Metcash Limited · ASX:MTS
Metcash — H1 FY2023 Earnings Presentation
35 slides from Metcash's earnings presentation, Dec 5, 2022
Slide 1: Metcash FY23 Half Year Results Presentation ASX cover letter
Metcash Limited ABN 32 112 073 480 1 Thomas Holt Drive Macquarie Park NSW 2113 Australia 5 December 2022 Market Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam METCASH LIMITED – FY23 HALF YEAR RESULTS PRESENTATION Please find attached for r
Slide 2: FY23 Half Year Results
FY23 HALF YEAR RESULTS 5 December 2022
Slide 3: Group Overview and Divisional Results
GROUP OVERVIEW AND DIVISIONAL RESULTS Doug Jones Group Chief Executive Officer 2
Slide 4: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY I would like to acknowledge the traditional custodians of the lands from which we are all connecting in from today. I am connecting in from Wallumedegal Country, and pay my respects to elders across Country, past, present and emerging. Care for Country, Maggie-Jean Douglas
Slide 5: About Metcash
ABOUT METCASH Our Purpose Creating Value – Our Flywheel Championing successful independents Our Values Supply Demand We believe: Provide a 03 Generate Independence is worth fighting for; multi-channel and capture in treating our people, retailers and B2B platform 02 for our customers suppliers the w
Slide 6: Group Highlights
GROUP HIGHLIGHTS Continued strong ➢ Significant improvement in ESG ➢ Strong sales and earnings growth while growth supported facing higher inflation and cycling credentials by ongoing impact of extensive lockdowns • Further improvement in retailer ➢ Balance Sheet strength preference for local compet
Slide 7: Group Highlights Cont.
GROUP HIGHLIGHTS CONT. Continued strong Group revenue1 Group EBIT Profit after tax growth supported by ongoing +7.8% +10.3% +9.1% Underlying to $8.9bn to $255m to $160m Underlying preference for local (+31.7% 3yr ) 2 (+63.8% 3yr) (+76.5% 3yr) neighbourhood $126m Reported shopping lnterim FY23 Operat
Slide 8: ESG – Significant Improvement
ESG – SIGNIFICANT IMPROVEMENT Our 1H23 commitment Highlights • Safety performance improvement – TRIFR • Assessing opportunities for reducing Scope 3 down 18% emissions We are committed • DJSI ranking increased to 85th percentile • Reporting alignment with GRI in to the people and in 2022 assessment
Slide 9: Results Overview by Pillar
RESULTS OVERVIEW BY PILLAR 20% Sales revenue 1 1H23 1H22 % 3yr 2 18% (including charge-through sales ) $m $m % Food 4,703.3 4,561.0 3.1 20.5 53% 27% 56% Hardware 1,732.6 1,483.7 16.8 65.9 26% Liquor 2,426.8 2,174.4 11.6 36.0 Total sales revenue (including charge-through sales) 8,862.7 8,219.1 7.8 31
Slide 10: Food – Sales
FOOD – SALES 1H23 1H22 3yr1 Continuation of strong sales growth despite cycling impact of extensive lockdowns in 1H22 % $m $m % Total Food sales (including charge-through) up 3.1% to $4.7bn (3yr +20.5% normalised1) • Supermarkets +2.0% (3yr +20.4% normalised ) 1 Revenue (including charge-through) 1
Slide 11: Food – EBIT
FOOD – EBIT 1H23 1H22 3yr % Total Food EBIT increased $3.0m or 3.2% to $98.2m reflecting: $m $m % • The strong trading performance Total revenue1 (including charge-through) 4,703.3 4,561.0 3.1 20.5 • An incremental increase in contribution from joint venture stores of $2.8m EBIT 98.2 95.2 3.2 11.1 G
Slide 12: Food – Strategy Update
FOOD – STRATEGY UPDATE Network of the future Supply chain Network refresh with national brand standards and more Logistics operations consistent offer by format • Continued to demonstrate resilience and flexibility during • 296 stores fully aligned to new channel standards with supply chain challeng
Slide 13: Hardware – Sales
HARDWARE – SALES Total sales (including charge-through) increased by $248.9m or 16.8% to $1.7bn 1H23 1H22 3yr % $m $m % (3yr +65.9%) with continuation of significant growth in both IHG and Total Tools • Continued strong demand in both Trade and DIY Total revenue as per Statutory Accounts 1,187.7 958
Slide 14: Hardware – Sales (cont.)
