Tesco Plc · LSE:TSCO
Tesco — FY2009/10 Earnings Presentation
86 slides from Tesco's earnings presentation, Apr 20, 2010
Slide 1: Preliminary Results 20 April 2010
Preliminary Results 20 April 2010
Slide 2: David Reid, Chairman
David Reid Chairman
Slide 3: Slide 3
Slide 4: Progress - 09/10
Progress - 09/10 Tesco Korea Bank China
Slide 5: Growing dividends
Growing dividends Pence per share 13.05
Slide 6: Slide 6
Slide 7: Clubcard
Clubcard Double Slovakia points Poland Thailand
Slide 8: Environment
Environment Zero Green carbon stores store
Slide 9: Community
Community £60m raised for good causes Community Champions
Slide 10: People
People
Slide 11: Laurie McIlwee, Group Finance Director
Laurie McIlwee Group Finance Director
Slide 12: Financial headlines
Financial headlines • Broadly-based, double-digit profit growth • Increased investment in the shopping trip, funded by Step Change • Debt reduction more than our £1bn target • £1.8bn property sold at attractive yields • Excellent prospects for improving returns
Slide 13: Group performance
Group performance* • Sales £62.5bn, up 7% • Trading profit rose 12% to £3.4bn • Pre-tax profit and underlying profit before tax grew by 10% * growth on a 52 week basis
Slide 14: Returns to shareholders
Returns to shareholders • Underlying diluted earnings per share up 9%* to 31.66p • Full-year dividend also up 9% • Proposed final dividend 9.16p * On a constant tax-rate basis
Slide 15: Group ROCE
Group ROCE 0.4% 13.1% 0.6% 12.7% 0.4% 12.1% 2008/09* Underlying Japan Acquisitions 2009/10 performance Impairment *On a 52 week basis, restated for IFRIC13 and IFRS2
Slide 16: UK
UK • Sales up 6.1%* • 3.2% growth from like-for-like* • Trading profit up 7% * Ex-petrol, VAT-adjusted
Slide 17: Tesco sales growth vs competitors
Tesco sales growth vs competitors % 1.5 1.0 0.5 0.0 (0.5) (1.0) (1.5) Q1 Q2 Q3 Q4 Source: Kantar Worldpanel Note: Competitor set comprises Asda, J Sainsbury, Morrisons, Co-Op, Somerfield, Iceland, Waitrose, Budgens, M&S
Slide 18: Maintaining success in the UK
Maintaining success in the UK • Improving shopping trip for customers and funding this investment • Sustaining optimum level of new space to grow profitably into the long-term
Slide 19: Step Change
Step Change • £550m incremental savings this year • ‘Better, simpler and cheaper’ • Targeting £800m global savings this year
Slide 20: Stock reduction
Stock reduction Before After
Slide 21: Long-term UK growth
Long-term UK growth • 3-4% like-for-like growth • New space pipeline to deliver a further 3-4% of new sales • Excellent potential in non-food
Slide 22: International
International Korea Slovakia Turkey China
Slide 23: International LFL
International LFL Q1'08 Q2' Q3'08 Q4'08 Q1"09 Q2"09 Q3"09
Slide 24: Asia
Asia • Sales up by 20% • Trading profit rose 24% • Turned around acquired Korean stores that had been loss-making
Slide 25: China
China
Slide 26: China
China
Slide 27: Japan
Japan
Slide 28: Europe
Europe • Sales stable • Trading profit performance resilient
Slide 29: Ireland
Ireland
Slide 30: United States
United States
Slide 31: International returns
International returns • Like-for-like CROI down by 0.5% • Continued investment through downturn • Benefits of investment already being seen in Asia • Drivers of improvement: – scale – asset maturity – market position
Slide 32: International returns
International returns Index 170 130 100 All countries No 1 or 2 market No 1 or 2 market position position - mature assets
Slide 33: Retailing Services
Retailing Services • Profits £540m, up 18%* • Contributed a quarter of Group profit growth • Significant potential for future growth * including Tesco Bank on a pro-forma basis
Slide 34: Tesco Bank
Tesco Bank • Focus on setting up systems and infrastructure • Migration progressing well • Profits rose 13%* to £250m • Bad debt trends improving and better than industry average • Balance sheet in net surplus, with strong tier-1 capital ratio over 12% * including Tesco Bank on a pro-forma basis
Slide 35: Balance sheet
Balance sheet • Net debt reduction on £1.7bn, ahead of £1bn target • Reduction achieved through: – managing capital expenditure back to a normal level – £0.6bn working capital improvement – release of value from property
Slide 36: UK cashflow
UK cashflow £bn EBITDA Capex ’ ‘ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’
Slide 37: International cashflow
International cashflow £bn EBITDA Capex ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ ’ Note: Excludes China Property and U.S.
