Woolworths Group Ltd · ASX:WOW
Woolworths — H1 F19 Earnings Presentation
41 slides from Woolworths's earnings presentation, 2019
Slide 1: Company Results Half-Year 2019
Company Results 1 Half-Year 2019
Slide 2: Woolworths Group Purpose
Woolworths Group Purpose Company Results Half-Year 2019 2 Our Ways-of-Working How we work Our Purpose Why we exist Our Values Who we are
Slide 3: Contents
Company Results 3 Contents Half-Year 2019 H19 SUMMARY AND PROGRESS 4 Brad Banducci FINANCIAL RESULTS 8 David Marr BUSINESS UPDATE 17 OUTLOOK 38 Brad Banducci
Slide 4: H1 F19 summary
Company Results 4 Half-Year 2019 H1 F19 summary More challenging half across the Group but customer satisfaction remains high Improved sales momentum in Australian Food in Q2’19 compared to Q1’19 but more subdued demand in November and December Lower EBIT from Endeavour Drinks in a low growth market
Slide 5: Woolworths Group F19 priorities
Woolworths Group F19 priorities Company Results Half-Year 2019 5 6 Customer 1st Build growth Team 1st Culture platforms for the future Connected, Personalised and Convenient 5 Shopping Experiences Differentiate our Accelerate Create differentiation Innovation in our Unlock Value in 2 Food Customer 3
Slide 6: Progress against our key priorities
Progress against our key priorities Company Results Half-Year 2019 6 Customer 1st Team 1st Connected, Personalised and Differentiate our Food Customer culture Convenient Shopping Experiences Propositions • Launched ‘I am here’ as part of wide set of • Strong online (2U) sales growth in all digital •
Slide 7: Contents
Company Results 7 Half-Year 2019 Contents H19 SUMMARY AND PROGRESS 4 Brad Banducci FINANCIAL RESULTS 8 David Marr Group financial results Key balance sheet metrics Cash flow summary Capital expenditure Capital management Impact of new lease standard BUSINESS UPDATE 17 OUTLOOK 38 Brad Banducci
Slide 8: Financial Results
Company Results 8 Half-Year 2019
Slide 9: Results H19 – modest sales and profit growth
Results H19 – modest sales and profit growth Company Results Half-Year 2019 9 CONTINUING OPERATIONS TOTAL GROUP $m Change Change Sales 30,587 2.3% 33,166 2.5% EBIT 1,445 1.0% 1,529 (1.5)% NPAT attributable to Woolworths 920 2.1% 979 1.0% Group shareholders Earnings per share (basic) 70.3¢ 0.9% 74.7¢
Slide 10: EBIT growth impacted by Endeavour Drinks
EBIT growth impacted by Endeavour Drinks Company Results Half-Year 2019 10 $m H19 H18 Change Continuing operations Australian Food 937 901 4.0% Endeavour Drinks 290 309 (6.4)% New Zealand Food 137 139 (1.3)% New Zealand Food (NZD) 148 151 (2.0)% BIG W (8) (10) (20.8)% Hotels 161 163 (1.5)% Central o
Slide 11: Balance sheet metrics further improved
Balance sheet metrics further improved Company Results Half-Year 2019 11 Average inventory days ROFE – rolling 12m Days Percentage Continuing operations Continuing operations Group Continuing operations – lease-adjusted 41.6 41.3 40.6 40.4 24.1 40.3 24.0 39.5 39.4 39.3 37.1 13.8 13.8 36.5 H15 H16 H1
Slide 12: Solid cash flow despite higher investment and dividends
Solid cash flow despite higher investment and dividends Company Results Half-Year 2019 12 $m H19 H18 Change Operating activities before interest and tax 2,487 2,406 3.4% Interest and tax (472) (431) 9.5% Operating activities 2,015 1,975 2.1% Investing activities (911) (605) 50.8% Free cash flow befo
Slide 13: Operating capex expected to be $1.7-1.8bn in F19
Operating capex expected to be $1.7-1.8bn in F19 Company Results Half-Year 2019 13 $m H19 H18 Continuing operations Operating capex 825 770 Property development 201 107 Gross capex 1,026 877 Property sales (101) (24) Net capex 925 853 Discontinued operations 18 (6) Group net capex 943 847 Operating
