Wesfarmers Limited · ASX:WES
Wesfarmers — Wesfarmers Ltd Old — H1 FY2024 Earnings Presentation
66 slides from Wesfarmers's earnings presentation, Feb 15, 2024
Slide 1: 2024 Half-year Results Briefing Presentation
2024 HALF-YEAR al use only RESULTS BRIEFING PRESENTATION To be held on 15 February 2024
Slide 2: Presentation outline
Presentation outline Item Presenter Slide Group performance overview Rob Scott – Managing Director, Wesfarmers Limited 3 Financial performance Anthony Gianotti – Chief Financial Officer, Wesfarmers Limited 10 al use only Outlook Rob Scott – Managing Director, Wesfarmers Limited 18 Q&A Rob Scott – Ma
Slide 3: Group Performance Overview
GROUP al use only PERFORMANCE OVERVIEW ROB SCOTT Managing Director Wesfarmers Limited
Slide 4: Wesfarmers Way
Wesfarmers Way Wesfarmers’ primary objective Anticipating the needs of our Looking after our team is to deliver a satisfactory return customers and delivering members and providing a safe, to shareholders. We believe it is competitive goods and services fulfilling work environment al use only only p
Slide 5: 2024 Half-year highlights
2024 Half-year Maintain focus on highlights responsible long-term management Revenue NPAT up 0.5% to up 3.0% to al use only Well-positioned Continued to advance $22.7b $1.4b portfolio provides both resilience and growth key growth projects • Businesses with clear competitive advantages Operating cas
Slide 6: Results reflect strong execution from high-quality businesses
Results reflect strong execution from Core retail offer of everyday products Driving sustainable long-term returns high-quality providing market-leading value is resonating with • Expanding addressable businesses more customers markets al use only • Progressing growth platforms in health and lithium
Slide 7: Divisional highlights
Divisional highlights al use only BUNNINGS GROUP KMART GROUP WESCEF OFFICEWORKS • Performance highlights resilience • Significant earnings growth reflects • Strong operating performance with • Growth across key categories and of demand across the offer strong underlying trading results good plant av
Slide 8: Focus on long-term value, consistent with our objective
Focus on PEOPLE COMMUNITIES long-term value, 10.9 consistent with total recordable injury $46m our objective frequency rate (TRIFR) and a direct and indirect community continued focus on safety contributions 3.7% al use only Indigenous employment1, maintaining employment parity CLIMATE AND 37 team m
Slide 9: Group performance summary
Group performance summary Half-year ended 31 December ($m)1 2023 2022 Var % Revenue 22,673 22,558 0.5 al use only EBIT 2,195 2,160 1.6 EBIT (after interest on lease liabilities) 2,081 2,053 1.4 NPAT 1,425 1,384 3.0 Basic earnings per share (cps) 125.8 122.3 2.9 Return on equity (R12,%) 31.4 32.8 (1.
