Coles Group Ltd. · ASX:COL
Coles — H1 FY21 Earnings Presentation
40 slides from Coles's earnings presentation, Feb 17, 2021
Slide 1: Coles Group Limited – 2021 Half Year Results Presentation
17 February 2021 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2021 Half Year Results Presentation Please find attached for immediate release to the market the 2021 Half Year Results Presentation for Coles Group Limited. This announce
Slide 2: 2021 First Half Results Presentation and eCommerce Strategic Update
“Value the Australian Way” celebrates Coles’ role in sustainably feeding all Australians to help them lead healthier and happier lives. 2021 First Half Results Presentation and eCommerce Strategic Update 17 February 2021
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its related bodies corporate (together, Coles) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not purport to be complete. It sho
Slide 4: 1H21 summary
Coles helped lower the cost of living for the many additional Australians celebrating Christmas at home this year. 1H21 summary
Slide 5: 1H21 financial highlights
1H21 financial highlights Continued strategic progress and strong balance sheet Total sales revenue EBIT Net profit after tax $20.4bn $1,020m $560m 8.1% vs. pcp 12.1% vs. pcp 14.5% vs. pcp Smarter Selling Gross operating Operating cash flow on track to capex deliver cost $532m $1,736m savings in exc
Slide 6: Progress against strategy: Inspire Customers
Progress against strategy: Inspire Customers Supermarkets customer satisfaction improved by 3.9pp to 89.8% in H1 ▪ eCommerce B2C sales growth of 61% with significant improvement in Perfect Order Rate and customer satisfaction ▪ Led the industry in removing door-to-door paper catalogues and the launc
Slide 7: Progress against strategy: Smarter Selling
Progress against strategy: Smarter Selling On track to deliver cost savings in excess of $250 million in FY21 ▪ Smarter Selling cost savings during the period include: o Improved end-to-end flow of fresh goods to store with a more efficient supply chain providing greater shelf life for customers o P
Slide 8: Progress against strategy: Win Together
Progress against strategy: Win Together Improvements in safety scores (TRIFR 15% improvement) ▪ Focused on the mental wellness of team members including support of RUOK? Day and GEM program ▪ More than $580,000 raised for the Movember Foundation, the largest corporate contribution in Australia, to s
Slide 9: Coles’ strategy tracker – significant progress in 18 months
Coles’ strategy tracker – significant progress in 18 months KPIs Progress Reduced safety TRIFR ▪ 15% reduction in TRIFR compared to 2H20 Increased team member ▪ Update to be provided at FY21 results announcement following annual engagement mysay team engagement survey Improved customer ▪ Customer sa
Slide 10: eCommerce strategic update
We have made significant improvements to the Coles app as part of our strategy to build a seamless omnichannel customer experience. eCommerce strategic update Ben Hassing, Chief Executive eCommerce
Slide 11: Coles Online is building from 20 years’ experience
Coles Online is building from 20 years’ experience Online sales Launched C&C exceed $1bn Rapid (90 mins) National C&C Launched Coles rollout Plus membership Ocado agreement signed FY21 Delivery fleet upgraded FY20 Rover Power Pick introduced FY19 to improve store pick accuracy FY18 Almost doubled FY
Slide 12: eCommerce supports how Coles inspires customers
eCommerce supports how Coles inspires customers 1 Provide a seamless, unified customer experience • Merge commerce and content • Converge online and offline channels • Improve the end-to-end online offer and experience 2 Continually develop differentiated services • Continually evolve customer offer
Slide 13: Our digitally engaged customers drive growth & loyalty
Our digitally engaged customers drive growth & loyalty Shop online, Shop offline, pick up at store Shop from home, be informed digitally (may also shop in store) deliver to home 11
Slide 14: Omnichannel customers are our most valuable
Omnichannel customers are our most valuable Omnichannel vs single-channel customer spend, Q2 FY21 In-store spend Online spend 2.1x Online-only In-store only Omnichannel 12
Slide 15: We are building customer-focused digital capabilities
We are building customer-focused digital capabilities …with enterprise capabilities providing a Merging content and commerce… 360-view of customer, product and order Website App Customer Product Order 13
Slide 16: We are removing friction for customers
We are removing friction for customers Have It Find It Price It Display It Fulfil It Support It 14
Slide 17: Customer satisfaction is improving
Customer satisfaction is improving Perfect order rate1 and Online NPS2 Online NPS Perfect Order Rate 3.8x 2.8x Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 1 Perfect Order Rate represents the percentage of total Home Delivery orders (excluding Click&Collect) that were fulfilled on time without any missing items
Slide 18: Online liquor has grown rapidly across all banners
Online liquor has grown rapidly across all banners Online liquor sales growth 90% H1 FY20 H1 FY21 Notes: Supermarkets eCommerce sales reporting excludes liquor sales. 16
Slide 19: Click&Collect Rapid: Order to pick-up in 90 minutes
Click&Collect Rapid: Order to pick-up in 90 minutes Expanding to >400 locations across Australia 17
Slide 20: Coles Plus now available nationwide
Coles Plus now available nationwide Free delivery Free delivery on one 2x flybuys points for all Coles Liquorland on all Coles online online orders online order purchases# over $100 over $50 per month Access to 90-minute Priority customer care Click&Collect # Terms and conditions apply 18
