Slide 1: Coles Group Limited – 2023 Full Year Results Presentation (ASX cover letter)
22 August 2023 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2023 Full Year Results Presentation Please find attached for immediate release to the market the 2023 Full Year Results Presentation for Coles Group Limited. This announceme
Slide 2: 2023 Full Year Results Presentation
0 2023 Full Year Results Presentation 22 August 2023 Leah Weckert, Managing Director & Chief Executive Officer Charlie Elias, Chief Financial Officer Coles announced the removal of soft-plastic shopping bags from in-store and online, removing 230 million plastic bags from circulation in one year.
Slide 3: Disclaimer
1 Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its controlled entities (collectively, ‘Coles’, ‘Coles Group’ or ‘the Group’) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does n
Slide 4: Coles wishes to acknowledge the Traditional Custodians
Coles wishes to acknowledge the Traditional Custodians of this land We recognise their strength and resilience and pay our respects to their Elders past and present. Coles extends that respect to all Aboriginal and Torres Strait Iskander people, and recognises their rich cultures and their continuin
Slide 5: Year in review
Overview Financials Strategy Outlook 3 Year in review • Group sales revenue growth from continuing operations of 5.9%, Group EBITDA and EBIT growth of 3.8% and 1.8% respectively and Group adjusted EBITDA and EBIT growth of 5.3% and 4.5%1 respectively • Strong growth in exclusive brand portfolio, wit
Slide 6: FY23 financial highlights
Overview Financials Strategy Outlook 4 FY23 financial highlights Total sales revenue ($m) – continuing operations +5.9% 40,483 Total sales revenue – continuing EBIT – continuing operations operations $1,859m 38,237 $40.5bn 5.9% vs. pcp 1.8% vs. pcp FY22 FY23 NPAT – continuing operations Operating ca
Slide 7: Well placed in the current macroeconomic environment
Overview Financials Strategy Outlook 5 Well placed in the current macroeconomic environment Value campaigns and exclusive brand portfolio resonating strongly with customers Macro backdrop Trusted value Exclusive brands revenue growth 12.3% 13.0% Value conscious customers • Hundreds of prices locked
Slide 8: Actively responding to industry dynamics
Overview Financials Strategy Outlook 6 Actively responding to industry dynamics Headline inflation moderating but remains Rising wage costs and elevated across a range of categories increase in total loss1 Simplify and Save to Invest Cost price increase requests received (#) FWC2 annual wage increas
Slide 9: Innovating and growing through digital channels
Overview Financials Strategy Outlook 7 Innovating and growing through digital channels eCommerce revenue growth1 Omnichannel experience Digital customer experience Research online buy instore (ROBI) becoming Launched new website unifying existing ROBI increasingly important coles.com.au and FY20 FY2
Slide 10: Smarter Selling program achieved in excess of $1 billion of benefits
Overview Financials Strategy Outlook 8 Smarter Selling program achieved in excess of $1 billion of benefits Delivered ~$220 million benefits in FY23 • Key initiatives included: FY23 Enabled reinvestment in value and – Further service transformation in store including trolley assisted provided a part
Slide 11: Supply chain automation progressing well with first ADC successfully commissioned
Overview Financials Strategy Outlook 9 Supply chain automation progressing well with first ADC successfully commissioned On track to deliver structural cost efficiencies with first full year of benefits in FY26 following ramp up across both sites Redbank (QLD) Kemps Creek (NSW) Implementation operat
Slide 12: Update on automated CFCs
Overview Financials Strategy Outlook 10 Update on automated CFCs Key achievements during FY23 Update on timing Implementation operating expenditure New CFC vans designed, received and New South Wales CFC expected to be $m FY23 FY24 FY25 commissioned commissioned with an incremental ramp up period co
Slide 13: Continued strong focus on sustainability
Overview Financials Strategy Outlook 11 Continued strong focus on sustainability Scope 3 emissions Reducing waste Environment Community investment Announced SBTi validated target: Donated the equivalent of 200 million Stopped selling soft-plastic shopping Provided donations and support to 75% of sup
Slide 14: Group financial overview
12 2023 Full Year Results Presentation Group financial overview Coles and its customers raised >$8.5 million for FightMND’s annual Big Freeze campaign, taking our total fundraising tally for Motor Neurone Disease research to more than $30 million over six years.
Slide 15: FY23 results – Group
Overview Financials Strategy Outlook 13 FY23 results – Group $m FY23 FY22 Change Continuing operations • Adjusted EBITDA and EBIT from continuing operations increased by 5.3% and 4.5% Sales revenue 40,483 38,237 5.9% respectively, excluding major project EBITDA 3,382 3,259 3.8% implementation operat
Slide 16: FY23 results – segment financials
Overview Financials Strategy Outlook 14 FY23 results – segment financials $m FY23 FY22 Change Sales revenue Supermarkets 36,746 34,624 6.1% Liquor 3,610 3,613 (0.1)% Express divestment Other 127 - n/m Coles agreed to divest the Express business to Sales revenue – continuing operations 40,483 38,237
Slide 17: Operating cash flow
Overview Financials Strategy Outlook 15 Operating cash flow Cash flow1 Inventory and trade payable days2 Comments $m FY23 FY22 33 33 • Positive working capital movement 28 30 primarily reflects higher trade payables EBIT 1,970 1,869 offset by trade receivables from the PSA with Viva Energy and an in
Slide 18: Capital expenditure
Overview Financials Strategy Outlook 16 Capital expenditure Growth in capital expenditure driven by ADCs and delivery of renewal and new space programs Capital expenditure breakdown Key capital expenditure initiatives $m FY23 FY22 • Store renewals across Supermarkets (46) and Liquor (236) Store rene
Slide 19: Balance sheet
Overview Financials Strategy Outlook 17 Balance sheet Balance sheet summary Comments 25 Jun 1 Jan 26 Jun • Inventories declined largely driven by the $m 2023 2023 2022 Express divestment Inventories 2,323 2,825 2,448 • Trade and other receivables increased largely Trade and other receivables 605 473
Slide 20: Capital management
Overview Financials Strategy Outlook 18 Capital management Debt facility maturity profile ($m) Leverage ratio Comments Funding and liquidity Bank facilities SLL Bank facilities AMTN • Coles continues to maintain access to diversified funding sources and has no debt 150 maturing until FY26 300 • Weig
Slide 21: Supermarkets
19 2023 Full Year Results Presentation Supermarkets 17 new supermarkets were opened during the year, including a Coles Local in Toorak Village, Vic.
