Woolworths Group Ltd · ASX:WOW
Woolworths — FY2019 Earnings Presentation
55 slides from Woolworths's earnings presentation, 2019
Slide 1: Company Results Full Year 2019
Company Results Full Year 2019 1
Slide 2: Woolworths Group Purpose
Woolworths Group Purpose Company Results Full Year 2019 2 Our Ways-of-Working How we work Our Purpose Why we exist Our Values Who we are
Slide 3: Table of contents
Company Results 3 Table of contents Full Year 2019 F19 GROUP SUMMARY AND PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 10 Stephen Harrison BUSINESS PERFORMANCE UPDATE 22 ENDEAVOUR DRINKS AND ALH 45 TRANSACTION UPDATE David Marr OUTLOOK 51 Brad Banducci
Slide 4: F19 summary
Company Results Full Year 2019 4 F19 summary Customer scores resilient over F19 and finished year strongly Improved sales and profit momentum across Group in H2 Group Online sales growth of 32%1; foundations for ‘X’ businesses established Materially improved momentum in BIG W; store and DC closures
Slide 5: Woolworths Group F19 priorities
Woolworths Group F19 priorities Company Results Full Year 2019 5 Live our Purpose and Build a Customer 1st Team 1st Culture Build growth platforms for Create Connected, Personalised and the future Convenient Shopping Experiences Create differentiation in all Differentiate our Accelerate Unlock Value
Slide 6: Progress against key priorities
Progress against key priorities Company Results Full Year 2019 6 Live our Purpose and Build a Create Connected, Personalised & Differentiate our Food Customer Customer 1st Team 1st Culture Convenient Shopping Experiences Propositions • Resilient customer scores • Rapid online sales growth continued
Slide 7: Progress against key priorities
Progress against key priorities Company Results Full Year 2019 7 Accelerate Innovation in our Unlock Value in our E2E Processes – ‘Better for Drinks Business Portfolio Customers’ and ‘Simpler for Stores’ • Launched new Endeavour Drinks • Sale of Petrol business to EG Group • Woolworths cloud platfor
Slide 8: Woolworths Group ecosystem
Woolworths Group ecosystem Company Results Full Year 2019 8 Extend our brand Build out our range into new channels and services Drive up Drive thru Core food and everyday needs retail Deepen food On Pick up and everyday demand needs offer Same day B2C Grow and Next partner in Home day adjacencies De
Slide 9: Table of contents
Company Results Full Year 2019 9 Table of contents F19 SUMMARY AND PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 10 Stephen Harrison Group financial results Key balance sheet metrics Cash flow summary Capital expenditure Capital management Impact of new lease standard BUSINESS UPDATE 22 ENDEAVOUR
Slide 10: Company Results Full Year 2019
Company Results Full Year 2019 10
Slide 11: Key financial metrics improved in F19
Key financial metrics improved in F19 Company Results Full Year 2019 11 CONTINUING OPERATIONS1 TOTAL GROUP CHANGE CHANGE $M CHANGE NORMALISED2 CHANGE NORMALISED2 Sales 59,984 5.3% 3.4% 63,680 3.2% - EBIT 2,724 6.9% 5.0% 3,553 29.5% 27.7% NPAT attributable to Woolworths 1,752 9.2% 7.2% 2,693 56.1% 54
Slide 12: Normalised EBIT growth of 5.0% in F19
Normalised EBIT growth of 5.0%1 in F19 Company Results Full Year 2019 12 CHANGE $M F19 F18 CHANGE NORMALISED2 Continuing operations before significant items Australian Food 1,857 1,757 5.7% 3.8% New Zealand Food 277 262 5.6% 2.6% New Zealand Food (NZD) 296 284 3.9% 1.0% Endeavour Drinks 474 516 (8.2
Slide 13: Improvement in balance sheet metrics on prior year
Improvement in balance sheet metrics on prior year Company Results Full Year 2019 13 Average inventory days Normalised ROFE Days Percentage Continuing operations Continuing operations Group Continuing operations – AASB 16 estimate 41.3 40.8 40.4 40.0 39.9 24.1 24.2 39.0 38.8 37.6 37.2 36.0 14.1 F15
Slide 14: Free cash flow impacted by week 53, capex and higher dividends