HARDWARE – SALES (CONT.) 1H23 1H22 3yr % Total Tools sales increased 93.4% to $296.9m reflecting strong Trade activity and the 1 $m $m % impact of additional majority-owned joint venture stores • Total retail network sales $566.7m (RTM basis: $1,030m) (FY22: $972m) Total revenue as per Statutory Acc
Slide 15: Hardware – EBIT
HARDWARE – EBIT 1H23 1H22 3yr EBIT increased a significant $17.7m or 17.9% to $116.6m % $m $m % IHG EBIT increased $4.0m or 6.1% to $69.8m Total revenue1 (including charge-through) 1,732.6 1,483.7 16.8 65.9 • Strong trading performance, particularly in IHG company-owned / joint venture stores • Excl
Slide 16: Hardware – Strategy Update
HARDWARE – STRATEGY UPDATE IHG TOTAL TOOLS • Grow store network • Grow store network • 3 new stores opened by Independents • 2 new stores opened 1H23 • 4 acquisitions completed continuing the consolidation of the fragmented trade market • 2 further stores opened 2H23 to date and securing independent
Slide 17: Liquor – Sales
LIQUOR – SALES Total sales (including charge-through) increased 11.6% to $2.4bn (3yr +36.0%) 1H23 1H22 3yr % reflecting growth in both retail and on-premise segments $m $m % • Price/volume split ~50/50 Total revenue as per Statutory Accounts 2,420.6 2,169.8 11.6 Continued strong demand in retail net
Slide 18: Liquor – EBIT
LIQUOR – EBIT 1H23 1H22 3yr % EBIT increased $5.0m or 11.3% to $49.3m reflecting the contribution from strong sales $m $m % growth Total revenue1 (including charge-through) 2,426.8 2,174.4 11.6 36.0 Additional costs: Fuel and freight. Fuel surcharge applicable for retailers in 2H23 EBIT 49.3 44.3
Slide 19: Liquor – Strategy Update
LIQUOR – STRATEGY UPDATE Drive brand awareness Owned & Exclusive brands Supply chain flexibility and appeal (O&E) and efficiency • Continued to enhance the network through • Portfolio planning complete with focus on • Commenced pilot of ‘ALM Connect’ in investment in stores and cool room upgrades bu
Slide 20: Group Financials
GROUP FINANCIALS Alistair Bell Group Chief Financial Officer 19
Slide 21: Financial Highlights
FINANCIAL HIGHLIGHTS Continued earnings Strong sales and underlying earnings • Operating leverage includes supporting price competitiveness and high costs momentum and Balance sheet strength with financing flexibility financial strength • Net Debt remains below target DLR1 Effective working capital
Slide 22: Profit & Loss
PROFIT & LOSS 1H23 1H22 % $m $m Sales revenue including charge-through sales 8,862.7 8,219.1 7.8 Charge-through sales (1,124.9) (1,068.5) 5.3 Sales revenue per statutory accounts 7,737.8 7,150.6 8.2 EBITDA1 341.0 316.2 7.8 Depreciation and amortisation (85.9) (85.0) (1.1) EBIT 255.1 231.2 10.3 Net f
Slide 23: Cashflows
CASHFLOWS 1H23 1H22 $m $m Operating cash flows1 89.6 212.1 Investing cashflows, net (106.8) (67.1) Capital expenditure (including Project Horizon and store upgrades) (81.1) (60.7) Acquisitions of businesses (28.6) (13.4) Net loan repayments and other investing activities 2.9 7.0 Financing and lease
