Wesfarmers Limited · ASX:WES
Wesfarmers — Debt Investor Presentation (2021)
44 slides from Wesfarmers's debt investor presentation, 2021
Slide 1: 2021 Half-year results debt investor update
2021 Half-year results debt investor update
Slide 2: Group performance overview
Group performance overview 7 Wesfarmers
Slide 3: Maintaining a long-term focus, consistent with our values
Maintaining a long-term focus, consistent with our values Anticipating the needs of our Looking after our team Engaging fairly with our customers and delivering members and providing a safe, suppliers and sourcing ethically competitive goods and services fulfilling work environment and sustainably •
Slide 4: Financial overview
Financial overview Half-year ended 31 December ($m) 2020 2019 Var % Results from continuing operations excluding significant items Revenue 17,774 15,249 16.6 EBIT (after interest on lease liabilities) 2,057 1,615 27.4 NPAT 1,414 1,127 25.5 Basic earnings per share (cps) 125.0 99.6 25.5 Results inclu
Slide 5: Operational highlights
Operational highlights • Bunnings: Strong revenue and earnings growth; strong growth across all product categories, particularly garden and outdoor living, and major trading regions; strength of the result reflects Bunnings’ solid execution of the strategic agenda and ability of the operating model
Slide 6: Divisional sales performance
Divisional sales performance Sales performance ($m) 1H20 Half-year ended 31 December 1H21 Retail sales (excludes Catch) Revenue Total sales +24.3% +7.1% +2.3% +23.6% (6.6%) +4.7% growth Comp sales +27.7% +9.1% +13.0% growth 9,046 7,275 3,417 3,658 1,492 1,527 1,226 1,515 889 830 858 898 Bunnings Kma
Slide 7: Divisional earnings performance
Divisional earnings performance EBT1 ($m) % of divisional Half-year ended 31 December 2020 2019 Var (%) EBT Bunnings 1,274 938 35.8 62% Kmart Group2 487 343 42.0 23% Officeworks 100 82 22.0 5% WesCEF 160 173 (7.5) 8% Industrial and Safety3 37 7 n.m. 2% n.m. = not meaningful 1. Excludes significant i
Slide 8: Working capital and cash flow
Working capital and cash flow • Divisional operating cash flows increased Half-year ended 31 December ($m) 2020 2019 16.1%1 Working capital cash movement – Strong divisional earnings growth Receivables and prepayments 176 96 – Ongoing normalisation of working capital Inventory (671) (286) positions
Slide 9: Capital expenditure
Capital expenditure • Gross capital expenditure of $410m Half-year ended 31 December1 ($m) 2020 2019 Var % – Increased investment in data and digital capabilities in all divisions Bunnings 219 269 (18.6) – The successful conversion of 19 Target stores to Kmart stores, including 12 large formats Kmar
Slide 10: Mt Holland lithium project Final Investment Decision
Mt Holland lithium project Final Investment Decision • Wesfarmers together with 50:50 JV partner, SQM, Overview of Mt Holland lithium project approved the final investment decision (FID) for the Mt Holland lithium project • Provides new growth opportunity for WesCEF – Capitalises on strong chemical
Slide 11: Group outlook
Group outlook • Economic conditions in Australia have recovered strongly and the outlook is more positive, subject to future COVID-19 risks • Sales across the Group’s retail businesses have continued to remain strong through January and February, with some impact from government-mandated trading res
Slide 12: Debt management
Debt management Wesfarmers
Slide 13: Maintaining strong credit ratings and balance sheet
Maintaining strong credit ratings and balance sheet • Strong credit ratings: Moody’s A3 (stable outlook); Standard and Poor’s A- (stable outlook) • Maintaining prudent capital structure and strong credit rating is important to Wesfarmers • Continued strength in Group’s debt position – Strong liquidi
Slide 14: Pro-active debt management
Pro-active debt management • Continued focus on maturity profile and maintaining liquidity headroom provided by bilateral bank facilities – Increased committed bank facilities by $1.95b in May 2020 – Repaid A$500m five and one half-year domestic bonds in November 2020 Debt maturity profile1 $m 1,200
Slide 15: Debt capital market funding sources
