Slide 1: Company Results HY Ended 1 January 2012
For personal use only Company Results HY Ended 1 January 2012 Grant O'Brien Managing Director and Chief Executive Officer
Slide 2: Agenda
AGENDA For personal use only GROUP STRATEGIC PRIORITIES PROGRESS AGAINST STRATEGIC PRIORITIES BUSINESS UNIT RESULTS FINANCIAL PERFORMANCE 1 1
Slide 3: Group Strategic Priorities
For personal use only GROUP STRATEGIC PRIORITIES 2 2
Slide 4: Our Ambition
OUR AMBITION WOOLWORTHS LIMITED IS AUSTRALIA'S LEADING RETAIL GROUP, CREATING A CUSTOMER-DRIVEN FUTURE OF INNOVATION AND GROWTH For personal use only BRANDS FOR OUR MULTIPLE REASONS EVERYDAY CUSTOMER OPTIONS TO SHOP NEEDS Range Service Value Convenience 3 3
Slide 5: Building on Our Success
BUILDING ON OUR SUCCESS OUR OBJECTIVE IS A RENEWED FOCUS ON INNOVATING FOR OUR CUSTOMERS AND OPTIMISE THE BUSINESS FOR OUR SHAREHOLDERS TO ACHIEVE GROWTH AND For personal use only PERFORMANCE IMPROVEMENT FROM A STRONG AND STABLE BASE GP / CODB / EBIT Margin Rate $m Baselined: FY99 = 100 30% 700 We d
Slide 6: Strategic Priorities for Future Growth
STRATEGIC PRIORITIES FOR FUTURE GROWTH For personal use only • Re-establish marketing supremacy around value and growth EXTEND AND DEFEND • Unlock sales growth for a tougher consumer and competitive environment 1 LEADERSHIP IN • Accelerate our leadership in Fresh Food FOOD AND LIQUOR • Extend leader
Slide 7: Progress Against Strategic Priorities
For personal use only PROGRESS AGAINST STRATEGIC PRIORITIES 6 6
Slide 8: Extend and Defend Leadership in Food and Liquor
1 EXTEND AND DEFEND LEADERSHIP STRATEGIC PROGRESS GOOD INITIAL START – IN FOOD AND LIQUOR MUCH MORE TO DO For personal use only Tjeerd Jegen making Space growth improvements Excellent momentum in New Zealand transformation excellent progress with continuing, further liquor continues with further del
Slide 9: Act on Our Portfolio to Maximise Shareholder Value
2 ACT ON OUR PORTFOLIO TO MAXIMISE STRATEGIC PROGRESS GOOD INITIAL START – SHAREHOLDER VALUE MUCH MORE TO DO For personal use only Accelerated the review of Dick Smith, culminating in a Initial steps taken to improve BIG W’s value perception with sharper decision to restructure and divest the busine
Slide 10: Maintain Our Track Record of Building New Growth
3 MAINTAIN OUR TRACK RECORD OF STRATEGIC PROGRESS GOOD INITIAL START – BUILDING NEW GROWTH MUCH MORE TO DO For personal use only Strong multi-option Launch of Door Buster, 118% increase in total 9 Masters stores Acquisition of 12 Hotels growth with strategy Supermarkets mobile online sales for the c
Slide 11: Put in Place the Enablers for a New Era of Growth
4 PUT IN PLACE THE ENABLERS FOR A STRATEGIC PROGRESS GOOD INITIAL START – NEW ERA OF GROWTH MUCH MORE TO DO For personal use only Latest supply chain initiative, Data driven "Category Lab" Cost savings resulting from Focused on assembling a world Hoxton Park DC, about to go is proving to be a growin
Slide 12: Business Unit Results
For personal use only BUSINESS UNIT RESULTS 11 11
Slide 13: Results — Half Year 2012
RESULTS — HALF YEAR 2012 For personal use only Continuing Total Group Before Total Group After Operations CE Provision1 CE Provision HY12 HY12 HY12 Sales – Group $28.9b 5.2% $29.7b 5.0% $29.7b 5.0% EBITDA $2,282.5m 4.1% $2,314.2m 3.9% $2,014.2m 9.6% EBIT $1,825.9m 3.3% $1,845.4m 3.3%
