Wesfarmers Limited · ASX:WES
Wesfarmers — FY2021 Earnings Presentation
56 slides from Wesfarmers's earnings presentation, Aug 27, 2021
Slide 1: 2021 Full-year results briefing presentation
2021 Full-year results briefing presentation To be held on Friday 27 August 2021
Slide 2: Presentation outline
Presentation outline Item Presenter Page Group performance overview Rob Scott 3 Group balance sheet and cash flow Anthony Gianotti 11 Bunnings Michael Schneider 17 Kmart Group Ian Bailey 22 Officeworks Sarah Hunter 28 Chemicals, Energy and Fertilisers Ian Hansen 33 Industrial and Safety Tim Bult 38
Slide 3: Group performance overview
Group performance overview Rob Scott Managing Director, Wesfarmers Limited
Slide 4: Wesfarmers' primary objective is to provide a satisfactory return to shareholders
Wesfarmers’ primary objective is to provide a satisfactory return to shareholders We believe it is only possible to achieve this over the long term by: Anticipating the needs of our Looking after our team Engaging fairly with our customers and delivering members and providing a safe, suppliers, and
Slide 5: 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 competitive goods and services fulfilling work environment ethically and sustainably
Slide 6: Financial overview
Financial overview Year ended 30 June ($m) 2021 2020 Var % Results from continuing operations excluding significant items1 Revenue 33,941 30,846 10.0 EBIT 3,776 3,179 18.8 EBIT (after interest on lease liabilities) 3,550 2,942 20.7 NPAT 2,421 2,083 16.2 Basic earnings per share (cps) 214.1 184.2 16.
Slide 7: Divisional sales performance
Divisional sales performance Sales performance ($m) 2020 Year ended 30 June 2021 Retail sales1 GTV2 Revenue Total sales +12.4% +12.0% (3.7%) +8.6% +41.0% +2.9% +6.3% growth Comp sales +11.9% +7.8% +13.3% growth 16,861 14,996 6,068 6,795 2,692 2,592 2,775 3,014 2,085 2,146 973 1,745 1,855 632 Bunning
Slide 8: Divisional earnings and return on capital
Divisional earnings and return on capital EBT1 ($m) ROC2 (R12, %) Year ended 30 June 2021 2020 Var (%) 2021 2020 Var (ppt) Bunnings 2,185 1,826 19.7 82.4 58.0 24.4 Kmart Group3 693 410 69.0 52.1 20.4 31.7 Officeworks 212 197 7.6 22.3 20.2 2.1 WesCEF4 384 394 (2.5) 17.7 20.3 (2.6) Industrial and Safe
Slide 9: Renewed priorities to support sustainable long-term growth
Renewed priorities to support sustainable long-term growth Develop a market-leading data Invest in platforms for Accelerate the pace of and digital ecosystem long-term growth continuous improvement • Leverage scale and unique • Follows the repositioning of the • Maintain the operational agility asse
Slide 10: Group performance summary
Group performance summary Year ended 30 June ($m) 2021 2020 Var % Results from continuing operations1 Revenue 33,941 30,846 10.0 EBIT 3,717 2,744 35.5 EBIT (after interest on lease liabilities) 3,491 2,507 39.3 EBIT (after interest on lease liabilities) (excl. significant items)2 3,550 2,942 20.7 NP
Slide 11: Group balance sheet and cash flow
Group balance sheet and cash flow Anthony Gianotti Chief Financial Officer, Wesfarmers Limited
Slide 12: Other business performance summary
Other business performance summary Year ended 30 June ($m) Holding % 2021 2020 Var % Share of profit of associates and joint ventures Coles1 4.9 - 111 n.m. BWP Trust 24.8 65 52 25.0 Other associates and joint ventures2 Various 23 38 (39.5) Sub-total share of profit of associates and joint ventures 8
Slide 13: Working capital and cash flow
Working capital and cash flow Year ended 30 June ($m) 2021 2020 • Solid operating cash flow of $3,383m Working capital cash movement • Divisional cash generation of 90%1 Receivables and prepayments (244) (66) – Strong divisional earnings growth Inventory (665) 443 Payables 214 346 – Normalisation of
Slide 14: Capital expenditure
Capital expenditure • Gross capital expenditure of $896m, up 3.3% on prior year Year ended 30 June1 ($m) 2021 2020 Var % – Increased data and digital investment Bunnings 445 511 (12.9) – Successful conversion of 86 Target stores to Kmart stores, including 31 large formats Kmart Group 185 142 30.3 –
