Woolworths Holdings Limited · JSE:WHL
Woolworths — FY2020 Earnings Presentation
53 slides from Woolworths's earnings presentation, September 2020
Slide 1: Woolworths Holdings Limited 2020 Annual Results
WO O LWO R T H S H O L D I N G S L I M I T E D 2020 Annual Results
Slide 2: Presentation Outline
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION PRESENTATION OUTLINE 01 02 03 OVERVIEW FINANCIAL UPDATE AND OF THE YEAR OVERVIEW OUTLOOK WHL 1 / 2020
Slide 3: Overview of the Year
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION OVERVIEW OF THE YEAR Roy Bagattini Group CEO WHL 2 / 2020
Slide 4: Appreciation
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION APPRECIATION Remarkable support by our teams for each other, their customers and their communities • Our primary focus has been the health and wellness of our people, the safety of our customers, and the protection of jobs for all o
Slide 5: Economic Overview
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION ECONOMIC OVERVIEW Weakening macro and consumer confidence exacerbated by COVID-19 SOUTH AFRICA AUSTRALIA % Real annual GDP growth % % Real annual GDP growth % 6 6 4 4 2 2 – 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 6: Overview of the Year
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION OVERVIEW OF THE YEAR Exceptionally challenging and tumultuous year for all our businesses • WSA Food delivered an exceptional performance, underpinning Group results • WSA FBH‘s disappointing H1 performance further exacerbated by lo
Slide 7: Financial Overview (Pre IFRS 16)
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION FINANCIAL OVERVIEW (PRE IFRS 16) Reeza Isaacs Group CFO WHL 6 / 2020
Slide 8: Group Performance
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP PERFORMANCE The challenging trading conditions due to the pandemic placed significant pressure on H2 performance H1 H2 Full year Turnover and concession sales +3.8% to R40.9 billion -4.0% to R37.4 billion -0.1% to R78.3 billio
Slide 9: Impact of COVID-19 on H2 Sales Performance
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IMPACT OF COVID-19 ON H2 SALES PERFORMANCE First local Declaration of First local Stock- case of National State Level 5 Level 4 Level 3 case of piling Level 5 Level 4 Level 3 COVID-19 of Disaster Lockdown Lockdown Lockdown COVID-19
Slide 10: H1, H2 and Full Year Sales Performance
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION H1, H2 AND FULL YEAR SALES PERFORMANCE 12 421 35 817 (0.9) 17.4 1.9 16.1 (12.4) (10.7) 13.3 7 236 (24.1) 17 040 18 777 5 185 7.5 10.7 7.8 (61.4) H1 H2 – first H2 – second H2 – last H2 Full year H1 H2 – first H2 – second H2 – last H2
Slide 11: H1, H2 and Full Year EBIT Performance
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION H1, H2 AND FULL YEAR EBIT PERFORMANCE 2 716 (50% of PAT) 28.6 19.0 1 559 1 157 834 683 (8.9) (59.5) 8.0 >-100 159 101 >-100 1.3 (58) (65.8) (151) H1 H2 Full year H1 H2 Full year H1 H2 Full year 56 40 20 8.2 (60.0) (57.4) >-100 (16)
Slide 12: Impact of COVID-19 on EBITDA
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IMPACT OF COVID-19 ON EBITDA Lost sales in our discretionary businesses due to the pandemic had a significant impact on EBITDA, notwithstanding a strong Food performance Net impact on gross profit from lost sales Incremental uplift
Slide 13: Group Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP INCOME STATEMENT 52 weeks 52 weeks Jun 2020 Jun 2019 % Rm Rm change Turnover and concession sales 78 262 78 335 (0.1) Gross profit 25 336 27 473 (7.8) Adjusted EBITDA 5 740 7 699 (25.4) Adjusted EBIT 3 570 5 659 (36.9) WSA Fas
Slide 14: EPS, HEPS and Adjusted HEPS
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION EPS, HEPS AND ADJUSTED HEPS Adjusted diluted HEPS declined 45.7% for the year (-11.7% in H1 and -90.5% in H2) 78.7 193.6 168.4 (25.2) 31.5 1.8 114.9 81.6 Diluted EPS Impairment* Other Diluted HEPS Adjustments* Adjusted IFRS 16 impac