Slide 14: Supermarkets
Supermarkets Tjeerd Jegen Managing Director Australian Supermarkets & Petrol For personal use only 13
Slide 15: Australian Food, Liquor & Petrol
AUSTRALIAN FOOD, LIQUOR & PETROL HY11 HY12 Change • Sales up 5.9%, EBIT up 6.3% For personal use only Sales – Food & Liquor ($m) 18,772 19,571 4.3% • Comparable Food and Liquor sales up – Petrol ($m) 2,945 3,434 16.6% 1.5% – Total ($m) 21,717 23,005 5.9% • Average prices index was in deflation Gross
Slide 16: Growth in Supermarkets — Our New Vision
GROWTH IN SUPERMARKETS — OUR NEW VISION For personal use only 15 15
Slide 17: Best Retail Talent and Best Resources
BEST RETAIL TALENT AND BEST RESOURCES For personal use only WORLD CLASS TEAM • Strong local talent now blending with globally experienced new recruits to create depth of expertise and breadth of experience • Average length of tenure of senior team is 15 years WITH THE BEST RESOURCES • 4 month market
Slide 18: First Choice for Fresh Food
FIRST CHOICE FOR FRESH FOOD For personal use only AUSTRALIA'S FRESH FOOD PEOPLE • Innovations in Fresh Food have continued, with positive sales momentum, led by Bakery, Deli and Meat INDUSTRY LEADING SUPPLY CHAIN • Approximately half a day removed from Produce end to end supply chain in the last 6 m
Slide 19: First Choice for Fresh Food — MSA Beef
FIRST CHOICE FOR FRESH FOOD — MSA BEEF For personal use only A UNIQUE MODEL • First National Australian Supermarket to receive MSA accreditation • Sourcing livestock for over 20 years direct from Australian farmers • Unique end to end sourcing model with full control of meat quality at every step CU
Slide 20: Unbeatable Value
UNBEATABLE VALUE For personal use only GREAT PROGRESS ON OUR VALUE CONTRACT WITH CUSTOMERS • Roll out of new store-wide price ticketing clearly highlighting value • Strong customer response to seasonal value offers – Lamb leg coupons – Christmas ham offer CONTINUED IMPROVEMENTS IN REDUCING COGS JUST
Slide 21: Customer Led
CUSTOMER LED POWER OF INSIGHTS For personal use only • Extensive progress on "Category Lab" reviews with 6 dedicated teams – a growing and powerful capability • Completion of category deep dives on over 20% of sales base or 35 key categories in last 6 months • Started weekly ‘Customer Talkback’ focu
Slide 22: Exciting New Offers — Brands
EXCITING NEW OFFERS — BRANDS CUSTOMERS APPRECIATE CHOICE • Our depth and breadth of range is appreciated by our customers For personal use only • Proprietary brands remain the most important offer in longlife complemented by a strong Own Brand range GROWING CATEGORY VALUE WITH BRANDS • Together with
Slide 23: Exciting New Offers — Own Brands
EXCITING NEW OFFERS — OWN BRANDS For personal use only CONTINUED SUCCESS FOR MACRO • Macro now our fastest growing segment. Creating a new ‘Food that is good for you’ category with new opportunities for branded players to enter • Fastest growth of Macro is in Fresh Foods where our Free Range Poultry
Slide 24: Shopping Tailored for Our Customers
