Slide 1: CEO Presentation cover letter
Metcash Limited ABN 32 112 073 480 50 Waterloo Road Macquarie Park NSW 2113 Australia For personal use only PO Box 6226 Silverwater Business Centre NSW 1811 Australia Ph: 61 2 9751 8200 Fax: 61 2 9889 1557 1 June 2009 The Manager, Companies Australian Securities Exchange Company Announcements Office
Slide 2: Company Results Financial Year Ending 30 April 2009
“Champion of the Independent Retailer” 2009 For personal use only Company Results Financial Year Ending 30 April 2009 Andrew Reitzer Chief Executive Officer
Slide 3: Group Headlines
1 GROUP HEADLINES 2009 For personal use only Strong consumer support for independent retailers translates to a strong Group result FY09 FY08 Variance % WHOLESALE SALES ($m) 10,974 1 10,045 1 9.3% EBITA ($m) - Reported 382.5 341.3 2 12.1% EBITA MARGIN (%) - Reported 3.49% 2 3.40% +9bps CODB / GP (%)
Slide 4: Financial Highlights – Group
2 2009 For personal use only FINANCIAL HIGHLIGHTS – GROUP
Slide 5: Wholesale Sales
3 WHOLESALE SALES 2009 For personal use only Group wholesale sales up 9.3% (pcp 6.3%) Driven principally by strong consumer support for core IGA independent retailers Sales growth accelerated from 1H09 reported growth of 8.2% +9.3% on pcp R 13.7% CAG 12,000 10,974 10,045 10,000 9,451 7,705 $M 8,
Slide 6: Market Share
4 MARKET SHARE 2009 For personal use only Market share (MAT) for the year ended 12 April 09 was 19.0% Market share maintained 20% 18.8% 19.0% 18.5% 18.6% 16% MAT 13.5% NOTES: 1. Market share data collated 12% by Nielsen is for defined dry grocery product categories 2. MAT as at respective full year
Slide 7: EBITA
5 EBITA 2009 For personal use only FY09 FY08 Variance % EBITA ($m) – Reported 382.5 1 341.3 12.1% EBITA ($m) – pre NRI 382.5 1,2 335.1 14.1% Good leverage on 9.3% wholesale sales growth 420.0 18.4 % 382.5 R 380.0 CAG 335.1 340.0 310.7 300.0 $M 260.0 NOTES: 226.9 1. FY09 ‘EBITA pre NRI’ and ‘EBITA re
Slide 8: EBITA Margin
6 EBITA MARGIN 2009 For personal use only EBITA margin up 15 bps on FY08 (+12 bps on 1H09) reflecting: Volume benefits (both seasonality impact of Christmas and Easter plus underlying growth) CODB improvement (next slide) +15 bps on pcp 4.00% 3.49% 3.50% 3.29% 3.34% 2.96% 2.95% 3.00% 2.50% 2.00%
Slide 9: CODB as % of GP
7 CODB AS % OF GP 2009 For personal use only CODB decreases 280 bps this year, reflecting: Cycling out of retail operations and associated exit costs (as reported in1H09) Constant focus on cost control Constant supply chain improvement Warehouse and distribution cost decreasing as facilities
Slide 10: PAT
8 PAT 2009 For personal use only FY09 FY08 Variance PAT ($m) - Pre NRI 219.7 1 193.1 13.8% PAT ($m) - Pre IA, NRI 225.9 2 199.0 13.5% PAT ($m) - Reported 202.5 197.4 2.6% Normalised PAT PAT Reported PAT pre NRI +13.8% on sales growth of 9.3% 250.0 219.7 220.0 % NOTES: R 20.8 193.1 CAG 1. PAT in grap
Slide 11: Operating Cashflow
9 OPERATING CASHFLOW 2009 For personal use only Operations again generate strong cashflows ($248.1m) Management continues to reinvest in core businesses to keep the company's retail customers competitive with dominant chains PATBDA Operating Cashflow 260.0 248.1 242.7 252.3 220.0 228.3 197.6 $M 20
Slide 12: EPS
10 EPS 2009 For personal use only FY09 FY08 Variance EPS - Pre IA, NRI 29.53 1 26.07 13.3% EPS - Pre NRI 28.73 2 25.29 13.6% EPS - Reported 26.47 25.86 2.4% Double digit EPS growth for third Exceeds upper end year in a row of guidance range 28.3-29.3 cps EP S Repo rted EP S pre NRI 32.0 29.68 28.73
Slide 13: DPS
11 DPS 2009 For personal use only The Board has declared a final dividend of 14.0 cents a share (100% franked) The total dividend of 24cps represents a payout ratio of: 91% of Reported EPS (81% for FY08) 81% of EPS - pre IA & NRI 2 4 .0 2 4 .0 2 1.0 2 0 .0 17 .0 Cents 16 .0 11.5 12 .0 9 .5 NOTES
