Slide 1: Coles Group Limited – 2022 Half Year Results Presentation
22 February 2022 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2022 Half Year Results Presentation Please find attached for immediate release to the market the 2022 Half Year Results Presentation for Coles Group Limited. This announce
Slide 2: 2022 Half Year Results Presentation
Coles celebrated 10 years partnering with REDcycle and with our customers, reached the milestone of more than 2 billion pieces of soft plastic diverted from landfill to be recycled into furniture, children’s playground equipment, car parks and “buddy benches” (right). 2022 Half Year Results Presenta
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its controlled entities (collectively, ‘Coles’, ‘Coles Group’ or ‘the Group’) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not
Slide 4: 1H22 summary
Australia’s largest coalition of partners and favourite loyalty program Coles Group Wesfarmers Other partners New partners 1H22 summary
Slide 5: Continued significant strategic progress in the half
Continued significant strategic progress in the half with more benefits to come Our vision. ‘Become the most trusted retailer in Australia and grow long-term shareholder value.’ Our strategic differentiators ✓ Win in online food and drinks with an optimised store and supply chain network ✓ Be a grea
Slide 6: 1H22 financial highlights
1H22 financial highlights Smarter Selling program and efficient management of COVID-19 disruption delivers solid Supermarkets EBIT Total sales revenue EBIT1 Net profit after tax $20.6bn $975m $549m 1.0% vs. pcp; (4.4)% vs. pcp (2.0)% vs. pcp 9.2% vs. 1H20 Smarter Selling Gross operating Operating ca
Slide 7: Smarter Selling benefits support solid Supermarkets EBIT
Smarter Selling benefits support solid Supermarkets EBIT Excluding transformation project costs, Supermarkets EBIT increased by 1.3% Group EBIT ($m) Supermarkets EBIT ($m) EBIT Transformation project costs +16.1% +1.3% 1,020 995 910 903 916 975 789 896 1H20 1H21 1H22 1H20 1H21 1H22 1H22 Group EBIT i
Slide 8: Supermarkets eCommerce key metrics
Supermarkets eCommerce key metrics Growth driven by expanded customer offer and investment in capacity Sales growth1 eCommerce Omnichannel +46% penetration1 customers spend vs. 1H21 8.2% in 1H22 2.1x +116% vs. 5.7% in 1H21 vs. in-store only vs. 1H20 shoppers in Q2 Coles Plus Unified shoppable Monthl
Slide 9: Update on Ocado transformation project
Update on Ocado transformation project Over the past 18 months, Coles has invested significantly in its digital platforms ▪ As a result of these investments and the rapid acceleration of eCommerce: ▪ Coles and Ocado have agreed to update arrangements regarding how the OSP will integrate with Coles d
Slide 10: Progress against strategy: Inspire Customers
Progress against strategy: Inspire Customers New Flybuys partners build scale for future customer rewards and personalisation • Strengthened Flybuys loyalty program with the addition of Bunnings and Officeworks, providing members new opportunities to earn and redeem points • Supermarkets eCommerce s
Slide 11: Progress against strategy: Smarter Selling
Progress against strategy: Smarter Selling Delivered Smarter Selling benefits in excess of $100 million in 1H22 ▪ The following key initiatives were delivered in 1H22: o Measures to reduce loss in store o Alignment of meat operating models o Service transformation in store e.g. trolley assisted chec
Slide 12: Progress against strategy: Win Together
Progress against strategy: Win Together Improved safety with 4% reduction in TRIFR compared to 2H21 • Invested in team member mental health and wellbeing • Ranked #2 food retailer globally (Tesco #1) for sustainable business practices in the World Benchmarking Alliance’s 2021 Food and Agriculture Be
Slide 13: Coles’ strategy tracker
Coles’ strategy tracker Coles has continued to make progress on “Winning in our Second Century” strategy KPIs Progress Reduced safety TRIFR • 4% reduction in TRIFR compared to 2H21 Increased team member • Update to be provided at FY22 results announcement following annual engagement mysay team engag
Slide 14: Group financial overview
Coles customers opted for premium products at Christmas with best-selling items including rock lobster, croissants, macarons and premium cheese. Group financial overview
Slide 15: 1H22 results – Group
1H22 results – Group EBIT impacted by higher COVID-19 costs, lower Express earnings as well as transformation project costs $m 1H22 1H21 Change Sales revenue1 20,593 20,390 1.0% EBITDA2 1,762 1,802 (2.2)% EBIT2 975 1,020 (4.4)% EBIT margin % 4.7 5.0 (27)bps Net profit after tax 549 560 (2.0)% Basic
Slide 16: 1H22 results – segment financials
