Wesfarmers Limited · ASX:WES
Wesfarmers — H1 FY2008 Earnings Presentation
101 slides from Wesfarmers's earnings presentation, Feb 22, 2008
Slide 1: 2008 Half Year Results Information Pack
2008 Half Year Results Information Pack 22 February 2008
Slide 2: Table of Contents
Table of Contents 1 Group Performance 3 2 Capital Management 9 3 Coles Integration 14 4 Home Improvement & Office Supplies 19 5 Coles 29 6 Target 37 7 Kmart 42 8 Resources 47 9 Insurance 64 10 Industrial & Safety 72 11 Chemicals & Fertilisers 80 12 Energy 86 13 Other Businesses 93 14 Outlook 99 2
Slide 3: Group Performance
Group Performance Wesfarmers
Slide 4: Group Performance Summary
Group Performance Summary Half Year ended 31 December ($m) 2007 2006 % Operating revenue 9,808 4,718 107.9 EBITDA 1,266 791 60.1 EBIT 1,046 613 70.6 Net profit after tax 601 392 53.3 Operating cash flow 1,241 477 160.2 Earnings per share (excl. employee res. shares) 134.9 105.8 27.5 Earnings per sha
Slide 5: Divisional EBIT
Divisional EBIT Half Year ended 31 December ($m) 2007 2006 % Home Improvement & Office Supplies 332 270 23.0 Coles 130 - n/a Target 118 - n/a Kmart 101 - n/a Resources 112 168 (33.3) Insurance 64 60 6.7 Industrial & Safety 61 51 19.6 Chemicals & Fertilisers 48 28 71.4 Energy 48 38 26.3 Other 72 34 1
Slide 6: Divisional ROC & Capital Employed
Divisional ROC & Capital Employed 2007 2006 Rolling 12 months to 31 December EBIT Cap Emp ROC ROC $m $m % % Home Improvement (excl Office Supplies) 584 1,862 31.4 25.1 Resources 282 931 30.3 52.9 Insurance 123 1,106 11.2 24.6 Industrial & Safety 125 740 16.9 13.7 Chemicals & Fertilisers 121 747 16.2
Slide 7: Return on Shareholders' Funds
Return on Shareholders’ Funds (rolling 12 months to 31 December) % 35 30 25 21.4 20 15 30.2 27.7 10 20.2 17.0 18.4 5 0 2003 2004 2005 2006 2007 AGAAP^ A-IFRS # Excludes sale of Landmark, Girrah (2003) and ARG (2006) ^ Before goodwill amortisation 7
Slide 8: Cash Flow & Dividend (Half Year to 31 Dec)
Cash Flow & Dividend (Half Year to 31 Dec) (per share) cents 280 240 200 160 120 80 40 0 2003# 2004 2005 2006 2007 EPS^ Operating Cashflow* Dividend # EPS and Cash flow exclude sale of Landmark * WANOS includes employee reserved shares ^ AGAAP excl. goodwill amortisation (2003), AIFRS excl. employee
Slide 9: Capital Management
Capital Management Wesfarmers
Slide 10: Capital Expenditure
Capital Expenditure Half Year ended 31 December (A$m) 2007 2006 Home Improvement & Office Supplies 173 91 Coles, Target and Kmart ^ 93 - Resources 95 95 Insurance 6 7 Industrial & Safety 14 11 Chemicals & Fertiliser 127 75 Energy 78 38 Other 3 1 Total 588 317 ^ Capex spent for the period 23 November
Slide 11: Capital Management
Capital Management • Net Debt / Equity of 70.1% at 31 December 2007 • Cash Interest Cover Ratio (rolling 12 months) of 5.0 times • $4,000 million to be refinanced in 2008 – DIP; Australian and offshore medium term debt; hybrids or convertibles • Dividend Investment Plan – at least 75% underwrite for
Slide 12: Net Debt/Equity
Net Debt/Equity (as at 31 December) % 100 80 60 55.0 40 84.2 74.1 70.1 44.3 47.9 20 0 2003 2004 2005 2006 2007 AGAAP A-IFRS 12
Slide 13: Interest Cover Ratio (cash basis)
Interest Cover Ratio (cash basis) (Rolling 12 months to 31 December) times 25 20 15 22.0 10 13.3 13.9 12.4 5 5.0 0 2003* 2004 2005 2006^ 2007 * Excludes the sale of Landmark and Girrah ^ Excludes the sale of ARG 13
Slide 14: Coles Integration
Coles Integration Wesfarmers
Slide 15: Integration Programme Overview
Integration Programme Overview Support the integration and transformation of Coles Group into the Wesfarmers business model to ensure that full value for the transaction is captured Integration Management Coles Group ‘Integrate’ ‘Create’ • Tax Where necessary, arbitrate what and who goes where (wi
Slide 16: Coles Integration
Coles Integration Integrate: Corporate Functions - All reporting lines are now to Wesfarmers Limited Full integration to coincide with budgetary cycle and establishment of a small corporate office presence in Melbourne. Head Office to remain in Perth Create: Divisional Structures – Organisatio
Slide 17: Coles Integration
Coles Integration Commercial Reviews: Kmart – options assessment well progressed; 5yr business plan developed Simplification – programme ceased; all divisions have responsibility for cost base Supply Chain – review to be completed early March 2008 Working capital – accountability and managem
