change Turnover 496 512 (3.1) Gross profit margin 59.5% 60.0% Expenses 249 215 15.8 Adjusted EBIT 48 94 (48.9) Ad
Slide 18: Capital Expenditure
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION CAPITAL EXPENDITURE Capex continues shift to digital and online; slower H1 run rate due to focus on cash preservation Rm 2 500 R2.3bn A$27m 2 000 A$35m FY22 full year forecast 1 500 • Below previous guidance of R2.8bn due to phasi
Slide 19: Group Balance Sheet
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION GROUP BALANCE SHEET Strong balance sheet, with net cash and higher equity; improvement in key financial metrics; well within covenant limits Constant Dec 2021 Dec 2020 currency Rm Rm % change Assets Property, plant and equipment 9
Slide 20: Cash Generation
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION CASH GENERATION Positive free cash flow notwithstanding resumption of FY21 H2 dividend and store closures in Australia Rm 62 397 6 000 5 483 (993) 4 000 (865) (655) 2 000 1 994 (1 435) (286) 1 070 (638) – Cash Working JV Net finan
Slide 21: Dividends and Capital Structure
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION DIVIDENDS AND CAPITAL STRUCTURE Ended H1 in a strong capital position; interim dividend resumed; long-term payout ratio dependent on outlook • Borrowings are well within the targeted gearing ratios – 1.5x for WSA WHL DPS – 1.0x fo
Slide 22: WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION WHL 22 / 2022
Slide 23: Strategic Update
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION STRATEGIC UPDATE Roy Bagattini Group CEO WHL 23 / 2022
Slide 24: WHL Strategic Framework
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION WHL STRATEGIC FRAMEWORK WHL 24 / 2022
Slide 25: Addressing Questions That May Be Top of Mind: Fashion
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION ADDRESSING QUESTIONS THAT MAY BE TOP OF MIND Fashion turnaround and growth in Beauty and Home Question: Why aren’t you making more progress in the turnaround of your Fashion business, particularly from a top-line perspective? • Hi
Slide 26: Addressing Questions That May Be Top of Mind: Food
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION ADDRESSING QUESTIONS THAT MAY BE TOP OF MIND Leading and iconic Food business Question: The growth in Food appears to be slowing relative to the market; what are you doing to reverse this trend? • New leadership structure, under Z
Slide 27: Defining the WHL Investment Thesis
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION DEFINING THE WHL INVESTMENT THESIS WHL is a pre-eminent retailer of iconic brands, with significant self-help opportunities to grow earnings independently of the macro-economic outlook 1. Highest return on capital Food business in
Slide 28: Capital Allocation Principles
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION CAPITAL ALLOCATION PRINCIPLES Our principles support our growth ambitions, whilst also seeking to satisfy our targeted gearing structure and shareholder aspirations CAPITAL ALLOCATION IS DRIVEN TOP-DOWN AND TIGHTLY ALIGNED TO GROU
Slide 29: Medium-Term Financial Targets
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION MEDIUM- TERM FINANCIAL TARGETS WHL 29 / 2022
Slide 30: Building Blocks to Our Margin Targets – FBH
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION BUILDING BLOCKS TO OUR MARGIN TARGETS – FBH Turnover FY21 • Positive sales growth, notwithstanding space reduction FY24 target R12.9bn • • • Market share gain in “must win” categories Trading density growth ahead of sales Growth i
Slide 31: Building Blocks to Our Margin Targets – Food
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION BUILDING BLOCKS TO OUR MARGIN TARGETS – FOOD FY21 Turnover FY24 target R38.3bn • Longer-term sales growth > market growth • Growing online sales across multiple channels >R46bn Gross profit margin • Higher distribution costs from
Slide 32: Building Blocks to Our Margin Targets – CRG
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION BUILDING BLOCKS TO OUR MARGIN TARGETS – CRG Turnover FY21 • Sales growth > inflation > market growth FY24 target $1.0bn • • • Repositioning of select brands Channel expansion Online sales penetration of >30% >$1.2bn Gross profit m
Slide 33: Investing to Drive Long-Term Value Creation
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION INVESTING TO DRIVE LONG-TERM VALUE CREATION We have self-help opportunities across our businesses to grow both revenue and profitability, and are allocating our capital accordingly to enhance the returns profile of the Group • WSA
