Metcash Limited · ASX:MTS

Metcash — FY2017 Earnings Presentation

33 slides from Metcash's earnings presentation, Jun 26, 2017

  1. Slide 1: FY17 Full Year Results

    DRAFT COPY NOT FOR DISTRIBUTION FY17 Full Year Results 26 June 2017

  2. Slide 2: Group update and divisional results

    Group update and divisional results IAN MORRICE GROUP CHIEF EXECUTIVE OFFICER

  3. Slide 3: Our purpose and vision

    Our purpose and vision SUCCESSFUL INDEPENDENTS OUR VALUES OUR VISION BEST STORE IN EVERY TOWN INTEGRITY IS THE FOUNDATION OF OUR VALUES:  Differentiated offer & service  Supporting our customers and suppliers  Celebrating Individuality  Our people are empowered and accountable  Loved by Locals

  4. Slide 4: Group overview

    Group overview  Group sales revenue up 5.4% to $14.12bn  Group EBIT increased 8% to $296.7m (including 53rd trading week and acquisition of HTH)  Hardware EBIT up $15.7m (48%) – continued strong performance from Mitre 10 and earnings from HTH in 2H17  Liquor EBIT up $4.9m (8%) – continued growth

  5. Slide 5: Results overview by pillar

    Results overview by pillar FY17 FY16 % Sales revenue (%) $m $m Change Sales revenue1 11% Food2 9,180.0 9,126.6 0.6% Food 24% Liquor 3,333.1 3,219.3 3.5% 65% Liquor Hardware3 1,608.8 1,056.6 52.3% Total sales revenue 14,121.9 13,402.5 5.4% Hardware EBIT EBIT (%) Food 180.0 179.9 0.1% Liquor 67.0 62.1

  6. Slide 6: Food - overview

    Food - overview Market conditions Network investing for growth  Competitive intensity continued in 2H17  Multi-store owners investing in both new stores and upgrades, delivering differentiated new formats:  Higher deflation in 2H17 v 1H17  Romeo’s CBD format - MLC centre (NSW)  Intense promotio

  7. Slide 7: Food - sales

    Food - sales Supermarkets FY17 FY16 % $m $m Change  Sales up 1.3% to $7.65bn. Excluding 53rd trading week sales decreased 0.6% Sales revenue1  IGA Retail LfL sales up 0.1 %2 – positive over last three Supermarkets 7,651.5 7,555.3 1.3% financial years Convenience 1,528.5 1,571.3 (2.7%)  Improved p

  8. Slide 8: Food - sales (cont.)

    Food - sales (cont.) Convenience FY17 FY16 % $m $m Change  Total sales declined 2.7% to $1.53bn. Excluding 53rd trading week sales declined 4.5% Sales revenue1  CSD - lower volumes due to revision of key contract Supermarkets 7,651.5 7,555.3 1.3%  Campbells – impacted by continued decline in rese

  9. Slide 9: Food - EBIT

    Food - EBIT Food FY17 FY16 % $m $m Change  EBIT in line with prior year Sales revenue1  FY17 includes a 53rd trading week Supermarkets 7,651.5 7,555.3 1.3%  EBIT in line with guidance at 1H17: Convenience 1,528.5 1,571.3 (2.7%)  Supermarkets 2H17 EBIT higher than 2H16 Total sales 9,180.0 9,126.6

  10. Slide 10: Food – Best Store in Town

    Food – Best Store in Town Taylor Road IGA - Nedlands, WA Prince’s Fresh&Save Food Warehouse - Maryborough, Qld Ritchie’s - Dromana, Vic Romeo’s Foodhall – Summer Hill, NSW 10

  11. Slide 11: Liquor - overview

    Liquor - overview Market Conditions Investing for growth  Modest industry growth as consumer habits continue  Focus on conversion of existing wholesale customers to to shift to less volume consumption but higher quality IBA network  Continuation of trend to smaller, more frequent  Acquisition of

  12. Slide 12: Liquor - financials

    Liquor - financials Sales FY17 FY16 % $m $m Change  Sales up 3.5% to $3.33bn. Excluding 53rd trading week sales increased 1.8% Sales revenue1 3,333.1 3,219.3 3.5%  Wholesale sales through IBA bannered network increased 6.3%. Excluding 53rd trading week sales were EBIT 67.0 62.1 7.9% up 4.6%.  LfL

  13. Slide 13: Liquor – Best Store in Town

    Liquor – Best Store in Town The Bottle-O Albany, WA Cellarbrations, Cooma, NSW Gisborne Cellarbrations, Vic IGA Liquor, Wauchope, NSW 13

  14. Slide 14: Hardware - overview

    Hardware - overview Market Conditions HTH Acquisition  Market continues to be highly competitive  Acquisition completed 2 October 2016  Masters stock liquidation negatively impacted market  Created ~$2bn hardware business, positioning Metcash in late 2016 as second largest in sector and a leader

  15. Slide 15: Hardware - financials

    Hardware - financials Sales FY17 FY16 % $m $m Change  Sales increased 52.3% to $1.61bn Sales revenue1 1,608.8 1,056.6 52.3%  HTH sales since acquisition of $521.5m  Mitre 10 sales increased 2.9%, up 1.4% excluding 53rd EBIT 48.5 32.8 47.9% trading week, with positive momentum from “shopper led” i

  16. Slide 16: Hardware – Best Store in Town

    Hardware – Best Store in Town TM&H Home Timber & Hardware, Vic Johnson Bros Mitre 10, NSW Balhannah Mitre 10, SA Provans Home Timber & Hardware, Vic 16

