Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Day (June 2018)
129 slides from Wesfarmers's investor day presentation, Jun 7, 2018
Slide 1: Presentation to be given at Strategy Briefing Day – Sydney
7 June 2018 The Manager Company Announcements Office Australian Securities Exchange Dear Manager, PRESENTATON TO BE GIVEN AT STRATEGY BRIEFING DAY – SYDNEY Following is a presentation that is to be given today at a Strategy Briefing Day in Sydney which is scheduled to commence at 6:30am AWST / 8:30a
Slide 2: 2018 Strategy Briefing Day
2018 Strategy Briefing Day Thursday, 7 June 2018
Slide 3: Agenda
Agenda Time Topic Presenter 8.00 – 8.30am Registration 8.30 – 9.40am Introduction & Group Overview Rob Scott & Anthony Gianotti 9.40 – 10.40am Bunnings Michael Schneider 10.40 – 11.00am Morning tea break 11.00 – 12.00pm Coles John Durkan 12.00 – 1.00pm Department Stores Guy Russo & Ian Bailey 1.00 –
Slide 4: Introduction & Group Overview
Introduction & Group Overview Rob Scott Managing Director, Wesfarmers Limited
Slide 5: Immediate priorities & progress
Immediate priorities & progress Immediate priorities Progress • Strategic review of BUKI resulting in agreement to Address areas of divest Homebase 1 underperformance • Accelerating Department Store network optimisation & Target earnings improvement Reposition the • Sale of Curragh for $700m 2 portf
Slide 6: Completion of Bunnings UK & Ireland review
Completion of Bunnings UK & Ireland review Divestment of Homebase The BUKI investment • Announced agreement to divest Homebase • Many learnings from the acquisition • Transaction in the best interests of • Elements of management assumptions & shareholders – a good outcome under difficult plans too o
Slide 7: The Wesfarmers Way
The Wesfarmers Way Objective To provide a satisfactory return to shareholders Value creating strategies Strengthen existing Secure growth Renew the portfolio Ensure sustainability businesses through opportunities through through value-adding through responsible operating excellence & entrepreneurial
Slide 8: Reinforcing disciplines & positioning for future
Reinforcing disciplines & positioning for future Wesfarmers’ objective is to deliver satisfactory returns to shareholders over the long term Active portfolio Divisional autonomy management Underpinned by a strong balance sheet & sustainable practices AREAS OF FOCUS ` ` Developing great Leveraging da
Slide 9: Refining & strengthening the Wesfarmers Way
Refining & strengthening the Wesfarmers Way Divisional autonomy Active portfolio management • Proven driver of outperformance when • Regular portfolio review & valuations leadership, strategy & values are aligned • Strengthened Business Development • KEEPP remuneration framework promotes capability
Slide 10: Approach to capital allocation
Approach to capital allocation Opportunities to deliver superior returns from investment in existing growth businesses while leveraging assets & capabilities in adjacent & new opportunities 1 2 Portfolio of strong businesses with good Adjacent opportunities momentum Framework & incentives to encoura
Slide 11: Developing our data & digital capability
Developing our data & digital capability Retained stake in flybuys & Coles Advanced Analytics Centre • flybuys to be an ongoing partnership between • Centre to support best-practice analytics Wesfarmers & Coles across the Group • Alignment supports greater value creation • General Manager & senior d
Slide 12: Long-term value creation
Long-term value creation We are committed to creating value for shareholders, Wealth creation, value distribution (FY17) customers, employees & the communities we serve $8.7b $46.4b Employees Payments to suppliers • Top 10 Australian tax payer $2.1b Government $68.4b $15.2b • Relentless focus on pro
Slide 13: Positioned to deliver superior returns over time
Positioned to deliver superior returns over time Activity to address areas of Group well-positioned for underperformance & reposition the portfolio superior performance • Decisive action & active capital management: • Portfolio of cash generative businesses with – Completed sale of Curragh good mome
Slide 14: Group Balance Sheet & Cash Flow
Group Balance Sheet & Cash Flow Anthony Gianotti Chief Financial Officer, Wesfarmers Limited
Slide 15: Approach to delivering satisfactory returns
Approach to delivering satisfactory returns Long-term earnings growth Maintain a strong balance sheet & strong cash flow generation 1 Portfolio of strong businesses with good momentum Strong credit metrics Optimise funding costs 2 3 Value accretive Adjacent opportunities Diversified funding sources
