Slide 1: Metcash Limited – 2013 Full Year Results Presentation
Metcash Limited ABN 32 112 073 480 50 Waterloo Road Macquarie Park NSW 2113 Australia PO Box 6226 24 June 2013 Silverwater Business Centre NSW 1811 Australia Ph: 61 2 9751 8200 Fax: 61 2 9741 3027 ASX Limited Company Announcements Office Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear
Slide 2: Company Results – Full Year Ending 30 April 2013
Company Results Full Year Ending 30 April 2013 24 June 2013.
Slide 3: Agenda
Agenda Andrew Reitzer, CEO Metcash Limited - Group Overview Silvestro Morabito, COO Metcash Food & Grocery - Divisional Highlights Fergus Collins, CEO ALM - Divisional Highlights Mark Laidlaw, CEO Mitre 10 - Divisional Highlights (Hardware & Automotive) Adrian Gratwicke, CFO Metcash Limite
Slide 4: Overview
Overview Solid Revenue, Profit and Growth: Wholesale sales up 3.8% Reported PAT up 128.9% Underlying PAT up 6.9% to $280.7m Underlying EPS of 32.6 cps within guidance Operating Cash Flow up 5.5% to $300m despite Franklins retail losses Final Dividend 16.5 cps (28.0 cps full year) Hig
Slide 5: Overview
Overview Group results influenced by: Continuing elevated marketing intensity in Food & Grocery sector Cautious, value conscious consumer still shopping for bargains Deleveraging effect of continued deflation in core grocery Retail losses on discontinued Franklins operations Dilutive EPS i
Slide 6: Financial Headlines
Financial Headlines FY13 FY12 Variance Note Fav / (Unfav) %Var Revenue - Reported $M 1 13,095.0 12,612.3 482.7 3.8% Strong Liquor result including 7 months of Wholesale Sales $M 2 12,976.6 12,501.1 475.5 3.8% LMG contract, plus Franklins and ABG Strong Liquor and Hardware & Auto results EBITA $M 460
Slide 7: Divisional Highlights - Metcash Food & Grocery (MF&G)
DIVISIONAL HIGHLIGHTS - Metcash Food & Grocery (MF&G) 55
Slide 8: Food & Grocery - Financials
Food & Grocery - Financials Variance Variance Food and Grocery FY13 FY12 $M % SALES ($M) 9,120.6 9,331.7 (211.1) (2.3%) EBITA ($M) 377.9 397.7 (19.8) (5.0%) EBITA MARGIN (%) 4.14% 4.26% Sales impacted by Campbells branches, closure of Cornetts and Walters stores in FNQ and also exit of stores in W
Slide 9: Food & Grocery - Franklins Strategy
Food & Grocery - Franklins Strategy Franklins Store Handover Summary Handover virtually complete: Significant new footprint in NSW New retailers – who can grow / expand in the future Increased operational leverage through Huntingwood DC Significant management effort to execute conversion o
Slide 10: Food & Grocery - Retail network
Food & Grocery - Retail network New store developments, extensions and refurbishments continue to progress Branded Stores (IGA – 3 channels + Friendly Grocer + Eziway) COMPLETED 1H COMPLETED 2H TOTAL FULL YEAR NO SQM NO SQM NO SQM New Stores 21 25,805 30 29,818 51 55,623 Conversions (1) 1 160 3 1,
Slide 11: Food & Grocery - Operational Highlights
Food & Grocery - Operational Highlights Store Buy-Back Program 50 completed Buy-Backs for the full year Retail uplift of +10% since transfer with anticipated annualised impact of +20% Significant opportunity to improve sales and m2 throughout network with improved execution Convenience CSD H
Slide 12: Food & Grocery - Business Initiatives
Food & Grocery - Business Initiatives Strategic campaign positioning IGA as the champion of brands, providing value through Locked Down Low Prices and contributing $60m to local communities through Community Chest Brand Promise – Four elements: Fresh, Range/Brands, Value and Community 10 10
Slide 13: Divisional Highlights - Australian Liquor Marketers (ALM)
DIVISIONAL HIGHLIGHTS - Australian Liquor Marketers (ALM) 11 11
Slide 14: ALM - Financials and Operations
ALM - Financials and Operations Variance Variance Liquor FY13 FY12 $M % SALES ($M) 2,917.6 2,336.2 581.4 24.9% EBITA ($M) 47.1 34.9 12.2 35.0% EBITA MARGIN (%) 1.61% 1.49% Overall sales growth 24.9% EBITA up 35% - Good leverage IBA1 performance up on LY 2.8% in a flat market IBA Beer sales doi