SHOPPING TAILORED FOR OUR CUSTOMERS MOBILE… …TO ONLINE • 1.5m customers have downloaded • New online shopping platform was For personal use only Australia's most subscribed shopping app launched November 2011 • Upgraded mobile app launched 2 weeks • Enhanced features and benefits include ago which n
Slide 25: Petrol
PETROL For personal use only A STRONG RESULT • Sales were $3.4b, up 16.6%. Merchandise (non-fuel) up 9.4% • Comparable sales (dollars) increased by 13.7% reflecting higher fuel prices • Volumes increased 2.5% for the half • National average fuel prices were 140.8 cpl for the half year, up from 124.0
Slide 26: Woolworths Liquor Group
Woolworths Liquor Group Steve Greentree Director Woolworths Liquor Group For personal use only 25
Slide 27: Liquor
LIQUOR CONTINUED MOMENTUM For personal use only • Group Liquor sales $3.6b (HY11: $3.2b) • The Liquor group experienced another half of strong growth across all brands, gaining further market share, despite increased competitor activity LEADERSHIP IN MULTI-OPTION • The acquisition of the Cellarmaste
Slide 28: Hotels
HOTELS For personal use only • Sales increased 3.9% with gaming HY11 HY12 Change comparable sales up 1.3% Sales ($m) 612 636 3.9% • Result reflects the strong sales across Gross margin (%) 81.60 81.47 (13) bps both food and bar offerings CODB (%) 63.32 63.20 (12) bps • There continues to be a change
Slide 29: Liquor & Hotels — Imperatives to Drive Growth
LIQUOR & HOTELS — 7 IMPERATIVES TO DRIVE GROWTH 1 GROW • Opened 14 Dan Murphy's and 32 BWS stores, totalling 1,302 liquor outlets at the end of HY12 • Compass Group acquisition added 12 hotels to the network. Laundy, subject to regulatory For personal use only NETWORK approval, will represent an add
Slide 30: NZ Supermarkets
NZ Supermarkets Dave Chambers Managing Director PEL For personal use only 29
Slide 31: New Zealand Supermarkets
NEW ZEALAND SUPERMARKETS For personal use only NZ$ HY11 HY12 Change Sales ($m) 2,795 2,879 3.0% • Sales up 3.0%, Trading EBIT up 9.2% Gross margin (%) 22.41 23.02 61 bps • Comparable sales up 4.5% CODB (%) 17.44 17.75 31 bps • Largest retail brand by turnover in New Zealand sustained by growth in ma
Slide 32: New Zealand Supermarkets — Strategic Priorities
NEW ZEALAND SUPERMARKETS 1 • Last Foodtown and Woolworths stores rebranded just For personal use only SINGLE BRAND before Christmas GROW 2 COUNTDOWN NETWORK • 2 further new stores opened in January 2012 including the first Countdown Metro store in the Auckland CBD 3 LARGER, MODERN • Replacement, ext
Slide 33: BIG W
For personal use only BIG W Julie Coates Director BIG W 32
Slide 34: BIG W
BIG W For personal use only HY11 HY12 Change Sales ($m) 2,392 2,362 (1.3)% • Sales down 1.3%, EBIT down 4.3%. EBIT in Q2 Gross margin (%) 29.52 30.37 85 bps grew positively CODB (%) 24.29 25.31 102 bps • Comparable sales down 2.8%, prior year EBIT to sales (%) 5.23 5.06 (17) bps down 4.2% EBIT ($m)
Slide 35: BIG W — Strategic Priorities: Win on Value Everyday
BIG W — STRATEGIC PRIORITIES For personal use only 1 WIN ON VALUE EVERYDAY • Successful launch of Emerson brand, on-trend product at an entry level price point • "Get it For Less" marketing campaign effectively communicates our price leadership position • Successful launch of BIG W's "Smart Value" r