Slide 15: Woolworths Fashion, Beauty and Home
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION Disappointing H1 performance, exacerbated by lockdown restrictions in H2 H2 52 weeks 52 weeks 2020 Jun 2020 Jun 2019 % Rm Rm Rm change Turnover 5 185 12 421 13 908 (10.7) Gross profit margin 40.4% 44.0% 47.5% Adjusted EBIT (151) 683
Slide 16: Woolworths Food
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION H2 benefitted from stock piling pre lockdown; positive momentum continued post lockdown H2 52 weeks 52 weeks 2020 Jun 2020 Jun 2019 % Rm Rm Rm change Turnover 18 777 35 817 32 342 10.7 Gross profit margin 25.1% 24.9% 24.8% Adjusted
Slide 17: Woolworths Financial Services
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION A credible performance despite higher impairments due to store closures, lower discretionary spend and lower interest rates H2 2020 Jun 2020 Jun 2019 % Rm Rm Rm change Average total financial services assets 13 185 12 295 7.2 % % In
Slide 18: David Jones
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION Loss of footfall across the chain was partially offset by a shift to online and the Elizabeth Street store reopening H2 52 weeks 52 weeks 2020 Jun 2020 Jun 2019 % A$m A$m A$m change Turnover and concession sales 888 2 064 2 204 (6.4
Slide 19: Country Road Group
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION Store closures adversely impacted trade; strong Country Road brand and online performance H2 52 weeks 52 weeks 2020 Jun 2020 Jun 2019 % A$m A$m A$m change Turnover 386 927 1 082 (14.3) Gross profit margin 53.4% 58.6% 61.7% Adjusted
Slide 20: Capital Expenditure
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION CAPITAL EXPENDITURE Targeted capex reduction in H2 and FY21; FY21 pulled back by R1 billion from previous guidance Rm Depreciation and amortisation* 3 200 52 weeks 52 weeks R2 706m Jun 2020 Jun 2019 % change R2 535m Woolworths (Rm)
Slide 21: Group Balance Sheet
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP BALANCE SHEET Several key initiatives underway to further strengthen the balance sheet; targeting a sustainable capital structure of 1.5x Net debt to EBITDA Constant Jun 2020 Jun 2019 currency Rm Rm % change Assets Property, p
Slide 22: Net Gearing and Covenants
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION NET GEARING AND COVENANTS Significant focus on cash generation and preservation initiatives across the Group resulted in an improved net gearing position at year-end, despite COVID-19 Net gearing Covenants* Jun 2020 Jun 2019 Jun 202
Slide 23: Cash Generation
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION CASH GENERATION Positive cash generation in H2 through minimising operating and capital expenditure and proactively managing working capital Rm H1 5 000 554 80 4 000 3 872 (503) 3 000 (754) 2 000 1 930 (1 319) (299) 1 000 681 (950)
Slide 24: Group Liquidity
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP LIQUIDITY While the funding support to the Australian Group remains available, no funds have flowed due to the better than expected liquidity position South Africa Net gearing Australasia Net gearing (R) (A$m) 10 000 750 9 000
Slide 25: Recent Trading
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION RECENT TRADING 17.4 1.9 16.1 FBH: first 10 weeks impacted by smaller winter (12.4) 13.9 clearance due to a lower year-end stock position; 13.3 (21.8) reduced formal wear sales and later summer launch; (24.1) FBH price movement for H
Slide 26: Update and Outlook
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION UPDATE AND OUTLOOK Roy Bagattini Group CEO WHL 25 / 2020
Slide 27: Impact of COVID-19 on Customers' Behaviour
