Slide 1: CEO Presentation cover letter to ASX
Metcash Limited ABN 32 112 073 480 50 Waterloo Road Macquarie Park NSW 2113 Australia For personal use only PO Box 6226 Silverwater Business Centre NSW 1811 Australia Ph: 61 2 9751 8200 Fax: 61 2 9741 3027 3 June 2008 The Manager, Companies Australian Stock Exchange Company Announcements Office Leve
Slide 2: Company Results Financial Year Ending 30 April 2008
1 “Champion of the Independent Retailer” For personal use only Company Results Financial Year Ending 30 April 2008 Andrew Reitzer Chief Executive Officer
Slide 3: Group Headlines
2 2008 GROUP HEADLINES For personal use only A strong result in light of IGA>D’s Blacktown (NSW) warehouse closure in Dec 07 after hailstorm damage and ongoing market upheaval. FY08 FY07 Variance WHOLESALE SALES ($m) 10,045 *1 9,451 *1 6.3% CODB / GP (%) 65.21% 66.86% -165bps EBITA ($m) - Reported 3
Slide 4: Financial Highlights - Group
3 2008 For personal use only FINANCIAL HIGHLIGHTS - GROUP
Slide 5: Wholesale Sales
4 2008 WHOLESALE SALES For personal use only Group wholesale sales up 6.3% driven by strong performance across all three divisions – discussed further in individual divisions results +6.3% on pcp 12,000 R 11.17% CAG 10,045 10,000 9,451 7,705 $M 8,000 6,577 6,565 6,000 NOTES: 4,000 1. Data is for who
Slide 6: Market Share
5 2008 MARKET SHARE Market share (MAT) for the year ended 13 April 08 was 19.2%. For personal use only For the quarter 13 April 08 it was 19.3%. +60bps on 07 pcp MAT 22% 19.2% 18.5% 18.6% 18% MAT 13.2% 13.5% 14% 10% NOTES: 1. MAT as at respective 2004 2005 2006 2007 2008 year end date
Slide 7: EBITA
6 2008 EBITA For personal use only FY08 FY07 Variance EBITA ($m) - Reported 341.3 309.9 10.1% EBITA ($m) - pre NRI 335.1 *1 *2 310.7 *2 *3 7.9% 380.0 .20% A GR 16 335.1 340.0 C 310.7 300.0 260.0 $M 226.9 220.0 194.5 183.8 180.0 NOTES: 1. Normalised EBITA in 08 excludes $6.1m 140.0 non-recurring inco
Slide 8: EBITA Margin
7 2008 EBITA MARGIN EBITA margin up 5bps on FY07 (+18bps on 1H FY08) reflecting: For personal use only 2H traditionally stronger margin half +5bps on pcp 4.00% 3.50% 3.29% 3.34% 2.96% 2.95% 3.00% 2.80% 2.50% 2.00% NOTES: 1.50% 1. EBITA Margin calculated on EBITA pre NRI & wholesale sales 2. EBITA
Slide 9: Operating Cashflow After Tax
8 2008 OPERATING CASHFLOW AFTER TAX For personal use only Metcash operations continue to throw off significant cashflows enabling trading opportunities to be optimised, debt reduction, supply chain reinvestment, and return of cash to shareholders Strong cashflow generation Operating Cashflow PATBDA
Slide 10: CODB as % of GP
9 2008 CODB AS % OF GP For personal use only Metcash has reduced CODB a further 1.65% this year reflecting its continuing ability to secure supply chain efficiencies in spite of inflationary cost pressures Ongoing strong cost control & productivity 80.0% improvement 68.85% 68.24% 70.0% 67.16% 66.86%
Slide 11: PAT
10 2008 PAT FY08 FY07 Variance For personal use only PAT ($m) - Reported 197.4 166.8 18.4% PAT ($m) - Pre GA 203.4 172.7 17.7% PAT ($m) - Pre GA & pre NRI 199.0 *1 180.3 *2 10.4% PAT Reported PAT pre GA 210.0 197.4 203.4 Pre GA PAT 190.0 % R1 8.02 +17.7% on sales A G 166.8 growth of 6.3% 170.0 C 172
Slide 12: EPS
11 2008 EPS For personal use only FY08 FY07 Variance EPS - Reported 25.86 22.15 16.7% EPS - Pre GA 26.64 22.94 16.1% EPS - Pre GA & pre NRI 26.07 23.94 8.9% EPS Reported EPS pre GA 32.0 29.68 Towards upper end of guidance range 28.0 24.5-27.0 cps 25.86 26.64 24.0 22.15 Cents 22.94 NOTES: 1. FY08 rep
Slide 13: DPS
12 2008 DPS For personal use only The Board has declared a final dividend of 12.0 cents a share (100% franked). The total dividend of 21cps represents a payout ratio of 81% of Reported EPS (73% for FY07). +2.0cps on pcp 22.0 21.0 23.5% 18.0 17.0 47.8% Cents 14.0 11.0 11.5 9.5 21.1% NOTES: 10.0 27.9%