Slide 34: Outlook
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OUTLOOK WHL 34 / 2022
Slide 35: Outlook
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION OUTLOOK Trading environment is likely to remain challenging; we have self-help opportunities to use to our advantage and remain steadfast in executing strategies • South Africa’s economic outlook remains challenging • Australian m
Slide 36: Questions
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION QUESTIONS WHL 36 / 2022
Slide 37: Disclaimer
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION DISCLAIMER Shareholders and noteholders are advised that the information, including the constant currency and pro forma financial information in this presentation has not been reviewed and reported on by Woolworths Holdings’ exter
Slide 38: Appendix
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION APPENDIX WHL 38 / 2022
Slide 39: Appendix Contents
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION APPENDIX CONTENTS 1. GROUP PERFORMANCE 2. GROUP AND SEGMENTAL INCOME STATEMENTS 3. NET (CASH)/BORROWINGS 4. IFRS 16 – IMPACT BY SEGMENT 5. CAPITAL EXPENDITURE 6. AUSTRALIA BALANCE SHEET 7. TRADING SPACE 8. STORE LOCATIONS WHL 39 /
Slide 40: Group Performance
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION GROUP PERFORMANCE Dec 2021 Dec 2020 Change Turnover and concession sales R42.1bn R43.0bn -2.1% Adjusted profit before tax R2.2bn R2.7bn -16.9% Adjusted EBIT R3.2bn R3.9bn -18.2% Adjusted diluted HEPS 162.2cps 193.7cps -16.3% Inter
Slide 41: Group Income Statement
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION GROUP INCOME STATEMENT Dec 2021 Dec 2020 % Rm Rm change Turnover and concession sales 42 128 43 047 (2.1) Gross profit 14 124 14 552 (2.9) Adjusted EBITDA 5 438 6 362 (14.5) Adjusted EBIT 3 213 3 926 (18.2) WSA Fashion, Beauty and
Slide 42: H1 FY22 Group Segmental Income Statement
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION H1 FY22 GROUP SEGMENTAL INCOME STATEMENT Woolworths Country David Road FBH Food Logistics WFS Jones Group Treasury Intragroup Group Dec 2021 Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 6 697 19 630 305 – 10 798 5 494
Slide 43: H1 FY21 Group Segmental Income Statement
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION H1 FY21 GROUP SEGMENTAL INCOME STATEMENT Woolworths Country David Road FBH Food Logistics WFS Jones Group Treasury Intragroup Group Dec 2020 Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 6 426 18 903 280 – 12 472 5 978
Slide 44: Net (Cash)/Borrowings
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION NET (CASH)/BORROWINGS Dec 2021 Dec 2020 Net (cash)/borrowings WHL Net (cash)/debt (Rm) (258) 6 772 R5.9bn Interest-bearing debt 6 160 15 068 R4.3bn A$83m Net cash and cash equivalents (6 418) (8 296) Unutilised committed facilitie
Slide 45: IFRS16 – Impact by Segment
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION IFRS16 – IMPACT BY SEGMENT UPDATE TO GROUP LEASE PORTFOLIO Group WSA DJ CRG Lease liabilities Rm Rm A$m A$m Dec 2020 24 335 6 753 1 163 424 Dec 2021 28 928 6 228 1 629 376 Average remaining lease term (years): Dec 2020 4.9 6.1 10.
Slide 46: Capital Expenditure
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION CAPITAL EXPENDITURE Rm Depreciation and amortisation % 2 500 Dec 2021 Dec 2020 change R2.3bn Woolworths (Rm) 477 482 (1.0) David Jones (A$m) 29 36 (19.4) 2 000 13 17 (23.5) Country Road Group (A$m) Total Group pre IFRS 16 (Rm) 931
Slide 47: Australia Balance Sheet
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION AUSTRALIA BALANCE SHEET Dec 2021 Dec 2020 A$m A$m Country Country David Road David Road Jones Group Total Jones Group Total Assets Property, plant and equipment 405 95 500 799 106 905 Intangible assets 1&2 54 355 409 88 364 452 Ri
Slide 48: Trading Space
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION TRADING SPACE Projected Projected Projected Dec 2021 Dec 2020 % Jun 2022 % Jun 2023 % Jun 2024 % 000m2 000m2 change 000m2 change 000m2 change 000m2 change Woolworths Fashion, Beauty and Home* 446 474 (6.1) 436 (3.8) 405 (7.1) 402
Slide 49: Store Locations
WOOLWORTHS HOLDINGS LIMITED INTERIM RESULTS 2022 ANALYST PRESENTATION STORE LOCATIONS Projected Projected Projected Dec 2021 Dec 2020 Growth Jun 2022 Growth Jun 2023 Growth Jun 2024 Growth Woolworths Fashion, Beauty and Home 264 277 (13) 261 (6) 263 2 259 (4) South Africa 199 212 (13) 196 (6) 198 2
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