Wesfarmers Limited · ASX:WES
Wesfarmers — H1 2004 Earnings Presentation
79 slides from Wesfarmers's earnings presentation, Feb 10, 2004
Slide 1: 2004 Half Year Results
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Slide 2: Group Performance
ie) Group Performance Divisional Comments Peter Davis Bob Buckley Bob Denby David Robb John Gillam Gene Tilbrook Outlook Michael Chaney
Slide 3: OT q
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Slide 4: Performance Summary
Performance Summa Earnings Per Share (before g/will ex. Landmark) (cents) 3,728.1 71.4 3,786.2 26.3
Slide 5: Half Year Performance
Half Year Performan » Strong performance from operating unit » Lumley purchase » Sale of Landmark » GPEF divestment (Repco) - $44.2m net profit » Capital return of $934m in December 2003
Slide 6: Profit on Sale of Non-Operating Items
Profit on Sale of No! Industrial Rural Operations & Safety EAU AT 0.4 0.4 0.0 0.4 3.2
Slide 7: Divisional EBITA
Divisional EBITA : Half Year Ended 31 December ($m) Hardware Rural Operations 21.5 8.4 Other 16.7 84.1 *Excludes earnings from sale of Landmark 2004HalfYearResults : 7
Slide 8: Divisional ROC & Capital
Divisional RO & Cap (before goodwill amortisation) Hardware 364.9 1,928.9 18.9 17.8 Insurance 48.6 421.6 32.0* 58.6 Chemicals & Fertilisers 83.8 475.5 17.6 15.8 *2003 Insurance ROC has been adjusted to take into account that Lumley was owned for 2.5 months
Slide 9: Earnings, cashflow and dividend per share
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Slide 10: Return on Shareholders' Funds
Return on Shareho === (pre goodwill) - rolling 12 months to 31 Decemb ia - 1999 2000 2001 2002 2003* — Target * Excludes sale of Landmark 2004 Half Year Results a y 10
Slide 11: Net Debt/Equity
Net Debt/Equity (as at 31 D: 1999 2000 2004 Half Year Results 2001 ] u aq We 2002 2003 11
Slide 12: 2004 Half Year Results
2 , 2004 Half Year Results
Slide 13: Interest Cover Ratio
Interest Cover Ratio. (Rolling 12 months to 31 Decembe >) 1999 2000 2001 2002 2003* i 13
Slide 14: Capital Management
Capital Management >» Capital return of $934m in December » On-market buy-back of up to 5% of Wesfarmers shares « At 31 December 2003, approximately 6.98m shares repurchased at an average price of $25.43 EAU AT 14
Slide 15: iy Oe eid, y ee a,
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Slide 16: Bunnings Warehouse: Lowest Prices, Widest Range, Best Service
; warehouse. LOWEST PRICES WIDEST RANGE BEST SERVICE 2004 Half Year Results’ —— 16
Slide 17: Half Year Result: Segment Result
Half Year Result | Segment Result ($m) 2002 Revenue* 1,781.6 EBITA* 196.1 211.9 8.1% Amortisation 25.1 25.0 -0.2% EBIT 171.0 186.9 9.3% EBITA/Sales Ratio 11.0%] 10.6% -0.4% *Includes Revenue and EBITA from property and other EAU AT 17
Slide 18: Half Year Result: Trading Result
Half Year Result : Trading Result ($m) 2002 2003 Revenue* 1,755.7] 1,965.0 11.9% EBITA* 185.9 205.8 10.7% Amortisation 25.1 25.0 -0.2% EBIT 160.8 180.8 12.4% EBITA/Sales Ratio 10.6%} 10.5% -0.1% *Excludes Revenue and EBITA from property and other if Year Results _ | 48
Slide 19: Half Year Result
Half Year Result » Cash store on store growth 13% e Strong result - Queensland, Western Australia, - New South Wales & New Zealand » Water restrictions » NSW Stage 1, Vic Stage 2, ACT Stage 3 » Sales impact $5m/month 2004 Half Year Results 19
Slide 20: Half Year Result
Half Year Result » Trade credit sales decreased by 5% (A e Account rationalisation & store closures e Slowing housing construction market e Strong competition (margin) » Inventory Management « Information systems * Supplier scorecard Logistics If Year Results 20
Slide 21: 1st Half Highlights: Store Network Development
1st Half Highlights — » Store Network Development « Warehouses = 8 new (NB: Christchurch NZ) « 2 closed (former Hardwarehouse) « Traditional stores « 6 closed (ex-BBC trade and small regional) 21
Slide 22: 1st Half Highlights