Slide 10: Financial Performance
FINANCIAL al use only PERFORMANCE ANTHONY GIANOTTI Chief Financial Officer Wesfarmers Limited
Slide 11: Divisional sales performance
Divisional sales performance Total sales Comp. sales Half-year ended 31 December ($m)1 2023 2022 growth (%) growth (%) Bunnings Group 9,951 9,782 1.7 1.2 • Retail sales results reflect continued strong execution from well-positioned businesses Kmart 4,884 4,531 7.8 7.5 al use only • Leading value cr
Slide 12: Divisional earnings performance
Divisional earnings performance Half-year ended 31 December ($m)1 2023 2022 Var % Performance summary • Continued commercial and consumer sales growth Bunnings Group 1,282 1,278 0.3 • Ongoing cost discipline and improved business productivity al use only • Earnings increased 3.1% excluding the net c
Slide 13: Other business performance summary
Other business performance summary Half-year ended 31 December1 ($m) Holding % 2023 2022 Var % Share of profit of associates and JVs Other EBT result includes: BWP Trust 24.8 13 28 (53.6) • Lower property revaluations in BWP Trust al use only • A favourable Group insurance result Other associates an
Slide 14: Working capital and cash flow
Working capital and cash flow NET WORKING CAPITAL CASH MOVEMENT • Divisional operating cash flows increased 27.1%, with divisional cash Half-year end 31 December ($m) 2023 2022 al use only realisation of 120%1 Receivables and prepayments 121 74 – Reflects disciplined inventory management in Bunnings
Slide 15: Capital expenditure
Capital expenditure CAPITAL EXPENDITURE • Gross capital expenditure of $577m, down 14.6% Half-year end 31 December1 ($m) 2023 2022 Var % al use only – Lower capex driven by completion of construction of the Mt Holland Bunnings Group 135 226 (40.3) concentrator in 2H23 and fewer new store openings in
Slide 16: Balance sheet and debt management
Balance sheet and debt management • Continue to focus on balance sheet and cost of funds DEBT MATURITY PROFILE1 – Weighted average cost of debt of 3.83% for the half (FY23: 3.32%, $m 1H23: 3.06%) 2,500 al use only 2,000 – Impact of interest rate increases substantially mitigated by fixed rate capita
Slide 17: Shareholder distributions
Shareholder distributions SHAREHOLDER DISTRIBUTIONS1 $/share • Fully-franked ordinary interim dividend of $0.91 per share al use only • Dividend record date 21 February 2024; dividend payable 27 March 2024 5.00 • Dividend investment plan: not underwritten; last day for application 22 February 2024 4
Slide 18: Outlook
OUTLOOK al use only ROB SCOTT Managing Director Wesfarmers Limited
Slide 19: Well-placed portfolio
Well-placed portfolio al use only Strong, value-based retail Strategic manufacturing Exposure to growing Businesses supporting offers focused on capabilities supporting demand in health and global decarbonisation everyday products critical industries wellbeing Underpinned by a strong balance sheet t
Slide 20: Group outlook
Group outlook • Wesfarmers remains focused • Strong value credentials and • The performance of the • Wesfarmers maintains a strong on long-term value creation expanding offer make the Group’s industrial balance sheet and portfolio of al use only and continues to invest to retail divisions well posit
Slide 21: Questions
al use only QUESTIONS
Slide 22: Appendix: Divisional Summaries
al use only APPENDIX: DIVISIONAL SUMMARIES Wesfarmers 2024 Half-year results | 22
Slide 23: Bunnings Group
BUNNINGS al use only GROUP MICHAEL SCHNEIDER Managing Director Bunnings Group
Slide 24: Bunnings Group performance summary
Bunnings Group performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue 9,963 9,792 1.7 al use only EBITDA 1,748 1,721 1.6 Depreciation and amortisation (408) (387) (5.4) EBIT 1,340 1,334 0.4 Interest on lease liabilities (58) (56) (3.6) EBT 1,282 1,278 0.3 Net property con
Slide 25: Bunnings Group performance overview
Bunnings Group performance overview Revenue growth of 1.7% to $9,963m • Total sales growth of 8.1% on four-year CAGR1 basis al use only • Growth across both consumer and commercial customer segments • Growth in customer visitation, transactions and units sold, with lowest price credentials resonatin
