Tesco Plc · LSE:TSCO
Tesco — H1 2007/08 Earnings Presentation
34 slides from Tesco's earnings presentation, Oct 2, 2007
Slide 1: Interim Results
Interim Results 2 October 2007 David Reid Chairman 1
Slide 2: Highlights
Highlights • Sales are up 9.2% • Underlying profit before tax up 14.3% • Property programme going well • Interim dividend up 13.9% • Share buy-back value now over £800m International 2
Slide 3: Strategy
Strategy • Core UK • International • Non-food • Retailing services • Community Community 1 billion bags saved 3
Slide 4: Responsible retailing
Responsible retailing Our people 4
Slide 5: Results headlines
Andrew Higginson Finance and Strategy Director Results headlines • Good growth in sales, profits and earnings • Releasing value from property • Benefits for shareholders – Share buy-backs – Strong dividend growth • Strong cash flows and balance sheet 5
Slide 6: Group performance
Group performance • Sales up 9.2% to £24.7bn • Trading profit up 10.1% to £1,249m • Significant start-up costs on Direct and U.S. • Trading margin up, at 5.7%* • Group underlying profit up 14.3% to £1,317m * Before start-up costs on Direct and the U.S. Property profits H1 - £m 07/08 06/07 UK 121 39
Slide 7: Group performance
Property Group performance • Group operating profit up 18.9% to £1,309m • Group pre-tax profit up 18.0% to £1,289m • Underlying diluted earnings per share up 17.2% to 11.90p • Proposed interim dividend up 13.9% to 3.20p 7
Slide 8: UK sales growth and trading profit
UK sales growth excluding petrol Sales up 6.4% 2.9% 0.9% 3.5% 2.6% Volume Inflation Like-for-like New stores Total sales UK trading profit • Trading profit up 8.2% to £978m • Trading margin up, at 5.8% 8
Slide 9: International and Asia
International • Sales up 22.0% to £6.4bn at actual rates • China consolidated for first time • Trading profit up 17.8% to £271m at actual rates • Margins rose, before inclusion of China Asia • Sales up 26.1% to £2.9bn at actual rates • Trading profit £124m, up 18.1% at actual rates • Margin rose to
Slide 10: Europe and tesco.com grocery
Europe • Sales up 18.8% to £3.6bn at actual rates • Trading profit £147m, up 17.6% at actual rates • Trading margin stable at 4.7% tesco.com - grocery • Sales up 24% • Over 300,000 customers a week • Bag-less delivery – 40% take-up 10
Slide 11: Tesco Direct and Telecoms
Tesco Direct Telecoms • Growing profitability • Tesco Mobile – number one for customer satisfaction – fastest growing operator for pay-as-you-go 11
Slide 12: Tesco Personal Finance
Tesco Personal Finance • £26.5m share of profit • Share of flood costs for year – £11m • Launch of tescocompare.com Credit card arrears trends 1.2% 3 months arrears rate (% active balances) 1.0% 0.8% 0.6% 0.4% Total market 0.2% TPF 0.0% Jan-04 Jan-05 Jan-06 Jan-07 Source: APACS 12
Slide 13: JV's and Associates; Finance costs and tax
JV’s and Associates • £32m profit • Profit up 33% excluding sale of Weston Favell last year Finance costs and tax • Net finance costs £52m • Underlying net finance costs up slightly • Interest cover strengthened to 25.8 times • Effective tax rate 27.2% • One-off benefit to deferred tax due to corpor
Slide 14: Net debt, shares and pensions; Capital expenditure
Net debt, shares and pensions • Net debt increased to £5.3bn • Gearing broadly stable at 50% • 96 million shares bought back in first half • Meeting our commitment to end earnings dilution arising from issuing new shares • IFRS pension deficit reduced to £530m post-tax Capital expenditure £bn 1.8 1.
Slide 15: Terry Leahy, Chief Executive
Terry Leahy Chief Executive 15
Slide 16: International
International • Sales up 22.0% • First time contribution from China • Profits advanced well • Good margin growth 16
Slide 17: Central Europe, Ireland and Turkey
Central Europe Hungary Ireland and Turkey Izmir Donabate 17
Slide 18: Turkey and Asia
Turkey Asia Korea Thailand 18
Slide 19: Asia
Asia Malaysia Japan China 19
Slide 20: International Focus
International • Flexible • Local • Focus • Multi-format • Capability • Brand Focus Czech Republic Poland 20
Slide 21: Multi-format
Multi-format 1K 2K 3K Express Budapest Seoul Bangkok 21
Slide 22: United States
United States =| com ing soon) 22
Slide 23: Summer sales growth
Summer sales growth 0 Summer sales growth 0 23
Slide 24: Price and Service
Price Service 4.5 million more customers 24
Slide 25: Finest and Organic
Finest TESCO | Einy vite boys Organic TESCO | Evy Little bolps 25
Slide 26: Availability and Non-food
Availability Non-food 26
Slide 27: Clothing and Tesco Direct
Clothing Tesco Direct New Catalogue 1000s of New Products Online Now >> With 3 ways to order and 2 ways to How to receive your order it couldn’t be easier. SHOP... 27
Slide 28: Homeplus and Dobbies
Homeplus Dobbies 28
Slide 29: On-line services
On-line services • tescocompare.com • tescodiets.com • Baby & Toddler Club 29
Slide 30: Retailing services
Retailing services • Tesco Personal Finance • tesco.com • Telecoms 30
Slide 31: Five part strategy
Five part strategy • Core UK • International • Non-food • Retailing services • Community Community 1 billion bags saved 31
Slide 32: Community
Community Shrewsbury Marmaris Community Sustainable Consumption Institute Local 32
Slide 33: Summary
Summary • Good first half performance • Resilient business model • Broadly-based growth – across the Group • Our five part strategy reflects our priorities • Investing to drive long term growth • Delivered by staying focused on our customers Q&A 33
Slide 34: Interim Results
Interim Results 2 October 2007 34