Metcash Limited · ASX:MTS
Metcash — H1 FY2019 Earnings Presentation
36 slides from Metcash's earnings presentation, Dec 3, 2018
Slide 1: FY19 Half Year Results
Draft 28/11/18 FY19 HALF YEAR RESULTS 3 FY19 HALF2018 December YEAR RESULTS 3 December 2018
Slide 2: Group Update and Divisional Results
GROUP UPDATE AND DIVISIONAL RESULTS JEFF ADAMS GROUP CHIEF EXECUTIVE OFFICER
Slide 3: Our Purpose & Vision
Meicash OUR PURPOSE & VISION CHAMPIONING ceva WE: INDEPENDENCE IS WORTH FIGHTING FOR; S U C C = S S F U L IN TREATING © RETAILERS AND SUPPLIERS INDEPENDENTS ===: TREATED; AND IN© 520° TO THE COMMUNITIES INDEPENDENCE IS WORTH FIGHTING FOR WHERE WE LIVE AND WORK. » CO & fs A BEST STORE PASSIONATE ABOU
Slide 4: Group overview
4 Group overview Reported results reflect the adoption of the new Accounting Standard AASB15 Reported Group sales (which now exclude charge-through sales) increased 2.2% to $6.2bn Excluding the impact of AASB15, Group sales increased 2.3% Sales growth was achieved in all Pillars Group EBIT
Slide 5: Group overview (continued)
5 Group overview (continued) Underlying profit after tax1 increased 1.2% to $100.3m, up 2.0% excluding impact of AASB15 Statutory profit after tax increased 3.0% to $95.8m, up 3.9% excluding impact of AASB15 Working Smarter program on track to deliver cumulative savings of ~$125m by the end of
Slide 6: Results overview by pillar
6 Results overview by pillar 1H19 1H18 Change $m $m % Sales revenue1 (including charge-through) Sales revenue (including charge-through) (%) Food 4,330.9 4,289.4 1.0% Liquor 1,753.9 1,644.5 6.7% 15% Food Hardware 1,089.6 1,076.0 1.3% 60% Liquor 25% Total sales revenue (including charge-through) 7,17
Slide 7: Food - sales
7 Food - sales Supermarkets 1H19 1H18 Change Total sales (including charge-through) broadly flat at $3.57bn $m $m % Supermarkets Continuation of highly competitive market conditions, albeit some improvement evident with deflation for the period reducing to 1.3% Total revenue as per Statutory Acc
Slide 8: Food - EBIT
8 Food - EBIT Food1 1H19 1H18 Change $m $m % Reported EBIT increased 2.4% to $93.0m Total revenue2 4,330.9 4,289.4 1.0% Excluding the impact of AASB15, EBIT increased (including charge-through) 1.0% to $94.5m Includes incremental investment on growth initiatives of Reported EBIT 93.0 90.8 2.4%
Slide 9: Food - initiatives update
9 Food - initiatives update Retailer engagement Project Align Customer key contact point moved to New state-based operational structure States Bringing business closer to the Long-term supply agreement reached with customer – faster decision making Foodland retailers in SA Logistics and pu
Slide 10: New South Australia Distribution Centre
10 New South Australia Distribution Centre Long term supply agreements with Foodland retailers Long term lease agreement for the construction and leasing of a new DC at Gepps Cross (replaces Kidman Park DC) The new purpose built 68,000sqm DC will service both Food and Liquor Pillars Improves
Slide 11: Liquor - sales
11 Liquor - sales Total sales (including charge-through) increased 6.7% 1H19 1H18 Change to $1.75bn $m $m % Modest volume growth – continuation of ‘premiumisation’ Total revenue as per Statutory Accounts 1,749.9 1,641.3 6.6% trend with higher value / lower consumption Continued growth in ALM w
Slide 12: Liquor - EBIT
12 Liquor - EBIT Reported EBIT of $29.1m 1H19 1H18 Change $m $m % Excluding the impact of AASB15, EBIT increased 5.4% Total revenue1 1,753.9 1,644.5 6.7% (including charge-through) Some impact to earnings from higher costs including fuel and costs associated with the introduction of the ACT an
Slide 13: Liquor - initiatives update
13 Liquor - initiatives update Private label On-premise Continued to evolve Private label range Strengthening alignment between key In-store execution to engage shoppers and partners including suppliers and grow category customers Focus on increasing basket size and returns Investment in d
Slide 14: Hardware - sales
14 Hardware - sales Total sales (including charge-through) increased 1.3% to 1H19 1H18 Change $1.09bn $m $m % Closure of stores (primarily non profitable corporate/JV stores) Total revenue as per Statutory Accounts 579.2 579.3 - Loss of large HTH customer in Qld Charge-through sales 510.4 496.