Slide 15: ALM - Story of Growth
ALM - Story of Growth Business continues to build with strong EBITA and Sales Growth over past three years 100.0 3,500.0 90.0 2,917.6 3,000.0 80.0 2,336.2 70.0 2,296.6 2,500.0 60.0 EBITA $M Sales $M 2,000.0 50.0 47.1 34.9 1,500.0 40.0 30.1 30.0 1,000.0 20.0 500.0 10.0 - - 2011 2012 2013 13 13
Slide 16: ALM Hotel Strategy
ALM Hotel Strategy Hotel joint venture strategy has seen ALM acquire stakes in three hotels in South East Queensland Facilitates increased retail footprint for IBA Helps support independently owned and operated hotels ALM continues to review options to partner independent operators in key ma
Slide 17: Divisional Highlights - Hardware & Automotive
DIVISIONAL HIGHLIGHTS - Hardware & Automotive 15 15
Slide 18: Hardware & Automotive – Financials
Hardware & Automotive – Financials Variance Variance Hardware and Automotive FY13 FY12 $M % SALES ($M) 938.4 833.2 105.2 12.6% EBITA ($M) 36.2 21.2 15.0 70.8% EBITA MARGIN (%) 3.86% 2.54% Hardware EBIT improvement driven by: Gross margin growth through increased buying power Supply chain initi
Slide 19: Hardware – Operating Activities
Hardware – Operating Activities Mitre 10 strengthening Retail and Trade footprint Network includes 425 Branded stores and 400 Unbranded. 20 stores converted from competitors in last 12 months (52 converted since acquisition) 7 JVs established. Newest include Dahlsens (Qld) and Banner (SA)
Slide 20: Hardware & Automotive – Automotive Industry Focus
Hardware & Automotive – Automotive Industry Focus Business performing in line with expectations Automotive aftermarket parts industry worth $5.6 bn. Highly fragmented – significant number of independent operators along with franchise, service and retail chain models Opportunities to leverage
Slide 21: Hardware & Automotive – Expansion
Hardware & Automotive – Expansion $84m (including costs) Acquisition of ATAP Announced on 16 May 2013 Acquisition provides access to 2,500 independents ($1.5bn addressable market) Focus on network growth Opportunity for buying synergies and range expansion for both ATAP and ABG Opportunity
Slide 22: Supply Chain Update
Supply Chain Update Project Mustang Local council building approvals finalised Construction underway “Go Live” expected September 2014 (with commissioning period up to December 2014) Will pick store orders in exact store layout sequence providing more efficient store replenishment and reduci
Slide 23: 'Champion of the Independent Retailer' Financial Insights
'Champion of the Independent Retailer' Financial Insights 21 21
Slide 24: Financials
FINANCIALS 1. Balance Sheet Extract 2. Cash Flow Extract 3. Interest Expense 4. Significant Items 5. Equity Raising Update 22 22
Slide 25: Balance Sheet - Extract
Balance Sheet - Extract Trade and Other Payables Inventories Net Trade Creditor Funding Other Creditors / Provisions Net Creditor Funding Receivables / Derivatives Assets held for resale Net Working Capital Fixed assets and investments Intangible Assets Total Funds Employed Net Tax Balances Net Asse
Slide 26: Cash Flow Extract
Cash Flow Extract EBITDA - Underlying Net interest paid Taxation paid Earnings before Depreciation and Amortisation Significant items / Discontinued operations Working capital movement & other Total Cash Provided by Operating Activities Proceeds from sale of property, plant and equipment Purchase of
Slide 27: Interest Expense
Interest Expense FY13 FY12 Change $M $M $M Change (%) Fav / (Unfav) Interest Costs 58.5 74.9 16.4 21.9% Deferred Borrowing Costs 1.8 3.4 1.6 47.1% Discount Rate Adjustments 9.0 2.0 (7.0) (350.0%) Interest Expense (Total) 69.3 80.3 11.0 13.7% Interest Income 7.7 12.7 (5.0) (39.4%) Interest Expense (N
Slide 28: Significant Items
