Woolworths Group Ltd · ASX:WOW
Woolworths — H1 F20 Earnings Presentation
55 slides from Woolworths's earnings presentation, 2020
Slide 1: Company Results F20 Half-Year
COMPANY RESULTS HALF-YEAR 2020 1 COMPANY RESULTS F20 HALF-YEAR Thank you to Andrew Lawrence and Dan Medd from Penrose RFS Brigade. Photography by Matthew Abbott.
Slide 2: Woolworths Group purpose
Woolworths Group purpose COMPANY RESULTS HALF-YEAR 2020 2
Slide 3: Contents
COMPANY RESULTS HALF-YEAR 2020 3 Contents H20 GROUP SUMMARY & PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 12 Stephen Harrison BUSINESS PERFORMANCE UPDATE 24 OUTLOOK 50 Brad Banducci
Slide 4: Standing together to support Australians through natural disasters
Standing together to support Australians through COMPANY RESULTS 4 natural disasters HALF-YEAR 2020 One of our values at Woolworths Group is that we care deeply and was at the core of our response to support Australians through the recent devastating bushfires • More than $3.8 million raised via the
Slide 5: Update on salaried store team member remediation
Update on salaried store team member remediation COMPANY RESULTS HALF-YEAR 2020 5 • On 30 October, announced review of salaried store team members against GRIA • $78 million paid to date to eligible team members ($69 million paid in H1) • Original estimate of $200 – 300 million based on two years’ d
Slide 6: H20 summary
H20 summary COMPANY RESULTS HALF-YEAR 2020 6 Strong H1 sales and EBIT growth Online growth remains strong; X businesses continue to scale Pleasing improvement in BIG W profitability driven by Apparel Endeavour Drinks and Hotels restructure and merger completed; separation progressing Making progress
Slide 7: Woolworths Group F20 priorities
Woolworths Group F20 priorities COMPANY RESULTS HALF-YEAR 2020 7 Customer 1st Brand, Team & Culture Build connected capabilities for Connected and Convenient Ways to Shop the future Create differentiation in Differentiate our Evolve our Unlock Value all our businesses Food Customer Drinks Business i
Slide 8: Progress against key priorities
Progress against key priorities COMPANY RESULTS HALF-YEAR 2020 8 Customer 1st Connected and Differentiate our Food Brand, Team & Culture Convenient Ways to Shop Customer Propositions • Strong improvement in Brand NPS • Strong online sales growth across • 36 Renewals and 15 new stores X businesses in
Slide 9: Progress against key priorities
Progress against key priorities COMPANY RESULTS HALF-YEAR 2020 9 Evolve our Unlock Value in our Better for Customers, Simpler Drinks Business Portfolio & Safer for Stores & Support • Nine Dan Murphy’s opened • Announced and progressed separation • Notable team safety improvements; of Endeavour Group
Slide 10: Woolworths Group digital retail ecosystem
Woolworths Group digital retail ecosystem COMPANY RESULTS HALF-YEAR 2020 10 Delivery Now Delivery Next day Same day (Supermarkets) Delivery (Food stores) Unlimited Pick up In-store woolworths.com.au Drive-thru Our customers Technology-enabled platform businesses eCom Digital, Data & Loyalty & Retail
Slide 11: Contents
COMPANY RESULTS HALF-YEAR 2020 11 Contents H20 GROUP SUMMARY & PROGRESS 4 Brad Banducci 12 GROUP FINANCIAL RESULTS Stephen Harrison Group financial results Key balance sheet metrics Cash flow summary Capital expenditure Capital management BUSINESS PERFORMANCE UPDATE 24 OUTLOOK 50 Brad Banducci
Slide 12: Financial Results
COMPANY RESULTS HALF-YEAR 2020 12 Financial Results
Slide 13: H20 results summary
H20 results summary COMPANY RESULTS HALF-YEAR 2020 13 Reported PRE-AASB 16 REPORTED REPORTED1 $ MILLION H20 H19 CHANGE Continuing operations before significant items Sales 32,410 30,587 6.0% EBIT 1,893 1,419 33.5% NPAT 979 902 8.5% Basic EPS – cents 77.9 68.9 13.1% Group after significant items EBIT
Slide 14: Normalised Group EBIT up 11.4% on F19