Slide 15: Balance sheet and debt management
Balance sheet and debt management • Maintained significant balance sheet flexibility, Debt maturity profile1 net cash of $109m as at 30 June 2021 $m 2,400 • Continue to optimise debt maturity profile and cost of borrowing • Issued $1.0b in sustainability-linked bonds 1,200 – Australian first, met wi
Slide 16: Dividends and proposed capital return
Dividends and proposed capital return Dividend: Proposed capital return: • Fully-franked final ordinary dividend of • Return of capital to shareholders of $2.00 per $0.90 per share share, subject to shareholder approval at the 2021 AGM – Reflects strong underlying NPAT result – Opportunity to distri
Slide 17: Bunnings
Bunnings Michael Schneider Managing Director, Bunnings Group
Slide 18: Bunnings performance summary
Bunnings performance summary Year ended 30 June ($m) 2021 2020 Var % Revenue 16,871 14,999 12.5 EBITDA1 2,993 2,601 15.1 Depreciation and amortisation (692) (658) (5.2) EBIT1 2,301 1,943 18.4 Interest on lease liabilities (116) (117) 0.9 EBT1 2,185 1,826 19.7 Net property contribution (10) 16 n.m. E
Slide 19: Bunnings sales and earnings overview
Bunnings sales and earnings overview • Revenue growth of 12.5% to $16.9b – Total store sales growth of 12.4% – Store-on-store sales growth of 11.9% – Strong growth from commercial customers – Online penetration increased to 2.3% • Second-half total store sales growth of 0.7%, cycling elevated demand
Slide 20: Bunnings progress on strategy
Bunnings progress on strategy • Investing in customer experience – Relentless focus on driving even more value – More than 10,000 additional team members recruited to service demand and customers – Continued focus on widest range, evolving and refreshing thousands of products • Development of the di
Slide 21: Bunnings outlook
Bunnings outlook • Near-term operating environment remains uncertain Strategic agenda • FY22 YTD1 sales declined 4.7%, but strong growth of 24.4% on a two-year basis – Solid growth from commercial customers • Trading performance in FY22 is expected to moderate following the extraordinary growth reco
Slide 22: Kmart Group
Kmart Group Ian Bailey Managing Director, Kmart Group
Slide 23: Kmart Group performance summary
Kmart Group performance summary Year ended 30 June1 ($m) 2021 2020 Var % Revenue 9,982 9,217 8.3 EBITDA2 1,326 1,113 19.1 Depreciation and amortisation (539) (601) 10.3 EBIT2 787 512 53.7 Interest on lease liabilities (94) (102) 7.8 EBT2 693 410 69.0 Significant items (59) (635) n.m. EBT including s
Slide 24: Kmart and Target performance overview
Kmart and Target performance overview • Revenue growth of 6.8% to $9,456m Year ended 30 June ($m) 2021 2020 Var % – Solid sales growth in home, active and kids Revenue 9,456 8,853 6.8 categories, partially offset by lower demand for some apparel products EBITDA1 1,349 1,093 23.4 – Strong growth in o
Slide 25: 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 • Target focused on simplifying the business, significantly reducing its cost base, accelerati
Slide 26: Catch performance overview
Catch performance overview • Gross transaction value growth of 41.0% Year ended 30 June1 ($m) 2021 2020 – Growth across both retail and marketplace segments – Active customers increased to 2.9m Gross transaction value 973 632 Revenue 528 364 • Earnings impacted by higher levels of clearance in retai
Slide 27: Kmart Group outlook
Kmart Group outlook • Kmart Group remains well positioned to deliver sustainable growth over the long term • Combined Kmart and Target sales for FY22 YTD1 declined 14.3%, sales declined 12.3% on a two-year basis – Impacted by recent lockdowns as well as the closure of 13 Target stores and 45 Target
Slide 28: Officeworks
Officeworks Sarah Hunter Managing Director, Officeworks
Slide 29: Officeworks performance summary