1st Half Highlights » Store Network Development e Bunnings Warehouse upgrades « 5 completed e Former Hardwarehouse refits « 4 completed e Traditional store upgrades = 2 completed 22
Slide 23: Store Network Update
Store Network Update Traditional Kz Stores WA Salvage Stores As at 31 December 2003 Excludes Frame & Truss Operations NANA AN 23 TUCO 2004 Half Year Results
Slide 24: Outlook
Outlook » Continued growth in DIY and renovation nar » Rising interest rates affecting new housing » Store development pipeline » Store network upgrades and conversions » Continuous improvement EAU AT 24
Slide 25: Bunnings Warehouse
Slide 26: Ni L
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Slide 27: Insurance
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Slide 28: Agenda
ae J ] / A a genda | : : _ ; sos a 7 _ j \ » Financial highlights for 15* half Claims performance Sale of Lumley Life » Integration » Outlook LS TT ee ee NN La ~ 28
Slide 29: Financial Highlights
cI SiN Financial Highlights and @) » Includes 2.5 month contribution from Lu » Excludes Lumley Life » Operating revenue of $300.7m » EBITA of $35.8m (not pro-ratable) EAU TUCO 29 2004 Half Year Results
Slide 30: Claims Performance
Claims Performance » Lower than budget » Division not adversely affected by Melbourne storms - LGA protected by reinsurance » LGNZ claims lower than budget » WFI recorded higher than normal crop claims 30
Slide 31: Sale of Lumley Life
SaleofLumley Life = = |) Lo Le Go Wy » Lumley Life sale completed on 30/12/2003 » $4.4m overall reduction in Wesfarmers’ purchase price VL ae I : NN La i \S 2004 Half Year Results _ a 31
Slide 32: Integration
Integration | P Y > Business focus and momentum uninterrupted Modest savings expected from merged reinsurance programs Higher retentions in Lumley from 2005 onwards Restructure of Lumley Technology continues satisfactorily Gennetic@ development restricted to current clients Results ~ 82
Slide 33: Outlook
Outlook i ta Competition re-emerging in a number of « Claims trending lower than budget Environment remains positive 33
Slide 34: Industrial and Safety
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Slide 35: Financial Highlights
Financial Highlights | » Operating Revenue down 0.6% to $575m >» EBITA down 4.5% to $53m » EBITA up 5.1% for 2"¢ Quarter on last year » EBITA/Op. Rev. Margin down from 9.6% to 9.2% » EBITA/Capital up from 12.9% to 13.8% EAU AT 35
Slide 36: Business Activity Highlights
Business Activity Highlig » Blackwoods e Northern & Western regions strong gro e Central & Southern regions flat sales | » Protector Alsafe « New management & business improvement now in place » New Zealand e Significant sales increase, margin & EBITA growth contributed by the Paykels acquisition If
Slide 37: Highlights for Half Year
Highlights for Half Year » Blackwoods Trade Fair » Integration of Blackwoods & Paykels » Rationalisation of distribution centres » Implementation of ERP system e Acc Payable & Gen Ledger live 1/10/03 ® Payroll live 15/10/03 e Acc Receivable live 1/12/03 if Year Results _ | 0 B7
Slide 38: Outlook for Second Half
Outlook for Second Ha f » Australia ® Generally positive e Easing of drought « Continued spending in mining and transport infrastructure (cautious outlook due to AUD) » New Zealand « Steady e EBITA improvement through integration of Paykels if Year Results _ | 38
Slide 39: Energy
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Slide 40: Energy 2003/04 H1: Gas and Coal
Energy 2003/04 H1 | Gas » International prices similar to pcp » Excise uncertainty Coal » Demand firm, logistics bottlenecks » Coking coal prices lower, steam improving » Western Power deliveries down » Adverse exchange rate movement EAU AT 40
Slide 41: Energy 2003/04 H1: Saudi Contract Price
Energy 2003/04 H Saudi Contract Price US$it 400 350 | 300 | 250 | 200 | Jun Dec Mar 150 Jul Sep —e—Propane 2002/2003 ~@Propane 2003/2004 Al ) 2004 Half Year Results
Slide 42: Hard Coking Coal Prices