Slide 14: Dividend & Capital Management
13 2008 DIVIDEND & CAPITAL MANAGEMENT For personal use only The Board’s intention is to return earnings to shareholders whilst retaining adequate funds within the business to invest in future growth opportunities The proposed second half dividend of 12 cents brings the total FY08 dividend 21 cen
Slide 15: Divisional Highlights - IGA>D
14 2008 For personal use only DIVISIONAL HIGHLIGHTS – IGA>D
Slide 16: IGA>D - Financials
15 IGA>D 2008 - FINANCIALS For personal use only Variance FY08 FY07 (%) 1.5x WHOLESALE SALES ($m) 5,994 5,581 *1 7.4% operating EBITA ($m) 275.1 247.3 *2 11.1% leverage EBITA MARGIN (%) 4.59% 4.43% 16bps IGA>D’s performance remains solid with strong underlying growth and overall EBITA leverage maint
Slide 17: IGA>D - Growth Analysis
16 IGA>D 2008 – GROWTH ANALYSIS For personal use only FY07 FY FY08 1H FY08 FY Base Business 7.8% 7.1% 7.4% See Store New Store Growth (2.0)% (0.6)% (1.2%) Development slide Comp Store Growth 5.8% 6.5% 6.2% Inflation (2.5)% (2.3)% (3.2)% Real L4L Growth 3.3% 4.2% 3.0% Heightened inflationary enviro
Slide 18: IGA>D - Operating Performance
17 IGA>D 2008 – OPERATING PERFORMANCE For personal use only Wholesale Sales up 7.4% on pcp with comp store sales up 6.2% Total IGA>D market share per AC Nielsen is 19.2% MAT to 13 Apr 08 IGA growth in the market (MAT to 13 Apr 08) was 8.0% compared to overall market growing at 4.5% For the q
Slide 19: IGA>D - Operating Performance (Supply Chain)
18 IGA>D 2008 – OPERATING PERFORMANCE For personal use only Supply Chain Victorian DC expansion in next phase Mini loader automated storage and retrieval system – expected completion in FY10 WA cold store expansion On target and expect to be operating towards Dec 08 Crestmead mega DC in
Slide 20: IGA>D - Retail Development
19 IGA>D - RETAIL DEVELOPMENT For personal use only IGA FULL YEAR COMPLETED 1H COMPLETED 2H NO. SQM NO. SQM NO. SQM New Stores 55 51,628 25 20,864 30 30,764 Conversions 16 10,612 13 5,825 3 4,787 Extensions 28 10,637 14 4,358 14 6,279 Refurbishment 95 N/A 48 N/A 47 N/A Sales impact dependent upon
Slide 21: IGA Fresh
20 IGA>FRESH Total Fresh sales $566m up 10% For personal use only Sales ex IGA Fresh produce and meat warehouses $117m (+17% on pcp) Fresh sales ex-Perishable DC’s $164 m Charge through fresh sales $284m New structure commenced Nov 07 Senior management team in place Business structured
Slide 22: IGA>D - Growth Drivers
21 IGA>D 2008 – GROWTH DRIVERS For personal use only Increase Teamwork Score Restructured Fresh division + faster national produce roll-out Retail Development $100m Refurbishment fund Not on MTS balance sheet (100% bank funded) Rebate to offset interest cost over first 3 years Plan to
Slide 23: Hailstorm Affects Blacktown, NSW Warehouse
22 IGA>D 2008 – HAILSTORM AFFECTS BLACKTOWN, NSW WAREHOUSE X For personal use only IGA>D’s dry grocery warehouse at Blacktown NSW severely damaged by hailstorm Warehouse roof and $51m stock damaged Warehouse comprises two buildings – 9 Dec 07 Original building, Warehouse A = 30,000m2 & exten
Slide 24: Hailstorm Affects Blacktown - Damage
23 IGA>D 2008 – HAILSTORM AFFECTS BLACKTOWN, NSW WAREHOUSE For personal use only Damage to Blacktown Warehouse
Slide 25: Hailstorm Affects Blacktown - Recovery Timeline
24 IGA>D 2008 - HAILSTORM AFFECTS BLACKTOWN, NSW WAREHOUSE For personal use only X 7 Mar 08 Further flood damage to critical IT data centre and office area. Also slows recovery & roof replacement work X Warehouse A roof work completed and restocking commenced 29 Apr 08 ~ 2 weeks to fully resto
Slide 26: Hailstorm Affects Blacktown - Insurance
25 IGA>D- 2008 - HAILSTORM AFFECTS BLACKTOWN, NSW WAREHOUSE For personal use only Material Damage X All stock ($51m) condemned and covered by Material Damage Insurance policy excluding $500,000 Material Damage policy excess ¨ P& L impact = $500,000 IGAD : Costs incurred including: Moorebank wa
