Woolworths Group Ltd · ASX:WOW
Woolworths — H1 FY2013 Earnings Presentation
52 slides from Woolworths's earnings presentation, February 2013
Slide 1: Company Results Half Year Ended 30 December 2012
Company Results Half Year Ended 30 December 2012 Grant O'Brien Chief Executive Officer and Managing Director
Slide 2: Highlights for half year 2013
Highlights for half year 2013 • Sales from continuing operations of $30.0b, up 4.8% or $1.4b • EBIT from continuing operations before significant items1 up 6.1% to $1,934.7m (total EBIT up 19.1%) • NPAT from continuing operations before significant items1 up 5.5% • 19.4% increase in NPAT and 17.9% i
Slide 3: Results — half year 2013
Results — half year 2013 Continuing Operations Total Group Before Significant Items1 HY13 HY13 Sales – Group $30.0b 4.8% $30.7b 3.2% EBITDA $2,422.5m 6.3% $2,328.5m 15.6% EBIT $1,934.7m 6.1% $1,840.7m 19.1% NPAT $1,247.2m 5.5% $1,154.8m 19.4% EPS 101.1¢ 4.2% 93.6¢ 17.9% DPS 62¢
Slide 4: Pleasing Progress Against Strategic Priorities
Pleasing Progress Against Strategic Priorities 3
Slide 5: 1. Extend leadership in food and liquor
1. Extend leadership in food and liquor Well Underway Fresh improvement Value improvement More customers Liquor growth New Zealand programs programs benefiting from our accelerating market share growth merchandising Strong fresh category Renewed focus on Strong sales and market Continued market shar
Slide 6: 2. Act on our portfolio to maximise shareholder value
2. Act on our portfolio to maximise shareholder value Well Underway Property divestment and Consumer Australia's best and BIG W’s evolving capital management Electronics divestment most responsible Hotels customer offer Creation of new ASX listed Real Completed the divestment Growing customer Good p
Slide 7: 3. Maintain our track record of building new growth businesses
3. Maintain our track record of building new growth businesses Well Underway Delivering our multi-option growth opportunity Providing Australia's best Home Improvement offer Online sales growth Connecting with customers Click and collect 40% increase in total Over 2.8m Woolworths, Click and collect
Slide 8: 4. Put in place the enablers for a new era of growth
4. Put in place the enablers for a new era of growth Well Underway Improving our Customer data Cost leadership is part Increasing our supply chain improving our offer of Woolworths' DNA talent pool Major investments in BIG W, Our ‘Category Lab’ is playing a The cost performance in Continued focus on
Slide 9: Business Unit Results
Business Unit Results WOooLWORTHS LIMITED
Slide 10: Supermarkets
Supermarkets Tjeerd Jegen Managing Director Australian Supermarkets & Petrol 9
Slide 11: Australian Food, Liquor & Petrol
Australian Food, Liquor & Petrol Improving sales, improving profits, more to come • Sales up 3.8% (4.7% excluding Petrol), EBIT HY12 HY13 Change up 6.0% Sales – Food & Liquor ($m) 19,571 20,488 4.7% • Comparable Food and Liquor sales up 2.4% – Petrol ($m) 3,434 3,393 (1.2)% • Average prices were in
Slide 12: Progress against strategic objectives: First choice for fresh food
Progress against strategic objectives 1. First choice for fresh food • Continuing improvement in quality and freshness recognised by our customers • ‘Australia’s Fresh Food People’ brand campaign launched in June 2012 through a variety of channels including ‘Fresh Fairs’ held in store • Newest store
Slide 13: Progress against strategic objectives: Unbeatable value
Progress against strategic objectives 2. Unbeatable value • In August 2012, we reduced prices of lamb cuts by 20-30% with Australian Lamb farmers benefiting from significant increases in volumes sold • In October 2012, we launched ‘For Less for Families’, cutting prices on essential items for famili
Slide 14: Progress against strategic objectives: Customer led
Progress against strategic objectives 3. Customer led – the power of insights • Our ‘Category Lab’ has covered ~75% of our sales base. We continue to uncover many opportunities to enhance our offer with better ranges, more tailored promotions and improved category layouts • Continued to increase the
Slide 15: Progress against strategic objectives: Exciting new offers
Progress against strategic objectives 4. Exciting new offers • Fresh sushi made daily in 18 stores, new flavours well received by our customers – 49 kiosks planned by FY13 • Fresh pizza bars in five stores, delivering quality pizzas made in store daily – 17 bars planned by FY13 • Extended My Kitchen
Slide 16: Progress against strategic objectives: Shopping tailored for customers
Progress against strategic objectives 5. Shopping Tailored for our Customers • Ongoing development of our transactional mobile site and Apps is core to our ambition to make our customers’ shopping experience easier and more rewarding – providing seamless link between online and bricks & mortar • Onl
Slide 17: Petrol
Petrol Lower volumes as fuel promotional investments diverted to other targeted offers • Sales were $3.4b, down 1.2% with comparable (dollar) sales down by 3.2% driven by fuel volumes • Total fuel volumes decreased 2.8% on HY12 affected by decision to broaden customer offers beyond enhanced fuel off