Debt capital market funding sources • Commitment to ensure diversity of funding sources, including the domestic and international debt capital markets • Standard terms and conditions across all debt capital market programmes • Australian and European debt capital market programme documentation updat
Slide 16: Reduced funding costs
Reduced funding costs • Finance costs decreased by 13.0% to $60m in 1H21 (1H20: $69m) reflecting lower average debt balances – Weighted average cost of debt increased to 4.38% (1H20: 4.25%) due to a shift in the mix of debt towards higher cost bonds – Additional costs incurred due to undrawn facilit
Slide 17: Management of lease portfolio
Management of lease portfolio • Lease liabilities totalled $7.3b and represent ($m) 1H21 FY20 1H20 82% of Group fixed financial obligations as at Bunnings 3,822 3,727 3,873 31 December 2020 Kmart Group 2,875 2,943 3,136 • Average remaining lease tenure of 4.7 years1 (FY20: 4.8 years) Officeworks 342
Slide 18: Dividends & capital management
Dividends & capital management • Dividend policy takes into account through the cycle free cash flow requirements and debt refinancing • Fully-franked interim ordinary dividend of $0.88 per share – Reflects strong underlying NPAT result – Takes into account available franking credits, strong balance
Slide 19: Appendix: 2021 Half-year results briefing presentation (Operational extract)
Appendix: 2021 Half-year results briefing presentation (Operational extract)
Slide 20: Bunnings
Bunnings PUNNINGS = BUNNINGS —Zphnas
Slide 21: Bunnings performance summary
Bunnings performance summary Half-year ended 31 December ($m) 2020 2019 Var % Revenue 9,054 7,276 24.4 EBITDA 1,669 1,316 26.8 Depreciation and amortisation (337) (321) (5.0) EBIT 1,332 995 33.9 Interest on lease liabilities (58) (57) (1.8) EBT 1,274 938 35.8 Net property contribution 1 22 n.m. EBT
Slide 22: Bunnings sales and earnings overview
Bunnings sales and earnings overview • Revenue growth of 24.4% to $9,054m – Total store sales growth of 24.8% – Store-on-store sales growth of 27.7% – Strong growth across all product categories and major trading regions – Particularly strong growth in garden and outdoor living – Online penetration
Slide 23: Bunnings progress on strategy
Bunnings progress on strategy • Investing in customer experience – Investment in lower prices across a wide number of categories and products – 6,000 additional team members to service increased demand – Product display upgrades and refreshed ranges • Development of the digital agenda – Ongoing enha
Slide 24: Bunnings outlook
Bunnings outlook • Outlook remains uncertain • Trading performance expected to continue to benefit from consumers continuing to spend more time at home • Sales and earnings growth likely to moderate from March as the business begins to cycle the initial impacts of COVID-19 in the prior year • Contin
Slide 25: Kmart Group
Kmart Group
Slide 26: Kmart Group performance summary
Kmart Group performance summary Half-year ended 31 December ($m)1 2020 2019 Var % Revenue 5,441 4,990 9.0 EBITDA2 818 696 17.5 Depreciation and amortisation (283) (292) 3.1 EBIT2 535 404 32.4 Interest on lease liabilities (48) (52) 7.7 EBT2 487 352 38.4 EBT including payroll remediation costs 487 34
Slide 27: Kmart and Target performance overview
Kmart and Target performance overview • Revenue growth of 5.7% to $5,112m Half-year ended 31 December ($m) 2020 2019 Var % – Kmart comparable sales growth of 9.1% – Target comparable sales growth of 13.0% Revenue 5,112 4,835 5.7 – Very strong growth in online EBITDA1 822 685 20.0 EBT1 502 348 44.3 •
Slide 28: Kmart and Target progress on strategy
Kmart and Target progress on strategy • Kmart continued to invest in initiatives to enhance its customer offer, including new in-store retail technology and the development of data and digital capabilities • Good progress on actions to accelerate the growth of Kmart and optimise the Target store net
Slide 29: Catch performance overview
Catch performance overview • Strong growth across both the in-stock and marketplace Half-year ended 31 segments December ($m)1 2020 2019 – Gross transaction value growth of 95.6% Gross transaction value 610 255 Revenue 329 155 • Accelerated investment in marketing and capability – Active customers i