  17. Slide 17: Financials

    Financials BRAD SOLLER GROUP CHIEF FINANCIAL OFFICER

  18. Slide 18: Financial overview

    Financial overview  Underlying profit after tax (excludes significant items) increased $16.5m to $194.8m  The 53rd trading week and Working Smarter savings helped offset impact of difficult trading conditions  Strong operating cash flows  Net debt reduced to $81m  Balanced debt maturity profile

  19. Slide 19: Profit & Loss

    Profit & Loss FY17 FY16 % $m $m Change Sales revenue1 14,121.9 13,402.5 5.4% EBITDA 360.2 335.7 7.3% Depreciation and amortisation (63.5) (60.3) 5.3% EBIT 296.7 275.4 7.7% Net finance costs2 (25.5) (27.0) 5.6% Tax (74.6) (68.4) (9.1%) Non-controlling interests (1.8) (1.7) (5.9%) Underlying profit af

  20. Slide 20: Working Smarter

    Working Smarter  Focused on driving cost savings and improving margins Working Smarter will make doing business with Metcash  Exceeded FY17 savings target of $35m simpler for customers, suppliers and our people through:  Total program targeted savings increased to $120m (annualised savings throug

  21. Slide 21: Cashflows

    Cashflows FY17 FY16 $m $m Net cash from operating activities1 304.6 165.8 Net cash from/(used in) investing activities (198.6) 237.4 Proceeds from disposal of businesses 1.8 242.1 Proceeds from disposal of surplus assets and loan repayments 39.4 75.8 Acquisitions of businesses and associates (195.4)

  22. Slide 22: Balance Sheet

    Balance Sheet 30 April 2017 30 April 2016 $m $m Trade receivables and prepayments 1,133.3 967.7 Inventories 759.2 673.6 Trade payables and provisions (1,811.4) (1,632.0) Net working capital 81.1 9.3 Intangible assets 1,152.7 1,135.5 Property, plant and equipment 242.1 251.9 Equity accounted investme

  23. Slide 23: Borrowings

    Borrowings FY17 FY16 Key changes in debt profile Net debt $m $m Gross debt (177.3) (301.9)  Net debt reduced by $195m to $81m ($686m reduction since FY14) Cash and cash equivalents 96.5 26.4  $215m of debt facilities cancelled (~$500m cancelled Net debt (80.8) (275.5) in past 2 years)  Average ne

  24. Slide 24: Dividends

    Dividends  FY17 final dividend of 4.5 cents per share fully franked  Record date 7 July 2017  Payable 27 July 2017  Dividend policy from FY18  Target payout ratio 60% of underlying earnings  Weighting of interim and final dividends anticipated to be in line with prior payments 24

  25. Slide 25: Group Outlook

    Group Outlook IAN MORRICE GROUP CHIEF EXECUTIVE OFFICER

  26. Slide 26: Group Outlook

    Group Outlook  Group  FY18 earnings will cycle inclusion of 53rd trading week in FY17  Liquor  Moderate growth in overall liquor market  Continued focus on building and improving quality of IBA network  Hardware  FY18 will include a full year of earnings from HTH  Synergies expected to be at

  27. Slide 27: Appendices

    Appendices 1. Five year financial history 2. Sales reconciliation 3. Bannered store numbers 4. Contact details 27

  28. Slide 28: 1. Financial history

    1. Financial history FY171 FY16 FY15 FY14 FY13 Financial Performance Sales revenue ($m) 14,121.9 13,402.5 13,244.3 13,045.1 12,767.8 EBIT ($m) 296.7 275.4 297.3 368.4 437.7 Net finance costs ($m) (25.5) (27.0) (55.1) (57.3) (61.7) Underlying profit after tax ($m) 194.8 178.3 173.6 218.4 261.2 Report

  29. Slide 29: 2. Sales revenue reconciliation

    2. Sales revenue reconciliation 1 $m FY17 53rd week FY17 FY16 WA Supplier FY16 2 Actual Previously reported Income Adjusted (excluding 53rd week) Food 9,180.0 (168.6) 9,011.4 9,265.4 (138.8) 9,126.6 Liquor 3,333.1 (54.6) 3,278.5 3,219.3 - 3,219.3 Hardware 1,608.8 (30.3) 1,578.5 1,056.6 - 1,056.6 Sal

  30. Slide 30: 3. Bannered store numbers

    3. Bannered store numbers April April 2017 2016 Pillar Supermarkets 1,683 1,678 Campbells 18 18 Liquor 2,517 2,674 Hardware 740 378 TOTAL 4,958 4,748 Supermarkets Liquor Hardware Store movement Number of stores at April 2016 1,678 2,674 378 Stores joined banner during the period 57 324 371 Stores le

  31. Slide 31: 3. Bannered store numbers

    3. Bannered store numbers April April 2017 2016 Supermarkets Supa IGA 397 415 IGA 823 822 IGA-Xpress 206 202 Total IGA bannered stores 1,426 1,439 Friendly Grocer / Eziway 257 239 Total Supermarkets 1,683 1,678 Liquor Cellarbrations 553 518 Bottle-O & Bottle-O Neighbourhood 457 601 IGA Liquor 462 49

  32. Slide 32: 4. Contact details

    4. Contact details For additional information contact: Steve Ashe, Head of Corporate Affairs & Investor Relations Phone: +61 2 9751 8368 E-mail: steve.ashe@metcash.com Merrin Hodge, Investor Relations Manager Phone: +61 2 9647 0866 Email: merrin.hodge@metcash.com Or visit our website: www.metcash.co

  33. Slide 33: Disclaimer

    Disclaimer This presentation contains summary information about Metcash Limited (ABN 32 112 073 480) (Metcash) and its activities current as at the date of this presentation. The information in this presentation is of general background and does not purport to be complete. It should be read in conju

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