Metcash Limited · ASX:MTS
Metcash — FY2019 Earnings Presentation
35 slides from Metcash's earnings presentation, Jun 24, 2019
Slide 1: FY19 Full Year Results
FY19 Full Year Results 24 June 2019 Championing Successful Independents FY19 Full Year Results 0
Slide 2: Group update and divisional results
Group update and divisional results Jeff Adams Group Chief Executive Officer
Slide 3: Championing Successful Independents
Our purpose Our vision Our values Championing Best store in town We believe: Independence is worth fighting Successful Passionate about independents for; in treating our people, retailers and suppliers the way we like to be treated; and in Independents A favourite place to work giving back to the co
Slide 4: Group overview
Group overview Reported results reflect adoption of the new Accounting Standard AASB15 Reported Group sales (which excludes charge-through sales) increased 1.8% to $12.7bn Group sales (including charge-through sales) increased 1.4% to $14.6bn Group EBIT declined 1.4% to $330.0m Food EBIT d
Slide 5: Group overview (continued)
Group overview (continued) Underlying profit after tax1 decreased 3.0% to $210.3m Reversal of provision against NSW DC insurance claim in FY18, and increase in finance costs due to the $150m share buy-back in 1H19 Underlying EPS up 1.8% to 22.6 cents reflecting the benefit of the share buy-bac
Slide 6: Results – overview by pillar
Results – overview by pillar FY19 FY181 Change $m $m % Sales revenue (%) Sales revenue (including charge-through sales) (including charge-through) Food 8,794.3 8,768.6 0.3% Liquor 3,666.9 3,474.0 5.6% 15% Food Hardware 2,102.0 2,120.1 (0.9%) Liquor Total sales revenue (including charge-through sales
Slide 7: Food – sales
Food – sales Supermarkets FY19 FY18 Change $m $m % Total sales (including charge-through) declined 0.5% to $7.2bn Some improvement in highly competitive market conditions evident in 2H19 Food Deflation1 continued to ease in 2H19 reflecting a reduction in the level of promotional Supermarkets r
Slide 8: Food – EBIT
Food – EBIT Food FY19 FY18 Change $m $m % EBIT decreased $5.6m (3.0%) to $182.7m Total revenue1 (including charge-through) 8,794.3 8,768.6 0.3% The implementation of AASB15 had a $1.6m positive year-on-year impact on EBIT EBIT 182.7 188.3 (3.0%) The decline in wholesale sales (excluding tobacc
Slide 9: Food – initiatives update
Food – initiatives update Retailer engagement Project Align Diamond Store Accelerator Community Co Small format offer Strategic direction endorsed by the Implementation of new state- A further 79 stores completed the Now in all IGA and Supa IGA stores First of proposed 10 store trial of Na
Slide 10: Liquor – sales
Liquor – sales Total sales (including charge-through) increased 5.6% to $3.7bn FY19 FY18 Change $m $m % Continuation of ‘premiumisation’ trend Total revenue as per Statutory Accounts 3,658.8 3,467.1 5.5% Modest improvement in sales volumes Charge-through sales 8.1 6.9 17.4% Cycling addition
Slide 11: Liquor – EBIT
Liquor – EBIT Reported EBIT increased $0.9m (1.3%) to $71.2m FY19 FY18 Change $m $m % Implementation of AASB15 had a negative $1.9m1 year-on-year impact on EBIT Total revenue2 (including charge-through) 3,666.9 3,474.0 5.6% EBIT margin declined 10bps to 1.9% due to: Reported EBIT 71.2 70.3 1.3
Slide 12: Liquor – initiatives update
Liquor – initiatives update Store investment Core range Private & exclusive labels On-premise Continued improvement in the Focused on higher value premium Continued to evolve and premiumise Renewed focus on ‘on-premise’ quality of IBA store network and products (wine and spirits) and private
Slide 13: Hardware – sales
Hardware – sales Total sales (including charge-through) decreased 0.9% to $2.1bn, negatively FY19 FY18 Change impacted by: $m $m % Total revenue as per Statutory Accounts 1,165.1 1,143.3 1.9% Slowdown in construction activity Charge-through sales 936.9 976.8 (4.1%) Loss of large HTH customer i
Slide 14: Hardware – EBIT
Hardware – EBIT FY19 FY18 Change EBIT increased by $11.9m (17.2%) to $81.2m $m $m % Implementation of AASB15 had a $0.1m positive year-on-year impact on EBIT Total revenue1 (including charge-through) 2,102.0 2,120.1 (0.9%) Additional synergies in the year from HTH acquisition of ~$10m Reported
Slide 15: Hardware – initiatives update
Hardware – initiatives update Sapphire program Trade focus Hardings expansion Core range HTH integration Keeps stores modern and Additional seven store Strong market position Continued to rollout core HTH integration delivered a leading edge conversions in FY19, bringing in Victoria rangin
Slide 16: MFuture - next 5 years
MFuture - next 5 years Key growth initiatives Food Retail brand offer – right brand for store size Core range and price – better everyday value Our 5 year vision Acceleration of DSA program Delivering a pathway to sustainable growth Small format convenience store trial Liquor Our strategy
Slide 17: Financials
Financials Brad Soller Group Chief Financial Officer
Slide 18: Profit & Loss
Profit & Loss FY19 FY181 Change $m $m % Sales revenue 12,660.3 12,442.2 1.8% EBITDA 386.4 391.2 (1.2%) Depreciation and amortisation (56.4) (56.6) (0.4%) EBIT 330.0 334.6 (1.4%) Net finance costs (28.9) (26.4) (9.5%) Profit before tax and NCI 301.1 308.2 (2.3%) Tax (88.5) (88.5) - Non-controlling in