Slide 38: Balance sheet
Balance sheet • Improved key credit metrics • Financing and liquidity positions remain strong
Slide 39: Debt maturity profile
Debt maturity profile £m 1,800 - 1,600 - 1,400 - 1,200 - 1,000 - 800 - 600 - bit 1 | 2010/11 2057/58
Slide 40: Balance sheet
Balance sheet • Group capex this year about £3.5bn • Target to reduce debt to £7.5bn by year-end
Slide 41: Property
Property Irlam Fushun
Slide 42: Property
Property • Solid UK margin progress as increased rents absorbed • Yields substantial and sustainable profits • Useful source of funds for financing growth • Property worth significantly more than book value
Slide 43: Conclusion
Conclusion • Delivering for shareholders • Strengthening the balance sheet • Continued investment in our strategy • Strong outlook for returns
Slide 44: Terry Leahy, Chief Executive
Terry Leahy Chief Executive
Slide 45: Slide 45
Slide 46: International
International China Hungary Ireland Malaysia
Slide 47: Central Europe market share
Central Europe market share 2008 2009 Hungary 15.8 16.8 Slovakia 15.5 15.6 Czech Republic 7.8 8.1 Poland 4.8 4.9 Source: GFK
Slide 48: Central Europe
Central Europe Mw f oo Ps _ ele eb eg
Slide 49: Central Europe
Central Europe Czech Republic Slovakia
Slide 50: Slovakia
Slovakia
Slide 51: Central Europe
Central Europe Hungary
Slide 52: Europe
Europe Turkey
Slide 53: Ireland
Ireland • Completed operational changes • 12,000 price reductions, averaging 20% • Like-for-like turnaround – now strongly positive • Growing market share
Slide 54: Slide 54
Slide 55: Korea
Korea
Slide 56: China
China
Slide 57: Asia
Thailand Malaysia TESCO | Eve uit holps
Slide 58: Japan
Japan
Slide 59: India
India
Slide 60: Fresh & Easy
Fresh & Easy Compton Manhattan Beach
Slide 61: Fresh & Easy
Fresh & Easy fresh@ | A lean, green, ceasy Neighborhood Market savings machine.
Slide 62: Fresh & Easy
Fresh & Easy
Slide 63: Fresh & Easy
Fresh & Easy • Store economics improving steadily • We’ll grow sales by more than 50% this year
Slide 64: Slide 64
Slide 65: Tesco
TESCO 4 47 47 427 aa Rigs, atte dade Cri LAU bolps
Slide 66: Availability
Availability 97.5% 2009 2008 96.5% 2007 2006 2005 95.5% 94.5% Mar May July Sept Nov Jan
Slide 67: Service
Service
Slide 68: Range
Range Discount brands Finest
Slide 69: Quality
Quality
Slide 70: Clubcard
Clubcard 634004 1234 1234 1234 Ms K Robinson
Slide 71: Non-food
4 Te Aa pilations Chart Peay Y hg
Slide 72: UK - clothing
UK - clothing Beek ie) ARRINO OS na Ohana aaa get set for summer shop bow © snop gr O HJ < @23 1 jewellery poolside ™ glamour
Slide 73: International - clothing
International - clothing TESCO | Eve uit holps
Slide 74: Slide 74
Slide 75: Tesco Bank
Tesco Bank 12 months for the price of 8
Slide 76: tesco.com
tesco.com Substitutions will never cost you more w Total Price match price refund If we have to substitute a more expensive product for the one you ordered, we will only charge you the price of your ordered item* *Substituted products for link-save and multi-buy offers such as Buy One Get One Free a
Slide 77: Tesco direct
Tesco direct TESCO Order now, collect Thursday 4pm TESCO direct In a hurry? Other ways to shop: | Evewy litte holps
Slide 78: Telecoms
Telecoms
Slide 79: dunnhumby
dunnhumby dunnhumby is now present in 26 markets … and analyses the shopping transactions of 350 million customers
Slide 80: Slide 80
Slide 81: Environment – long-term targets
Environment – long-term targets • Become a zero carbon business by 2050 • Reduce the carbon impact of the products we sell by 30% by 2020 • Help our customers halve their own footprint by 2020
Slide 82: Good jobs and careers
Good jobs and careers
Slide 83: Conclusion
Conclusion • Strong, flexible business model • Well-geared into the global recovery • Emerging from recession even stronger • Delivering for all stakeholders • Good outlook for higher returns • Renewed target to increase ROCE to 14.6%
Slide 84: Q&A
Q&A
Slide 85: Preliminary Results April 2010
Preliminary Results 20 April 2010
Slide 86: International returns – 2009/10
International returns – 2009/10 £m capital invested 3,000 Korea 2,500 2,000 Poland ROI 1,500 Thailand Czech Republic 1,000 Turkey China Slovakia Hungary 500 Japan Malaysia 0 -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%c.7-10% 6.0% 8.0% c.10% 10.0% 12.0%c.15% c.20% 14.0% 16.0% 18.0% 20.0% LFL CROI