Slide 16: Long-term earnings growth & strong cash flow generation
Long-term earnings growth & strong cash flow generation Earnings before interest & tax1 • Long-term earnings growth delivered through $m 6,000 FY01 to FY17 growth of existing businesses & portfolio 5,000 management 4,000 • Portfolio of cash generative businesses with 3,000 strong market positions in
Slide 17: Capital expenditure directed to high return opportunities
Capital expenditure directed to high return opportunities • Maintain strong capital disciplines with respect to Cumulative capital expenditure by project capital allocation $m FY13 - 1H18 14,000 – Robust business case development 12,000 10,000 – Focus on NPV in investment appraisal 8,000 6,000 – Hur
Slide 18: Balance sheet & debt management
Balance sheet & debt management • Strong balance sheet $m Debt maturity profile2 2,500 – Access to diverse funding markets 2,000 1,500 – Limited debt maturities in any given year 1,000 500 – Strong & stable credit ratings 0 » Moody’s: A3 (stable outlook) (500) » Standard & Poor’s: A- (stable outlook
Slide 19: Active & disciplined lease management
Active & disciplined lease management • Non-cancellable operating leases represent a Fixed financial obligations (Dec 2017)1 majority of fixed financial obligations Bonds & bank Domestic bilaterals • Disciplined management of off-balance sheet 20% Bonds 27% leases continues Euro Bonds 33% – Risk man
Slide 20: Capital structure post-demerger
Capital structure post-demerger • Engagement continuing with credit rating agencies • Wesfarmers expected to retain its current strong credit ratings (A-/A3) – Diverse portfolio of cash generative businesses – Balance sheet capacity to support investment plans & opportunistic acquisitions • Coles ex
Slide 21: Shareholder distributions deliver long-term returns
Shareholder distributions deliver long-term returns • Dividend distributions subject to current earnings, Shareholder distributions & capital returns $/share franking credit availability, current liquidity 3.50 3.00 position, credit rating, & cash flow requirements 3.00 2.50 2.30 1.00 2.23 – Maximis
Slide 22: Q&A – Group Overview
Q&A – Group Overview Rob Scott Anthony Gianotti Managing Director, Wesfarmers Limited Chief Financial Officer, Wesfarmers Limited
Slide 23: Bunnings
Bunnings Michael Schneider Managing Director, Bunnings Group
Slide 24: Long-term value creation
Long-term value creation $b 14 PRICE. RANGE. SERVICE. $m 1,400 CAGR 12 1994 – 2017 1,200 Sales ($bn) 15.3% 10 EBIT ($mn) 18.4% 1,000 8 800 6 600 4 400 2 200 - - 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1st Bunnings Wareho
Slide 25: Bunnings Australia & New Zealand
Bunnings Australia & New Zealand Bunnings | 2018 Strategy Briefing Day | 24
Slide 26: Our strategic framework
Our strategic framework Creating & Engaging & Doing what’s Deliver great delivering a building a team right to build results that winning offer passionate about trust… stand the test of for our winning team, suppliers, time customers customers & shareholders Bunnings | 2018 Strategy Briefing Day | 2
Slide 27: The dynamic market
The dynamic market —
Slide 28: Market evolution: wider addressable market
Market evolution: Wider addressable market plus more seasonal & commercial focus $ 52B ++$B $ 52B Note: $52b market relates to Australia only; New Zealand market size estimated at $NZ9b Bunnings | 2018 Strategy Briefing Day | 27
Slide 29: Home Improvement & Outdoor Living – fragmented market
Home Improvement & Outdoor Living – fragmented market Bunnings | 2018 Strategy Briefing Day | 28
Slide 30: Market structure & drivers
Home Improvement & Outdoor Living - market structure & drivers Multiple Drivers Varied Formats note: online activity prevalent in all formats • Household disposable • Category specialists income • Hard goods mass • Renovation activity merchants • Housing • Traditional hardware – Churn, value & forma
Slide 31: Housing market – house construction & renovations
Housing market – house construction & renovations Australian no. dwelling commencements Australian renovations, rolling 12 months value of investment ($m) 45,000 Forecasts Mar-18 to Jun-19 250,000 40,000 35,000 200,000 30,000 150,000 25,000 20,000 100,000 15,000 10,000 50,000 5,000 0 - Jul-04 Jul-17
Slide 32: Mega trends
Mega trends Demographic & societal trends are impacting spending on lifestyle products & experiences, creating opportunities for category expansion: – Greater digitisation & connectivity – Lifestyle & housing affordability trends driving high-density living – Population growth increasingly driven by