Energy 2003/04 H Hard Coking Coal Prices JIRP US$/Tonne FOB nominal 60 55 4 50 5 / 45 - 40 - 35 4 30 * * ; ; ; ; ; ; ; ; 83 85 87 89 91 93 95 97 99 01 03 04 A2
Slide 43: Thermal Coal Prices
Energy 2003/0 Thermal Coal Prices US$/Tonne FOB nominal 50 20 | ° | I l | | | l | | Pd Po] | | Apr- 96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-04 Apr-02 Apr-03 =o Spot Price Source: Barlow Jonker 2004 Half Year Results EAU TUCO Apr-04 43
Slide 44: Exchange Rates
Energy 2003/ Exchange Rates $A/SUS 0.8 5 0.7 5 0.6 5 0.5 0.4 Jul Dec Jan ~« AUD/USD 2002/2003 —AUD/USD 2003/2004 2004HalfYearResults ow 44
Slide 45: Wesfarmers Curragh Hedge Position
Wesfarmers Curragh Hed ¢) at 31 December 2003 We 2004/5 2005/6 2006/7 2007/8 77 0.6349 58 0.6347 41 0.6540 18 0.7023 *Calculated after adjusting for Curragh North, USD capital and operational expenditure and USD royalty payments. 2004 Half Year Results ie A5
Slide 46: Production
wey Production WLPG Kt 400 300 200 7 100 5 4 a o/ 1999 2000 2001 2002 2003 H1 04 1999 2000 2001 2002 2003 Hi 04 46
Slide 47: Production
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Slide 48: Gladstone and Newcastle
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Slide 49: Sales Volumes
Sales Volumes 1H2004 versus 1H2003 YP P P 7 Kleenheat Gas Wesfarmers LPG Air Liquide* +3% Premier -6% Curragh +31% Bengalla 0% *Pipeline Sales 49
Slide 50: Profitable Growth: Financial Performance
Profitable Growth — E Financial Performance $m EBITA* % 300 35 250 30 - : 25 200 20 7 150 15 100 7 j ] 10 50 7 5 or T T T : o- T T T T T 1999 2000 2001 2002 2003 H104 1999 2000 2001 2002 2003 Ri2 Dec * Excludes Girrah $80.5m in 2003 50
Slide 51: Energy Highlights
Energy Highlights - - Ye Pe LPG excise outcome ALWA Hismelt construction progress Mid West power project commissioning Curragh North development Premier’s mineral sands sales progress Successful Oracle system implementation EAU AT , Oi 51
Slide 52: Energy Issues Second Half
Energy Issues Secon » LPG prices and demand ® Lower summer peak » Excise decision impact * Supermarket success » Coal volumes, prices, costs e Export sales prices increase « Production performance (dragline shutdown) ® Inventory effects » Exchange rates e Hedge program 52
Slide 53: Chemicals and Fertilisers
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Slide 54: CSBP
CSBP uy 2004 Half Year Results Li Chemicals nlG CSBP Fertilisers ) 54
Slide 55: Performance Summary
Performance Su Year to Date Lay Ta UE Le ie LI oe, a _ vs Le a yy La LL ‘Chemicals - Total Sales Revenue Fertilisers Total Sales Revenue Company Safety EBITA | 2 _ PS ee (‘000t) 196 ($m) 84 (000t) 241 ($m) 74 (R12 LTIFR) 6.9 ($m) 15.7 oa Uo _ MES iy i - a / Le NO L ys ae fain Lo L Ly a ye A. al oe 1
Slide 56: EBITA and EBITA/Capital
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Slide 57: Chemicals: Key Influences Year to Date
Chemicals — Key Influences Year to Date =" » Favourable resource sector conditions ® Lift in AN volumes « Contracted ammonia customer difficulties « Competitive sodium cyanide markets » Steady production performance » Queensland Nitrates performing to expectations e Joint venture structure simplifie
Slide 58: Chemicals: Outcomes Year to Date
Chemicals Outcomes Year to Date » Higher Ammonia and AN contribution » Ammonia export shipment in October-200 » Queensland Nitrates positive contribution ® Equity accounted earnings from July 2003 » Sodium cyanide margin pressures » Earnings contribution 19% higher than pcp 58
Slide 59: Chemicals: Outlook
Chemicals Outlook » Continued strength in resource sector » Short term earnings softness « Major ammonia plant shutdown May 2004 » Below budget sodium cyanide earnings » Evaluating growth opportunities EAU AT 5 9
Slide 60: Fertilisers: Key Influences Year to Date
Fertilisers Key Influences Year to Date » Good seasonal conditions e Record 2003 harvest Solid first half sales programme ® Good distributor support « Competitive pricing » Cost base and supply chain improvements EAU AT 6 0