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IMPACT OF COVID-19 ON CUSTOMERS’ BEHAVIOUR Our customers’ shopping behaviour was significantly impacted by COVID-19 Changes in shopping behaviour Key drivers of store choice % % 70 80 60 70 60 50 50 40 40 30 30 20 20 10 10 0 0 Shopp
Slide 28: Lessons We Have Learnt from Navigating the COVID-19 Crisis
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION LESSONS WE HAVE LEARNT FROM NAVIGATING THE COVID-19 CRISIS We are amplifying and accelerating certain initiatives which may otherwise have taken longer Our customers’ lifestyles and shopping ...we are intensifying our efforts to mee
Slide 29: Australasia Restructure and Unlock of Value
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION AUSTRALASIA RESTRUCTURE AND UNLOCK OF VALUE We are undertaking several key initiatives to unlock value in Australasia • Demonstrable progress in several key areas – Redeveloped Elizabeth Street store showing encouraging signs, but l
Slide 30: Australasia Restructure and Unlock of Value
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION AUSTRALASIA RESTRUCTURE AND UNLOCK OF VALUE We are undertaking several key initiatives to unlock value in Australasia • We are making progress on our capital plan – Sale of Bourke Street menswear building for A$121 million – Good in
Slide 31: FBH Turnaround
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION FBH TURNAROUND We are focused on fixing and repositioning our FBH business • Our challenges lie both in strategy and execution • Insufficient focus on acquiring new and aspiring customers • Relatively long, inflexible lead times • S
Slide 32: Maintaining Leadership in Food
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION MAINTAINING LEADERSHIP IN We will amplify our investment to protect and actively grow our market share • Extend our leadership position in product quality and innovation • Expand our advantage in our Fresh food offering while develo
Slide 33: Our Good Business Journey
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION OUR GOOD BUSINESS JOURNEY Sustainability is core to our business and a distinct competitive advantage • Our deeply divided and unequal society is a reality that will continue to affect business and its sustainability • Active citize
Slide 34: Accelerating Data and Digital Initiatives
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION ACCELERATING DATA AND DIGITAL INITIATIVES We are prioritising our capital and operational spend and focus towards data and digital transformation • Data-driven decision-making will start to inform all our business decisions • Critic
Slide 35: Outlook
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION OUTLOOK The operating environment is challenging and fluid, and will remain so for the foreseeable future • The full economic impact of the pandemic is yet to be felt, especially on peoples’ livelihoods – we will not lose sight of o
Slide 36: Appendix
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION APPENDIX WHL 35 / 2020
Slide 37: Group Income Statement (Jun 2020)
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP INCOME STATEMENT Woolworths Country FBH Food Logistics WFS David Jones Road Group Treasury Intragroup Group Jun 2020 Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 12 421 35 817 517 – 21 542 9 655 – (1 690) 78 262 Co
Slide 38: Group Income Statement (Jun 2019)
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP INCOME STATEMENT Woolworths Country FBH Food Logistics WFS David Jones Road Group Treasury Intragroup Group Jun 2019 (52 weeks) Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 13 908 32 342 483 – 22 363 10 986 – (1 74
Slide 39: Australasia Balance Sheet
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION AUSTRALASIA BALANCE SHEET Jun 2020 Jun 2019 A$m A$m Country Country David Road David Road Jones Group Total Jones Group Total Assets Property, plant and equipment 918 114 1 032 893 138 1 031 Intangible assets 1 & 2 91 367 458 89 366