Free cash flow impacted by week 53, capex and higher dividends Company Results Full Year 2019 14 $M F19 F18 CHANGE Operating activities before interest and tax 3,858 3,839 0.5% Interest and tax (910) (845) 7.7% Operating activities 2,948 2,994 (1.5)% Investing activities (246) (1,510) (83.7)% Free c
Slide 15: Operating capex increase driven by renewals and digital spend
Operating capex increase driven by renewals and digital spend Company Results Full Year 2019 15 Operating capex – F19 $M F19 F18 16% 10% Continuing operations Operating capex1 1,819 1,691 8% $1,819m 35% Property development 285 245 16% Gross capex 2,104 1,936 15% Property sales (164) (90) New stores
Slide 16: Capital management and dividends
Capital management and dividends Company Results Full Year 2019 16 Shareholder distributions $m (total dollars, excluding franking credits) Capital management 3,081 • Total of $3.1 billion returned to shareholders (excluding franking credits) 10 1,700 • $1.7 billion off-market share buy-back success
Slide 17: Balance sheet and funding
Balance sheet and funding Company Results Full Year 2019 17 Debt maturity profile ($m) Credit ratings 2,500 • Committed to solid investment grade ratings 2,000 1,500 10 • S&P: BBB (stable outlook)3 1,000 Green Bond • Moody’s: Baa2 (stable outlook)3 500 • Credit metrics have significant headroom abov
Slide 18: Balance sheet before and after adoption of AASB 16
AASB 16 Leases Balance sheet before and after adoption of AASB 16 Company Results Full Year 2019 18 AASB 117: lease commitments are off balance sheet Recognition of lease AASB 16: lease liabilities and lease assets are now on balance sheet liability +$14.7bn and other transition adjustments -$0.4bn
Slide 19: Lease asset and lease liability by business – 1 July 2019
AASB 16 Leases Lease asset and lease liability by business – 1 July 2019 Company Results Full Year 2019 19 $BN LEASE ASSET LEASE LIABILITY Continuing operations Australian Food 7.3 8.6 Endeavour Drinks 0.8 1.1 New Zealand Food 1.1 1.3 BIG W 0.9 1.1 Hotels 1.9 2.3 Unallocated 0.2 0.3 Group 12.2 14.7
Slide 20: Indicative impact on P&L for F19
AASB 16 Leases Indicative impact on P&L for F19 Company Results Full Year 2019 20 F19 $BN F19 $BN AASB 16 IMPACT ON F19 EBIT (PRE-AASB 16) (POST-AASB 16) VARIANCE COMMENTARY F19 EBIT1 2.7 2.7 Operating lease rentals under AASB 117 added Add: Rent 2.1 back under AASB 16 (including services) Deduct: S
Slide 21: Table of contents
Company Results 21 Table of contents Full Year 2019 F19 GROUP SUMMARY AND PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 10 Stephen Harrison BUSINESS PERFORMANCE UPDATE 22 ENDEAVOUR DRINKS AND ALH 45 TRANSACTION UPDATE David Marr OUTLOOK 51 Brad Banducci
Slide 22: Company Results Full Year 2019
Company Results Full Year 2019 22
Slide 23: Australian Food
Australian Food Company Results Full Year 2019 23 CHANGE F19 F18 CHANGE NORMALISED Sales ($m) 39,568 37,589 5.3% 3.3% EBITDA ($m) 2,613 2,430 7.5% 6.1% EBIT ($m) 1,857 1,757 5.7% 3.8% Gross margin (%) 28.7 29.0 (24) bps (24) bps Cost of doing business (%) 24.0 24.3 (27) bps (26) bps EBIT to sales (%
Slide 24: Australian Food F19 priorities
Australian Food F19 priorities Company Results Full Year 2019 24 Build Customer 1st Brand, Team and Culture Innovate our customer and Create Connected, Personalised and team experience Ultra-Convenient Shopping Experiences Differentiate core Good Prices Engaging Famous for customer offer Store Fresh
Slide 25: Strong progress against F19 priorities
Strong progress against F19 priorities Company Results Full Year 2019 25 • VOC NPS 51, +3 pts on last year and Store-controllable VOC at 82%, in line with the prior year and +2 pts on March • ‘I am here’ mental health awareness training completed by ~20,000 team members; material improvement in phys
Slide 26: Customer metrics solid despite challenging year
