Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Presentation (October 2003)
54 slides from Wesfarmers's investor presentation, Oct 7, 2003
Slide 1: Wesfarmers Limited, October 2003
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Slide 2: Capital Employed
Capital Employed wn Ly June 2003 * . : YO ee yy iy a Energy Other $467m Xa cae Chemicals & . 7 Fertilisers — $491m Industrial & Safety $797m Insurance * $413m * Proforma - including Lumley acquisition and excludi g Landmark
Slide 3: EBIT - 1985
ue Hig J Chemicals & Fertilisers 58% ices Rural Serv om 9 2003 er EBIT - 1985 b Total EBIT $35 0 t Oc
Slide 4: EBIT - 1990
EBIT - 1990 i oy Total EBIT $130m Energy 28% Chemicals & Fertilisers 49% eG
Slide 5: EBIT - 2003
EBIT — 2003 Total EBIT $841.9m Energy 30.8% 5.5% _ Ae Industrial & Sarery Chemicals & 9% Fertilisers 9.3% Rural Operations & Insurance 8% NZ Hardware/DIY 35.5%
Slide 6: Performance Summary
Performance Summa 7,385.6 7,753.4 Operating Revenue Net Profit (before goodwill) 493.3 623.9 26.5 Goodwill Amortisation (79.3) (85.7) 8.1 October 2003
Slide 7: 2003 Performance
2003 Performance » Strong performance from Energ Industrial and Safety | » Continued growth in hardware business » Improved performance from CSBP » Pisces / Girrah transaction » Rural services business negatively impacted by the drought
Slide 8: Corporate Objective
October 2003 Corporate Objective To provide a satisfactory return to shareholders oe ue GG Ig ~ nn) 7
Slide 9: Share Price vs Earnings
Share Price vs Earnings. rg (pre goodwill amortisation and abnor Di. yy 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 — Share Price {@ Earnings Per Share ] Girrah October 2003 i TUCO
Slide 10: Australian Accumulation 1984 - 2003
Australian Accumulatior 1984 - 2003 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 oO an po ~— = ee ae 84 86 87 88 89 90 91 93 94 95 96 97 98 00 O01 02 O03 oom Wesfarmers Limited — All Ordinaries 10
Slide 11: Logical Incrementalism
y, a nn) 7 Logical Incrementalism ~ October 2003 _ aaa | 11
Slide 12: Corporate Strategies
Corporate Strategies Ly Ly yy a By 1. Improve performance of existing businesses | 2. Expand existing businesses 3. Portfolio management \S October 2003 fel 12
Slide 13: Corporate Strategies
Corporate Strategies 1. wy October 2003 us ge ly a i Improve performance of existin businesses . Jom Yuh % c ae i. BE ECO T eee aoe EX nd BxSO nC ous Messe: Mc LE : 13
Slide 14: Integrated Shareholder Systems
Integrated Sharehol Systems aca » Objective Setting Performance Measures Performance Targets Management Accounts Cash Management Corporate Planning Project Evaluation Remuneration EAU TUCO October 2003 14
Slide 15: Performance Targets
ZEAE Performance Targets 17% after » Group ROE = » Divisions ROC = 18% before tax = 10% after tax » Projects IRR 15 a Ly October 2003t«*”
Slide 16: emer
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Slide 17: Divisional ROC & Capital
Divisional ROC & C (before goodwill amortisation) Hardware 349.0 1,993.9 17.5 15.7 Rural Operations & Insurance 76.3 439.8 17.4 17.7 Chemicals & Fertilisers 78.9 491.4 16.1 14.3 * Excluding Girrah October 2003. 17
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Slide 20: Repurchase of Wesfarmers shares
ye Va yy of Wesfarmers shares » At 30 September 2003, approximately 6.2 million shares (1.6%) repurchased at an average price of $25.17 » Other alternatives under consideration A October 2003 20
Slide 21: Corporate Strategies
Corporate Strategies October 2003 NNN A:
Slide 22: Energy Division Financial Performance
