Metcash Limited · ASX:MTS
Metcash — FY2020 Earnings Presentation
41 slides from Metcash's earnings presentation, Jun 22, 2020
Slide 1: FY20 Full Year Results
FY20 Full Year Results 22 June 2020 This slide must be copied from pre-formatted slide to retain the lines and logo.
Slide 2: Group update and divisional results
Group update and divisional results Jeff Adams Group Chief Executive Officer FY20 FullFY20 YearFull Results 1 1 Year Results
Slide 3: Championing Successful Independents
Our purpose Our vision Our values Best store in town We believe: Championing Independence is worth fighting for; in treating our people, Successful Passionate about independents retailers and suppliers the way we like to be treated; and in Independents A favourite place to work giving back to the co
Slide 4: FY20 – an unprecedented year
FY20 – an unprecedented year A year of challenges • The year included significant challenges including devastating bushfires and the global COVID-19 pandemic • These challenges highlighted the vital role our independent retailers play in supporting their local communities • We proudly supported our
Slide 5: FY20 – an unprecedented year continued
FY20 – an unprecedented year continued COVID-19 pandemic • Reset business priorities early in response to COVID-19 pandemic • Protecting the health and wellbeing of our people • Keeping our supply chains open to ensure delivery of essential goods • Keeping our business financially strong by protecti
Slide 6: Group highlights
Group highlights • Group revenue increased 2.9% to $13.0bn and, including charge through sales, was up 2.0% to $14.9bn • All Pillars responded well to service our retailers in a very challenged environment impacted by both bushfires and COVID-19 • Food delivered sales growth, even if the positive up
Slide 7: Results overview by pillar
Results overview by pillar FY20 FY19 Change $m $m % Sales revenue (%) (including charge through) Sales revenue (including charge through sales) Food 9,103.7 8,794.3 3.5% 14% Liquor 3,678.4 3,666.9 0.3% Food Hardware 2,075.0 2,102.0 (1.3%) 25% 61% Liquor Total sales revenue (including charge through
Slide 8: Food – sales
Food – sales Supermarkets FY20 FY19 Change • Total sales (including charge through) increased 3.8% to $7.5bn (+6.1% ex Drakes impact1) $m $m % • Total sales for the 10 months to February (excludes higher COVID-19 sales months of March Food and April) were up 0.2% on the prior year Supermarkets reven
Slide 9: Food – EBIT
Food – EBIT • Reported EBIT of $182.7m includes a positive AASB16 adjustment of $5.2m FY20 FY19 Change $m $m % • EBIT (pre AASB16) declined $5.2m (2.8%) to $177.5m Total revenue1 (including charge through) 9,103.7 8,794.3 3.5% • Underlying EBIT (pre AASB16) improved by ~$12m after adjusting for: EBI
Slide 10: Food – COVID-19
Food – COVID-19 COVID-19 change Impact on Food pillar and response • Change in consumer behaviour • Food sales up ~18% in March and April • Increase in number of people cooking at home • Increase in new customer visits • Preference for local neighbourhood shopping • Increase in average basket size •
Slide 11: Food – MFuture Initiatives
Food – MFuture Initiatives • Small format store trial completed with learnings being rolled • Community Co well received by retailers and customers out to Xpress network • New ranges launched in ready meals, delivering value to • First ‘SupaValu’ large format store opened at Doonside, NSW customers
Slide 12: Liquor – sales
Liquor – sales • Total sales (including charge through) increased 0.3% to $3.7bn, despite FY20 FY19 Change $m $m % being adversely impacted by COVID-19 restrictions in March/April Total revenue as per Statutory Accounts 3,670.3 3,658.8 0.3% • Total sales for the 10 months to February (pre COVID-19 i
Slide 13: Liquor – EBIT
Liquor – EBIT • Reported EBIT of $72.8m includes a positive AASB16 adjustment of $2.2m FY20 FY19 Change $m $m % • EBIT (pre AASB16) decreased $0.6m to $70.6m reflecting the impact of COVID-19 Total revenue1 (including charge through) 3,678.4 3,666.9 0.3% restrictions EBIT (Statutory Accounts) 72.8 7