Slide 33: Growth opportunities
Growth opportunities puse _. | 4 Ld Trolley Boy
Slide 34: Growth strategies
Growth strategies • Maximise digital opportunities • Continue to invest in store pipeline • Continued range innovation & expansion • Expand the services offer • Deeper & wider commercial engagement • Empowering the team Bunnings | 2018 Strategy Briefing Day | 33
Slide 35: Digital opportunities – leverage digital engagement
Digital opportunities – leverage digital engagement (1 of 2) Digital audience • Largest online audience amongst Australian retailers1 • Australian website sessions 13m per month average2 – 20% growth year-on-year • New Zealand website sessions 1.4m per month average2 – 32% growth year-on-year • Aust
Slide 36: Digital opportunities – accelerate digital transformation
Digital opportunities – accelerate digital transformation (2 of 2) Investment in digital capabilities to create an integrated & seamless commerce platform that builds on a foundation of: • a loyal customer base • a wide & growing store footprint • long-standing supplier relationships Achievements in
Slide 37: Continue to invest in stores
Continue to invest in stores • Since 2011, we have added on average 12 Store count 369 359 stores per year to our network 347 334 313 320 • Continue investment in stores to support 300 289 future growth 271 253 – Target 10-14 net new stores per annum 231 240 221 211 216 – 23 sites with Development A
Slide 38: Continued range innovation & expansion
Continued range innovation & expansion (1 of 3) Battery Power Garden Home Automation Storage Outdoor Structures Assisted Living Portable & Fixed Shade Bunnings | 2018 Strategy Briefing Day | 37
Slide 39: Across all categories
Across all categories (2 of 3) Special Orders Commercial Services Bunnings | 2018 Strategy Briefing Day | 38
Slide 40: Do more in project-related categories
Do more in project-related categories (3 of 3) Bathrooms Hard Flooring Ceiling Fans Window Furnishings Bunnings | 2018 Strategy Briefing Day | 39
Slide 41: Expand service offer
Expand service offer A core part of the Bunnings Strategy is a compelling service offer • Meaningful & personalised customer experiences (in-store, in-home, & online) • More service investments (know-how & intensity, digital experiences) As customer behaviours evolve, the opportunity exists to build
Slide 42: Deeper & wider commercial engagement
Deeper & wider commercial engagement Bunnings Commercial has seen strong growth • Our loyal Commercial customers appreciate the convenience of the physical sites & the value PowerPass brings • Special orders now available online Making it even easier for Commercial customers to shop with us will exp
Slide 43: Empowering the team
Empowering the team Bunnings will continue to attract & retain the best talent through • Encouraging behaviours & actions that create a safe & inclusive workplace • Improving leadership capability, diversity & flexibility • Utilising technology to offer more training with easier access for the wider
Slide 44: Outlook
Outlook
Slide 45: Outlook: Positioned for continued growth
Outlook: Positioned for continued growth • A lot of runway in $52b HIOL market & in broader commercial wholesale market • Good momentum & opportunities across both Australia & New Zealand – Focus on growing digital & physical presence – Strong pipeline & plans for 10-14 net new trading locations per
Slide 46: Thank you
Thank you
Slide 47: Q&A – Bunnings
Q&A – Bunnings Michael Schneider Justin Williams Managing Director, Bunnings Group Chief Financial Officer, Bunnings Group
Slide 48: Coles
Coles John Durkan Managing Director, Coles
Slide 49: Divisional Overview
Divisional Overview 2 Site network footprint • Coles is an iconic Australian business with quality assets, significant scale & leading market position 8 8 11 • Extensive & non-replicable store portfolio with a 169 240 143 national footprint 97 119 85 4 76 56 35 46 7 • 115,000+ dedicated team members
Slide 50: Highly experienced leadership team
Highly experienced leadership team (Retiring) CEO (Incoming) CEO John Durkan Steven Cain 10 years at Coles 29 years in retail CFO Liquor Director Store Operations Director Leah Weckert Cathi Scarce Paul Bradshaw 8 years at Coles 25 years at Coles 8 years at Coles Digital & Financial Services COO Leg
Slide 51: Progress update