Energy Division | Financial Performance $m EBITA 300 250 cme 200 | 150 | 100 | tL 0 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 * Excludes Girrah $80.5m in 2003 22
Slide 23: Wesfarmers Coal
Wesfarmers Coal » 3.4mt domestic energy | Collie, » 7.0mt domestic energy and export coking at Curragh, QLD » 6.2mt export energy at Bengalla, NSW (40% owned) EAU TUCO October 2003 23
Slide 24: Coal Type and Destination
Coal Type and De 2003/4 | Domestic (milliontonne) —«_—-_—s«Energy © Collie, WA 3.4 3.4 Bengalla, NSW (Wes share) 0.8 1.7 2.5 Curragh, QLD 2.4 4.6 7.0 6.6 1.7 4.6 12.9 24
Slide 25: Hard Coking Coal Prices
Hard Coking Coal Prices JRP US$/Tonne FOB nominal 83 85 87 89 91 93 95 97 99 O01 03 Japanese Financial Year 2004 price outlook: positive Cs y : ) 25
Slide 26: Thermal Coal Prices
Energy 2003 En iro Thermal Coal Prices US$/Tonne FOB nominal 50 40 + 30 + 20 7 40 4 0 T T T Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 ~~ JPU Reference Price -~ Spot Price Source: Barlow Jonker 2004 price outlook: neutral OE ye ML 26
Slide 27: Wesfarmers Curragh Hedging
Wesfarmers Curragh Hedg 2003/4 2004/5 2005/6 2006/7 2007/8 Proportion of USD ayn ee og revenue hedged + “UD/USD hedge 90% 0.5730 70% 0.5767 50% 0.5621 30% 0.5798 10% 0.5872 * Calculated after adjusting for USD capital and operational expenditure and USD royalty payments. Hc : 27
Slide 28: 2004 Coal Issues
2004 Coal Issues | » Curragh » Export tonnes up 0.6 mt (domestic up ( » Export prices down around 5 percent » Average AUD/USD rate up from 0.56 to 0.58 » $14 m dragline shutdown » Bengalla » Export prices comparable with ‘03 » Export volumes up 0.5 mt (0.2mt net) » Premier » Flat sales » Price down
Slide 29: Wesfarmers Gas
Wesfarmers Gas domestic and export >» 500,000t Australia-wide LPG distribution business - Kleenheat » 40% interest in ALWA industrial gases EAU TUCO October 2003 29
Slide 30: 2004 Gas Issues
2004 Gas Issues » LPG prices lower » AUD/USD higher » Some volume growth but tighter margins national Kleenheat LPG business 30 a iy October 2003t«*”
Slide 31: Bunnings
Bunnings October 2003 i Lo | : 31
Slide 32: Bunnings
Bunnings » 211 hardware stores in Australia a Zealand including 116 warehouse stores » Sales of $3.2 billion » Rollout 8-12 warehouses per annum » Plus 4 new 3000 series per annum from 2005 32
Slide 33: Bunnings Sales and EBIT
1995 1996 1997 1998 1999 2000 2001 2002 Emm@a] Sales(CAGR 28.1%) === EBIT (CAGR 35.2%) 33
Slide 34: Key Issues 2004
Key Issues 2004 » Ongoing development of store. » Openings » Departmental and range upgrades » Store upgrades and conversions » Continuous improvement » Consistent offer (price, range, service) Attracting, developing and retaining the right people Safety October 2003 34
Slide 35: Key Issues 2004 (continued)
Key Issues 2004 (cor Cost and capital managemen » Investment in technology » Merchandise / inventory systems and process development Continued growth in DIY and renovation markets Slower growth in domestic building trade sector | October 2003 35
Slide 36: Industrial & Safety
Industrial & Safety » Blackwoods/Alsafe/Protector >» Revenue around $1 billion > EBITA around $115 million » Over 200 distribution centres in Australia and 50 in New Zealand October 2003 ce ee
Slide 37: Highlights for 2003
Highlights for 200 » Metals disposal » Integration of Protector and Alsafe » Rationalisation of distribution centres and customer service centres Blackwoods catalogue published April w w Paykels acquisition October 2003 37
Slide 38: Outlook & Priorities