Slide 22: Supermarkets – key metrics
Overview Financials Strategy Outlook 20 Supermarkets – key metrics Sales revenue growth of 6.1% and adjusted EBITDA and EBIT growth of 6.1% and 5.8% respectively EBITDA ($m) – reported vs adjusted1 3,240 +6.1% 25 +4.5% 3,157 58 3,054 3,022 3,157 32 Total sales revenue eCommerce sales growth EBIT 3,0
Slide 23: Supermarkets – FY23 results
Overview Financials Strategy Outlook 21 Supermarkets – FY23 results Volumes improved throughout the year with positive volume growth in 2H $m FY23 FY22 Change Key commentary Key P&L items • Sales growth delivered through value campaigns, successful execution of trade plans, targeted and personalised
Slide 24: Liquor
22 2023 Full Year Results Presentation Liquor The local spirits range at the 400th Black & White Liquorland renewal in Rochedale, Qld.
Slide 25: Liquor – key metrics
Overview Financials Strategy Outlook 23 Liquor – key metrics Return to sales and earnings growth in the second half after cycling of on-premise closures and restrictions in the first half Total sales revenue EBIT eCommerce sales growth1 $3.6bn $157m 22.6% (0.1)% vs. pcp; 2H 2.7% vs. pcp (3.7)% vs. p
Slide 26: Liquor – FY23 results
Overview Financials Strategy Outlook 24 Liquor – FY23 results Continued growth in ELB portfolio and eCommerce as customers focus on value and more immediacy offers $m FY23 FY22 Change Key commentary Key P&L items • Headline sales revenue for the full year was flat. Sales revenue returned to growth o
Slide 27: Strategy evolution
25 2023 Full Year Results Presentation Strategy evolution Prime Minister Anthony Albanese at the opening of the Automated Distribution Centre in Redbank, Qld.
Slide 28: Established track record in delivering returns for shareholders
Overview Financials Strategy Outlook 26 Established track record in delivering returns for shareholders Consistent delivery of solid financial performance and margin Balance sheet strength and flexibility expansion in core Supermarkets business Group sales revenue – excluding Express Group EBIT – ex
Slide 29: Strong industry fundamentals and operating model
Overview Financials Strategy Outlook 27 Strong industry fundamentals and operating model Industry Coles Defensive A market leading position Omnichannel network Extensive exclusive brand portfolio Consistent market growth through Maintained despite Extensive national reach – in economic cycles contin
Slide 30: Strategy evolution
Overview Financials Strategy Outlook 28 Strategy evolution Our vision is to become the most trusted retailer in Australia and grow long-term shareholder value. • Deliver quality, delicious and healthy food • Enhance value across the customer offer Destination for • Innovate and differentiate through
Slide 31: Immediate areas of focus
Overview Financials Strategy Outlook 29 Immediate areas of focus Availability, loss and quality Delivering value Restore availability, reduce loss and provide a Through exclusive brand portfolio, weekly specials and high-quality fresh food offering promotions, Flybuys, everyday trusted low prices Si
Slide 32: Outlook
30 2023 Full Year Results Presentation Outlook Coles launched its annual national winter appeal with SecondBite, to help more than 1,100 community organisations across the country feed Australians in need.
Slide 33: Outlook
Overview Financials Strategy Outlook 31 Outlook • In the early part of FY24, volumes have remained modestly positive Cost of living pressures • Fresh produce remains in deflation while inflation in bakery, grocery and dairy remains consistent with Q4 are likely to remain for Supermarkets • Value cam
Slide 34: Q&A
32 2023 Full Year Results Presentation Q&A Bartle Frere Bananas in Queensland received a Coles Nurture Fund grant to invest in new technologies to develop a carbon neutral banana range while reducing runoff into the Great Barrier Reef.
Slide 35: Appendices
33 2023 Full Year Results Presentation Appendices Coles has partnered with Planet Ark to help further its efforts to reduce food waste and packaging, and to tackle the challenge of plastic waste and recycling.
Slide 36: Appendix – Reporting calendars for FY24 and FY25
Appendices 34 Appendix 1 – Reporting calendars for FY24 and FY25 FY24 is a 53 week reporting period FY24 1Q24 2Q24 3Q24 4Q24 26 Jun 2023 - 25 Sep 2023 - 1 Jan 2024 - 25 Mar 2024 - Reporting period 24 Sep 2023 31 Dec 2023 24 Mar 2024 30 Jun 2024 Number of days 91 days 98 days 84 days 98 days Number o
Slide 37: Appendix – Express divestment impacts
Appendices 35 Appendix 2 – Express divestment impacts Underlying EBIT reconciliation $m (52 WEEKS TO 25 JUNE 2023) FY23 FY22 Convenience (c-store) sales revenue 988 1,132 EBITDA – underlying 164 181 EBIT – underlying 46 42 Divestment impacts - Notional depreciation and amortisation1 83 - - Loss on s