Slide 19: Working Smarter
Working Smarter Three-year Working Smarter program now completed Working Smarter makes doing business with Delivered significant cost savings and helped protect margins Metcash simpler for customers, suppliers and our people through: Total annualised gross savings for program ~$125m (initial t
Slide 20: Cashflows
Cashflows FY19 FY181 $m $m Net cash from operating activities2 244.9 276.3 Net cash used in investing activities (47.9) (43.8) Capital expenditure (54.2) (34.7) Proceeds from sale of businesses/assets and net loan movements 18.1 6.8 Acquisitions of businesses (11.8) (15.9) Dividends paid and other f
Slide 21: Balance Sheet
Balance Sheet 30 April 30 April 2019 2018 $m $m Trade receivables and prepayments 1,472.5 1,458.6 Inventories 779.3 754.1 Trade payables and provisions (2,210.5) (2,170.2) Net working capital 41.3 42.5 Intangible assets 793.5 792.3 Property, plant and equipment 225.8 215.5 Equity accounted investmen
Slide 22: AASB16 – Leases
AASB16 – Leases Implementation of AASB16 will not impact the Group’s cashflows, debt covenants or shareholder value; but will change reported results as follows: Balance Sheet Recognition of ‘right of use’ asset, sublease receivable and offsetting liability Asset value estimated at $800m – $1,00
Slide 23: Net (debt) / cash
Net (debt) / cash Net debt of $42.9m (FY18: Net cash $42.8m) FY19 FY18 $m $m $150m share buy-back in August 2018 Net debt Average net debt of ~$310m (FY18: $150m) Gross debt (185.5) (118.4) Refinanced $450m of debt facilities Cash and cash equivalents 142.6 161.2 Syndicated facility with 3
Slide 24: Dividends
Dividends FY19 final dividend 7.0 cents per share, fully franked Ex-dividend date: 9 July 2019 Record date: 10 July 2019 Payment date: 7 August 2019 Total dividends for FY19 of 13.5 cents per share, fully franked Dividend payout ratio of ~60% of underlying earnings per share FY19 Full
Slide 25: Group outlook
Group outlook Jeff Adams Group Chief Executive Officer
Slide 26: Group outlook
Group outlook In Supermarkets, there has been a continued improvement in the sales trajectory of wholesale sales (excluding tobacco) through the first seven weeks of FY20 As announced, Metcash has entered into a five-year supply agreement with Drakes Supermarkets in Queensland. Metcash, however,
Slide 27: Appendices
Appendices 1. Financial history 2. AASB15 – Revenue from contracts with customers 3. Restatement of EBIT as a result of AASB15 4. Restatement of sales revenue as a result of AASB15 5. Bannered store numbers
Slide 28: 1. Financial history
1. Financial history FY19 FY18 FY17 FY16 FY15 Financial Performance Sales revenue 1 ($m) 12,660.3 12,442.2 12,293.0 11,716.5 11,604.2 EBIT 2,3 ($m) 330.0 334.6 304.8 286.7 310.6 Net finance costs 3 ($m) (28.9) (26.4) (33.6) (38.3) (68.4) Underlying profit after tax 2 ($m) 210.3 216.9 194.8 178.3 173
Slide 29: 2. AASB15 – Revenue from contracts with customers
2. AASB15 – Revenue from contracts with customers Effective from 1H19. Comparative period balances have been restated Key change is the derecognition of $1.9bn in charge-through revenue Impact on reported EBIT in both FY19 and FY18 was immaterial See Appendix 3 for reconciliation Details r
Slide 30: 3. Restatement of EBIT as a result of AASB15
3. Restatement of EBIT as a result of AASB15 FY19 FY18 AASB15 adjustment AASB15 AASB15 year-on-year Pre AASB15 adjustment1 Post AASB15 Pre AASB15 adjustment1 Post AASB15 change $m $m $m $m $m $m $m Food 181.4 1.3 182.7 188.6 (0.3) 188.3 1.6 Liquor 71.2 - 71.2 68.4 1.9 70.3 (1.9) Hardware 80.8 0.4 81
Slide 31: 4. Restatement of sales revenue as a result of AASB15
4. Restatement of sales revenue as a result of AASB151 FY19 FY18 Sales revenue Sales revenue Sales Revenue Charge-through (including Sales Revenue Charge-through (including (Statutory) sales charge-through) (Statutory) sales charge-through) $m $m $m $m $m $m Supermarkets 6,277.4 957.9 7,235.3 6,338.
Slide 32: 5. Bannered store numbers
5. Bannered store numbers April April 2019 2018 Pillar Supermarkets 1,673 1,674 Campbells 17 18 Liquor 2,667 2,754 Hardware 668 710 Total 5,025 5,156 Supermarkets Campbells Liquor Hardware Total Store movement Number of stores at April 2018 1,674 18 2,754 710 5,156 Stores opened / joined banner grou
Slide 33: 5. Bannered store numbers
5. Bannered store numbers April April 2019 2018 Supermarkets Supa IGA 373 376 IGA 792 808 IGA-Xpress 220 209 Total IGA bannered stores 1,385 1,393 Friendly Grocer / Eziway 288 281 Total Supermarkets 1,673 1,674 Liquor Cellarbrations 557 574 Bottle-O & Bottle-O Neighbourhood 237 239 IGA Liquor 467 45
Slide 34: Disclaimer Contact details
Disclaimer This presentation contains summary information about Metcash Limited (ABN 32 112 073 480) (Metcash) and its activities current as at the date of this presentation. The information in this presentation is of general background and does not purport to be complete. It should be read in conju
Slide 35: Championing Successful Independents
Championing Successful Independents