Outlook & Priorities | — a » Australia » Generally positive » Easing of drought » Continued spending in mining and transport infrastructure New Zealand » Steady » MRO growth through acquisition of Paykels » Overall modest profit growth after large increase in 2003 A 38
Slide 39: Steady premium growth in 2003 despite drought
Steady premium growth in 2003 despite drought » Combined operating ratio in 2003 of 90.9% » 2003 EBIT of $25m EAU AT : 39
Slide 40: Lumley Insurance
ANNs Lumley Insurance: » Purchase for $320m approx. | » General / financing / technology Signed 30 June 2003 » Completion expected during October » Formation of new Insurance division October 2003 ce a0
Slide 41: CSBP - Fertilisers and Chemicals
CSBP - Fertilisers and » Western Australian fertiliser m and importer » Sales around 1 million tonnes » Competitive market >» Producer of mining chemicals » High market share » Plant expansions continuing October 2003 a _ i = 41
Slide 42: EBITA and EBITA/Capital Year Trend
EBITA and EBITA/Capital 5 Year Trend EBITA $m 100 80 4 ; : a 60 ie : ee e a 7 y : i 10 40 5 20 5 o a at . t . He t : — t : 0 1999 2000 2001 2002 2003 EBITA —@ EBITA/Capital October 2003 Se gp
Slide 43: Chemicals - Outlook & Priorities 2004
Chemicals - Outlook & Priorities 2004 » Firm demand for ammonia in c base » Export excess production » Capacity upgrade in planned shutdown » Solid resource sector demand for ammonium nitrate » Improving sodium cyanide conditions » Evaluating growth opportunities 43
Slide 44: Fertilisers - Outlook & Priorities 2004
Fertilisers - Outlook & Priorities 2004. » Positive outlook for 2003 harve » Highly competitive market » Focus on strong market offer » Product range development » Increased sales and service presence » Further cost base and supply chain improvements » Seeking new markets for proprietary fertilisers
Slide 45: Forest products business
"7 ay : ye QZ evvivinininnnnnaninagg : : : . 7 oo @ Ly, oe ee y 7 » Forest products business 2003 EBIT was $12.6m » Exit by 2004 October 2603 See 45 ~
Slide 46: Sale of Wesfarmers Landmark
2 iin Ly Sale of Wesfarmers Lane » Sold to AWB, 29 August 2003, fo approximately $825 million » $396 million pre tax profit » Ongoing arrangements with » CSBP - Fertiliser » WFEI - Insurance EAU TUCO October 2003 46
Slide 47: Australian Railroad Group
Australian Railroad Gro >» 50% owned » WA and SA rail networks above and below rail » Positive outlook in 2004 Record wheat harvest Lower incident (derailment) expectation EAU TUCO October 2003 47
Slide 48: Gresham Private Equity
Gresham Privat 50% Interest GRESHAM — INVESTMENT HOUSE > $155m invested in Fund 1 (WES share $77 » Fund 1 commenced in 1999 » Good returns expected in 2004, 2005 and 2006 » Planning for Fund 2 October 2003 - | IN ag
Slide 49: Corporate Strategies
Corporate Strategies pn pe | mM Lt % ohn web aS October 2003 Vy e iG Mc LE : 49
Slide 50: Portfolio Management in 2003
Ge Portfolio Man ageme ms : ic slit t con in 2003 i Girrah sale Curragh North arrangements Sale of Metals from WISD » Purchase of Paykel » Lumley Insurance purchase » Sale of Landmark October 2003 EAU TUCO 50
Slide 51: Key Success Factors
Key Success Factors 1. Financial Focus 2. Strict Disciplines y, a nn) —— 3. Building Growth-Enabling Competencies Culture - succession planning October 2003 ~ 51
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Slide 53: Share Price vs Earnings
Share Price vs Earnings. (pre goodwill amortisation and abnor Le Ey 91 92 93 94 95 96 97 98 99 00 O01 02 03 — Share Price {@ Earnings Per Share ] Girrah October 2003 i | : 53 TUCO
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