Slide 36: BIG W — Strategic Priorities: Grow Store Footprint
BIG W — STRATEGIC PRIORITIES For personal use only 2 CONTINUE TO GROW STORE FOOTPRINT • Delivered 4 new stores in the half, further 3 to open in second half • Strong property pipeline to deliver up to 35 stores in the next 5 years • 69% of stores now have the new livery 3 LEAD IN MULTI-OPTION • Exte
Slide 37: BIG W — Strategic Priorities: Supply Chain Overhaul
BIG W — STRATEGIC PRIORITIES For personal use only 4 EXPLOIT BENEFITS OF SUPPLY CHAIN OVERHAUL • DC in Hoxton Park about to go operational • Continued investment in enhanced supply chain systems 5 STEP UP GLOBAL SOURCING • 85 bps increase in gross margin influenced by increase in global sourcing vol
Slide 38: Home Improvement
For personal use only Home Improvement 37
Slide 39: Home Improvement
HOME IMPROVEMENT For personal use only • 7 stores opened this half with 8 more planned to open next half • Of the 150 sites we plan to secure over 5 years, there are over 100 sites in the pipeline • 18 stores currently under construction • DC in Hoppers Crossing, VIC has capacity to service at least
Slide 40: For personal use only
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Slide 41: Discontinued Operations — Consumer Electronics
DISCONTINUED OPERATIONS CONSUMER ELECTRONICS — AUSTRALIA AND NZ For personal use only A$ HY11 HY12 Change • Acceleration of restructure with a view to divesting the business in a staged and Sales ($m) 868 873 0.6% considered process Gross margin (%) 26.01 24.71 (130) bps • Provision of $300m taken i
Slide 42: Productivity
41 For personal use only PRODUCTIVITY 41
Slide 43: Cost Focus — The Next Phase
COST FOCUS — THE NEXT PHASE For personal use only LEVERAGING GROUP QUANTUM SCALE AND BEST PRACTICE OVER THE NEXT 5 YEARS DIRECT ABOVE PROCUREMENT SUSTAINABILITY GLOBAL STORE NOT FOR COST SOURCING COSTS RESALE SAVINGS • HY12 51% growth • New procurement • $55.7m invested in • Significant focus on • T
Slide 44: Logistics Costs as a % to Sales Continuing to Reduce
LOGISTICS COSTS AS A % TO SALES CONTINUING TO REDUCE For personal use only AUSTRALIAN FOOD AND LIQUOR: FY06-FY16 • World class food and liquor supply chain CREATING LEVERAGING capability to realise group benefits CAPABILITIES CAPABILITIES • Best practice transport system includes 40% 105 inbound vol
Slide 45: Financial Performance
For personal use only FINANCIAL PERFORMANCE 44 44
Slide 46: Balance Sheet
BALANCE SHEET Inventory balances are up 14.4%, driven by start up of our Masters business, Cellarmasters acquisition, additional overseas sourcing and incremental liquor inventory from new DC structure. Excluding the impact of these items, average inventory days are 30.8 days, down from 31.4 HY11 da
Slide 47: Average Inventory Days for Continuing Operations
AVERAGE INVENTORY DAYS FOR CONTINUING OPERATIONS INVENTORY DAYS INCREASED 1.2 DAYS. WHEN WE EXCLUDE THE IMPACT OF INCREMENTAL IMPORTED INVENTORY, ADDITIONAL INVENTORY ASSOCIATED WITH For personal use only CELLARMASTERS AND HOME IMPROVEMENT, INVENTORY DAYS DECREASED BY 0.6 DAYS Number of Days HY08 30
Slide 48: Cash Flow