Slide 61: Fertilisers: Outcomes Year to Date
Fertilisers — Outcomes Year to Date = » Higher sales volumes » Growth driven by liquid fertilisers ® storage and handling investment support » Cost base and supply chain benefits » Improved overall contribution 61
Slide 62: Fertilisers: Outlook 2004
Fertilisers Outlook 2004 » Positive outlook for 2004 harvest » Focus on strong market offer ® Product range leadership ® Increased sales and service presence » Cost base and supply chain improvements » Pricing pressure from import based competitors » Developing new markets for proprietary fertiliser
Slide 63: Business Development
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Slide 64: Outline
ae Y, OUTLINE » Australian Railroad Group » Gresham Private Equity » Business Development VL ee ae es AT ee 2004 Half Year Results i MM es ye ; GOO USO UN OO ese ~ 64
Slide 65: ARG
ARG 50% Interest with Genesee » Improved performance, although still belo expectations e Large grain harvest « New business gained e Improved safety / reduced incidents EAU AT
Slide 66: ARG: Rolling LTIFR
ig ARG Rolling LTIFR Le Ly Frequency Rate 20 18 16 14 12 Pty 10 Li - 7 = 7 7 = - 1 8 6 4 2 0 1 1 1 1 1 1 1 1 1 1 1 1 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 wm@ome ACtual (Rolling) ommon Target A 2004 Half Year Results
Slide 67: ARG
ARG 50% Interest with Genesee & Wyoming » Actual performance improved, although. expectations e Large grain harvest e New business gained e Improved safety / reduced incidents e Refinancing ear Results
Slide 68: ARG: Outlook
ARG » Outlook for improvement » Grain season » New business contributions ® Operational initiatives e Mineral tonnages
Slide 69: Gresham Private Equity
Gresham Private Eq 50% interest » Repco IPO $64m EBIT contribution e 5+ times money back » Other divestments being considered » Wesfarmers has some $52m invested in Fund 1, representing half the fund GRESHAM. INVESTMENT HOUSE EAU AT 6 9
Slide 70: Gresham Private Equity: Remaining Investments
Gresham Private Remaining Investments » Cashcard - ATMs + financial trans processing » EROC - mining / infrastructure contractor » Norcros - building materials, coatings » Riviera - cruisers » Virgin Active - health clubs » Raywood - vehicle control systems GRESHAM INVESTMENT HOUSE If Year Results _
Slide 71: Gresham Private Equity Fund 2
Gresham Private Equity Fund 2) Wesfarmers has committed up to $100m $110m) >» Potential commitment: $150m of $300-350m target » Investments over 4 - 5 years » Life of up to 10 years; realisations 6 - 8 years GRESHAM INVESTMENT HOUSE 71
Slide 72: Gresham Private Equity
yy yy Z, Gresham Private Equit » Wesfarmers’ involvement: Investment Committee; and e secondee GRESHAM. INVESTMENT HOUSE 72 ) 2004 Half Year Results
Slide 73: all
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Slide 74: Projects to December
Projects to December : Lumley Insurance completion Koukia acquisition Landmark sale Lumley Life sale 2004 Half Year Results \S
Slide 75: . iy LD)
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Slide 76: Capital Expenditure 2004 Estimate
Capital Expenditure amn 2004 Estimate Total: $329.0m icals & F : Hardware $106.3m Energy $141.6m Insurance $7.9m Other $6.5m Excludes Lumley acquisition Bes aee i 76
Slide 77: Outlook
Outlook » Hardware - solid retail sales growth — subdued trade sales performance » Favourable outlook for Industrial and Safety » Improved earnings from CSBP » Lower short term earnings outlook for Coal, medium term positive » LPG outlook dependent on international LPG prices 77
Slide 78: Outlook (cont)
Outlook (cont) = ae a fae Ain » P Positive outlook for Insurance Australian Railroad Group - improving performance Continued wind down of Sotico operations Further profitable divestments likely for GPEF 78
Slide 79: " y ee
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