Slide 27: Divisional Highlights - ALM
26 2008 For personal use only DIVISIONAL HIGHLIGHTS - ALM
Slide 28: ALM - Financials
27 ALM 2008 - FINANCIALS For personal use only Variance FY08 FY07 (%) Good SALES ($m) 2,499 2,453 1.9% underlying sales growth Less Hedley / Coles (108) 2,345 6.5% EBITA ($m) 31.2 28.4 10.1% EBITA MARGIN (%) 1.25% 1.16% 9bps Earnings growth Sales growth strong given loss of Hedley / Coles in FY07
Slide 29: ALM - Operating Performance
28 ALM 2008 - OPERATING PERFORMANCE For personal use only Reported sales up 1.9% on last year Underlying growth driven by IBA stores - Sales to Cellarbrations +12% and IGA Plus Liquor +14% MAT EBITA growth of 10.1% to $31.2m (up on FY08 1H increase of 5.6%) EBITA margin beginning to improve
Slide 30: ALM - IBA Store Growth
29 ALM 2008 - IBA STORE GROWTH For personal use only The two prong growth strategy develops further: Liquor Alliance – as at Apr 08, 410 hotels have been branded under the “Thirsty Camel” (in line with target of 415 by end of 2008) IBA – continues to look for opportunities to expand its networ
Slide 31: ALM - Growth Drivers
30 ALM – 2008 GROWTH DRIVERS For personal use only Increased retail and marketing power Support from independents seen via IBA and Liquor Alliance growth (brand consolidation) Improved retail execution and compliance Teamwork score Optimise share of suppliers’ volumes eg IDA back through D
Slide 32: Divisional Highlights - Campbells Wholesale
31 2008 For personal use only DIVISIONAL HIGHLIGHTS - CAMPBELLS WHOLESALE
Slide 33: Campbells Wholesale - Financials
32 CAMPBELLS WHOLESALE 2008 - FINANCIALS For personal use only FY08 FY07 Variance (%) 2H EBIT up SALES ($m) 1,550.8 1,417.4 9.4% 11.1% on LY – good recovery on 1H EBITA ($m) 30.6 28.9 5.8% EBITA MARGIN 1.97% 2.04% -7bps Margin Sales up 9.4% on last year contraction 1H = Primary categories up 8%
Slide 34: Campbells Wholesale - Operating Performance
33 CAMPBELLS WHOLESALE 2008 - OPERATING PERFORMANCE For personal use only 22 metropolitan cash and carry 18 country distribution centres. Specialist food service business 4 stockless DCs, 4 Specialist stores FY08 – 1 closure (Gladstone) - Perth, WA based Confectionery DCs Walk-in customers
Slide 35: CW - Growth Drivers
34 CW 2008 – GROWTH DRIVERS For personal use only Retail Branding 180 Lucky 7 bannered convenience stores in operation nationally C&C store reformatting 14 stores to be reformatted, similar to Ringwood, VIC to enhance shopping experience Consistent internal layout & display, and external p
Slide 36: Financials - Balance Sheet - Cashflow
35 2008 For personal use only FINANCIALS - BALANCE SHEET - CASHFLOW
Slide 37: Balance Sheet - Extract
36 2008 BALANCE SHEET - EXTRACT For personal use only 30-Apr-07 30-Apr-08 #039;m #039;m Movement Reflectiv e of reduction in inv entory due to loss of Blacktow n DC. Reduction in pay ment terms by 1.8 day s. $m % Trade and other payables -1,169.5 -1,153.9 15.7 -1% Reduction in day s by 1.2 reflectiv e of
Slide 38: Cashflow - Extract
37 2008 CASHFLOW - EXTRACT For personal use only FY 07 FY 08 #039;000 #039;000 #039;000 #039;000 EBITDA 354,561 383,064 Difference in net interest cost compared to P&L Net Interest Paid (57,217) (52,990) amount due to amortisation of debt- raising costs Taxation Paid (51,927) (63,767) offset by interest collar
Slide 39: Debt Facilities
38 2008 DEBT FACILITIES For personal use only Syndicated Loan - $700m Fixed until 17 September 2010 Presently $400m drawn Monthly rollover at BBSY plus margin (depending on senior leverage ratio) Debtors Securitisation - $400m Presently $200m drawn $350m on 365 days notice $150m on 3
Slide 40: Conclusions - Key Messages - Earnings Guidance - Symbion