Normalised Group EBIT up 11.4% on F19 COMPANY RESULTS HALF-YEAR 2020 14 Group EBIT/(LBIT) Post-AASB 16 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 2 3 NORMALISED1 $ MILLION H20 H19 CHANGE Continuing operations before significant items Australian Food 1,177 1,090 8.0% New Zealand Food 175 161 8.8%
Slide 15: Group EBIT excluding AASB 16 impact in F20
Group EBIT excluding AASB 16 impact in F20 COMPANY RESULTS HALF-YEAR 2020 15 Group EBIT/(LBIT) Pre-AASB 16 PRE-AASB 16 PRE-AASB 16 NORMALISED1 REPORTED2 3 NORMALISED1 $ MILLION H20 H19 CHANGE Continuing operations before significant items Australian Food 1,018 933 9.0% New Zealand Food 150 137 9.7%
Slide 16: Impact of restatement for salaried store team member remediation
Impact of restatement on financial statements for salaried COMPANY RESULTS 16 HALF-YEAR 2020 store team member remediation $ MILLION FINANCIAL STATEMENT IMPACT F18 and pre-F18 payment shortfall 263 Opening retained earnings - F19 balance sheet H19 payment shortfall 26 H19 profit or loss and balance
Slide 17: Key P&L lines impacted by the introduction of AASB 16
Key P&L lines impacted by the introduction of AASB 16. COMPANY RESULTS HALF-YEAR 2020 17 Similar NPAT impact in both years H201 Pre-AASB 16 $ MILLION NORMALISED2 REPORTED Impact of AASB 16 EBITDA 2,263 3,141 878 D&A (659) (1,248) (589) EBIT 1,604 1,893 289 Interest expense (71) (440) (369) Tax (452)
Slide 18: Key balance sheet lines impacted by introduction of AASB 16
Key balance sheet lines impacted by introduction of AASB 16 COMPANY RESULTS HALF-YEAR 2020 18 Recognition of lease assets +$12.2bn, net deferred tax assets +$0.6bn 36.4 36.7 Recognition of lease liabilities +$14.7bn and other adjustments -$0.5bn 27.3 27.3 Increase in total net debt due to lease 23.6
Slide 19: Balance sheet metrics improved on prior year
Balance sheet metrics improved on prior year COMPANY RESULTS HALF-YEAR 2020 19 Average inventory days Normalised ROFE Days Percentage Continuing operations Group Continuing operations – post-AASB 16 Continuing operations – pre-AASB 16 41.6 41.3 40.6 40.5 40.3 39.3 24.2 38.9 38.3 37.3 37.1 13.3 14.6
Slide 20: Free cash flow lower than prior year due to working capital timing
Free cash flow lower than prior year due to working COMPANY RESULTS 20 HALF-YEAR 2020 capital timing PRE-AASB 16 REPORTED REPORTED1 $ MILLION H20 H19 CHANGE EBITDA – continuing operations 3,141 2,030 54.8% +ve AASB 16 impact with fixed rent becoming lease interest and repayment of lease liabilities.
Slide 21: Operating capex below prior year
Operating capex below prior year due to Supply Chain COMPANY RESULTS HALF-YEAR 2020 21 and timing of Renewal spend Operating capex – H20 $ MILLION H20 H191 Continuing operations 10% 10% 6% Operating capex2 683 800 Property development 222 227 23% $683m Gross capex 905 1,027 35% Property sales (174)
Slide 22: Capital management and funding
Capital management and funding COMPANY RESULTS HALF-YEAR 2020 22 Fully-franked interim dividend up 2.2% to 46 cps Dividends (cents per share) 7 10 • Dividend up 2.2% on the prior year. 57 Excluding non-comparable Petrol earnings 50 10 in H19, interim dividend is up 9.5% • DRP remains active, no disc
Slide 23: Contents
COMPANY RESULTS HALF-YEAR 2020 23 Contents H20 GROUP SUMMARY & PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 12 Stephen Harrison BUSINESS PERFORMANCE UPDATE 24 OUTLOOK 50 Brad Banducci
Slide 24: COMPANY RESULTS HALF-YEAR 2020
COMPANY RESULTS HALF-YEAR 2020 24
Slide 25: Australian Food
Australian Food COMPANY RESULTS HALF-YEAR 2020 25 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 NORMALISED1 H20 H19 CHANGE Sales ($m) 21,200 19,928 6.4% EBITDA ($m) 1,929 1,757 9.8% EBIT ($m) 1,177 1,090 8.0% Gross margin (%) 29.1 28.8 38 bps Cost of doing business (%) 23.6 23.3 29 bps EBIT to sale
Slide 26: Australian Food delivering strong sales in H1
Australian Food delivering strong sales in H1 COMPANY RESULTS HALF-YEAR 2020 26 Total sales (% year on year) Comp transactions (% year on year) 7.8 2.8 1.9 1.5 1.4 4.9 0.7 4.7 4.0 Q2 F19 Q3 F19* Q4 F19* Q1 F20 Q2 F20 2.7 Comp items per basket (% year on year) 2.6 2.6 Q2 F19 Q3 F19* Q4 F19* Q1 F20 Q2