Slide 26: Bunnings Group progress on strategy
Bunnings Group progress on strategy CARE • Strong focus on safety performance • New Enterprise Agreement for Australian warehouse and trade centre teams al use only • Continued progress to net zero and renewable electricity targets • Positive momentum in community engagement GROW • Continue to inves
Slide 27: Bunnings Group outlook
Bunnings Group outlook • Resilient operating model and leading customer value proposition across consumer and commercial customers supporting profitable growth through the cycle al use only • As many households continue to manage cost of living and budget pressures, Bunnings remains well positioned
Slide 28: Kmart Group
KMART al use only GROUP IAN BAILEY Managing Director Kmart Group
Slide 29: Kmart Group performance summary
Kmart Group performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue 5,986 5,714 4.8 al use only EBITDA 895 765 17.0 Depreciation and amortisation (252) (250) (0.8) EBIT 643 515 24.9 Interest on lease liabilities (42) (40) (5.0) EBT 601 475 26.5 EBT margin (%) 10.0 8.3 ROC
Slide 30: Kmart Group performance overview
Kmart Group performance overview • Revenue increased by 4.8% to $5,986m ‒ Kmart comparable sales grew by 7.5% al use only ‒ Kmart extended its lowest price leadership, with an increase in customer numbers, transactions and units sold delivering sales growth across all categories ‒ Digitisation of su
Slide 31: Kmart Group progress on strategy
Kmart Group progress on strategy • Kmart Group continued to invest in key strategic initiatives to grow share of customer wallet and to develop data and digital assets: al use only – Continued improvements in the product offer delivered through leveraging world-class Anko product development capabil
Slide 32: Kmart Group outlook
Kmart Group outlook • Kmart is well positioned to continue to grow customer share of wallet in an environment where customers remain focused on value by: al use only – Maintaining strong price leadership – Leveraging leading Anko product development capabilities to expand and enhance existing catego
Slide 33: WesCEF
WESCEF al use only IAN HANSEN Managing Director Wesfarmers Chemicals, Energy and Fertilisers
Slide 34: Chemicals, Energy and Fertilisers performance summary
Chemicals, Energy and Fertilisers performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue2 Chemicals 628 860 (27.0) Energy 262 265 (1.1) al use only Fertilisers 215 277 (22.4) Total 1,105 1,402 (21.2) EBITDA 229 372 (38.4) Depreciation and amortisation (56) (48) (16.7) EBI
Slide 35: Chemicals, Energy and Fertilisers performance overview
Chemicals, Energy and Fertilisers performance overview • Revenue of $1,105m decreased 21.2% and earnings of $172m decreased 46.9% for the half, largely impacted by lower global commodity prices, particularly for ammonia and fertiliser products • Chemicals: Earnings decreased significantly for the ha
Slide 36: Chemicals, Energy and Fertilisers key commodity pricing
Chemicals, Energy and Fertilisers key commodity pricing Ammonia price – CFR Far East1 US$/t • Ammonia pricing 1,200 1HFY22 1HFY23 1HFY24 – 1H FY24 earnings impacted by lower global ammonia pricing relative 1,000 al use only to the unusually elevated pricing environment in FY22 and FY23 800 – Further
Slide 37: Chemicals, Energy and Fertilisers outlook
Chemicals, Energy and Fertilisers outlook • Chemicals earnings are expected to continue to be impacted by lower global ammonia pricing compared to FY22 and FY23 – Demand for AN from domestic mining customers is anticipated to improve in 2H24 and remain strong in the long-term – Positive outlook for
Slide 38: Officeworks
OFFICEWORKS al use only SARAH HUNTER Managing Director Officeworks
Slide 39: Officeworks performance summary
Officeworks performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue 1,681 1,651 1.8 al use only EBITDA 161 152 5.9 Depreciation and amortisation (67) (62) (8.1) EBIT 94 90 4.4 Interest on lease liabilities (8) (5) (60.0) EBT 86 85 1.2 EBT margin (%) 5.1 5.1 ROC (R12, %) 18