Slide 15: Hardware - EBIT
15 Hardware - EBIT Reported EBIT increased by $9.6m to $37.8m 1H19 1H18 Change $m $m % EBIT excluding the impact of AASB15 increased by Total revenue1 $10.2m to $37.3m (including charge-through) 1,089.6 1,076.0 1.3% Includes a further ~$7.5m of synergies from HTH acquisition (cumulative gross
Slide 16: Hardware - initiatives update
16 Hardware - initiatives update Store investment (Sapphire Trade focus program) Four new low-cost Trade focused A further 10 stores upgraded stores in FY18 Additional eight store conversions Total stores upgraded now at 40 planned for FY19 Average retail sales improvement >15% Expect to
Slide 17: Strategic focus - next phase
17 Strategic focus - next phase Food Future network strategy Full spectrum of stores from small convenience stores through to large format supermarkets Clear brand strategy by format through appropriate range and price Investment in existing stores and expanded footprint A five year progra
Slide 18: Financials
FINANCIALS BRAD SOLLER GROUP CHIEF FINANCIAL OFFICER
Slide 19: Profit & Loss
19 Profit & Loss 1H19 1H181 Change $m $m % Sales revenue 6,189.2 6,054.8 2.2% EBITDA 186.2 184.0 1.2% Depreciation and amortisation (28.1) (27.7) 1.4% EBIT 158.1 156.3 1.2% Net finance costs (14.5) (15.2) 4.6% Profit before tax and NCI 143.6 141.1 1.8% Tax (42.5) (40.9) (3.9%) Non-controlling intere
Slide 20: Working Smarter
20 Working Smarter Final year of three year program Working Smarter will make doing business with Metcash Successful in driving cost savings and protecting margins simpler for customers, suppliers and our people through: 1H19 gross savings of $11m delivered. Total program savings to date of $1
Slide 21: Cashflows
21 Cashflows 1H19 1H18 $m $m Net cash from operating activities1 120.3 161.4 Net cash used in investing activities (26.8) (18.5) Capital expenditure (24.7) (18.9) Proceeds from sale of assets and net loan movements 1.3 0.4 Acquisitions of businesses (3.4) - Dividends paid and other financing activit
Slide 22: Balance Sheet
22 Balance Sheet 31 October 30 April 31 October 2018 2018 2017 $m $m $m Trade receivables and prepayments 1,279.6 1,184.6 1,270.3 Current assets - customer charge cards agreement 212.9 274.0 266.3 Current liabilities - customer charge cards agreement (212.9) (274.0) (266.3) Inventories 916.2 754.1 8
Slide 23: Net (debt) / cash
23 Net (debt) / cash 1H19 FY18 Net debt of $85.2m (FY18: Net cash $42.8m) $m $m $150m share buy-back in August 2018 Net debt Average net debt of ~$215m in 1H19 Gross debt (197.6) (118.4) No debt maturities in FY19 Cash and cash equivalents 112.4 161.2 Cancelled a further ~$25m of USPPs Net
Slide 24: Interim dividend
24 Interim dividend FY19 interim dividend of 6.5 cents per share, fully franked Dividend payout ratio of ~60% of underlying earnings Ex-dividend date: 13 December 2018 Record date: 14 December 2018 Payment date: 18 January 2019
Slide 25: Group Outlook
GROUP OUTLOOK JEFF ADAMS GROUP CHIEF EXECUTIVE OFFICER
Slide 26: Group Outlook