Slide 14: Divisional Highlights – IGA>D
2009 For personal use only DIVISIONAL HIGHLIGHTS – IGA>D
Slide 15: IGA>D – Financials
13 IGA>D - FINANCIALS 2009 For personal use only 1.29x operating FY09 FY08 Variance (%) leverage WHOLESALE SALES ($m) 6,674.4 5,994.5 1 11.3% EBITA ($m) 315.5 275.1 14.7% NOTES: EBITA MARGIN (%) 4.73% 4.59% +14bps 1. Wholesale sales – excludes retail sales in MTS hands. Wholesale Sales up 11.3% with
Slide 16: IGA>D – Sales Performance
14 IGA>D – SALES PERFORMANCE 2009 For personal use only Total IGA>D market share of 19.0% MAT to 12 Apr 09 IGA>D growth in the market still ahead of market growth: − MAT to 12 Apr 09 was 8.3% against market growing at 7.4% Trends identified in 1H09 have strengthened in 2H09 − Entrepreneurial IGA
Slide 17: IGA>D – Retail Development
15 IGA>D - RETAIL DEVELOPMENT 2009 For personal use only Branded Stores (IGA – 3 channels + Friendly Grocer + Eziway) COMPLETED COMPLETED COMPLETED 1H 2H FULL YEAR NO. SQM NO. SQM NO. SQM New stores up 2 on 1H09 forecast New Stores1 21 23,685 22 28,303 43 51,988 FY10 new stores forecast at 44 Stores
Slide 18: IGA>D – Corporate Brands
16 IGA>D – CORPORATE BRANDS 2009 For personal use only Black & Gold Meeting value consumer needs 1,011 SKUs (Apr 09) - up 87 SKUs from 924 (Oct 08) 30 SKUS to be launched in the next 3 months, up to a target of 1,100 SKUs (Apr 10) Sales growing at 12% p.a. IGA Signature Premium label range
Slide 19: IGA Fresh Strategy – Execution
17 IGA FRESH STRATEGY - EXECUTION 2009 For personal use only Strategic Rationale: Provide independent retailers with complete, consistent and quality Fresh food offer to meet customer needs Produce Total Run Rate Fresh Run Date Event Rate $’m $’m Nov 07 IGA Fresh formally launched and structure co
Slide 20: IGA Fresh Strategy – Operational Review
18 IGA FRESH STRATEGY - OPERATIONAL REVIEW 2009 For personal use only Performance Annualised run rate: Produce ~ $390m, total Fresh sales ~ $950m (inclusive of acquisitions) Small shortfall to ~$1b target due to last remaining acquisition in process of finalisation YTD category growth: Meat
Slide 21: IGA Fresh Strategy – Private Label Brands
19 IGA FRESH STRATEGY - PRIVATE LABEL BRANDS 2009 For personal use only Produce “Field Fresh” launched Jul 08 Range commenced with pre-packs. Cut fruit and loose fruit ranges now introduced. 70 SKUs with total target of 100 SKUs by Oct 09 − Total traded SKUs fluctuate based on produce season
Slide 22: IGA>D – Supply Chain Initiatives
20 IGA>D – SUPPLY CHAIN INITIATIVES 2009 For personal use only IGA>D continually searches for opportunities to improve the efficiency and effectiveness of its supply chain Initiatives to drive CODB reduction going forward include: Start Due Business Project Date Date IGA>D VIC ‘Mini-loader’ automa
Slide 23: IGA>D – Supply Chain Initiatives (Mini-loader)
21 IGA>D - SUPPLY CHAIN INITIATIVES 2009 For personal use only Mini-loader (Automated Storage and Retrieval System) under construction at Laverton Storage “Cube” and “Put” station Phase 1 (General Merchandise) section completed Full completion scheduled for FY10 Increased Range Improved Productivity
Slide 24: Divisional Highlights – ALM
2009 For personal use only DIVISIONAL HIGHLIGHTS - ALM
Slide 25: ALM – Financials
23 ALM - FINANCIALS 2009 For personal use only FY09 FY08 Variance (%) SALES ($m) 2,639.5 2,499.3 5.6% Excellent EBITA ($m) 33.8 31.2 8.2% Leverage at 1.46X EBITA MARGIN (%) 1.28% 1.25% +3bps Strong sales growth up 5.6% (pcp 1.9%) Up on 1H09 sales growth of 5.1%. IBA sales up 16% including sales
Slide 26: ALM – IBA Store Growth