1H22 results – segment financials Sales revenue growth in Supermarkets and Liquor 2-yr $m 1H22 1H21 Change change1 Sales revenue Supermarkets2 18,016 17,812 1.1% 8.6% Liquor 1,999 1,946 2.7% 18.2% Express 578 632 (8.5)% 1.1% Group sales revenue 20,593 20,390 1.0% 9.2% EBITDA Supermarkets3 1,552 1,55
Slide 17: Operating cash flow
Operating cash flow Strong cash realisation of 117% Cash flow Comments • Working capital movement reflects higher closing trade and other payables position primarily from $m 1H22 1H21 strong Christmas trade as well as reduced inventory holdings due to heightened COVID-19 EBIT 975 1,020 demand toward
Slide 18: Capital expenditure
Capital expenditure Capital expenditure impacted by COVID-19 construction delays Capital expenditure breakdown 1H22 key capital expenditure initiatives $m 1H22 1H21 Store • Store renewals across renewals Supermarkets (21) Store renewals 98 141 • First Choice Liquor Market (6) and B&W Liquorland rene
Slide 19: Balance sheet
Balance sheet Significant balance sheet capacity provides flexibility for future growth Balance sheet summary Comments 2 Jan 27 Jun 3 Jan • Net cash of $54 million and balance sheet $m 2022 2021 2021 leverage ratio of 2.7x1 Inventories 2,387 2,107 2,423 • Working capital improved relative to the pcp
Slide 20: Capital management
Capital management Sustainability Linked Loans established to support our ambition to be Australia’s most sustainable supermarket Debt facility maturity profile ($m) Dividend • Fully-franked 1H22 interim dividend of 33.0 cents per share • Coles retains its industry-leading annual target dividend pay
Slide 21: Supermarkets
The 13th Coles Local was opened in Brighton. Local’s feature food entertaining and healthier options including Aussie frozen fruit scoop and weigh, and an extended range of vegetarian. Supermarkets
Slide 22: Supermarkets key metrics
Supermarkets key metrics Successful Christmas campaign and strength in eCommerce Total sales revenue1 2-year2 comp sales Sales per sqm growth $18.0bn 8.7% $17,919 +1.1% vs. pcp vs. 1H20 (1.0)% vs. pcp Exclusive to Coles eCommerce sales1,3 Customer satisfaction sales (NPS) +4.7% +46.1% +0.2 point vs.
Slide 23: Supermarkets 1H22 results
Supermarkets 1H22 results Solid EBIT despite increased COVID-19 and transformation project costs 1H22 results Key commentary $m 1H22 1H21 Change • Sales growth delivered as a result of strong trade over the Christmas period and growth in Key P&L items eCommerce sales Sales revenue1 18,016 17,812 1.1
Slide 24: Liquor
Renewal activity continued across all three Liquor banners during the half, including the new Black & White Liquorland format. Liquor
Slide 25: Liquor key metrics
Liquor key metrics Sales growth driven by eCommerce and Liquorland Total sales revenue 2-year comp sales eCommerce sales2 growth1 $2.0bn 16.9% +60.4% +2.7% vs. pcp vs. 1H20 vs. pcp Exclusive Liquor Liquor renewals Number of stores Brand More than 230 97 931 awards received completed in +2 vs. 2H21 i
Slide 26: Liquor 1H22 results
Liquor 1H22 results Progress made against Liquor’s strategy, underpinned by investments in team, systems, eCommerce, and formats 1H22 results Key commentary $m 1H22 1H21 Change • Improving customer metrics in service, value, range, and store experience were supported Key P&L items by investments in
Slide 27: Express
Coles Express was proud to support the Redkite campaign to support children and families affected by cancer. . Express
Slide 28: Express key metrics
Express key metrics C-store sales and EBIT negatively impacted by reduced mobility as a result of lockdowns Total sales revenue 2-year comp sales EBIT growth1 $578m 2.4% $12m (8.5)% vs. pcp vs. pcp (62.5)% vs. pcp 1H22 weekly fuel Comp fuel volume Number of sites volumes growth 52.6mL/wk (4.4)% 711
Slide 29: Express 1H22 results
Express 1H22 results C-store sales (ex-tobacco) flat despite reduced traffic flows 1H22 results Key commentary $m 1H22 1H21 Change • Sales growth negatively impacted by lower forecourt traffic due to lockdowns, as well as Key P&L items cycling strong tobacco sales in the pcp C-store sale revenue 578
Slide 30: Outlook
As the COVID-19 pandemic continued, Coles set up pop-up vaccination clinics in our distribution centres (left). More than 120,000 team members have had at least two doses of a COVID-19 vaccine with many sharing their stories as part of the #GetTheJab campaign (right). Outlook
Slide 31: Outlook
Outlook • As Omicron spread through the community in the early part of January, Supermarkets sales were elevated before moderating later in the month • There has been significant variation in sales performance between states, store locations and on a week- to-week basis as a result of COVID-19 and f
Slide 32: Q&A
World Champion javelin thrower Kelsey-Lee Barber with Little Athletics participants. Coles is proud to support grass roots athletics through Little Athletics to help kids live healthier, happier lives. Q&A