Slide 1: Coles Group Limited – 2021 Full Year Results Presentation (ASX cover letter)
18 August 2021 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2021 Full Year Results Presentation Please find attached for immediate release to the market the 2021 Full Year Results Presentation for Coles Group Limited. This announceme
Slide 2: 2021 Full Year Results Presentation
Coles’ Together to Zero sustainability strategy set our ambitions including 100% renewable energy by FY25. 2021 Full Year Results Presentation 18 August 2021
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its controlled entities (collectively, ‘Coles’, ‘Coles Group’ or ‘the Group’) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not
Slide 4: FY21 summary
Coles, its customers and its pork farmers raised more than $6.7 million for FightMND(left), and also supported food rescue organisation SecondBite (right). During FY21, Coles marked the milestone of donating the equivalent of 150 million meals to SecondBite since the partnership began in 2011, suppo
Slide 5: Significant strategic progress in the last two years, majority of benefits still to come
Whilst we have made significant strategic progress in the last two years, the majority of our transformation and benefits are still to come over the next three years Our vision. ‘Become the most trusted retailer in Australia and grow long-term shareholder value.’ Our strategic differentiators ✓ Win
Slide 6: Strong progress on strategy execution over last two years
Strong progress on strategy execution over last two years With more differentiation and benefits to come FY19 FY20-21 FY22 onwards Post-demerger Delivered progress More to come foundations • Increased Coles customer satisfaction and • Grow ‘Exclusive to Coles’ to trust 40% of sales focusing on • Suc
Slide 7: FY21 financial highlights
FY21 financial highlights Second year of strategy delivered to grow trust and long-term shareholder value Total sales revenue EBIT Net profit after tax1 $38.6bn $1,873m $1,005m 3.1% vs. pcp; 6.3% vs. pcp 7.5% vs. pcp 10.2% vs. FY19 Smarter Selling Gross operating Operating cash flow2 capex Delivered
Slide 8: Progress against strategy: Inspire Customers
Progress against strategy: Inspire Customers Customer advocacy (NPS)1 improved by 2.3 points in Supermarkets; 4.9 points in Liquor • Q4 exit market share restored to pre-COVID-19 levels as shopping centres recovered • Now ranked as one of Australia’s most trusted consumer brands in Roy Morgan survey
Slide 9: Supermarkets eCommerce key metrics
Supermarkets eCommerce key metrics Q4 growth of 62% supported by investments in capacity and customer experience Monthly active eCommerce Omnichannel shoppers penetration customers spend +46% 6% in Q4 2.2x vs. 3.8% in Q4 vs. in-store only vs. pcp FY20 shoppers in Q4 Coles Plus Perfect order rate Onl
Slide 10: Progress against strategy: Smarter Selling
Progress against strategy: Smarter Selling Achieved Smarter Selling benefits of approximately $300 million in FY21 • Delivered total cumulative benefits in excess of $550 million since commencement of program • Despite challenging operating conditions presented by COVID- 19, the following key initia
Slide 11: Progress against strategy: Smarter Selling
Progress against strategy: Smarter Selling In excess of $550m of Smarter Selling benefits achieved since commencement of program FY21 Smarter Selling benefits of On track to deliver $1bn of benefits ~40% in GP, ~60% in CODB by FY23 (ex-COGS) Admin remuneration, expenses and other $1.0bn Logistics 15
Slide 12: Progress against strategy: Win Together
Progress against strategy: Win Together Launched new sustainability strategy Together to Zero and Better Together • Committed to reduce environmental impact through: o Net zero greenhouse gas emissions by 2050 o 100% renewable electricity by the end of FY25 o Reduce combined Scope 1 and 2 greenhouse
Slide 13: Coles’ market share has recovered to pre-COVID-19 levels
Coles’ market share has recovered to pre-COVID-19 levels Supermarkets market share Key COVID-19 Victoria Refreshed strategy starting to National events pantry lockdown Local shopping unwind gaining traction lockdown stocking 27.7% 27.2% 27.3% 27.1% 26.7% 26.7% 26.6% 26.4% FY19 H1 FY20 Q3 FY20 Q4 FY2
Slide 14: Coles’ strategy tracker – 2nd year of strategy delivered
Coles’ strategy tracker – 2nd year of strategy delivered KPIs Progress Reduced safety TRIFR • 15.7% reduction in TRIFR compared to FY20 Increased team member • Three percentage points lower in FY21, however improved since strategy engagement refreshed in FY19 Improved customer • Supermarkets NPS imp
Slide 15: Group financial overview
Coles Local in Ascot was opened in June 2021, the first Coles Local store to open in Queensland . Group financial overview
Slide 16: FY21 results – Group
FY21 results – Group Operating leverage delivered strong earnings growth in FY21 $m FY21 FY20 Change Sales revenue 38,562 37,408 3.1% EBITDA 3,432 3,257 5.4% EBIT 1,873 1,762 6.3% EBIT margin % 4.9 4.7 15bps Net profit after tax1 1,005 935 7.5% Basic earnings per share1 (cents) 75.3 70.1 7.5% Interi
Slide 17: FY21 results – segment financials