24 ALM - IBA STORE GROWTH 2009 For personal use only IBA stores and alliance partnerships remain a focus: IBA – store numbers now 2,308 with Liquor Force Buying Group continuing to migrate into 3 other banners or non bannered groups IBA Oct 07 Apr 08 Oct 08 Apr 09 Cellarbrations 458 467 502 509
Slide 27: Divisional Highlights – Campbells Wholesale
2009 For personal use only DIVISIONAL HIGHLIGHTS - CAMPBELLS WHOLESALE
Slide 28: Campbells Wholesale – Financials
26 CAMPBELLS WHOLESALE - FINANCIALS 2009 For personal use only FY09 FY08 Variance (%) SALES ($m) 1,660.4 1,550.8 7.1% Leverage at EBITA ($m) 33.0 30.6 7.8% 1.1X EBITA MARGIN (%) 1.99% 1.97% +2bps Sales up 7.1% driven by Primary category sales up 10.6% fuelled by growth in foodservice, soft drinks
Slide 29: Campbells Wholesale – Operating Performance
27 CAMPBELLS WHOLESALE - OPERATING PERFORMANCE 2009 For personal use only 22 metropolitan cash and 17 country distribution Specialist food service 4 stockless DCs, 4 Specialist carry stores centres business - WA & QLD Confectionery DCs Walk-in ABN customers 85% business is pick, pack S
Slide 30: Financials – Balance Sheet, Cashflow, Debt, Interest
28 2009 For personal use only FINANCIALS - BALANCE SHEET - CASHFLOW - DEBT FACILITIES - INTEREST EXPENSE
Slide 31: Balance Sheet – Extract
29 BALANCE SHEET - EXTRACT 2009 For personal use only 30-Apr-08 30-Apr-09 $m $m Movement Commentary Approximate 2 day reduction in creditor days reflects changing mix of $m % business (Fresh on shorter terms) and some timing. Trade and other payables -1,153.9 -1,188.0 -34.1 3% Increase in inventorie
Slide 32: Cashflow – Extract
30 CASHFLOW - EXTRACT 2009 For personal use only FY08 FY09 Inc/ Apr 08 Apr 09 (Dec) $m $m $m $m $m Commentary EBITDA 383.1 422.9 39.8 Higher interest expense (per slide 32) offset by interest income. Net Interest Paid (53.0) (54.7) (1.7) Non-cash items include $3.8m MTM credit reversal, & $3.2m line
Slide 33: Debt Facilities
31 DEBT FACILITIES 2009 For personal use only Metcash has successfully extended its $700m syndicated loan facility until May 2012 Whilst there is a higher margin cost to the new facility, the Group has secured certainty of funding for the next 3 years The Group’s balance sheet is strong, suppo
Slide 34: Interest Expense
32 INTEREST EXPENSE 2009 For personal use only Interest Expense Apr 08 Apr 09 Commentary - 1H 27.7 37.8 1H09 reflects higher cash rates plus reversal of $3.8m MTM collar termination - 2H 34.2 32.4 2H09 explained below Interest Expense (Total) 61.9 70.2 Interest Income (10.8) (9.2) 2H08 includes $3.8
Slide 35: Conclusions – Key Messages – Earnings Guidance
33 2009 For personal use only CONCLUSIONS - KEY MESSAGES - EARNINGS GUIDANCE
Slide 36: Key Messages
34 KEY MESSAGES 2009 For personal use only PERFORMANCE Sales +11.3% Sales +7.1% Sales +5.6% EBIT +14.7% EBIT + 7.8% EBIT + 8.2% Operating leverage at 1.3x – in line with Operating leverage at 1.1x Operating leverage ~1.5x expectations during Fresh ‘start up’ GROWTH Fresh (Teamwork) Confectionery
Slide 37: Earnings Guidance – FY10
35 EARNINGS GUIDANCE – FY10 2009 For personal use only Trading environment remains volatile and financial uncertainties continue to impact wealth and discretionary consumer spending However, for the time being and given MTS’s focus on selling consumer essentials, no likely weakening is foreseen
Slide 38: Champion of the Independent – The Third Force
36 “Champion of the Independent” 2009 For personal use only “The Third Force”
Slide 39: Appendices
2009 For personal use only APPENDICES 1. Segment Note – Unallocated & Corporate 2. Reconciliation – Group Results 3. Split of Business 4. Dividend and Capital Management Policy 5. Trend Metrics (Financial & Operational) 6. Metcash TSR 7. Directory of Terms