26 Group Outlook Food Highly competitive market conditions are expected to continue through the balance of FY19. We are, however, encouraged by the slowdown in the rate of decline in non-tobacco sales and progress on key initiatives in the first half We expect 2H19 EBIT to be impacted by ~$8m
Slide 27: Appendices
27 Appendices 1. Financial history 2. New Accounting Standards – Revenues and Leases 3. Restatement – AASB15 and Charge Card Reclassification 4. Sales revenue reconciliation 5. Bannered store numbers 6. Contact details
Slide 28: 1. Financial history
28 1. Financial history 1H19 1H18 1H17 1H16 1H15 Financial Performance Sales revenue1 ($m) 6,189.2 6,054.8 5,743.7 5,698.5 5,650.3 EBIT2,3 ($m) 158.1 156.3 132.1 140.7 160.6 Net finance costs3 ($m) (14.5) (15.2) (16.9) (19.8) (31.4) Underlying profit after tax4 ($m) 100.3 99.1 82.8 86.9 92.5 Reporte
Slide 29: 2. New Accounting Standards - Revenue and Leases
2. New Accounting Standards - Revenue and 29 Leases AASB 15: Revenue from Contracts with Customers • Effective from 1H19. Comparative period balances have been restated • Key change is the derecognition of ~$2 billion in charge-through revenue (on an annualised basis) • Changes relating to EBIT were
Slide 30: 3. Restatement – AASB15 and Charge Card Reclassification
3. Restatement – AASB15 and Charge Card 30 Reclassification $m 1H19 1H18 FY18 Charge Charge As AASB15 Card As AASB15 Card As AASB15 1 2 1 2 1 reported adjustment reclass Adjusted reported adjustment reclass Restated reported adjustment Restated Food 90.3 (1.5) 4.2 93.0 89.4 (2.8) 4.2 90.8 188.6 (0.3
Slide 31: 4. Sales revenue reconciliation
1 31 4. Sales revenue reconciliation $m 1H19 1H19 1H18 1H18 FY18 FY18 Charge- Charge- Charge- Statutory through (including Statutory through (including Statutory through (including sales charge- sales charge- sales charge- through) through) through) Supermarkets 3,097.2 470.8 3,568.0 3,110.4 455.2 3
Slide 32: 5. Bannered store numbers
32 5. Bannered store numbers October April 2018 2018 Pillar Supermarkets 1,668 1,674 Campbells 18 18 Liquor 2,735 2,754 Hardware 682 710 TOTAL 5,103 5,156 Supermarkets Liquor Hardware Store movement Number of stores at April 2018 1,674 2,754 710 Stores joined banner group during the period 9 230 5 S
Slide 33: 5. Bannered store numbers (continued)
33 5. Bannered store numbers (continued) October April 2018 2018 Supermarkets Supa IGA 376 376 IGA 796 808 IGA-Xpress 211 209 Total IGA bannered stores 1,383 1,393 Friendly Grocer / Eziway 285 281 Total Supermarkets 1,668 1,674 Liquor Cellarbrations 573 574 Bottle-O & Bottle-O Neighbourhood 245 239
Slide 34: 6. Contact details
34 6. Contact details For additional information contact: Steve Ashe, Head of Corporate Affairs & Investor Relations Phone: +61 2 9751 8368 E-mail: steve.ashe@metcash.com Charmaine Lim, Investor Relations Manager Phone: +61 2 9647 0866 Email: charmaine.lim@metcash.com Or visit our website: www.metca
Slide 35: Disclaimer
35 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 co
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