Significant Items FY13 FY12 $M $M Acquisition costs - ABG / ATAP 4.6 - Franklins legal costs / (ACCC recovery) (3.5) 6.3 Associate impairment - 105.7 Group restructure - 42.5 Franklins acquisition & restructure - 22.2 Significant Items (Before Tax) 1.1 176.7 Income Tax Expense / (Benefit) 1.1 (41.1)
Slide 29: Franklins Discontinued Operations
Franklins Discontinued Operations FY13 FY12 $M $M Revenue from sale of goods 1 109.2 139.2 Cost of sales and other costs (184.2) (175.3) Finance costs attributable to discounting of 2 (13.4) (2.8) provisions Gain on disposal of assets 3 2.5 - Loss before income tax (85.9) (38.9) Income tax benefit 2
Slide 30: Franklins – Store Numbers
Franklins – Store Numbers IGA 1 Closure Total Stores Stores Stores April 2013 Position 2 56 20 76 May/June Sales & Closures 5 3 8 June 2013 Expected Position 61 23 84 July/August Sales 4 0 4 Sept/October Sales 2 0 2 October 2013 Expected Position 67 23 90 23 stores have been closed, or are expecte
Slide 31: Franklins Acquisition – Wrap Up
Franklins Acquisition – Wrap Up $M Acquisition goodwill 256.1 NOTES: 1. Acquisition cost represents the total economic cost of acquiring Retail store discontinued losses (FY13 & FY12) 87.1 the wholesale business . This comprises the acquisition goodwill (including rental subsidy provision), losses f
Slide 32: Equity Raising Update
Equity Raising Update Sources $M Institutional Placement 325.0 Share Purchase Plan 50.0 Transaction Costs (6.8) Net Funds 368.2 Application Spent Committed Total $M Notes $M $M Acquisition of 49.9% of Mitre 10 47.9 - 47.9 Other Mitre 10 Acquisitions / JV's 55.2 1 21.3 76.5 Liquor Acquisitions / JV's
Slide 33: Future Plans
FUTURE PLANS @ ws & Strengthening the & ae Independents 31
Slide 34: Future Plans
Future Plans Transition period has enabled: Deeper understanding of the business Key insights and learnings from stakeholders: team, retailers and suppliers Understanding the challenges and opportunities Commenced Strategic Planning – Update at 1H14 (December): Develop strategic priorities
Slide 35: 'Champion of the Independent'
'Champion of the Independent' 33 33
Slide 36: Appendices
APPENDICES 1. Group Financial Highlights - (5 Year Trend) 2. Reconciliation - Group Results (Reported and Underlying) 3. Group Results by Division 4. EBITA by Division 5. Dividend and Capital Management Policy 6. Trend Metrics (Financial & Operational) 7. Sustainability Metrics 8. Directory of Terms
Slide 37: Financial Highlights – Group
FINANCIAL HIGHLIGHTS – Group 3535
Slide 38: Wholesale Sales
Wholesale Sales Group wholesale sales $13.0 bn up 3.8%: Includes wholesale sales to continuing Franklins stores Strong ALM sales including seven months of LMG contract Solid contribution by Hardware and new Automotive pillar 13,500 12,977 13,000 12,501 12,500 12,364 12,000 11,517 11,500 $M 10,
Slide 39: CODB as % of Gross Profit
CODB as % of Gross Profit Marginal CODB increase due to: Significant incremental marketing/advertising costs Rising utility and transport costs Impact of sales deflation against fixed costs Increase in long service leave Partly offset by improved warehouse efficiency such as KNAPP single
Slide 40: EBITA
EBITA EBITA growth of 2.0% driven by: Strong ALM and Hardware & Automotive results Drag on MF&G earnings caused by: deleveraging impact of deflation; delayed store rollouts; and elevated marketing spend 470.0 460.4 451.2 450.0 438.0 430.0 $M 410.0 401.2 390.0 371.3 370.0 350.0 2009 2010 2011 2
Slide 41: PAT
PAT Variance Variance FY13 FY12 $M % PAT ($M) - Underlying 1 280.7 262.5 18.2 6.9% PAT ($M) - Reported 3 206.0 90.0 116.0 128.9% 300.0 Reported 280.7 Underlying 262.5 256.2 Primarily impact of 244.9 241.4 Franklins 250.0 225.9 227.6 Discontinued 206.0 Operations 2 202.5 200.0 $M 150.0 100.0 90.0 NOT
Slide 42: Operating Cash Flow
Operating Cash Flow Strong operating cash flow of $300m Strong working capital performance Achieved despite ‘drag’ from Franklins retail losses and expenditure relating to provisions raised in the prior year 350.0 92.6% Cash Realisation 299.8 Ratio 294.7 300.0 284.3 248.1 250.0 200.0 $M 150.0