Slide 21: Ocado partnership to deliver differentiation
Ocado partnership to deliver differentiation Range Customer experience Operational efficiency • ~2x the range of in-store • Market-leading perfect • Inventory and network fulfilment order rate optimisation • Reduced food waste and improved pick efficiency 19
Slide 22: Group financial overview
Athletes Kelsey Lee-Barber, Sally Pearson, Matthew Denny and Jaryd Clifford with athletes from the Runaway Bay Little Athletics Centre in Queensland, one of the more than 150 sports clubs around Australia that received a grant from Coles to purchase brand new sports equipment. Group financial overvi
Slide 23: 1H21 results – Group
1H21 results – Group Strong Group EBIT and NPAT growth $m 1H21 1H20 Change Sales revenue 20,378 18,846 8.1% EBIT 1,020 910 12.1% EBIT margin % 5.0 4.8 18bps Net profit after tax 560 489 14.5% Basic earnings per share1 (cents) 42.0 36.7 14.5% Interim dividend per share2 (cents) 33.0 30.0 10.0% 1 Basi
Slide 24: 1H21 results – segment financials
1H21 results – segment financials Sales revenue and EBIT growth across all segments $m 1H21 1H20 Change Sales revenue Supermarkets 17,800 16,583 7.3% Liquor 1,946 1,691 15.1% Express 632 572 10.5% Group sales revenue 20,378 18,846 8.1% $m 1H21 1H20 Change EBIT Supermarkets 903 789 14.4% - EBIT margi
Slide 25: Operating cash flow
Operating cash flow Cash realisation of 120%, on track for >100% in FY21 Cash flow Comments ▪ Working capital impacted by timing of the half year $m 1H21 1H20 end resulting in fewer payments in 1H21 compared to 1H20, expected to reverse in 2H21 EBIT 1,020 910 ▪ Change in provisions as a result of hi
Slide 26: Capital expenditure
Capital expenditure Increased investment in renewals, growth and efficiency initiatives Capital expenditure breakdown 1H21 key capital expenditure initiatives Store renewals ▪ Store renewals across $m 1H21 1H20 Supermarkets (30) and Liquor (26) Store renewals 141 76 Growth ▪ New stores in Supermarke
Slide 27: Balance sheet
Balance sheet Investment grade credit metrics with flexibility for future growth Balance sheet summary Comments ▪ Right-of-use assets of $7,703 million with lease additions and lease options becoming reasonably $m 3 Jan 2021 28 Jun 2020 5 Jan 2020 certain to be exercised partially offset by Inventor
Slide 28: Capital management
Capital management Fully-franked dividend up 10% and extended debt maturity profile at favourable rates Dividend Debt facility maturity profile ($m) ▪ The Coles Board has declared a fully-franked interim dividend of 33 cents per share, a 10% increase on the interim dividend of the prior period with
Slide 29: Supermarkets
Construction at the Queensland Witron automated distribution centre progressed during the half. Supermarkets
Slide 30: Supermarkets key metrics
Supermarkets key metrics Successful execution of Christmas campaign, range changes and eCommerce Total sales revenue Comp sales growth Sales per sqm $17.8bn 7.2% $18,101 +7.3% vs. pcp vs. pcp +7.7% vs. pcp Own Brand sales eCommerce sales Customer satisfaction +9.8% +48.3% 89.8% (1H21) vs. pcp vs. pc
Slide 31: Supermarkets 1H21 results
Supermarkets 1H21 results EBIT margin expansion in the first half 1H21 results Key commentary Retail basis ▪ Sales growth driven by the successful execution of $m 1H21 1H20 Change the Christmas campaign, range changes and strong growth in eCommerce sales Key P&L items ▪ Ongoing benefits from increas
Slide 32: Liquor
Premium categories such as gin, champagne, craft beer and seltzers continued to perform well, particularly over the Christmas period. Liquor
Slide 33: Liquor key metrics
Liquor key metrics Sales growth driven by strong performance across all banners, channels and categories, particularly eCommerce and larger format stores Total sales revenue Comp sales growth Online sales $1.9bn 15.1% +89.6% +15.1% vs. pcp vs. pcp vs. pcp Local range FCLM1 renewals Number of stores
Slide 34: Liquor 1H21 results
Liquor 1H21 results EBIT grew strongly as a result of operating leverage partly offset by margin pressure from mix 1H21 results Key commentary Retail basis ▪ Progress made under the “Simplify and $m 1H21 1H20 Change refocus” horizon of Liquor’s refreshed Key P&L items strategy Sales revenue 1,946 1,
Slide 35: Express
The Coles Express team in Alexandria, New South Wales. Coles customers and team members raised more than $580,000 for the Movember Foundation, the largest corporate contribution in Australia, to support mental health and cancer care. Express
Slide 36: Express key metrics
Express key metrics Strong c-store sales driven by local shopping Total sales revenue C-store comp sales EBIT growth $632m 9.9% $32m +10.5% vs. pcp vs. pcp +14.3% vs. pcp 1H21 weekly fuel Comp fuel volume Number of sites volumes growth 55.5mL/wk (14.9)% 723 (13.8)% vs. pcp vs. pcp +10 vs. FY20 34
Slide 37: Express 1H21 results
Express 1H21 results Strong c-store sales and favourable mix supported an increase in Express EBIT 1H21 results Key commentary Retail basis ▪ Sales growth driven by the drinks $m 1H21 1H20 Change category, supported by recent Key P&L items investments in fridges and targeted C-store sale revenue 632
Slide 38: Outlook
Coles Supermarkets has an Australian-first sourcing policy to provide customers with quality fresh produce supporting Australian farmers. Outlook
Slide 39: Outlook for remainder of FY21
Outlook for remainder of FY21 ▪ Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22. ▪ Coles will be cycling elevated sales from COVID-19 in Supermarkets late in t
Slide 40: Q&A
The Australian women’s rowing team after Coles extended its partnership with Rowing Australia to fuel the women and men with healthy food and beverages. Q&A