Slide 27: Brand NPS remains strong; plans in place to improve customer scores in H2
Brand NPS remains strong; plans in place to improve COMPANY RESULTS 27 customer scores in H2 HALF-YEAR 2020 Store-controllable VOC1 NPS - Store & Online1,2 % customers satisfied, 6 & 7 out of 7 % promoters - % detractors -3 -4 83 80 80 80 78 55 52 51 49 47 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q2'19 Q3'19 Q
Slide 28: F20 strategy
F20 strategy COMPANY RESULTS HALF-YEAR 2020 28 Customer 1st Brand, Team & Culture Build Customer & Connected, Personalised and Convenient Team advocacy Ways to Shop my Woolies Differentiate our Core Customer Offer Trusted Prices Engaging and Famous for Fresh and Localised Easy Woolies Every Time Ran
Slide 29: Progress highlights
Progress highlights COMPANY RESULTS HALF-YEAR 2020 29 Innovate our customer and team experience Customer scores WooliesX Team and Safety Community & Bushfires 51 VOC NPS 38% H20 Online 13,400* team members 200 pallets of Food and +2 pts vs Q1 F20; -4 vs H19 Sales Growth; 4.4% sales completed I am He
Slide 30: Woolworths in the community
Woolworths in the community COMPANY RESULTS HALF-YEAR 2020 30 Supporting Communities • Awarded 617 primary schools up to $1,000 each to inspire the next generation of environmental champions via Woolworths Junior Landcare Grants • More than $1 million raised in partnership with customers at Christma
Slide 31: WooliesX showing continued strong momentum
WooliesX showing continued strong momentum COMPANY RESULTS HALF-YEAR 2020 31 Strong eCom momentum Ultra-convenient experiences Rewards expansion eCom growth at 38% YoY in H1, supported by continued strong Continued investment 12 million into digital growth in Pick up offer ...members in our Rewards
Slide 32: COMPANY RESULTS HALF-YEAR 2020
COMPANY RESULTS HALF-YEAR 2020 32
Slide 33: New Zealand Food
New Zealand Food COMPANY RESULTS HALF-YEAR 2020 33 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 NORMALISED1 NZD H20 H19 CHANGE Sales ($m) 3,564 3,401 4.8% EBITDA ($m) 316 294 7.5% EBIT ($m) 186 175 6.4% Gross margin (%) 24.7 24.3 46 bps Cost of doing business (%) 19.5 19.1 38 bps EBIT to sales (%)
Slide 34: New Zealand Food F20 priorities
New Zealand Food F20 priorities COMPANY RESULTS HALF-YEAR 2020 34 Customer 1st Brand, Team and Culture Differentiate through innovation Create Convenient, Connected and and culture Innovative Shopping Experiences Grow customer loyalty through a stronger core Prices I Trust, Good Food with a Genuine
Slide 35: New Zealand Food highlights
New Zealand Food highlights COMPANY RESULTS HALF-YEAR 2020 35 H1 highlights Customer 1st Convenient and Sales Growth Great Prices Team 1st Connected and Good Acts NPS 4.8% Continued brand advocacy 32.7% H1 online sales growth vs last year strengthening to new highs TEAM 8.2% Online sales penetration
Slide 36: COMPANY RESULTS HALF-YEAR 2020
COMPANY RESULTS HALF-YEAR 2020 36
Slide 37: BIG W
BIG W COMPANY RESULTS HALF-YEAR 2020 37 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 NORMALISED1 H20 H19 CHANGE Sales ($m) 2,149 2,091 2.8% EBITDA ($m) 138 112 23.6% EBIT ($m) 50 20 155.3% Gross margin (%) 32.6 31.2 137 bps Cost of doing business (%) 30.2 30.3 (2) bps EBIT to sales (%) 2.3 0.9 139
Slide 38: BIG W F20 priorities
BIG W F20 priorities COMPANY RESULTS HALF-YEAR 2020 38
Slide 39: BIG W highlights
BIG W highlights COMPANY RESULTS HALF-YEAR 2020 39 H20 highlights Focus for the next 6 months Simplification of business processes and operations continued 1 Simplify business by continuing to curate ranges and streamline processes Continued to invest in price where it matters with more focus on ful
Slide 40: Endeavour Group
COMPANY RESULTS HALF-YEAR 2020 40 Endeavour Group
Slide 41: Separation of Endeavour Group Limited update