Slide 40: Segment Note – Unallocated & Corporate
38 SEGMENT NOTE - UNALLOCATED & CORPORATE 2009 For personal use only Apr 08 Apr 09 $m $m Corporate - Share Based Payments (4.8) (4.5) - Non Recurring Item - net 6.2 - - Other 3.0 4.7 Included in Group EBITA (‘Above the line’) 4.4 (0.2) Unallocated - Intangible Amortisation (5.9) (6.1) - Interest - n
Slide 41: Reconciliation – Group Results
39 RECONCILIATION - GROUP RESULTS 2009 For personal use only Apr 08 Apr 09 $m $m EBITA from Normal Operations 339.9 387.0 Share Based Payments (4.8) (4.5) EBITA after Share Based Payments 335.1 382.5 Net Interest (51.1) (61.0) Profit Before Tax and Amortisation 284.0 321.5 Tax (85.0) (94.9) Minority
Slide 42: Split of Business
40 SPLIT OF BUSINESS 2009 For personal use only EBITA by division Food Distribution Liquor Distribution Cash & Carry Distribution Total $M 400.0 $382.3 Total 360.0 33.0 (8.6%) $336.9 Total 33.8 (8.9%) 320.0 $304.6 30.6 (9.0%) 28.9 (9.5%) 31.2 (9.3%) 280.0 Total 28.4 (9.3%) $227.7 240.0 Total 21.2 (9
Slide 43: Dividend & Capital Management
41 DIVIDEND & CAPITAL MANAGEMENT 2009 For personal use only The Board’s intention is to return earnings to shareholders whilst retaining adequate funds within the business to invest in future growth opportunities The proposed FY09 final dividend of 14.0 cents per share takes the total FY09 divid
Slide 44: Trend Metrics – Financial
42 TREND METRICS – FINANCIAL 2009 For personal use only FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FULL YEAR CAGR* Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Sales (all sources) $ millions 7,010 8,214 9,695 10,116 10,981 12.1% Sales (wholesale) $ millions 6,565 7,705 9,451 10,045 10,974 13.7% EBITDA - reported
Slide 45: Trend Metrics – Operational
43 TREND METRICS - OPERATIONAL 2009 For personal use only Branded Stores Stores Stores Stores Stores (IGA – 3 channels + Friendly Grocer + Eziway) Oct 07 Apr 08 Oct 08 Apr 09 Supa IGA 416 418 425 430 IGA 719 717 720 717 Xpress 249 153 129 131 IGA branded stores 1,384 1,288 1,274 1,278 Friendly Groce
Slide 46: Metcash TSR
44 METCASH TSR 2009 For personal use only TSR under current management v competitors and market 6.00 5.00 4.00 MTS TSR: 38% Share price (rebased) 3.00 2.00 WOW TSR: 18% 1.00 ASX 200 TSR: 6% 0.00 Jan 01 Sep 02 May 04 Dec 05 Aug 07 Apr 09 MTS WOW ASX 200 Note: Total Shareholder Returns (TSR) represent
Slide 47: Directory of Terms
45 DIRECTORY OF TERMS 2009 For personal use only ALM - Australian Liquor Marketers is Australia and New Zealand's leading broad range liquor wholesaler. ALM operates from 18 distribution locations across the country. Larger ‘off-premise’ customers are supplied through the main distribution system; a
Slide 48: Directory of Terms – Financial Metrics Definitions
46 DIRECTORY OF TERMS 2009 For personal use only Financial Metrics Definitions CAGR - Compound Annual Growth Rate over 4 years (FY05 to FY09) Cash realisation ratio - Net operating cash flow (not adjusted for non-recurring items) / [Profit after tax pre non recurring items + Depreciation + Amort
Slide 49: Directory of Terms
47 DIRECTORY OF TERMS 2009 For personal use only Intangible Amortisation (IA) – Amortised costs of customer relationships, calculated on a straight line basis over 25 years Moving Average Total (MAT) - A 12 month running average measure of market share. Non-recurring items (NRI) - Items not expected
Slide 50: For additional information contact
48 2009 For personal use only For additional information contact: Adrian Gratwicke, GM Finance Phone: 61 2 9741 3248 Fax 61 2 9741 3027 E-mail adrian.gratwicke@metcash.com Or visit our website: www.metcash.com Disclaimer This presentation is for the general information of investors. Metcash Limited