CASH FLOW $m HY11 HY12 Change Net inventory purchases for the commencement For personal use only EBITDA – Total Group 2,227.3 2,314.2 3.9% of the Masters business Net decrease / (increase) in net investment in Masters inventory - (42.6) Net decrease / (increase) in investment in overseas indent inve
Slide 49: Shareholder Payouts
SHAREHOLDER PAYOUTS FRANKING CREDITS AVAILABLE FOR DISTRIBUTION (AFTER THE INTERIM DIVIDEND) = $1.4b For personal use only $ million Dividend Buy-Back 2,191 1,749 704 Profit growth, 325 coupled with balance sheet 1,487 1,424 management, 1,280 will have 941 1,121 delivered over 894 $11b payout to 534
Slide 50: Capital Management
CAPITAL MANAGEMENT CAPITAL STRUCTURE OBJECTIVE TO ENHANCE SHAREHOLDER VALUE THROUGH OPTIMISING WEIGHTED AVERAGE COST OF CAPITAL WHILST RETAINING FLEXIBILITY TO For personal use only PURSUE GROWTH AND CAPITAL MANAGEMENT OPPORTUNITIES • In October 2011, executed a A$1.2b syndicated revolving bank loan
Slide 51: Return on Funds Employed
RETURN ON FUNDS EMPLOYED1 For personal use only Percentage Comments • Decrease reflects investment HY08 17.85 in the start up phase of the Masters business and the acquisition of Cellarmasters • Excluding the impact of these, HY09 17.51 return on funds employed decreased 32 bps • ROFE is being adver
Slide 52: Outlook
OUTLOOK For personal use only • We anticipate trading will continue to be subdued over the remainder of the year as a result of the prevailing external conditions • As noted previously, Woolworths plans for future growth, through expansion into the circa $40b Home Improvement market. We anticipate s
Slide 53: Recap
RECAP AMBITION For personal use only Woolworths Limited is Australia's leading retail group, creating a customer-driven future of innovation and growth STRATEGY EXTEND AND ACT ON OUR MAINTAIN PUT IN PLACE DEFEND PORTFOLIO TO OUR TRACK THE ENABLERS 1 LEADERSHIP IN 2 MAXIMISE 3 RECORD OF 4 FOR A FOOD
Slide 54: Company Results HY Ended January 2012
For personal use only Company Results HY Ended 1 January 2012 Grant O'Brien Managing Director and Chief Executive Officer
Slide 55: Appendices
54 For personal use only APPENDICES 54
Slide 56: Profit After Tax from Continuing Operations — Up 3.2%
PROFIT AFTER TAX FROM CONTINUING OPERATIONS — UP 3.2% For personal use only $ million HY08 29.1% 860.8 HY09 11.6% 960.8 HY10 11.6% 1,072.3 HY11 7.0% 1,147.6 HY12 3.2% 1,184.3 55 55
Slide 57: EBIT from Continuing Operations — Up 3.3%
EBIT FROM CONTINUING OPERATIONS — UP 3.3% EBIT GROWTH UNDERPINNED BY SOLID GROWTH IN AUSTRALIAN FOOD AND LIQUOR For personal use only $ million Total Group EBIT HY08 19.4% 20.5% from Continuing Operations Australian Food HY09 16.6% 11.4% and Liquor EBIT HY10 11.4% 11.1% HY11 8.1% 7.2% HY12 6.3% 3.3%
Slide 58: CODB / Sales from Continuing Operations
CODB / SALES FROM CONTINUING OPERATIONS INCREASED BY 26 BPS BUT HAS BEEN WELL CONTROLLED IN DOLLAR TERMS IN A CHALLENGING TRADING PERIOD WITH SIGNIFICANT SELLING PRICE DEFLATION For personal use only Percentage Comments • Reflects HY08 19.76% – Investment in Masters – First year impact of the Cellar
Slide 59: Gross Profit Margin from Continuing Operations