Slide 18: Woolworths Liquor Group
Woolworths Liquor Group Brad Banducci, Director of Liquor 17
Slide 19: Liquor sales
Liquor sales Continued momentum with Group Liquor sales of $3.8b $ billion Comments • Sales and profitability growth HY09 2.8 across all brands highlights the relevance of each of our liquor offerings HY10 3.1 • Liquor is our most advanced multi-option segment courtesy of our market HY11 3.2 leading
Slide 20: Progress against strategic objectives: Liquor network and formats
Progress against strategic objectives 1. Grow our network • 11 new Dan Murphy’s, 30 new BWS stores • Total liquor outlets 1,346 • Laundy transaction added 29 hotels and 10 retail liquor outlets, including one rebranded as Dan Murphy’s 2. Improve our store formats • Rebranded 176 Woolworths Supermark
Slide 21: Progress against strategic objectives: Multi-option and own brands
Progress against strategic objectives 3. Multi-option retail • Dan Murphy’s online continued its excellent growth with key highlights including – Launch of a click and collect service across the entire Dan Murphy’s network – a first for a major Australian national retailer – Improved website functio
Slide 22: Hotels
Hotels Australia's best and most responsible pubs growing strongly HY12 HY13 Change • Sales increased 19.3% driven by hotel Sales ($m) 636 759 19.3% acquisitions as well as the overall benefit Gross margin (%) 81.47 82.29 82 bps obtained through the Victorian gaming CODB (%) 63.20 63.74 54 bps regul
Slide 23: NZ Supermarkets
NZ Supermarkets Dave Chambers Managing Director 22
Slide 24: New Zealand Supermarkets
New Zealand Supermarkets One focused brand delivering share, profit and customer growth NZD HY12 HY13 Change • Sales up 2.3% with Trading EBIT strong, Before Significant Items up 8.4% before significant items Sales ($m) 2,879 2,944 2.3% • Comparable sales were flat Gross margin (%) 23.02 23.28 26 bp
Slide 25: Progress against strategic objectives: Single brand, network
Progress against strategic objectives 1. Single brand • Customer appeal for the Countdown brand continues to grow • Launch of new fully integrated multi- option marketing program to support fresh food. ‘Countdown’s Fresh Stories’ has helped to increase the appeal of the Countdown brand 2. Grow Count
Slide 26: Progress against strategic objectives: Formats and multi-option
Progress against strategic objectives 3. Larger, modern format stores • Extensions and refurbishments continue, with 75% of all stores now converted to the 2010 or 2015 format providing customers with an enhanced shopping experience • Two 2015 refurbishments completed during the half 4. Multi-option
Slide 27: Progress against strategic objectives: Franchise, share, supply chain
Progress against strategic objectives 5. Grow franchise network • Two new format FreshChoice and one SuperValue franchise store opened • Two refurbishments and one extension completed during HY13 6. Grow market share • New marketing and category initiatives to drive growth in market share in both do
Slide 28: BIG W
BIG W Julie Coates Director of BIG W 27
Slide 29: BIG W
BIG W Profitable sales growth HY12 HY13 Change • Sales up 3.6%, comparable sales up 0.7% Sales ($m) 2,362 2,447 3.6% • EBIT up 8.3% Gross margin (%) 30.37 31.47 110 bps • Gross margin increase due to savings in freight CODB (%) 25.31 26.18 87 bps and outside storage costs from the operation EBIT to
Slide 30: Progress against strategic objectives: Win on value everyday
Progress against strategic objectives 1. Win on value everyday • High volume value program across apparel has almost doubled unit sales in HY13 • Our Smart Value brand continues to resonate strongly with our customers, with 225% unit growth in HY13. This has assisted in driving increased customer tr
Slide 31: Progress against strategic objectives: Evolve customer offer
Progress against strategic objectives 3. Evolve our customer offer through merchandising and range innovation • Innovation and newness in our merchandise is a key focus • Our Emerson brand (women’s apparel) is now the number two brand in our business • Launched our Michelle Bridges and Guy Leech act
Slide 32: Progress against strategic objectives: Full potential of existing business
Progress against strategic objectives 4. Deliver the full potential of our existing business • Opportunities identified to refine and align our offer with our core customers' needs, whilst delivering improved financial outcomes • Continued focus on driving gross margin improvement through expanding
Slide 33: Home Improvement
Home Improvement 32
Slide 34: Home Improvement
Home Improvement Australia's newest and best Home Improvement offer • 10 Masters stores opened this half with at least five more planned to open by FY13 • Feedback from customers has been very positive, with great interest in our range across all departments • Masters stores now trading in all mainl
Slide 35: Financial Performance
Financial Performance x” WOooLWORTHS LIMITED
Slide 36: Significant items