Slide 14: Further capital management intended following Petrol sale
Further capital management intended following Petrol sale Company Results Half-Year 2019 14 Interim Final Special Interim payout (RHS) Capital management: % Cents 80 • Petrol sale likely to settle around the end of March 100 10 75 2019 10 80 50 70 • Board will consider capital management initiatives
Slide 15: Update on impact of new lease accounting standard
Update on impact of new lease accounting standard Company Results Half-Year 2019 15 • AASB 16 brings majority of leases on balance sheet. Group The actual impact of will initially apply AASB 16 on 1 July 2019 applying the standard in F20 will depend on: • Well advanced for full implementation of sta
Slide 16: Contents
Company Results 16 Contents Half-Year 2019 H19 SUMMARY AND PROGRESS 4 Brad Banducci FINANCIAL RESULTS 8 David Marr BUSINESS UPDATE 17 OUTLOOK 38 Brad Banducci
Slide 17: Business Update
Company Results 17 Half-Year 2019
Slide 18: Australian Food
Company Results 18 Half-Year 2019
Slide 19: Australian Food
Australian Food Company Results Half-Year 2019 19 H19 H18 CHANGE Sales ($m) 19,892 19,436 2.3% EBITDA ($m) 1,317 1,242 6.0% EBIT ($m) 937 901 4.0% Gross margin (%) 28.7 28.7 2 bps Cost of doing business (%) 24.0 24.1 (5) bps EBIT to sales (%) 4.7 4.6 8 bps Sales per square metre ($) 16,624 16,338 1.
Slide 20: Australian Food F19 priorities
Australian Food F19 priorities Company Results Half-Year 2019 20 6 Customer 1st Brand,Team and Culture Innovate our customer and team experience Connected, Personalised and 5 Ultra Convenient Shopping Experiences Differentiate core Good Prices Engaging Famous for customer offer 2 and Localised 3 Sto
Slide 21: Progress highlights
Progress highlights Company Results Half-Year 2019 21 Innovate our • VOC NPS (Store and Online) and Store-controllable VOC both improving on last year and the customer and previous quarter increasing 4 pts to 54 and 1 pt to 83% respectively team experience • Successful conclusion of new enterprise a
Slide 22: Customer highlights
Customer highlights Company Results Half-Year 2019 22 Store-controllable VOC NPS - Store & Online % customers satisfied, 6 or 7 out of 7 % promoters - % detractors +1 100 100 82 83 +4 50 54 0 0 Dec-17 Dec-18 Dec-17 Dec-18 Ease of Pick up Product availability Team attitude % customers satisfied, 6 or
Slide 23: Sales highlights
Sales highlights Company Results Half-Year 2019 23 Comp transactions (% year on year) Total sales (% year on year) 4.1% 3.6% 4.3% 2.1% 1.5% 3.4% 2.8% Q3* Q4* Q1 Q2 F18 F19 1.9% Comp items per basket (% year on year) 2.6% Q3* Q4* Q1 Q2 F18 F19 Comp sales 4.1 3.3 1.8 2.7 1.0% (%) 0.8% 0.0% * Adjusted
Slide 24: Renewal highlights
Renewal highlights Company Results Half-Year 2019 24 Renewal progress Key metrics We are in the third year of our five year • Renewals continue to make a significant contribution to plan. So far this year we have launched: Woolworths Supermarkets sales growth • VOC and Team Attitude Renewal scores h
Slide 25: WooliesX highlights
WooliesX highlights Company Results Half-Year 2019 25 Ultra-convenient eCom (2U) Woolworths Rewards experiences eCom growth continued to be very Rewards program grew to 11.3m Continue to invest in our digital strong at 26.6% in H19 members in December (+0.4m vs experience and mobile app with June) w
Slide 26: Endeavour Drinks
Company Results 26 Half-Year 2019
Slide 27: Endeavour Drinks
Endeavour Drinks Company Results Half-Year 2019 27 H19 H18 CHANGE Sales ($m) 4,596 4,513 1.8% EBITDA ($m) 341 355 (4.1)% EBIT ($m) 290 309 (6.4)% Gross margin (%) 22.8 22.9 (10) bps Cost of doing business (%) 16.5 16.1 45 bps EBIT to sales (%) 6.3 6.9 (55) bps Sales per square metre ($) 18,079 18,01