FY21 results – segment financials Sales revenue and EBIT growth across all segments 2-yr $m FY21 FY20 Change change1 Sales revenue Supermarkets 33,845 32,993 2.6% 9.6% Liquor 3,525 3,308 6.6% 15.1% Express 1,192 1,107 7.7% 13.8% Group sales revenue 38,562 37,408 3.1% 10.2% EBITDA Supermarkets 3,001
Slide 18: Operating cash flow
Operating cash flow Cash realisation of 106% Cash flow Comments • Working capital movement reflects lower $m FY21 FY20 inventory and trade payables EBIT 1,873 1,762 • Change in provisions as a result of higher employee entitlements with fewer team members taking leave during COVID-19 and Depreciatio
Slide 19: Capital expenditure
Capital expenditure Increased investment in renewals, growth and efficiency initiatives Capital expenditure breakdown FY21 key capital expenditure initiatives $m FY21 FY20 Store • Store renewals across renewals Supermarkets (65) Store renewals 245 161 • First Choice Liquor Market (17) and B&W Liquor
Slide 20: Increased investment capex focused on long-term growth and efficiencies
Increased investment capex is focused on driving long-term growth and efficiencies Coles is expected to spend ~$1.4bn in FY22 Incremental capex Examples Rationale Omnichannel offer • Click & collect (to boot of car), Customers preference to shop online, expansion • Digital experience enhancements ac
Slide 21: Balance sheet
Balance sheet Investment grade credit metrics with flexibility for future growth Balance sheet summary Comments 27 Jun 3 Jan 28 Jun • Net debt of $355 million and balance sheet $m 2021 2021 2020 leverage ratio of 2.8x1 Inventories 2,107 2,423 2,166 • Working capital higher than the half year, reflec
Slide 22: Capital management
Capital management Total FY21 dividends payable up 6% and a strong liquidity and debt maturity profile Dividend Debt facility maturity profile ($m) • Fully-franked FY21 final dividend of 28 cents per share. Total FY21 dividends payable are a 6% increase on the prior year • Coles retains its industry
Slide 23: Supermarkets
Coles expanded its Click & Collect (to boot of car) to more than 500 stores (left) and re-launched its Coles Plus membership subscription offer (right) during the year. Supermarkets
Slide 24: Supermarkets key metrics
Supermarkets key metrics Successful value campaigns and strength in eCommerce Total sales revenue 2-year1 comp sales Sales per sqm growth $33.8bn 8.4% $17,847 +2.6% vs. pcp vs. pcp +1.7% vs. pcp Exclusive to Coles eCommerce sales2 Customer satisfaction sales +5.3% +51.8% 89.7% vs. pcp +2.6pp on FY20
Slide 25: Supermarkets FY21 results
Supermarkets FY21 results Operating leverage with EBIT margin increasing to 5.0% FY21 results Key commentary • Sales growth supported by local shopping $m FY21 FY20 Change unwind, successful value campaigns, Key P&L items execution across the MasterChef cookware 33,845 32,993 2.6% and knives campaig
Slide 26: Liquor
Coles Liquor raised more than $125,000 in just two weeks to support Clean Up Australia in its mission to clean up, fix up and conserve the environment (left). Investments were also made in eCommerce, including the roll out of Click & Collect (right). Liquor
Slide 27: Liquor key metrics
Liquor key metrics Sales growth driven by all banners, categories and states, underpinned by a strong performance in eCommerce Total sales revenue 2-year comp sales eCommerce sales2 growth1 $3.5bn 13.6% +78.6% +6.6% vs. pcp vs. pcp vs. pcp B&W Liquorland FCLM3 renewals Number of stores format 79% 92
Slide 28: Liquor FY21 results
Liquor FY21 results Progress made during the first year of Liquor’s refreshed strategy “to be a simpler, more accessible, locally relevant drinks specialist” FY21 results Key commentary $m FY21 FY20 Change • Implemented a new customer focused organisational structure, introduced simplified Key P&L i
Slide 29: Express
Coles Express self-serve coffee machine serving the award winning Urban Coffee Culture (left). Coles Express is also proud to support the Movember campaign for men’s health (right). Express
Slide 30: Express key metrics
Express key metrics Strong c-store sales driven by investments and range reviews Total sales revenue 2-year comp sales EBIT growth1 $1,192m 11.4% $67m +7.7% vs. pcp vs. pcp +103.0% vs. pcp FY21 weekly fuel Comp fuel volume Number of sites volumes growth 57.1mL/wk (5.4)% 717 (4.0)% vs. pcp vs. pcp +4
Slide 31: Express FY21 results
Express FY21 results Strong c-store sales and cost control supported an increase in Express EBIT FY21 results Key commentary $m FY21 FY20 Change • Sales growth driven by food-to-go (inc coffee) and cold drinks, supported by recent Key P&L items investments in new self-serve coffee machines C-store s
Slide 32: Outlook
Coles is committed to supporting diversity through providing more opportunities for Indigenous peoples, suppliers and communities (left) and championing inclusion for our LGBTQI+ team members, customers and the community (right). Outlook
Slide 33: Outlook for FY22
Outlook for FY22 ▪ In Supermarkets, sales growth in the first 7 weeks of Q1 is approximately 1% on a headline basis and 12% on a two-year headline basis as a result of the elevated sales from COVID-19. eCommerce penetration is approximately 8% in the first quarter. In July, Supermarkets incurred aro
Slide 34: Q&A
Coles is proud to be the official Supermarket of the AFLW and AFL and to support grass roots athletics through Little Athletics. Q&A