Slide 40: Officeworks performance overview
Officeworks performance overview • Sales growth of 1.8% to $1,673m – Growth in stationery, art, education, Print & Create and technology, al use only partially offset by lower furniture sales – Network expansion with three new stores1 – Strong online sales, with penetration of 34.7% including Click
Slide 41: Officeworks progress on strategy
Officeworks progress on strategy Modernise and simplify the business – Continued productivity focus, including increased use of technology in al use only support centre, stores and supply chain – Continued improvements at the Victorian IDC and CFC1, delivering the business case, and new CFC opened i
Slide 42: Officeworks outlook
Officeworks outlook • Positive Back to School performance with sales in line with prior corresponding period, despite non-recurrence of NSW back-to-school voucher program al use only – Supported by growth in technology sales, reflective of increased digitisation of education • Well positioned to del
Slide 43: Industrial & Safety
INDUSTRIAL & al use only SAFETY TIM BULT Managing Director Wesfarmers Industrial and Safety
Slide 44: Industrial and Safety performance summary
Industrial and Safety performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue 1,009 978 3.2 al use only EBITDA 92 89 3.4 Depreciation and amortisation (41) (40) (2.5) EBIT 51 49 4.1 Interest on lease liabilities (2) (2) - EBT 49 47 4.3 EBT margin (%) 4.9 4.8 ROC (R12, %) 7
Slide 45: Industrial and Safety performance overview
Industrial and Safety performance overview • Revenue growth of 3.2% to $1,009m – Blackwoods’ revenue increased, driven by growth from strategic customers al use only in Australia, particularly in the mining, utilities, manufacturing and government sectors – Workwear Group’s revenue increased due to
Slide 46: Industrial and Safety outlook
Industrial and Safety outlook • Focused on delivering continued improvements in financial performance • Blackwoods will continue to strengthen its customer value proposition and al use only enhance its core operational capabilities, including through further investment in data and digital capabiliti
Slide 47: Wesfarmers Health
WESFARMERS al use only HEALTH EMILY AMOS Managing Director Wesfarmers Health
Slide 48: Health performance summary
Health performance summary Half-year ended 31 December1 ($m) 2023 2022 Variance % Revenue 2,774 2,778 (0.1) al use only EBITDA 66 66 - Depreciation and amortisation2 (37) (36) (2.8) EBIT2 29 30 (3.3) Interest on lease liabilities (2) (3) 33.3 EBT2 27 27 - EBT (excluding purchase price allocation adj
Slide 49: Health performance overview
Health performance overview • During the half, the division continued to progress its ‘Accelerate’ transformation plan, with ongoing investment to build the capabilities necessary to support sustainable long-term returns al use only • Sales in Pharmacy Distribution declined in 1H24 – Cycling elevate
Slide 50: Health progress on strategy
Health progress on strategy Our ambition is to make Australians’ health, beauty and wellness experiences simpler, more affordable and easier to access Transform the core business – Accelerate • Significant progress on Pharmacy Distribution customer acquisition and al use only retention strategies •
Slide 51: Health outlook
Health outlook • The Health division is well positioned to deliver improved financial performance over time, supported by transformation plans and favourable sector tailwinds al use only • The division will continue to actively manage the impact of cost inflation, including rising labour costs, labo
Slide 52: OneDigital
ONEDIGITAL al use only NICOLE SHEFFIELD Managing Director Wesfarmers OneDigital
Slide 53: Significant data and digital capabilities across the Group