Slide 24: Balance Sheet
BALANCE SHEET 31 Oct 2022 30 April 2022 $m $m Capital Expenditure ($m)1 Trade and other receivables and prepayments 1,881.8 1,761.2 SIB: $17m Growth: $25m Inventories 1,226.7 1,125.2 160 Horizon: $39m 18 Trade payables and provisions (2,574.5) (2,478.2) 140 17 120 Net working capital 534.0 408.2 100
Slide 25: Debt Management
DEBT MANAGEMENT Debt facility maturity profile1 Group cash movements ($m) 400 300 200 $m 100 0 FY23 FY24 FY25 FY26 FY27 FY29 (364) Working capital Bi-lateral facility Syndicated facility (106) cashflow Exercise other • Net debt of $364.4m (FY22: $189.0m), including cash and cash Debt metrics and rat
Slide 26: Shareholder Distributions
SHAREHOLDER DISTRIBUTIONS Distributions Target dividend payout ratio ~70% of underlying profit after tax1 450 30 400 FY23 interim dividend increased 9.5% to 11.5 cents per share, fully franked (1H22: 10.5c) 350 200 • Ex-dividend date: 20 December 2022 300 20 • Record date: 21 December 2022 150 DPS 2
Slide 27: Group Outlook
GROUP OUTLOOK Doug Jones Group Chief Executive Officer 26
Slide 28: Outlook
OUTLOOK Group Pillars – first 4 weeks of 2H23 Group sales increased 6.2% in the first four weeks of 2H23 with all pillars Food continuing to trade well • Sales growth accelerated, increasing 4.0% (+10.6% ex-tobacco) compared to pcp, reflecting continued strong demand in both Sales growth rates have
Slide 29: Appendices
APPENDICES 01 01 02 03 Financial Sales revenue Bannered store history reconciliation numbers 28
Slide 30: 1. Financial History
1. FINANCIAL HISTORY 1H23 1H22 1H21 1H20 1H191 Financial Performance Sales revenue ($m) 7,737.8 7,150.6 7,059.7 6,289.8 6,189.2 EBIT ($m) 255.1 231.2 203.0 155.7 158.1 Net finance costs ($m) (26.8) (22.8) (21.3) (27.0) (14.5) Underlying profit after tax ($m) 159.9 146.6 129.6 90.6 100.3 Reported pro
Slide 31: 2. Sales Revenue Reconciliation
2. SALES REVENUE RECONCILIATION 1 YoY sales Sales ($m) 3yr sales growth % growth 1H23 Actual Actual Normalised2 Actual Supermarkets 4,197.2 2.0% 16.7% 20.4% Convenience 506.1 12.9% (35.5%) 21.2% Food 4,703.3 3.1% 7.4% 20.5% Hardware 1,732.6 16.8% 65.9% Liquor 2,426.8 11.6% 36.0% GROUP 8,862.7 7.8% 2
Slide 32: 3. Bannered Store Numbers
3. BANNERED STORE NUMBERS October April 2022 2022 Pillar Supermarkets 1,612 1,623 Convenience 16 16 Hardware 734 736 Liquor 3,035 3,048 Total 5,397 5,423 Supermarkets Convenience Hardware Liquor Total Store movement Number of stores at April 2022 1,623 16 736 3,048 5,423 Stores opened / joined banne
Slide 33: 3. Bannered Store Numbers
3. BANNERED STORE NUMBERS October April 2022 2022 Supermarkets Supa Valu IGA 3 3 Core IGA 991 1,016 Small Format IGA 325 322 Total IGA bannered stores 1,319 1,3411 Village Grocer / Friendly Grocer / Eziway 293 282 Total Supermarkets 1,612 1,623 Hardware Mitre 10 365 359 Home Hardware 151 154 True Va
Slide 34: Disclaimer
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 34