Officeworks performance summary Year ended 30 June ($m) 2021 2020 Var % Revenue 3,029 2,787 8.7 EBITDA 328 307 6.8 Depreciation and amortisation (106) (99) (7.1) EBIT 222 208 6.7 Interest on lease liabilities (10) (11) 9.1 EBT 212 197 7.6 EBT margin (%) 7.0 7.1 ROC1 (R12, %) 22.3 20.2 Total sales gr
Slide 30: Officeworks sales and earnings overview
Officeworks sales and earnings overview • Revenue growth of 8.7% to $3,029m $m Sustained sales growth – Continued strong sales growth in stores and online 3,100 +8.6% +20.4% – Online penetration approximately 35%, including 2,900 3,014 2,700 click and collect 2,775 2,500 +7.6% – Strong demand for pr
Slide 31: Officeworks progress on strategy
Officeworks progress on strategy Our team – Continued focus on safety, health and wellbeing – Indigenous employment increased to 3.8% of team Customer experience – Continued investment in data, analytics and digital capability, enabling more personalised and engaging communication – Enhanced website
Slide 32: Officeworks outlook
Officeworks outlook • Near term outlook remains uncertain with changing customer shopping patterns and any future COVID-19 measures expected to impact trading conditions • FY22 YTD1 sales declined 1.5%, but growth remained strong at 31.1% on a two-year basis • Ongoing global supply shortages of some
Slide 33: Chemicals, Energy and Fertilisers
Chemicals, Energy and Fertilisers Ian Hansen Managing Director, Wesfarmers Chemicals, Energy & Fertilisers
Slide 34: Chemicals, Energy and Fertilisers performance summary
Chemicals, Energy and Fertilisers performance summary Year ended 30 June1 ($m) 2021 2020 Var % Revenue2 Chemicals 1,018 1,022 (0.4) Energy 406 424 (4.2) Fertilisers 722 639 13.0 Total 2,146 2,085 2.9 EBITDA3 473 481 (1.7) Depreciation and amortisation (88) (86) (2.3) EBIT3 385 395 (2.5) Interest on
Slide 35: Chemicals, Energy and Fertilisers operational performance
Chemicals, Energy and Fertilisers operational performance Safety Plant productivity TRIFR Chemicals – production volume and availability kt % 14 1,200 100 12 1,000 90 10 800 8 80 600 6 70 400 4 60 2 200 - 0 0 50 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY2
Slide 36: Chemicals, Energy and Fertilisers overview
Chemicals, Energy and Fertilisers overview • Revenue of $2,146m, up 2.9% on the prior period, with volume growth in Fertilisers, partially offset by a decline in wholesale electricity sales volumes • Earnings of $384m, down 2.5% on prior period. Excluding $18m in one-off insurance proceeds in the pr
Slide 37: Chemicals, Energy and Fertilisers outlook
Chemicals, Energy and Fertilisers outlook • Chemicals expected to benefit from a higher global ammonia price, as the increasing index price is passed through in customer contracts • Ammonia production will be impacted by a five-yearly maintenance shutdown in FY22 • Production and demand for AN from
Slide 38: Industrial and Safety
Industrial and Safety Tim Bult Managing Director, Wesfarmers Industrial and Safety
Slide 39: Industrial and Safety performance summary
Industrial and Safety performance summary Year ended 30 June ($m) 2021 2020 Var % Revenue 1,855 1,745 6.3 EBITDA1 148 136 8.8 Depreciation and amortisation (74) (77) 3.9 EBIT1 74 59 25.4 Interest on lease liabilities (4) (5) 20.0 EBT1 70 54 29.6 EBT including payroll remediation costs 70 39 79.5 Sig
Slide 40: Industrial and Safety overview
Industrial and Safety overview • The Industrial and Safety businesses continued the reliable supply of critical products to customers during the year, despite global supply chain disruptions due to COVID-19 • Revenue growth of 6.3% to $1,855m – Blackwoods’ revenue increased due to growth from strate
Slide 41: Industrial and Safety outlook
Industrial and Safety outlook • Market conditions are expected to remain uncertain in the 2022 financial year – The Industrial and Safety businesses will continue to manage COVID-19 related global supply chain disruptions while maintaining their focus on delivering continued improvements in performa