Progress update • Fresh: Improved quality has delivered growth in market share Growth in fresh remains a focus 45% • Service: Investment in team hours & training continues 14,000 12,000 44% • Range: Rebalancing categories are driving mix benefits & 10,000 improving availability metrics 8,000 43% 42%
Slide 52: Changing landscape is providing opportunities for differentiation
Changing landscape is providing opportunities for differentiation I Competitive Intensity II Digital Disruption III Changing Missions Competition from both new Shopping convenience & Consumer preferences & & existing players experience is increasingly tied shopping habits are constantly to technolog
Slide 53: Fresh Tomorrow Strategy
Fresh Tomorrow Strategy Coles has developed a new, differentiated strategy which will make life easier for customers How we will measure success: Customer satisfaction Team member engagement Comp sales growth Sales per sqm EBIT Coles | 2018 Strategy Briefing Day | 52
Slide 54: Transform Food Offer
Transform Food Offer Coles will improve the product offer in fresh departments & drive innovation in own brand • Significant market share opportunity Retail food market share of independents1 – Independents hold a larger proportion of market 16.7% share in Australia compared to the UK 13.0%2 – Signi
Slide 55: Move towards EDLP
Move towards EDLP Coles will maintain its commitment to providing trusted value on products that matter most • Coles continues to invest in price – Over eight consecutive years of price deflation • Fewer but deeper promotions – Improve promotional effectiveness • Own Brand to drive greater value lea
Slide 56: Offer Anytime, Anywhere Shopping
Offer Anytime, Anywhere Shopping Coles will provide a seamless experience anytime, anywhere through investment across all channels, making life easier for our customers • Innovative delivery & pick up options – Click & Collect – Concierge, Service desk, Express – Lockers, mobile collection trucks –
Slide 57: Offer Anytime, Anywhere Shopping
Offer Anytime, Anywhere Shopping Coles continues to invest in delivering a suite of convenient shopping alternatives Coles Online Business Model 2018 Highlights • Online growth 25%+ YTD • ~580 C&C locations YTD, on track to reach 1,000+ C&C locations by Home Delivery Click & Collect Click & Collect
Slide 58: Offer Anytime, Anywhere Shopping – flybuys
Offer Anytime, Anywhere Shopping Strengthen flybuys to provide a more personalised & connected experience • flybuys to be an ongoing partnership between Coles & Wesfarmers – Greater access to capital & resources +6m +8m – Strengthen loyalty program between flybuys & program active active partners ho
Slide 59: Right Offer In Every Location
Right Offer In Every Location Coles will reinvent the in-store customer experience & tailor stores to the shopping missions of local customers • Store Tailoring – Customer-led ranges tailored to local communities • Strong store renewal program • Evolving store blueprint given increasing urban densit
Slide 60: Reduce Costs
Reduce Costs Evolution of productivity initiatives continues # Simplification & range rationalisation driving 30,000 improved efficiencies 18% • Coles continues on its journey to simplify range & drive efficiency 17% 28,000 – Exiting tail categories, rebalancing existing space & increasing 17% produ
Slide 61: Win Together
Win Together Coles will continue to engage with team members, customers & communities • Safety part of our DNA – Target zero – Mind your health • Building careers & growing talent – Leading Graduate program – Retail Leaders – Skills for trade • Community engagement – Partnerships – Innovation & Inve
Slide 62: Liquor & Coles Express
Liquor & Coles Express Liquor Coles Express (CEXP) • On track to deliver on the five year transformation • Continued rollout of existing offers plan – Rollout of food-to-go offer to ~500+ stores by • Continued focus on store investment 1H19 – Next evolution Liquorland format trialled – C&C to be rol
Slide 63: Outlook
Outlook • Remain focused & consistent in our customer-led strategy to deliver long-term growth • Changing competitive & digital landscape provide significant opportunities for differentiation – Substantial opportunities for fresh market share growth remain – Increased focus on Coles Own Brand to dri
Slide 64: Q&A – Coles
Q&A – Coles John Durkan Leah Weckert Managing Director, Coles Chief Financial Officer, Coles
Slide 65: Department Stores
Department Stores Guy Russo Chief Executive Officer, Department Stores Managing Director, Target
Slide 66: Highlights