Significant items Creation of SCA Property Group • Created the Shopping Centres Australasia (SCA) Property Group, through an in-specie distribution of stapled units in this entity to all Woolworths shareholders • As envisaged, a one-off loss of $28.5m after tax ($32.8m before tax) was incurred on th
Slide 37: Balance Sheet
Balance Sheet $ million FY121 HY121 HY13 Change • Inventory primarily driven by the building of Masters’ inventory, CONTINUING OPERATIONS increased direct global sourcing, additional bulk wine inventory Inventory 3,698.3 4,111.5 4,498.9 9.4% in the Pinnacle Liquor Group as part of the Group’s strate
Slide 38: Average inventory days for continuing operations
Average inventory days for continuing operations Inventory has increased due to building Home Improvement inventory and increased indent. Excluding this, average inventory days were up 0.5 days on HY12 Number of Days Comments HY09 30.2 • Closing inventory days were up 2.0 days on HY12 due to buildin
Slide 39: Cash flow
Cash flow $ million HY12 HY13 Change EBITDA – Total Group 2,014.2 2,328.5 15.6% Consumer Electronics provision/ Net loss on sale of Consumer • Cash from Operating Activities before Electronics businesses 300.0 63.7 Net (increase) in inventory (776.8) (890.6) Interest and Tax increased 25.2% Net incr
Slide 40: Shareholder payouts
Shareholder payouts Over $2.0b returned to shareholders in HY13 $ billion Comments • As part of the SCA Dividend Property Group Buy back transaction, an in-specie In-specie distribution distribution of $0.5b 2.2 made to shareholders 0.7 comprising an income component of $0.2b and 1.7 a capital compo
Slide 41: Return on funds employed from continuing operations
Return on funds employed1 from continuing operations Percentage Comments • ROFE increased 11 bps to HY09 17.5 15.5% reflecting – Positive impact of the sale of properties to the SCA Property Group HY10 17.7 offset by investment in our new Home Improvement business HY11 16.7 – Timing of the reporting
Slide 42: Outlook
Outlook • Woolworths has a focused strategy which is building momentum with benefits arising from continuing investment underpinning long term sustainable profit growth. Woolworths remains well positioned in all its market segments and has a strong and sustainable business model • At the end of FY12
Slide 43: Company Results Half Year Ended December 2012
Company Results Half Year Ended 30 December 2012 Grant O'Brien Chief Executive Officer and Managing Director
Slide 44: Appendices
Appendices WOooLWORTHS LIMITED
Slide 45: CODB / sales from continuing operations before significant items
CODB / sales from continuing operations before significant items CODB for our core retail trading businesses were well controlled during the period Percentage Comments • Reflects HY09 19.49% – Home Improvement in start-up phase – Hotel acquisition costs – Costs associated with HY10 19.65% Victorian
Slide 46: Gross profit margin from continuing operations
Gross profit margin from continuing operations Increase due to the benefits of more effective promotional activity, better buying, benefits of increased direct global sourcing, reduced shrinkage, efficiency improvements from the operation of new DCs and changes in sales mix Percentage HY09 24.00% 25
Slide 47: Dividends per share — interim
Dividends per share — interim The increase in dividends per share exceeded NPAT growth before significant items Cents HY09 9.1% 48 HY10 10.4% 53 HY11 7.5% 57 HY12 3.5% 59 HY13 5.1% 62 46
Slide 48: Half year total Group sales of $30.7b — up 3.2%
Half year total Group sales of $30.7b — up 3.2% Half Year $ million HY12 HY13 Change Comp Sales Australian Food and Liquor 19,571 20,488 4.7% 2.4% Petrol (dollars) 3,434 3,393 (1.2)% (3.2)% Petrol (litres) 2,605 2,532 (2.8)% (4.7)% - Australian Supermarkets 23,005 23,881 3.8% New Zealand Supermarket
Slide 49: Group EBIT from continuing operations before significant items – up 6.1%
Group EBIT from continuing operations before significant items – up 6.1% $ million HY12 HY13 Change Australian Food and Liquor 1,493.5 1,583.9 6.1% Petrol 67.4 71.0 5.3% Australian Supermarkets 1,560.9 1,654.9 6.0% New Zealand Supermarkets (NZD) 149.1 162.3 8.9% New Zealand Supermarkets 118.5 124.7
Slide 50: Earnings per share — total Group excluding significant items
Earnings per share — total Group excluding significant items up 2.9% Cents HY09 80.93 9.3% HY10 89.05 10.0% HY11 95.20 6.9% HY12 79.401 98.38 16.6% 3.3% HY13 93.631 101.27 17.9% 2.9% 1. Includes significant items 49
Slide 51: Capital expenditure — half year
Capital expenditure — half year New Stores1 Refurbs HY12 HY13 $ million Actual Actual Store numbers 2013 2012 2013 2012 New Stores 174 140 Australian Supermarkets2 17 25 1103 49 Refurbishments 184 236 Liquor 41 46 33 12 Growth Capex 358 376 NZ Supermarkets 4 4 2 4 Stay in Business / Supply Chain and
Slide 52: Capital expenditure — full year
Capital expenditure — full year Current Previous 2011 2012 2013 $ million – 2013 Fcst Fcst Var $ million – Full Year Actual Actual Fcst New Stores 323 301 22 New Stores 288 346 323 Refurbishments 529 512 17 Refurbishments 492 268 529 Growth Capex 852 813 39 Growth Capex 780 614 852 Stay in Business