Slide 14: Liquor – COVID-19
Liquor – COVID-19 COVID-19 change Impact on Liquor pillar and response • Change in consumer behaviour • Sales mix move to classic beer & everyday wine • Move from ‘premiumisation’ to everyday value - likely to continue under • IBA remained competitive during this period, increase in new customers un
Slide 15: Liquor – MFuture initiatives
Liquor – MFuture initiatives • Accelerating growth opportunities through expansion of digital capability • Launched new e-commerce platform ‘Shop My Local’ in April with 200+ stores • Significant retailer engagement and support for Loyalty program • Integrated POS program underway • Data excellence
Slide 16: Hardware – sales
Hardware – sales • Total sales (including charge through) decreased 1.3% to $2.08bn reflecting the impact of the FY20 FY19 Change slowdown in construction activity on Trade sales and the loss of a large HTH customer in QLD $m $m % in 1H19 Total revenue as per Statutory Accounts 1,233.5 1,165.1 5.9%
Slide 17: Hardware – EBIT
Hardware – EBIT • Reported EBIT of $84.2m includes a positive AASB16 adjustment of $3.0m FY20 FY19 Change $m $m % • EBIT (pre AASB16) was in line with FY19 at $81.2m Total revenue1 (including charge through) 2,075.0 2,102.0 (1.3%) • The impact of the decline in sales was offset by: EBIT (Statutory A
Slide 18: Hardware – COVID-19
Hardware – COVID-19 COVID-19 change Impact on Hardware pillar and response • Change in consumer behaviour • LfL Scan Sales up 11.6% across March/April • Increase in DIY projects • Increase in customer visits • Preference for local neighbourhood shopping • Increase in average basket size Look to reta
Slide 19: Hardware – MFuture initiatives
Hardware – MFuture initiatives • Sapphire store upgrades continuing to improve the • Further advanced leading Trade technology including: Truck quality of the network. 90 stores have completed the Tracker, Trade Online and Trade+ program delivering average retail sales growth of >15% • Significant i
Slide 20: Financials
Financials Brad Soller Group Chief Financial Officer FY20 FullFY20 YearFull Results 19 19 Year Results
Slide 21: AASB16 Leases
AASB16 Leases Metcash adopted AASB16 on 1 May 2019 which has resulted in the recognition of ‘right of use’ assets, lease receivables and lease liabilities. Balance Sheet • Initial recognition of ‘right of use’ asset, sublease receivable and offsetting liability • Asset value of $936.8m (includes ‘ri
Slide 22: Profit & Loss
Profit & Loss FY20 FY20 FY19 (Post AASB16) (Pre AASB16) (Pre AASB16) $m $m $m Sales revenue 13,025.4 13,025.4 12,660.3 EBITDA 492.1 383.6 386.4 Depreciation and amortisation (157.2) (59.4) (56.4) EBIT 334.9 324.2 330.0 Net finance costs (52.0) (25.9) (28.9) Profit before tax and NCI 282.9 298.3 301.
Slide 23: Significant items
Significant items FY20 1H20 FY19 $m $m $m Impairment of goodwill and other assets 242.4 242.4 - COVID-19 related impairment 15.6 - - MFuture restructure costs and South Australia DC costs 10.5 6.9 5.6 Working Smarter and HTH restructure costs - - 19.4 Total significant items before tax 268.5 249.3 2
Slide 24: Cashflows
Cashflows FY20 FY20 FY19 (Post AASB16) (Pre AASB16) (Pre AASB16) $m $m $m Net cash from operating activities 117.5 33.0 244.9 Net cash used in investing activities (36.4) (81.6) (47.9) Capital expenditure (61.5) (61.5) (54.2) Acquisitions of businesses (29.7) (29.7) (11.8) Proceeds from sale of busi
Slide 25: Balance Sheet
Balance Sheet 30 April 2020 30 April 20191 (Post AASB16) (Pre AASB16) $m $m Trade receivables and prepayments 1,559.0 1,472.5 Inventories 1,032.2 779.3 Trade payables and provisions (2,181.9) (2,051.5) Net working capital 409.3 200.3 Intangible assets 581.8 793.5 Property, plant and equipment 214.0
Slide 26: Capital management
Capital management • Steps taken to strengthen balance sheet in April due to uncertainty associated with COVID-19 • Raised ~$300m of equity • Secured additional $180m of committed short term debt facilities • Additional financial flexibility has enabled the Group to: • Support the retailer network d