39 2008 For personal use only CONCLUSIONS - KEY MESSAGES - EARNINGS GUIDANCE - SYMBION
Slide 41: Key Messages
40 2008 KEY MESSAGES For personal use only PERFORMANCE Sales +7.4% Sales +9.4% Sales +6.5% underlying EBIT +11.1% EBIT + 5.8% EBIT + 10.1% Operating leverage at 1.4x - 1.5x Operating leverage missed for the Operating leverage ~1.5x achieved year but achieved in 2H OPPORTUNITIES Fresh (Teamwork)
Slide 42: Earnings Guidance - FY09
41 2008 EARNINGS GUIDANCE – FY09 For personal use only Structural trading environment remains volatile with market conditions continuing to be uncertain in the light of higher fuel prices, food inflation, higher interest costs, emerging falling house prices and share market turbulence affecting co
Slide 43: Symbion
42 2008 SYMBION For personal use only Joint non-binding indicative offer for Consumer and Pharmacy business submitted Monday 12 May Bid for Symbion X Metcash shortlisted for Pharmacy business Sigma unsuccessful in Consumer business bid Final bids due Thursday 10 July X Sigma and Metcash JV
Slide 44: The Third Force
43 “Champion of the Independent” 2008 For personal use only “The Third Force”
Slide 45: Appendices
44 2008 For personal use only APPENDICES 1. Segment Note – Unallocated & Corporate 2. Split of Business 3. Trend Metrics 4. Metcash TSR 5. IGA Fresh National Produce Network 6. Directory of Terms
Slide 46: Segment Note - Unallocated & Corporate
45 SEGMENT NOTE 2008 - UNALLOCATED & CORPORATE For personal use only Apr-07 Apr-08 #039;000 #039;000 CORPORATE - Action Loss (4,000) - - Share Based Payments (4,284) (4,800) - Net Non-recurring Income 3,200 6,191 - Other 10,428 2,990 Included in Group EBITA ('Above the line') 5,344 4,381 'BELOW THE LINE'
Slide 47: Split of Business Analysis
46 2008 SPLIT OF BUSINESS ANALYSIS For personal use only EBITA by division $M Food Distribution Liquor Distribution Cash & Carry Distribution 360.0 320.0 30.6 (9.0%) 28.9 (9.5%) 31.2 (9.3%) 280.0 28.4 (9.3%) 240.0 21.2 (9.3%) 200.0 30.7 (13.5%) 17.3 (9.4%) 160.0 26.1 (14.1%) 275.1 (81.7%) 120.0 247.
Slide 48: Trend Metrics
47 2008 TREND METRICS For personal use only FULL YEAR 2004 2005 2006 2007 2008 CAGR* Sales (external) A$ millions 7,174 7,010 8,214 9,695 10,116 8.97% Sales (wholesale) $ millions 6,577 6,565 7,705 9,451 10,045 11.17% EBITA - reported $ millions 183.8 194.5 223.7 309.9 341.3 16.73% EBITA - pre NRI $
Slide 49: Metcash TSR
48 2008 METCASH TSR For personal use only TSR under current management v competitors and market 6.00 Share price (rebased) 5.00 MTS TSR: 43% 4.00 3.00 2.00 WOW TSR: 20% 1.00 ASX 200 TSR: 8% 0.00 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 MTS WOW ASX 200 Note: Total Shareholder Returns (TSR) re
Slide 50: Directory of Terms
49 2008 DIRECTORY OF TERMS For personal use only ALM - Australian Liquor Marketers is Australia and New Zealand's leading broad range liquor wholesaler. ALM operates from 18 distribution locations across the country. Larger ‘off-premise’ customers are supplied through the main distribution system;
Slide 51: Directory of Terms
50 2008 DIRECTORY OF TERMS For personal use only IG - Independent Grocers a trading name of some CWD operations IGA>D - Grocery wholesaler serving 4,500 independent retail grocery stores (including IGA branded stores) across Australia. IGA>D operates 8 distribution centres, carrying dry, chilled
Slide 52: For additional information contact
51 2008 For personal use only For additional information contact: Adrian Gratwicke, GM Finance Phone: 61 2 9741 3248 Fax 61 2 9741 3031 E-mail adrian.gratwicke@metcash.com Or visit our website: www.metcash.com Disclaimer This presentation is for the general information of investors. Metcash Limited
Slide 53: The Third Force
52 “Champion of the Independent” 2008 For personal use only “The Third Force”