Highlights • Revenue of approximately $8.5b (FY17) Department Stores revenue1 $m 10,000 • Post creation of Department Stores division in February 2016: 8,000 6,000 – Kmart: Continued strong growth in sales, EBIT & RoC 4,000 – Target: Earnings stabilisation, cost base reset 2,000 & improved cash flow
Slide 67: Differentiated propositions
Differentiated propositions Making everyday living brighter Fashion that excites & quality that endures Strategic Pillars Focus areas ‘A great place to shop that is simple to run’ ‘Fashion acceleration’ ‘Better products at even lower prices’ ‘Seamless & engaging online proposition’ ‘Optimised store
Slide 68: Addressable market broader than just department stores
Addressable market broader than just department stores Kids GM & Active Home & Living Apparel Australian market ~$25b Australian market ~$24b Australian market ~$34b FY17: 10.4% FY17: 7.3% FY17: 11.6% Kmart & Target market share FY17 Total market Department Stores | 2018 Strategy Briefing Day | 67
Slide 69: Addressable market opportunity
Addressable market opportunity Department Stores | 2018 Strategy Briefing Day | 68
Slide 70: Working together commercially
Working together commercially Property & Network Planning Commercial Alignment Joint sourcing & Ethical Sourcing GNFR1 & Sustainability Procurement Insight Sharing Corporate Affairs & Reputation 1. Goods Not For Resale Department Stores | 2018 Strategy Briefing Day | 69
Slide 71: Department stores network
Department stores network • Integrated network planning • Space optimisation 3 4 • Consolidated landlord negotiations 3 47 56 63 26 26 34 15 17 27 56 76 99 54 72 227 Kmart 21 73 255 KTAS 5 4 305 Target 6 Note: Store network count as at 31 March 2018 Department Stores | 2018 Strategy Briefing Day | 7
Slide 72: Sustainability & sourcing
Sustainability & sourcing • Department Stores ‘Better Together’ program outlines joint sustainable ethical commitments to our people, partners & planet − Integrated & enhanced ethical sourcing program − Sustainable factories & materials strategy including ‘Better Cotton Initiative’ sourcing, certifi
Slide 73: Target
Target Guy Russo Chief Executive Officer, Department Stores Managing Director, Target
Slide 74: Strategic framework & areas of focus
Strategic framework & areas of focus Fashion that excites & quality that endures Focus areas ‘Fashion acceleration’ ‘Seamless & engaging online proposition’ ‘Optimised store network’ Target | 2018 Strategy Briefing Day | 73
Slide 75: Fashion acceleration
Fashion acceleration • Differentiated offer with Fashion that excites Quality that endures improvements in fashionability & quality – Focused on better/best ranges – Reset of quality & fashion standards • Focused investment in people & customer channels – Design focus – Online user experience – Visu
Slide 76: Fashion acceleration
Fashion acceleration Target | 2018 Strategy Briefing Day | 75
Slide 77: Seamless & engaging online proposition
Seamless & engaging online proposition • Enhanced customer experience Shopping experience – Expanded range & new channels / services Intuitive & Full range & – Improved website including personalised exclusives content & site personalisation • Improved fulfilment model Fulfilment experience – Increa
Slide 78: Optimised store network
Optimised store network • Implement store network plan, focused on: – Financial performance – Catchment attractiveness – Online proposition relevance – Value creation for Department Stores • Reducing unproductive space & accelerating online growth – Online sales migration & channel acceleration – Re
Slide 79: Outlook
Outlook • Business transformation progressing • Advance product fashionability & quality • Accelerate online proposition & optimise store network • Progress store renewal trials & reset space & grades • Further focus on end-to-end costs & working capital Target | 2018 Strategy Briefing Day | 78
Slide 80: Kmart
Kmart Ian Bailey Managing Director, Kmart
Slide 81: Highlights
Highlights • Revenue of $5.6b (FY17) Sales Sales & EBIT Margin % EBIT ($m) Margin (%) • Sustained earnings growth 6,000 12% 5,000 10% – Five year EBIT CAGR of 15.6% to 4,000 8% 3,000 6% 30 June 20171 2,000 4% 1,000 2% • Strong return on capital 0 0% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 R12*
Slide 82: Addressable market
Addressable market Kids GM & Active Home & Living Apparel Australian market ~$25b Australian market ~$24b Australian market ~$34b FY17: 5.8% FY17: 5.5% FY17: 7.9% Kmart market share FY17 Total market Kmart | 2018 Strategy Briefing Day | 81
Slide 83: Differentiation through product development