Slide 27: Total Tools
Total Tools About Total Tools • Total Tools Holdings Pty Ltd (“Total Tools”) is the franchisor to the largest tool retail network in Australia • 81 stores nationwide generating sales of ~$555m1 • Differentiated by targeting professional tradespeople (“tradies”) who require high quality tools for 1 c
Slide 28: Total Tools continued
Total Tools continued Proposed acquisition • To acquire 70% of Total Tools for ~$57m1 • Consistent with Metcash’s successful approach in its Hardware pillar, Metcash would look, over time, to have a mix of store ownership, including both independently owned and joint venture retail stores • The prop
Slide 29: Net debt
Net debt Debt Maturity Profile FY20 FY19 $m $m 400 350 Net debt1 300 Gross debt (188.4) (178.1) 250 Cash and cash equivalents 275.1 142.6 200 $m Net cash / (debt) 86.7 (35.5) 150 100 50 Debt metrics and ratios 0 FY21 FY22 FY23 FY24 FY25 Weighted average debt maturity 1.8 years 2.9 years Working capi
Slide 30: Dividends
Dividends • FY20 final dividend • 6.5 cents per share, fully franked • Ex-dividend date: 7 July 2020 • Record date: 8 July 2020 • Payment date: 5 August 2020 • Total dividends for FY20 12.5 cents per share, fully franked • Dividend payout ratio of ~60% of underlying earnings per share FY20 Full Year
Slide 31: Group Outlook
Group Outlook Jeff Adams Group Chief Executive Officer FY20 FullFY20 YearFull Results 30 30 Year Results
Slide 32: Outlook
Outlook Food • Sales in the first seven weeks of FY21 continued to benefit from a change in consumer behaviour with total Food sales up 9.3%, and Supermarkets wholesale sales (ex-tobacco) up 16.7% (ex Drakes impact) • The earnings benefit from the increase in sales continues to be marginally offset
Slide 33: Outlook continued
Outlook continued Hardware • Hardware sales for the first seven weeks of FY21 have increased 9.4% underpinned by continuing strong demand in DIY categories • Trade sales in FY21 are expected to continue to be impacted by a slowdown in construction activity. Weak indicators of future residential cons
Slide 34: Appendices
Appendices 1. Financial history 2. AASB16 reconciliation 3. Bannered store numbers FY20 Full Year Results ‹#›
Slide 35: 1. Financial history
1. Financial history FY20 FY20 FY191 FY181 FY171 FY161 (Post AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) (Pre AASB16) Financial Performance Sales revenue ($m) 13,025.4 13,025.4 12,660.3 12,442.2 12,293.0 11,716.5 EBIT2 ($m) 334.9 324.2 330.0 334.6 304.8 286.7 Net finance costs ($m) (
Slide 36: 2. Impact of AASB16 – Profit & Loss
2. Impact of AASB16 – Profit & Loss FY20 AASB16 Pre AASB16 adjustment¹ Post AASB16 $m $m $m Food 177.5 5.2 182.7 Liquor 70.6 2.2 72.8 Hardware 81.2 3.0 84.2 Total Pillar EBIT 329.3 10.4 339.7 Corporate (5.1) 0.3 (4.8) Total underlying EBIT 324.2 10.7 334.9 Net finance costs (25.9) (26.1) (52.0) Tax
Slide 37: 2. Impact of AASB16 – Balance Sheet
2. Impact of AASB16 – Balance Sheet 30 April 2019 AASB16 AASB16 1 May 2019 (As reported) reclassifications adjustments (Post transition) $m $m $m $m Trade receivables and prepayments 1,472.5 - - 1,472.5 Inventories 779.3 - - 779.3 Trade payables and provisions (2,210.5) 159.0 - (2,051.5) Net working
Slide 38: 3. Bannered store numbers
3. Bannered store numbers April April 2020 2019 Pillar Supermarkets 1,623 1,673 Campbells 16 17 Liquor 2,679 2,667 Hardware 650 668 Total 4,968 5,025 Supermarkets Campbells Liquor Hardware Total Store movement Number of stores at April 2019 1,673 17 2,667 668 5,025 Stores opened / joined banner grou
Slide 39: 3. Bannered store numbers
3. Bannered store numbers April April 2020 2019 Supermarkets Supa IGA 323 373 IGA 789 792 IGA-Xpress 225 220 Total IGA bannered stores 1,337 1,385 Friendly Grocer / Eziway 286 288 Total Supermarkets 1,623 1,673 Liquor Cellarbrations 543 557 Bottle-O & Bottle-O Neighbourhood 232 237 IGA Liquor 471 46
Slide 40: Disclaimer Contact details
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 conju
Slide 41: Championing Successful Independents
Championing Successful Independents