Customer metrics solid despite challenging year Company Results Full Year 2019 26 NPS - Store & Online Store-controllable VOC % promoters - % detractors % customers satisfied, 6 or 7 out of 7 0 +3 82 83 82 48 54 51 Jun-18 Dec-18 Jun-19 Jun-18 Dec-18 Jun-19 Fruit & Vegetables Product Availability % c
Slide 27: Strong sales growth in H2
Strong sales growth in H2 Company Results Full Year 2019 27 Normalised sales grew 3.3% Comparable transactions grew 1.8% (% YoY) (% YoY) 4.7 2.1 1.9 4.1 1.5 1.4 2.8 Q1 Q2 Q3* Q4* 1.9 Comparable items1 grew 3.5% (% YoY) 4.5 4.1 Q1 Q2 Q3* Q4* 2.9 2.6 Comparable sales grew 3.1% (% year on year 53 week
Slide 28: Format Development highlights
Format Development highlights Company Results Full Year 2019 28 Format Development Progress Key Metrics We are in the third year of the program. This • Format Development makes a significant contribution to overall year we have launched: Australian Food sales • Format Development VOC scores have con
Slide 29: WooliesX highlights
WooliesX highlights Company Results Full Year 2019 29 Strong eCom momentum Ultra-convenient experiences Rewards expansion Online growth Continued investment into accelerated to our digital experiences 11.7M 31% YoY in and mobile app resulting in ...members now part of F19, supported improvements in
Slide 30: Company Results Full Year 2019
Company Results Full Year 2019 30
Slide 31: New Zealand Food
New Zealand Food Company Results Full Year 2019 31 CHANGE NZD F19 F18 CHANGE NORMALISED Sales ($m) 6,712 6,433 4.3% 2.4% EBITDA ($m) 425 411 3.0% 1.0% EBIT ($m) 296 284 3.9% 1.0% Gross margin (%) 24.4 24.2 18 bps 18 bps Cost of doing business (%) 20.0 19.8 20 bps 25 bps EBIT to sales (%) 4.4 4.4 (2)
Slide 32: New Zealand Food highlights
New Zealand Food highlights Company Results Full Year 2019 32 F19 HIGHLIGHTS F20 FOCUS Improving Customer Online and Digital Customer 1st Digital Experience Perceptions Differentiation Team 1st Culture and Online Growth 81% Store-controllable 40% F19 normalised online sales growth VOC (+2 pts Q4’18)
Slide 33: New Zealand Food F20 priorities
New Zealand Food F20 priorities Company Results Full Year 2019 33 Customer 1st Brand, Team and Culture Differentiate through innovation Create Convenient, Connected and and culture Innovative Shopping Experiences Grow customer loyalty through a stronger core Prices I Trust, Good Food with a Genuine
Slide 34: Company Results Full Year 2019
Company Results Full Year 2019 34
Slide 35: Endeavour Drinks
Endeavour Drinks Company Results Full Year 2019 35 CHANGE F19 F18 CHANGE NORMALISED Sales ($m) 8,657 8,244 5.0% 3.2% EBITDA ($m) 579 603 (4.1)% (5.4)% EBIT ($m) 474 516 (8.2)% (9.7)% Gross margin (%) 22.9 23.1 (16) bps (14) bps Cost of doing business (%) 17.4 16.8 63 bps 64 bps EBIT to sales (%) 5.5
Slide 36: BWS highlights
BWS highlights Company Results Full Year 2019 36 F19 HIGHLIGHTS 30 On Demand delivery Opened 30 net new stores Record VOC scores and Jimmy Brings expanded expanded to 605 bringing the total store strengthened Rewards to Brisbane, Canberra stores, supporting double- network to 1,346 and program throu
Slide 37: Dan Murphy's highlights
Dan Murphy’s highlights Company Results Full Year 2019 37 F19 HIGHLIGHTS 3 3 new stores added to the fleet total 230 Record VOC at 75% On Demand delivery (up 2 pts on June 18) rolled out to 91 stores (40% of fleet) Sustainability investments Over 3.5m members Introduced 35 wine with remote energy mo
Slide 38: Endeavour Drinks F20 priorities
Endeavour Drinks F20 priorities Company Results Full Year 2019 38 Customer 1st Brand, Team and Culture Innovate our Deliver increasingly effortless, personal and inspiring customer and experiences. Evolve portfolio to support core and develop new team experience growth avenues Differentiate our core
Slide 39: Company Results Full Year 2019