Slide 42: Trading update and outlook
Trading update and outlook Rob Scott Managing Director, Wesfarmers Limited
Slide 43: Trading update and current conditions
Trading update and current conditions Total sales 2Y total sales Online 2022 financial year to date1 growth growth2 penetration (%) (%) (% sales) Bunnings (7 weeks) (4.7) 24.4 3.3 Kmart and Target (8 weeks) (14.3)3 (12.3)3 K: 17.2 | T: 32.0 Catch GTV (7 weeks) (8.5) 112.5 100.0 Officeworks (7 weeks)
Slide 44: Outlook
Outlook • Wesfarmers’ strong balance sheet and portfolio of market-leading businesses make it well positioned to deliver satisfactory shareholder returns over the long term • The Group will continue to increase its investment in key strategic priorities, notwithstanding the likelihood of further nea
Slide 45: Questions
Questions
Slide 46: Appendix: Supplementary information
Appendix: Supplementary information
Slide 47: Significant items and discontinued operations summary
Significant items and discontinued operations summary Significant items Year ended 30 June 2021 ($m) Pre-tax Tax impact Post-tax Restructuring costs in Kmart Group (59) 18 (41) Total significant items (59) 18 (41) Year ended 30 June 2020 ($m) Pre-tax Tax impact Post-tax Non-cash impairment in Kmart
Slide 48: Group management balance sheet
Group management balance sheet ($m)1 FY21 1H21 FY20 Commentary (vs. FY20) • Normalisation in inventory across retail businesses Inventories 4,502 4,516 3,844 • Higher receivables in Bunnings due to supplier rebates Receivables and prepayments 1,434 1,024 1,261 outstanding and in Fertilisers due to s
Slide 49: Net financial debt
Net financial debt Movements in net financial debt1 ($b) Net debt 0 Net cash • Net cash1 position of $0.1b as at 30 June 2021, compared to the net cash1 position of $0.5b as at 30 June 2020, with key movements for the year including: – Strong operating cash flow result – Normalisation of working cap
Slide 50: Management of lease portfolio
Management of lease portfolio • Lease liabilities totalled $7.1b and ($m) FY21 FY20 represented 73% of Group fixed financial Bunnings 3,738 3,727 obligations as at 30 June 2021 Kmart Group 2,817 2,943 • Store closure and conversion program within Target supported a reduction of its lease Officeworks
Slide 51: Divisional return on capital
Divisional return on capital Rolling 12 months to 30 June 2021 2020 EBT Cap Emp1 ROC EBT Cap Emp1 ROC Var ($m) ($m) (%) ($m) ($m) (%) (ppt) Bunnings 2,185 2,651 82.4 1,826 3,146 58.0 24.4 Kmart Group2 693 1,329 52.1 410 2,011 20.4 31.7 Officeworks 212 949 22.3 197 976 20.2 2.1 WesCEF3 384 2,171 17.7
Slide 52: Retail store networks
Retail store networks As at 30 June 2021 More than 1,000 locations across Australia and New Zealand Brand NSW/ACT VIC QLD SA WA TAS NT NZ Total Bunnings Warehouse 79 61 52 18 29 7 3 29 278 Smaller format 19 15 12 3 9 - - 12 70 Trade 7 3 7 2 3 1 - 7 30 Adelaide Tools - - - 5 - - - - 5 Total Bunnings
Slide 53: Revenue reconciliation – Kmart Group
Revenue reconciliation – Kmart Group Year ended 30 June1 ($m) 2021 2020 Segment revenue (Gregorian) 9,982 9,217 Less: Non-sales revenue (74) (65) Headline sales (Gregorian) 9,908 9,152 Add: Gregorian adjustment2 (15) (40) Headline sales revenue (Retail)3 9,893 9,112 1. 2020 includes Catch from 12 Au
Slide 54: Retail calendars – full year
Retail calendars – full year Business Retail sales period Bunnings, Officeworks and Catch FY21 1 Jul 2020 to 30 Jun 2021 (12 months) FY20 1 Jul 2019 to 30 Jun 2020 (12 months) FY19 1 Jul 2018 to 30 Jun 2019 (12 months) Kmart FY21 29 Jun 2020 to 27 Jun 2021 (52 weeks) FY20 1 Jul 2019 to 28 Jun 2020 (
Slide 55: Retail calendars – year to date
Retail calendars – year to date Business Retail sales period Bunnings, Officeworks and Catch 2022 year to date 1 July 2021 to 18 August 2021 (7 weeks) 2021 year to date 1 July 2020 to 18 August 2020 (7 weeks) 2020 year to date 1 July 2019 to 18 August 2019 (7 weeks) Kmart 2022 year to date 28 June 2
Slide 56: Wesfarmers
We Wesfarmers