Slide 30: Kmart Group outlook
Kmart Group outlook • In an uncertain and volatile environment, Kmart Group is well-positioned for the future • Current global supply chain disruptions expected to continue • Kmart will continue to focus on investing for future growth – Accelerating development of new technology capabilities and opt
Slide 31: Officeworks
Officeworks
Slide 32: Officeworks performance summary
Officeworks performance summary Half-year ended 31 December ($m) 2020 2019 Var % Revenue 1,523 1,231 23.7 EBITDA 156 137 13.9 Depreciation and amortisation (51) (48) (6.3) EBIT 105 89 18.0 Interest on lease liabilities (5) (7) 28.6 EBT 100 82 22.0 EBT margin (%) 6.6 6.7 RoC1 (R12, %) 23.4 17.2 Total
Slide 33: Officeworks sales and earnings overview
Officeworks sales and earnings overview • Sales growth of 23.6% % Sales growth momentum – Every-channel offer continues to deliver strong sales 30 28.5 growth in stores and online 25 23.6 – Online sales penetration approximately 37%, including 20 Click and Collect sales 15 11.5 – Increased demand fo
Slide 34: Officeworks progress on strategy
Officeworks progress on strategy Our team – Continued focus on the safety, health and wellbeing of the team Customer experience – Investment in data analytics capabilities to improve marketing and increase the personalisation of communications with customers – New and expanded product ranges Connect
Slide 35: Officeworks outlook
Officeworks outlook • Outlook is uncertain but Officeworks remains well-positioned for the future • Sales and earnings growth likely to moderate from March as the business begins to cycle the initial impacts of COVID-19 in the prior year • Execution of strategy to drive long-term growth – Investment
Slide 36: Chemicals, Energy and Fertilisers
Chemicals, Energy and Fertilisers
Slide 37: Chemicals, Energy and Fertilisers performance summary
Chemicals, Energy and Fertilisers performance summary Half-year ended 31 December ($m)1 2020 2019 Var % Revenue2 Chemicals 489 510 (4.1) Energy 206 219 (5.9) Fertilisers 135 160 (15.6) Total 830 889 (6.6) EBITDA 202 214 (5.6) Depreciation and amortisation (42) (41) (2.4) EBIT 160 173 (7.5) Interest
Slide 38: Chemicals, Energy and Fertilisers overview
Chemicals, Energy and Fertilisers overview • Revenue of $830m down 6.6%, driven by a combination of lower Chemicals and Fertilisers sales volumes and lower energy prices (Saudi CP1) • Earnings of $160m down 7.5% impacted by lower AN2 sales and weaker export demand in the sodium cyanide business • Ch
Slide 39: Chemicals, Energy and Fertilisers outlook
Chemicals, Energy and Fertilisers outlook • Production and demand for AN expected to remain stable • Weaker sodium cyanide export demand is expected to continue, driven by ongoing disruption to international gold mines due to COVID-19 • The sodium cyanide business is investigating opportunities to e
Slide 40: Industrial and Safety
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Slide 41: Industrial and Safety performance summary
Industrial and Safety performance summary Half-year ended 31 December ($m) 2020 2019 Var % Revenue 898 858 4.7 EBITDA1 76 61 24.6 Depreciation and amortisation (37) (36) (2.8) EBIT1 39 25 56.0 Interest on lease liabilities (2) (3) 33.3 EBT1 37 22 68.2 EBT including payroll remediation costs 37 7 n.m
Slide 42: Industrial and Safety overview
Industrial and Safety overview • Industrial and Safety businesses continued to support customers in response to COVID-19 – Sourcing critical products including respiratory, cleaning and hygiene products – Ensuring critical oxygen supply to hospital groups – Providing additional risk consulting servi
Slide 43: Industrial and Safety outlook
Industrial and Safety outlook • Market conditions are expected to remain uncertain and challenging for the remainder of FY21 • Blackwoods continues to focus on improving the customer value proposition – Build on improvements to its core operational capabilities – Progress the implementation of the E
Slide 44: Questions
Questions