Slide 43: EPS
EPS Within guidance. Reflects dilution of 11.6% increase in WASO Variance Variance FY13 FY12 (cps) % EPS - Underlying (cps) 1 32.6 34.1 (1.5) (4.4%) EPS - Reported (cps) 24.0 11.7 12.3 105.1% 36.0 Reported 34.1 33.4 Underlying 32.6 32.0 31.5 31.0 29.5 29.7 Primarily reflects Franklins 26.5 Discontin
Slide 44: DPS
DPS The Board has declared a final dividend of 16.5 cents a share (fully franked) Dividend payout ratio: 116.7% of Reported EPS (FY12: 239.3%) 85.9% of Underlying EPS (FY12: 82.1%) Continuing strong payout ratio reflecting Board’s confidence in underlying position of the Group and strong cas
Slide 45: Reconciliation - Group Results (Reported and Underlying)
Reconciliation - Group Results (Reported and Underlying) FY13 FY12 FY13 FY12 $M $M EPS (cps) EPS (cps) EBITA 460.4 451.2 Net Interest (61.6) (67.6) Profit Before Tax and Amortisation 398.8 383.6 Tax (115.0) (112.9) Non Controlling Interest (3.1) (8.2) Underlying PAT 280.7 262.5 32.6 34.1 Intangible
Slide 46: Group Results by Division
Group Results by Division Wholesale Sales FY13 FY12 Variance $M $M $M Food and Grocery 9,120.6 9,331.7 (211.1) Liquor 2,917.6 2,336.2 581.4 Hardware & Automotive 938.4 833.2 105.2 Metcash Total 12,976.6 12,501.1 475.5 EBITA FY13 FY12 Variance $M $M $M Food and Grocery 377.9 397.7 (19.8) Liquor 47.1
Slide 47: Dividend and Capital Management Policy
Dividend and Capital Management Policy The Board’s intention is to return earnings to shareholders whilst retaining adequate funds within the business to invest in future growth opportunities A minimum payout ratio of 60% of underlying earnings per share has been set by the Board The FY13 fina
Slide 48: Trend Metrics - Financial
Trend Metrics - Financial FY2009 FY2010 FY2011 FY2012 FY2013 CAGR Full Year Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Revenues: Total Revenue $M 11,067 11,608 12,462 12,612 13,095 4.3% Sales $M 10,974 11,517 12,364 12,501 12,977 4.3% Underlying results: EBITDA $M 411.7 441.4 484.0 495.5 507.2 5.4% EBITA $M
Slide 49: Trend Metrics - Operational
Trend Metrics - Operational Branded Stores - Grocery Apr 10 Apr 11 Apr 12 Apr 13 (IGA – 3 channels + Friendly Grocer + Eziway) Supa IGA 446 463 475 506 IGA 718 734 744 773 Xpress 156 183 184 183 IGA branded stores 1,320 1,380 1,403 1,462 Friendly Grocer / Eziway 324 315 303 306 Total Stores 1,644 1,
Slide 50: Sustainability Metrics
Sustainability Metrics 2013 2012 2011 2010 2009 2008 2007 People Long Term Injury (LTI) 148 221(4) 209 244 273 275 317 Lost Time Injury Frequency Rate (LTIFR) 21.3 25.9 (1) 16.3 25.2(4) 30.8 27.3 25.7 Notes: 1. LTIFR is the number of lost 2013 2012 2011 2010 time injuries per million hours worked En
Slide 51: Directory of Terms
Directory of Terms Metcash’s Business Areas & Terms ABG Automotive Brands Group – Metcash acquired a 75.1% stake in this business on 1 July 2012. On 16 May 2013 Metcash announced the acquisition of AAD (refer below) bringing its stake in the automotive business to approximately 83%. ALM Australian L
Slide 52: Directory of Terms
Directory of Terms Financial Terms Net operating cash flow (not adjusted for significant items) / [Profit after tax pre significant items + Cash realisation ratio Depreciation + Amortisation (tax effected) ] CODB Cost of doing business Gearing Debt / [Debt + Shareholders equity] Intangible Amortisat
Slide 53: For additional information contact:
For additional information contact: Stephen Woodhill, General Manager Corporate Affairs Phone: 61 2 9741 3415 Fax: 61 2 9741 3027 Mob: 61 (0)413 318 455 E-mail: stephen.woodhill@metcash.com Vicki Wright, Manager Investor Relations Phone: 61 2 9751 8367 Fax: 61 2 9741 3027 Mob: 61 (0)457 728 937 E-ma
Slide 54: Disclaimer
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