Differentiation through product development • Design supported by customer insights & analytics • Enhanced retail trend forecasting ability • Strong product development capability − 52 designers \ across Australia & Asia \v − − Over 70% of products are designed in-house Consistent product co-ordinat
Slide 84: Customer brand perception
Customer brand perception Good progress on improving customer perception Opportunity exists to improve quality that matters most to customers Lowest Prices Product Quality – 7, 8, 9 & 10 Ratings* 80% 100% 80% 60% 70% 40% 20% 60% 0% Jul-Sep '15 Jan-Mar Jul-Sep '16 Jan-Mar Jul-Sep '17 Jan-Mar Jul-Sep
Slide 85: Our purpose
Our purpose Net Promoter Score • Customer relationship strength − Selling over 100m more units this year − Serving on average 250,000 more customers per week − Strong growth in units per basket − Over 70% increase in online transactions Kmart | 2018 Strategy Briefing Day | 84
Slide 86: Strategic framework – underpinned by two pillars
Strategic framework – underpinned by two pillars Kmart | 2018 Strategy Briefing Day | 85
Slide 87: Strategic Pillar 1: A great place to shop that is simple to run
Strategic Pillar 1: A great place to shop that is simple to run • Creating a store that is engaging & deliver a rewarding self-serve customer experience – Continued development of payment solutions: easy payment & exit – Over 70% of stores are in the Plan C format • Simplifying ways of working in st
Slide 88: Kmart products available everywhere
Kmart products available everywhere Store Network Online • Continuing strong growth in online • Increasingly important role in customer journey prior to visiting stores • 227 stores in AU & NZ • Growing availability of click & collect services across • Plan to open 8 to 10 new stores per year the ne
Slide 89: Strategic Pillar 2: Better products at even lower prices
Strategic Pillar 2: Better products at even lower prices • Desirable on-trend products at low prices – Continued strong growth in Home & Kids categories – Focusing on growth opportunities in Apparel – Improving phasing of new product throughout the year & product co-ordination across the store • Con
Slide 90: Outlook – Positioned for continued growth
Outlook – Positioned for continued growth • Continuing to lead on the lowest price in a highly competitive market – Maintaining strong brand perception for on-trend everyday items – Relentless pursuit of lowest cost to underpin price position • Ongoing investment in the store network through new sto
Slide 91: Q&A – Department Stores
Q&A – Department Stores Guy Russo Ian Bailey Marina Joanou Chief Executive Officer, Department Stores Managing Director, Kmart Chief Financial Officer, Department Stores Managing Director, Target
Slide 92: Officeworks
Officeworks Mark Ward Managing Director, Officeworks
Slide 93: Ongoing value creation through clearly defined vision, purpose & strategy
Ongoing value creation through clearly defined vision, purpose & strategy Placing customers at the ‘To help make bigger things Basing every business decision core of our decision making happen’ for customers in a way on how we support our ability to in order to meet their needs that supports & assis
Slide 94: Long-term financial performance
Long-term financial performance Headline Sales Earnings before Interest & Tax $b 6.1% $m 8.1% 9.4% 2.0 8.8% 160 13.6% 1.6% 4.7% 8.0% 4.4% 0.7% 140 14.6% 1.5 120 10.8% 9.4% 100 8.1% 6.3% 13.8 1.0 1.9 2.0 80 1.7 134 144 1.4 1.5 1.5 1.5 1.6 60 118 1.3 93 103 0.5 40 74 80 85 65 FY09-17 CAGR: 5.2% 20 FY0
Slide 95: Slide 95
Slide 96: Market Size
Current addressable market Total Market Opportunity Current Addressable Market 1 Market Size 1 ~ $6b Office Office Office Supplies, Technology, Broader market opportunity Supplies Supplies & Print & Copy, Furniture, incl. product & services (~ $6b) Technology Services1 adjacencies / extensions2 (~ $
Slide 97: Market is highly fragmented
Market is highly fragmented • More than 50 major market participants • Offer targeted at fastest growing customer segments in the market – Households – Students – Micro, small & medium businesses • No shortage of competition but no ‘one stop shop, every-channel’ competitor • Competitors are category
Slide 98: Our offer: Focus on specific customer segments & product categories
Our offer: Focus on specific customer segments & product categories Category Description Office supplies Includes writing instruments, office consumables, filing & presentation equipment, paper products, art supplies, mailroom supplies, education resources, catering & cleaning supplies. Technology P
