Wesfarmers Limited · ASX:WES
Wesfarmers — Macquarie Australian Investment Conference 2010
25 slides from Wesfarmers's conference presentation, May 5, 2010
Slide 1: Investment Conference: Philosophy, Performance and Direction
Investment Conference Philosophy, Performance and Direction Macquarie Australian Investment Conference Sydney 5 May 2010 1
Slide 2: Philosophy Based On A Single Focus
Philosophy Based On A Single Focus Satisfactory Returns To Shareholders
Slide 3: Long-term, consistent strategies
Long-term, consistent strategies MANAGING BALANCE SHEET EFFECTIVELY 3
Slide 4: The Wesfarmers Way…
The Wesfarmers Way… Portfolio of High Performing Quality Assets Value creating business model Autonomy Stand alone businesses High calibre leadership teams with operational control Lean corporate office Outstanding People Accountability Reporting Systems Delivering Results • Incentives aligned to •
Slide 5: Providing satisfactory returns over time
Providing satisfactory returns over time Objective: Satisfactory Returns to Shareholders Outcome: Growth in value of future cash flows to equity Review processes: (Growth in ROE) • Corporate planning • Budgeting process • Incentive schemes Disciplines: Improve Returns Invest for Growth Manage Capita
Slide 6: Group Results
Group Results
Slide 7: Group Performance Summary
Group Performance Summary Half Year ended 31 December ($m) 2009 2008 % Operating revenue 26,533 26,363 0.6 EBITDA* 1,996 2,160 (7.6) EBIT* 1,547 1,737 (10.9) Net profit after tax* 879 871 0.9 Operating cash flow 2,083 1,770 17.7 Earnings per share (excl. employee res. shares)^* 76.3 103.6 (26.4) Ear
Slide 8: Divisional EBIT
Divisional EBIT Half Year ended 31 December ($m) 2009 2008 % Coles 486 431 12.8 Home Improvement 422 370 14.1 Office Supplies 27 25 9.0 Target 279 215 29.8 Kmart 154 75 105.3 Resources* 2 664 (99.7) Insurance 58 67 (13.4) Industrial & Safety 51 68 (25.0) Chemicals & Fertilisers 27 4 575.0 Energy 56
Slide 9: Operating Divisions
Operating Divisions
Slide 10: Coles
Coles • Comprehensive 1. Building a solid foundation transformation underway Strategies 2. Delivering consistently well • Strong progress in building a 3. Driving the Coles difference solid foundation • Significant work remains to • Food & Liquor headline sales growth of 3.9% (Qtr 3), 6.1% (YTD) ext
Slide 11: Coles – Strategy
Coles – Strategy 5 years – 3 phases of recovery Building a Solid Delivering Driving the Coles Foundation Consistently Well Difference Performance • Culture of continuous • Embed the new culture improvement • Create a strong top team • Team member development • Strong customer trust and • Cultural ch
Slide 12: Coles – Q310 Sales Performance
Coles – Q310 Sales Performance F&L Comp Sales Growth • Six consecutive quarters of solid 9.0% comps growth for Food & Liquor 8.0% • Good transaction growth 7.0% • Strong underlying volume growth 6.0% 5.0% New supermarket at Flemington (Vic) 4.0% 3.0% 2.0% 1.0% 0.0% Q109 Q209 Q309 Q409 Q110 Q210 Q310
Slide 13: Home Improvement and Office Supplies: Bunnings
Home Improvement and Office Supplies Bunnings 1. Profitable sales growth • Maintain focus on strengthening 2. Better stock flow the customer offer and Strategies 3. Engaging and developing a strong team improving operational efficiency 4. Lifting effectiveness and efficiency 5. Sustainability focus
Slide 14: Home Improvement and Office Supplies: Officeworks
Home Improvement and Office Supplies Officeworks • Good progress on improving 1. Improving the customer offer 2. Improve customer service operational effectiveness 3. Team development & engagement Strategies 4. Make things simple & reduce costs • Strong progress on delivering 5. Drive sales & profit
Slide 15: Target
Target • Strong focus on the 1. Focus on fundamentals 2. Brand reinforcement customer and offer 3. Differentiation Strategies 4. Store network development 5. Customer service 6. Team member development 7. Business improvements • Flat headline sales (Qtr 3), up 2.6% (YTD) • Comp sales decline of 2.0%
Slide 16: Kmart
Kmart • Continue to re-set Kmart for 1. Outstanding customer experience renewal and growth 2. Ranges customers want • “Expect Change” program 3. Great value everyday Strategies 4. Clear communication launched in Q3 5. Every site a success 6. Best people, great company • Headline sales growth of 4.0%
Slide 17: Resources
Resources • Works commenced for 1. Maximise export sales and optimise sales mix 2. Cost reduction programs Curragh expansion (to 8.0mt Strategies 3. Expansion opportunities - 8.5mt per annum) 4. Extend product and market reach 5. Sustainability • Forecast Curragh • Curragh – wet weather impact metal
Slide 18: Insurance
Insurance • Strong focus on Lumley Underwriting business improvement • Stronger partnerships • Disciplined underwriting and pricing initiatives • Building a culture of achievement Strategies • Managing claims effectively • Bolt-on acquisitions continue to Broking • Client focused be assessed • Devel
Slide 19: Chemicals, Energy & Fertilisers
Chemicals, Energy & Fertilisers • Divisional restructure announced April 2010 to combine Chemicals & Fertilisers and Energy businesses • Combination allows for stronger growth focus 1. Growth through expansions 2. Optimise cost and capital Strategies 3. Sustainability 4. Improve capabilities and peo
Slide 20: Industrial & Safety
Industrial & Safety • Improving industrial business activity following global financial crisis • Pipeline of resources and infrastructure projects expected to benefit longer term • Transfer of Coregas business to Industrial & Safety to better leverage common customer relationships 1. Increase sales
Slide 21: Capital Management
Capital Management
Slide 22: Capital Management
Capital Management • First half balance sheet strengthened through strong cash generation • Net Debt to Equity of 15.5% at 31 December 2009 • Cash Interest Cover Ratio of 6.6 times (R12 basis) at 31 December 2009 • Net debt to R12 operating cash flow of 1.1 times at 31 December 2009 • March 2010 – E
Slide 23: Cash Flow – First Half
Cash Flow – First Half (6 months to 31 December) • Total capital expenditure of $891 million • Improved cash flow despite significant reduction from Resources $m % 2,500 200 2,000 160 1,500 120 1,000 80 500 40 0 0 2005 2006 2007 2008* 2009 NPATDA^ Operating Cash Flow Free Cash Flow Cash Realisation
Slide 24: Outlook
Outlook • Remain cautious on the near-term Australian retail environment given: – retailers trading without the assistance of prior year government stimulus – impact of interest rate rises and higher petrol prices on household income • Optimistic about longer term outlook of the retail businesses •
Slide 25: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au 25
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