Slide 40: Trading Space
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION TRADING SPACE Projected Projected Projected Jun 2020 Jun 2019 % Jun 2021 % Jun 2022 % Jun 2023 % 000m2 000m2 change 000m2 change 000m2 change 000m2 change Woolworths Fashion, Beauty and Home 485 478 1.0 462 (4.7) 445 (3.7) 429 (3.6)
Slide 41: Financial Services Book Performance
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION Book performance Contribution to sales IAS 39 IFRS 9 % of retail sales purchased Jun Jun on Woolworths cards 2020 2019 13 092 10% Total Fashion, Beauty and Home 23.6% 23.9% 12 830 11 890 Total Food 10.6% 11.3% 10 861 11 325 7.9% 8%
Slide 42: IFRS 16
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IFRS 16 WHL 41 / 2020
Slide 43: IFRS 16 Introduction
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION INTRODUCTION • Effective beginning of 2020 financial year (1 July 2019) • We have adopted the modified retrospective approach • Comparative amounts are not restated. Opening retained earnings is adjusted on Day 1 (1 July 2019). Resu
Slide 44: Group Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP INCOME STATEMENT Pre IFRS 16 Post IFRS 16 52 weeks 52 weeks 52 weeks Jun 2020 Adjustment Jun 2020 Jun 2019 Rm Rm Rm Rm Woolworths Fashion, Beauty and Home 683 265 948 1 686 Woolworths Food 2 716 180 2 896 2 283 WFS (50% of PAT
Slide 45: Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION INCOME STATEMENT Pre IFRS 16 Post IFRS 16 52 weeks 52 weeks 52 weeks Jun 2020 Adjustment Jun 2020 Jun 2019 Rm Rm Rm Rm Turnover 12 421 – 12 421 13 908 Cost of sales 6 953 – 6 953 7 298 Gross profit 5 468 – 5 468 6 610 Other revenue
Slide 46: Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION INCOME STATEMENT Pre IFRS 16 Post IFRS 16 52 weeks 52 weeks 52 weeks Jun 2020 Adjustment Jun 2020 Jun 2019 Rm Rm Rm Rm Turnover and concession sales 35 817 – 35 817 32 342 Concession sales (676) – (676) (746) Turnover – own buy 35 1
Slide 47: Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION INCOME STATEMENT Pre IFRS 16 Post IFRS 16 52 weeks 52 weeks 52 weeks Jun 2020 Adjustment Jun 2020 Jun 2019 A$m A$m A$m A$m Turnover and concession sales 2 064 – 2 064 2 204 Concession sales (677) – (677) (747) Turnover – own buy 1 3
Slide 48: Income Statement
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION INCOME STATEMENT Pre IFRS 16 Post IFRS 16 52 weeks 52 weeks 52 weeks Jun 2020 Adjustment Jun 2020 Jun 2019 A$m A$m A$m A$m Turnover 927 – 927 1 082 Cost of sales 384 – 384 414 Gross profit 543 – 543 668 Other revenue 6 – 6 6 Expense
Slide 49: Group Balance Sheet
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION GROUP BALANCE SHEET Pre IFRS 16 Post IFRS 16 Jun 2020 Adjustment Jun 2020 Jun 2019 Rm Rm Rm Rm Assets Property, plant and equipment 16 280 (34) 16 246 14 295 Intangible assets 8 228 – 8 228 7 283 Right-of-use assets – 20 519 20 519
Slide 50: Impact on Key Metrics
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IMPACT ON KEY METRICS Pre IFRS 16 Post IFRS 16 Jun 2020 Change Jun 2020 BALANCE SHEET Net debt* Rbn 11.6 19.9 31.5 Net debt to EBITDA* times 2.0 1.3 3.3 ROCE* & ** % 7.7 (0.6) 7.1 INCOME STATEMENT Adjusted EBIT Rbn 3.6 1.2 4.8 Opera
Slide 51: Impact by Segment
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION IMPACT BY SEGMENT Group WSA DJ CRG Rm Rm A$m A$m INCOME STATEMENT Depreciation 2 602 802 75 97 Finance costs – Lease liabilities 1 555 677 62 22 BALANCE SHEET Right-of-use assets 20 519 5 281 898 393 Lease liabilities (28 599) (6 72
Slide 52: Disclaimer
WOOLWORTHS HOLDINGS LIMITED FINAL RESULTS 2020 ANALYST PRESENTATION DISCLAIMER Shareholders are advised that the information in this presentation has not been reviewed and reported on by Woolworths Holdings’ external auditors and it does not constitute a profit forecast. Woolworths Holdings has take
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