GROSS PROFIT MARGIN FROM CONTINUING OPERATIONS INCREASE OF 15 BPS DUE TO THE BENEFITS OF GLOBAL DIRECT SOURCING, IMPROVED SHRINKAGE RATES, MOVING TO DISTRIBUTION CENTRE DELIVERY IN LIQUOR AND INCREASING For personal use only SALES OF EXCLUSIVE BRAND PRODUCTS Percentage Total GP Margin HY08 24.03% 25
Slide 60: Return on Equity Before Consumer Electronics Provision
RETURN ON EQUITY1 BEFORE CONSUMER ELECTRONICS PROVISION For personal use only Percentage HY08 14.97 HY09 15.08 HY10 14.63 HY11 16.05 HY12 14.62 1. Based on closing Shareholders Funds 59 59
Slide 61: Dividends Per Share — Interim
DIVIDENDS PER SHARE — INTERIM THE INCREASE IN DIVIDENDS PER SHARE EXCEEDED EARNINGS GROWTH For personal use only Cents HY08 25.7% 44 HY09 9.1% 48 HY10 10.4% 53 HY11 7.5% 57 HY12 3.5% 59 60 60
Slide 62: Half Year Total Group Sales of $29.7b — Up 5.0%
HALF YEAR TOTAL GROUP SALES OF $29.7b — UP 5.0% — UP 3.7 % EXCLUDING PETROL For personal use only Half Year $m HY11 HY12 Increase Comp Sales Australian Food and Liquor 18,772 19,571 4.3% 1.5% New Zealand Supermarkets (AUD) 2,183 2,244 2.8% 4.5%1 Petrol (dollars) 2,945 3,434 16.6% 13.7% Petrol (litre
Slide 63: Group EBIT from Continuing Operations — Up 3.3%
GROUP EBIT FROM CONTINUING OPERATIONS — UP 3.3% For personal use only $m HY11 HY12 Change Australian Food and Liquor 1,404.8 1,493.5 6.3% New Zealand Supermarkets (NZD) 134.3 149.1 11.0% New Zealand Supermarkets (AUD) 108.6 118.5 9.1% Petrol 63.4 67.4 6.3% Supermarkets Division 1,576.8 1,679.4 6.5%
Slide 64: Earnings Per Share — Excluding Consumer Electronics Provision
EARNINGS PER SHARE — EXCLUDING CONSUMER ELECTRONICS PROVISION UP 3.3% For personal use only Cents HY08 25.9% 74.06 EPS for the Group was 79.39. HY09 9.3% 80.93 Excluding the Consumer Electronics HY10 10.0% 89.05 provision EPS was up 3.3% on the prior year HY11 6.9% 95.20 to 98.38 HY12 16.6% 79.39 3.
Slide 65: Capital Expenditure — Half Year
CAPITAL EXPENDITURE — HALF YEAR New Stores1 Refurbs HY11 HY12 Store numbers 2012 2011 2012 2011 $m Actual Actual For personal use only New Stores 164 174 Australian Supermarkets2 25 12 49 41 Refurbishments 309 184 Liquor 46 41 12 31 Growth Capex 473 358 PEL - NZ Supermarkets 4 8 4 13 Stay in Busines
Slide 66: Capital Expenditure — Full Year
CAPITAL EXPENDITURE — FULL YEAR Current Previous 2010 2011 2012 $m – 2012 Fcst Fcst Var $m – Full Year Actual Actual Fcst For personal use only New Stores 393 303 90 New Stores 225 288 393 Refurbishments 297 454 (157) Refurbishments 622 492 297 Growth Capex 690 757 (67) Growth Capex 847 780 690 Stay
Slide 67: Capital Expenditure — Notes
CAPITAL EXPENDITURE — NOTES • Reflects the continued rollout of new stores across all our brands. Capital spend increased in HY12 as a New Stores result of more new stores being completed (112: HY12 vs 84: HY11). The full year forecast increase is For personal use only mainly driven by a continuatio
Slide 68: Supply Chain
SUPPLY CHAIN DEVELOPED WORLD CLASS FOOD AND LIQUOR SUPPLY CHAIN DELIVERING A STEP CHANGE IN OUR COSTS AND SERVICE For personal use only LOGISTICS PERFORMANCE BEST PRACTICE - TRANSPORT 2006-2011 • 40% OF INBOUND VOLUME HANDLED BY WOOLWORTHS CARTONS HANDLED + 45% PRIMARY FREIGHT – reducing trucks to D