Slide 99: Our offer: Integrated multi-channel proposition to market
Our offer: Integrated multi-channel proposition to market • Give customers more choice Apps Store team members – Stores Stores – Website – Store, Home / Office, Mobile Traditional media Digital media – Call centre – Business specialists • Give customers more delivery choices Social Call – media Inte
Slide 100: A differentiated proposition that is difficult to replicate
A differentiated proposition that is difficult to replicate Widest Range Low Prices Great Service • ‘One stop shop’ • Multi-channel offer – clicks & bricks • Single national price • c.40k products available in store & • 166 ‘mini-DCs’ across Australia • Same price in-store & online online • Stores o
Slide 101: A clear strategic agenda for profitable long-term growth
A clear strategic agenda for profitable long-term growth 1 2 3 Strengthen & expand the Extend our reach Enhance productivity & customer offer physically & digitally efficiency 4 Invest in talent, diversity & safety 5 Make a positive difference in the community Officeworks | 2018 Strategy Briefing Da
Slide 102: Strengthen & expand the customer offer
Strengthen & expand the customer offer • Give customers more choice – New products that are differentiated through style, fashion & quality – Private label / exclusives to drive uniqueness • Expand into new categories – Democratise niche markets » Art supplies » Education resources – Evolve offer wi
Slide 103: Strengthen & expand the customer offer
Strengthen & expand the customer offer • Add more services to the products we sell • Strengthen ‘one stop shop’ by growing existing services & adding new services – Print, copy & create – ICT Services – Prepaid Business Services • Develop / partner to deliver more services to help customers start, r
Slide 104: Extend our reach – Physically
Extend our reach – Physically Expand the Officeworks network • Store network expansion (regional, metro, CBD) 1 • Opportunity for new store formats 1 – Alternative store sizes 34 30 (currently c.200m2 – 2,400m2) 16 1 18 – Tailored to customer demographics 10 11 57 1 59 • More account managers – mobi
Slide 105: Extend our reach – Digitally
Extend our reach – Digitally Enhance the online experience by making it easier for customers • Two-hour click & collect1 • Ongoing online evolution – Website navigation – Search capabilities – Mobile experience – Information / recommendations • Google Home integration • More payment options, additio
Slide 106: Enhance productivity & efficiency
Enhance productivity & efficiency Working capital improvement Improve space utilisation • System investment to grow stock turn • Disciplined range review process • Continued focus on managing cash flow • Optimise in-store layouts • Add / expand categories • Utilise print & copy space more effectivel
Slide 107: Invest in talent, diversity & safety
Invest in talent, diversity & safety • Ongoing investment in leadership development 80.0 R12 All Injury Frequency Rate (AIFR) • Continue to enhance the diversity of the team 60.0 23.9% 23.7% – Optimise recruitment practices 40.0 0.3% 5.6% 35.4% 12.3% – Continue to focus on balanced leadership 62.0 4
Slide 108: Make a positive difference in the community
Make a positive difference in the community Environment • Restoring Australia with Officeworks • LED lighting & BEMS1 in stores • c.8m ink & toner cartridges recycled to-date Community Partnerships • National & local - ‘We live here too’ • Aust. Literacy & Numeracy Foundation • Smith Family ‘Learnin
Slide 109: Outlook
Outlook • Continued focus on disciplined execution of strategic agenda Driving ‘every channel’ improvement – physically & digitally Providing customers with a compelling offer – ‘one stop shop’ Delivering great customer service through an engaged team Providing best value supported by a ‘mat
Slide 110: Q&A – Officeworks
Q&A – Officeworks Mark Ward Michael Howard Managing Director, Officeworks Chief Financial Officer, Officeworks
Slide 111: Industrials
Industrials David Baxby Managing Director, Industrials
Slide 112: Current priorities
Current priorities WesCEF Chemicals, Energy & Fertilisers • Secure commitments for future uncontracted AN volumes • Optimise sales mix & protect margins across the businesses • Grow the Decipher platform Wesfarmers Industrial & Safety WIS • Enhancing the customer experience • Investment in e-commerc
Slide 113: Our safety record: Lost Time Injury Frequency Rate