Separation of Endeavour Group Limited update COMPANY RESULTS HALF-YEAR 2020 41 The creation of Endeavour Group was completed in early February through the internal restructure of Woolworths Group's retail drinks business, and the merger of this business with ALH Group As a result of these transactio
Slide 42: COMPANY RESULTS HALF-YEAR 2020
COMPANY RESULTS HALF-YEAR 2020 42
Slide 43: Endeavour Drinks
Endeavour Drinks COMPANY RESULTS HALF-YEAR 2020 43 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 NORMALISED1 H20 H19 CHANGE Sales ($m) 4,775 4,560 4.7% EBITDA ($m) 465 441 5.1% EBIT ($m) 338 316 6.7% Gross margin (%) 23.2 22.8 42 bps Cost of doing business (%) 16.2 15.9 29 bps EBIT to sales (%) 7.1
Slide 44: Dan Murphy's highlights
Dan Murphy’s highlights COMPANY RESULTS HALF-YEAR 2020 44 H1 highlights Successful relaunch Complete review of the Successful relaunch 9 new stores taking Continued strong of My Dan’s loyalty wine range of the Dan Murphy’s total fleet to 239. performance in VOC program. Over 4m Delivering a localise
Slide 45: BWS highlights
BWS highlights COMPANY RESULTS HALF-YEAR 2020 45 H1 highlights 7 Opened 7 net new stores On demand delivery New product lines New BWS APP +250k New partnership bringing the total store expanded to 740 stores launched supporting downloads supported by with Uber launched network to 1,353 and driving d
Slide 46: Endeavour Drinks F20 priorities
Endeavour Drinks F20 priorities COMPANY RESULTS HALF-YEAR 2020 46 Customer 1st Brand, Team and Culture Innovate our customer and Deliver increasingly effortless, personal and inspiring experiences. team experience Evolve portfolio to support core and develop new growth avenues Differentiate our core
Slide 47: Broadbeach Tavern, QLD
COMPANY RESULTS HALF-YEAR 2020 47 Broadbeach Tavern, QLD
Slide 48: Hotels
Hotels COMPANY RESULTS HALF-YEAR 2020 48 POST-AASB 16 POST-AASB 16 REPORTED NORMALISED1 NORMALISED1 H20 H19 CHANGE Sales ($m) 919 865 6.2% EBITDA ($m) 342 327 4.7% EBIT ($m) 224 207 8.3% Gross margin (%) 83.7 84.2 (57) bps Cost of doing business (%) 59.2 60.3 (105) bps EBIT to sales (%) 24.4 23.9 47
Slide 49: Contents
COMPANY RESULTS HALF-YEAR 2020 49 Contents H20 GROUP SUMMARY & PROGRESS 4 Brad Banducci GROUP FINANCIAL RESULTS 12 Stephen Harrison BUSINESS PERFORMANCE UPDATE 24 OUTLOOK 50 Brad Banducci
Slide 50: Outlook and focus for H2
Outlook and focus for H2 COMPANY RESULTS HALF-YEAR 2020 50 Slower start to Q3 reflecting a volatile consumer and natural environment. Despite this we are confident in our plans for H2 Higher food inflation expected to continue in Australian and New Zealand Food. Costs to be impacted by new EAs, whil
Slide 51: Glossary
Glossary COMPANY RESULTS HALF-YEAR 2020 51 Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Comparable sales Measure of sales which excludes stores that have been opened or closed in the last 12 months and demonstrable impa
Slide 52: Glossary continued
Glossary continued COMPANY RESULTS HALF-YEAR 2020 52 Renewals A total store transformation focused on the overall store environment, team, range and process efficiency (including digital) Return on Funds Employed ROFE is calculated as EBIT before significant items for the previous 12 months as a per
Slide 53: Glossary
Glossary COMPANY RESULTS HALF-YEAR 2020 53 Other non-IFRS measures used in describing the business performance include: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • EBIT – pre-AASB 16 • Normalised EBIT • Cash flow from operating activities before interest and tax • Signi
Slide 54: Disclaimer
Disclaimer COMPANY RESULTS HALF-YEAR 2020 54 This presentation contains summary information about Woolworths Group Limited (Woolworths Group) and its activities current as at the date of this presentation. It should be read in conjunction with Woolworths’ other periodic and continuous disclosure ann
Slide 55: Thank you
COMPANY RESULTS HALF-YEAR 2020 55 Thank you