Significant data and digital capabilities across the Group Large scale Unique and complementary Driving value through digital reach member programs deeper customer connections and operating efficiency al use only Digital interactions / month 210m+ (vs 94m in FY19) Rising penetration of OnePass trans
Slide 54: OneDigital performance and outlook
OneDigital performance and outlook • Launched significant enhancements to the OnePass CVP1, with differentiated omnichannel benefits and a uniquely broad range of partners providing significant value for customers al use only – Exclusive in-store benefits including 5x Flybuys points, express Click &
Slide 55: Catch performance summary
Catch performance summary • Loss of $37m excluding restructuring costs represents continued improvement relative to $48m loss in 2H23 and $75m loss in 1H23 Half-year ended 31 December1,2 ($m) 2023 2022 Var % • Successfully exited unprofitable range to enable focus on ongoing range of Gross transacti
Slide 56: Appendix: Supplementary Information
APPENDIX: al use only SUPPLEMENTARY INFORMATION Wesfarmers 2024 Half-year results | 56
Slide 57: Group management balance sheet
Group management balance sheet ($m)1,2 1H24 FY23 1H233 Inventories 6,176 6,039 6,634 al use only Receivables and prepayments 2,187 2,300 2,281 Trade and other payables (5,805) (5,268) (5,689) Other 369 252 263 Net working capital 2,927 3,323 3,489 Property, plant and equipment 5,578 5,365 5,034 Inta
Slide 58: Movements in net financial debt
Movements in net financial debt Movements in net financial debt ($b) al use only • Net financial debt position of $3.9b as at 31 December 2023, compared to the net financial debt position of $4.0b as at 30 June 2023 • Reduction reflected strong operating cash flows which offset the distribution of $
Slide 59: Management of lease portfolio
Management of lease portfolio • Lease liabilities totalled $6.8b and represented 61% of Group fixed Lease liabilities ($m) 1H24 FY23 1H23 financial obligations as at 31 December 2023 Bunnings Group 3,610 3,568 3,738 • Average remaining committed lease term of 4.0 years al use only (FY23: 4.1 years)
Slide 60: Divisional return on capital
Divisional return on capital 2023 2022 Cap Emp1 Cap Emp1 al use only Rolling 12 months to 31 December EBT ($m) ROC (%) EBT ($m) ROC (%) Var (ppt) ($m) ($m) Bunnings Group 2,234 3,394 65.8 2,223 3,145 70.7 (4.9) Kmart Group 895 1,523 58.8 760 1,756 43.3 15.5 WesCEF2 517 3,197 16.2 646 2,806 23.0 (6.8
Slide 61: Retail store networks
Retail store networks As at 31 December 2023 1,937 locations across Australia and New Zealand Brand NSW/ACT VIC QLD SA WA TAS NT NZ Total Bunnings Group Warehouse 81 64 52 19 29 7 3 31 286 al use only Smaller format 19 14 11 2 9 - - 10 65 Trade 7 3 6 2 3 1 - 9 31 Tool Kit Depot - 1 1 5 7 - - - 14 Be
Slide 62: Revenue reconciliation – Kmart Group
Revenue reconciliation – Kmart Group Half-year ended 31 December1 ($m) 2023 2022 al use only Segment revenue (Gregorian) 5,986 5,714 Less: Non-sales revenue (32) (32) Headline sales (Gregorian) 5,954 5,682 Add: Gregorian adjustment2 129 112 Headline sales revenue (Retail) 6,083 5,794 1. Refer to sli
Slide 63: Retail calendars
Retail calendars Business Retail sales period Bunnings, Officeworks and Catch al use only Half-year 2024 1 Jul 2023 to 31 Dec 2023 (6 months) Half-year 2023 1 Jul 2022 to 31 Dec 2022 (6 months) Half-year 2022 1 Jul 2021 to 31 Dec 2021 (6 months) Kmart Half-year 2024 26 Jun 2023 to 31 Dec 2023 (27 we
Slide 64: Glossary of terms (1 of 2)
Glossary of terms (1 of 2) Term AASB Australian Accounting Standards Board Australian Light Minerals. ALM is the company holding WesCEF’s 50 per cent share in the ALM Covalent lithium project and is responsible for the sales and marketing of lithium products as well as undertaking exploration al use
Slide 65: Glossary of terms (2 of 2)
Glossary of terms (2 of 2) Term ktCO2e Kilotonnes of carbon dioxide equivalent LNG Liquefied natural gas al use only LPG Liquefied petroleum gas m Million n.m. Not meaningful n.r. Not reported Interest-bearing loans and borrowings less cash at bank and on deposit and held in joint operation, net of
Slide 66: Wesfarmers
Xs Wesfarmers Ajuo asn ye