Our safety record: Lost Time Injury Frequency Rate (R12) WesCEF WIS 7.0 7.0 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 1.0 1.0 0.0 0.0 Apr-18 Apr-18 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Industrials | 2018 Strategy Briefing Day | 112
Slide 114: The WesCEF portfolio
The WesCEF portfolio Business Geography Sector Key Customers Ammonia WA Nickel, internal BHPB, Minara, AN, AGR, Fertilisers Ammonium nitrate (AN) WA/Global Iron ore, gold Rio Tinto, Dyno Nobel, Downer, Orica (50%) Ammonium nitrate (AN) Qld Coal BMA, Curragh (75%) Sodium cyanide (SC) WA/Global Gold N
Slide 115: WesCEF – historical EBIT & ROC
WesCEF – historical EBIT & ROC WesCEF is subject to cyclical earnings but has delivered financial returns through the cycle. EBIT $m ROC % WesCEF EBIT WesCEF ROC (RHS) 400 25 350 20 300 250 15 200 150 10 100 5 50 0 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Sale of Natural AN3 & SC Sal
Slide 116: WesCEF – market position & dynamics
WesCEF – market position & dynamics • Chemicals – Long history of operational excellence & delivering reliable supply – Strong domestic position & suite of contracts with high quality customers – New product launch with the AN emulsion plant successfully commissioned in FY18 – WA EGAN1 market in ove
Slide 117: WesCEF – current priorities
WesCEF – current priorities • Chemicals Kleenheat Natural Gas – Optimise AN sales mix & secure commitments for future uncontracted volumes – Incremental expansion & efficiency improvements in sodium cyanide production – Ongoing plant & operational efficiencies including assessment of automation & da
Slide 118: Decipher – Brings your farm data to life
Decipher – Brings your farm data to life Innovation in Fertilisers • Powered by Google Earth Engine, Decipher is an imagery & nutrition management software platform & mobile application • Enables growers & their advisors to visualise relevant farm data including soil & plant test results & biomass i
Slide 119: The WIS portfolio
The WIS portfolio Blackwoods Workwear Group Coregas Greencap Supplier of industrial Industrial & corporate Industrial gas Environmental & safety products work wear distributor consulting WIS | 2018 Strategy Briefing Day | 118
Slide 120: WIS – market position & dynamics
WIS – market position & dynamics • Blackwoods Coregas Healthcare – Market leader in B2B industrial supplies & safety products – Strong mining & construction sectors, offset by declining manufacturing sector • Workwear Group – Australia’s largest distributor of workwear with iconic King-Gee & Hard Ya
Slide 121: WIS – current priorities
WIS – current priorities • Blackwoods Blackwoods safety products & inventory solutions – Transformation continues – Enhancing the customer experience – Investment in core systems & digital • Workwear Group – Turnaround nearing completion – DC consolidation – Brand refresh – Hard Yakka & King Gee – C
Slide 122: Blackwoods – improving customer experience
Blackwoods – improving customer experience Sales & customer Merchandising Digital & Supply Chain service & Sourcing Systems • National strategic • OIFOT1 >90% but • Building preferred • New website build relationships, local inconsistent suppliers • ERP system delivery • Stocking more SKUs • Own bra
Slide 123: Blackwoods – investing in core systems
Blackwoods – investing in core systems • 27% of sales via digital channels Blackwoods Website • New website to launch in early FY19 • Customer Relationship Management (CRM) tools & sales training • New ERP system underway – Implementation FY19/20 WIS | 2018 Strategy Briefing Day | 122
Slide 124: Resources – Bengalla Mine
Resources – Bengalla Mine Bengalla Overview Areas of Focus • 40% joint venture interest • Continue improving safety performance • Managed by Bengalla Mining Company – Zero LTIs since August 2016 • High quality export steaming coal into Asian • Agreement executed to manage interactions with markets n
Slide 125: Focus on growth opportunities
Focus on growth opportunities Industrials growth opportunities • Focus on growth opportunities across the portfolio Build vs buy • Reviewing opportunities on the following basis: Leverages deep expertise & operational excellence Deep Market capability adjacency Provides expansion opportunities i
Slide 126: Industrials outlook
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Slide 127: Q&A – Industrials
Q&A – Industrials David Baxby Rachael McVitty Ian Hansen Managing Director, Industrials Chief Financial Officer, Industrials Chief Executive Officer, WesCEF
Slide 128: Close
Close Rob Scott Managing Director, Wesfarmers Limited
Slide 129: Wesfarmers
e Wesfarmers