Company Results Full Year 2019 39
Slide 40: BIG W
BIG W Company Results Full Year 2019 40 CHANGE F19 F18 CHANGE NORMALISED Sales ($m) 3,797 3,566 6.5% 4.2% LBITDA before significant items ($m) (5) (30) (82.2)% (88.7)% LBIT before significant items ($m) (85) (110) (22.2)% (24.0)% Significant items ($m) (371) - n.m. n.m. LBIT after significant items
Slide 41: BIG W highlights
BIG W highlights Company Results Full Year 2019 41 F19 HIGHLIGHTS F20 FOCUS Continued efforts to make a real difference for families • Simplify our business both in stores and support through activities like free books for kids 1 office by aligning tasks to customer needs Continued refinement of pri
Slide 42: BIG W F20 priorities
BIG W F20 priorities Company Results Full Year 2019 42
Slide 43: Company Results Full Year 2019
Company Results Full Year 2019 43
Slide 44: Hotels
Hotels Company Results Full Year 2019 44 CHANGE F19 F18 CHANGE NORMALISED Sales ($m) 1,671 1,612 3.7% 1.8% EBIT ($m) 261 259 1.0% (0.5)% Gross margin (%) 83.6 84.2 (55) bps (54) bps Cost of doing business (%) 68.0 68.1 (12) bps (18) bps EBIT to sales (%) 15.6 16.1 (43) bps (35) bps • Normalised sale
Slide 45: Table of contents
Company Results 45 Table of contents Full Year 2019 F19 GROUP SUMMARY AND PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 10 Stephen Harrison BUSINESS PERFORMANCE UPDATE 22 ENDEAVOUR DRINKS AND ALH 45 TRANSACTION UPDATE David Marr OUTLOOK 51 Brad Banducci
Slide 46: Merger and separation of Endeavour Drinks and ALH Group
Merger and separation of Endeavour Drinks and ALH Group Company Results Full Year 2019 46 Merger and separation of Endeavour Drinks and ALH Group is on track - dedicated internal team and advisor group mobilised for transaction execution and operational separation, and regulatory engagement process
Slide 47: Key milestones
Key milestones Company Results Full Year 2019 47 Early Oct 2019 Restructure Scheme Booklet provided to ASIC for review First court hearing to convene the Restructure shareholder meeting and approve the dispatch Late Oct 2019 of the Restructure Scheme Booklet Early Nov 2019 Restructure Scheme B
Slide 48: Endeavour Group footprint and F19 revenue split
Endeavour Group footprint and F19 revenue split Company Results Full Year 2019 48 National footprint of 1,904 locations F19 revenue by segment ALH Hotels 16% 12 3 3 Endeavour Drinks 439 124 retail 55% 132 25 27 ALH retail drinks 80 27 31 29% 381 34 53 26 314 67 85 Endeavour ALH retail ALH Total reta
Slide 49: Endeavour Group summary financials
Endeavour Group summary financials Company Results Full Year 2019 49 ALH Group1 (B + C) Woolworths Endeavour Drinks1,2 Hotels1,2 Indicative Group reported (A + B) (C) pro forma segments1: Endeavour ALH retail ALH hotels Endeavour Drinks1,2 ALH Group1 3 Drinks retail2 (A) (B) (C) (A + B + C) (A + B)
Slide 50: Table of contents
Company Results 50 Table of contents Full Year 2019 F19 GROUP SUMMARY AND PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 10 Stephen Harrison BUSINESS PERFORMANCE UPDATE 22 ENDEAVOUR DRINKS AND ALH 45 TRANSACTION UPDATE David Marr OUTLOOK 51 Brad Banducci
Slide 51: Outlook
Company Results Full Year 2019 51 Outlook Despite an uncertain consumer environment and input cost pressures, we are energised by the material opportunities to unlock further value for customers and shareholders in F20 • Australian Food Renewals, improved fresh experience and range localisation to s
Slide 52: Glossary
Glossary Company Results Full Year 2019 52 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 53: Glossary
Glossary Company Results Full Year 2019 53 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 54: Disclaimer
Disclaimer Company Results Full Year 2019 54 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
Slide 55: Company Results Full Year 2019
Company Results Full Year 2019 55