Slide 28: Dan Murphy’s highlights
Dan Murphy’s highlights Company Results Half-Year 2019 28 H19 Highlights Launched 30 minute Wine advisors Over 3m Named Australia’s #1 Record high VOC Pick up and On deployed to provide My Dan Murphy’s liquor store in YouGov and continued Demand delivery knowledgeable members 2018 Brand Advocacy mar
Slide 29: BWS highlights
BWS highlights Company Results Half-Year 2019 29 H19 Highlights 16 On Demand delivery Opened 16 net new stores Strengthened Rewards Record VOC scores, available through bringing the total store network program and partnership with improvements in c.500 stores to 1,332; 41 renewals and with Woolworth
Slide 30: New Zealand Food
Company Results 30 Half-Year 2019
Slide 31: New Zealand Food
New Zealand Food Company Results Half-Year 2019 31 H19 H18 CHANGE Sales ($m) 3,401 3,337 1.9% EBITDA ($m) 212 217 (2.2)% EBIT ($m) 148 151 (2.0)% Gross margin (%) 24.3 24.1 20 bps Cost of doing business (%) 19.9 19.5 37 bps EBIT to sales (%) 4.4 4.5 (17) bps Sales per square metre ($) 16,009 15,319
Slide 32: New Zealand Food highlights
New Zealand Food highlights Company Results Half-Year 2019 32 H19 highlights H2’19 focus Improving customer Online and digital Customer 1st Fresh perception momentum Team 1st Culture Provenance Voice of Customer improvement Fruit & Vegetables VOC +7 pts on last year Brand advocacy strengthened 40% H
Slide 33: BIG W
Company Results 33 Half-Year 2019
Slide 34: BIG W
BIG W Company Results Half-Year 2019 34 H19 H18 CHANGE Sales ($m) 2,091 2,037 2.7% EBITDA ($m) 34 31 10.3% LBIT ($m) (8) (10) (20.8)% Gross margin (%) 31.2 31.8 (58) bps Cost of doing business (%) 31.6 32.2 (69) bps LBIT to sales (%) (0.4) (0.5) (11) bps Sales per square metre ($) 3,442 3,369 2.1% R
Slide 35: BIG W highlights
BIG W highlights Company Results Half-Year 2019 35 H19 highlights H2’19 focus Further align team around our Purpose, Investing in our Team through roll-out of 1 ‘we make a real difference for families’ training programs 2 Continue building price trust by focusing Improvement of price perception on t
Slide 36: Hotels
Hotels Company Results Half-Year 2019 36 H19 H18 CHANGE Sales ($m) 865 861 0.5% EBIT ($m) 161 163 (1.5)% Gross margin (%) 84.2 84.3 (6) bps Cost of doing business (%) 65.7 65.4 30 bps EBIT to sales (%) 18.6 18.9 (37) bps • Slower sales growth than recent periods as we cycled strong events in prior y
Slide 37: Contents
Company Results 37 Contents Half-Year 2019 H19 SUMMARY AND PROGRESS 4 Brad Banducci FINANCIAL RESULTS 8 David Marr BUSINESS UPDATE 17 OUTLOOK 38 Brad Banducci
Slide 38: Outlook
Company Results 38 Half-Year 2019 Outlook Remain focused on opportunities to simplify our businesses and improve productivity. Continue to invest in areas that will drive the long-term success of the business with digital and data key areas of focus. Australian Food – we expect the market to remain
Slide 39: Glossary
Glossary Company Results Half-Year 2019 39 Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Comparable sales Measure of sales which excludes stores that have been opened or closed in the last 12 months and demonstrable impa
Slide 40: Glossary
Glossary Company Results Half-Year 2019 40 Other non-IFRS measures used in describing the business performance include: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • Earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) • Cash flow from operating ac
Slide 41: Disclaimer
Disclaimer Company Results Half-Year 2019 41 This presentation contains summary information about Woolworths Group Limited (Woolworths Group) and its activities current as at the date of this presentation. It should be read in conjunction with Woolworths’ other periodic and continuous disclosure ann