Slide 18: Coles Integration
Coles Integration Cost Savings: Simplification programme ceased $288 million in run-rate savings realised prior to WES acquisition Remaining $97 million to achieve $385 million target – expected to be realised through restructure and other initiatives $36 million net cost savings since acqui
Slide 19: Home Improvement & Office Supplies
Home Improvement & Office Supplies
Slide 20: Home Improvement & Office Supplies Performance Summary
Home Improvement & Office Supplies Performance Summary Half Year ended 31 December ($m) 2007 2006 % Revenue Home Improvement 2,795 2,471 13.1 Office Supplies 115 - n/a 2,910 2,471 17.8 EBIT Home Improvement 325 270 20.4 Office Supplies 7 - n/a 332 270 23.0 20
Slide 21: Home Improvement Performance Summary
Home Improvement Performance Summary Half Year ended 31 December ($m) 2007 2006 % Revenue 2,795 2,471 13.1 EBIT 325 270 20.4 ROC (R12 %) 31.4 25.1 6.3pt Safety (R12 LTIFR) 14.5 13.4 Trading Revenue* 2,766 2,428 13.9 Net property contribution 12 9 33.3 Trading EBIT* 313 271 15.5 Trading EBIT / Tradin
Slide 22: Home Improvement Highlights
Home Improvement Highlights • 14.4% cash sales growth – Store on store cash sales growth of 12.2% • 6.1% lift in trade sales • 6 warehouses and 1 trade centre opened – Strong ongoing investment in existing network • Maintaining strong focus on core retail drivers – Good traction from key strategies
Slide 23: Home Improvement Outlook
Home Improvement Outlook • Continued cash sales growth – Threats to positive retail trading conditions emerging • Further gains in trade • Ongoing network development – 12 warehouse openings likely for 2007/08 • Strong focus on delivering on strategic agenda 23
Slide 24: Office Supplies Performance Summary
Office Supplies Performance Summary 23 November to 31 December ($m) 2007 Revenue 115 EBIT 7 Comparative sales growth (%) 1.6 Trading Revenue* 115 Net property contribution - Trading EBIT* 7 Trading EBIT/Trading revenue (%) 6.1 * Excludes property and other non-trading items 24
Slide 25: Office Supplies Highlights & Outlook
Office Supplies Highlights & Outlook • Satisfactory Christmas trading; competitive trading environment • Full year result to be impacted by some “one-offs” • Integration work proceeding well – Executive team structures in place – Separation activities well progressed – Tactical changes to the offer
Slide 26: Bunnings Network
Bunnings Network at December 2007 160 Warehouse stores 2 63 Small format stores 12 Trade centres 28 5 2 19 10 7 3 1 1 48 18 5 12 25 40 1 3 2 2 1 26
Slide 27: Officeworks Network
Officeworks Network at December 2007 112 Officeworks stores 10 Harris Technology stores 20 2 8 10 2 37 5 35 1 2 27
Slide 28: Store Network Movements
Store Network Movements Open at Opened / Closed Open at Under June 2007 Acquired Dec 2007 development Home Improvement Bunnings Warehouse 155 6 1 160 10 Bunnings smaller format 65 - 2 63 2 Bunnings trade centres 11 1 - 12 3 HouseWorks stores* 3 - - 3 - Office Supplies Officeworks - 112 - 112 6 Harri
Slide 29: Coles
EH Br masse] WHY PAY MORES
Slide 30: Coles Performance Summary
Coles Performance Summary 23 November to 31 December ($m) 2007 Revenue 2,919 EBITDA 175 Depreciation & Amortisation^ (45) EBIT 130 Food & Liquor Revenue 2,271 Comparative store sales growth % 2.0 Trading EBIT* 118 Convenience Revenue 648 Comparative store sales growth % 6.2 Trading EBIT# 12 ^ Incl.
Slide 31: Coles Highlights
Coles Highlights • Improving Food & Liquor sales trend – Improved on-shelf availability and better fresh participation • Christmas trading solid, but later than last year – Stronger performance in all Christmas categories – Liquor sales weather affected • Strong increase in Convenience sales • Conti
Slide 32: Food and Liquor Store Network
Food and Liquor Store Network at December 2007 Selling area Supermarkets^ (sqm) 1,541,869 Selling area Liquor^^ (sqm) 262,633 10 8 11 ^ excludes Coles on-line ^^ excludes Hotels 152 228 79 77 91 5 116 68 66 31 5 44 236 248 4 208 158 193 155 748 Supermarkets 14 16 761 Liquor stores 93 Hotels 621 Conv
Slide 33: Store Network Movements
Store Network Movements Acquired on Open at Opened Closed 23 Nov 2007 31 Dec 2007 Supermarkets Coles 677 5 3 679 Bi-Lo 69 - - 69 Liquor 1st Choice 42 4 - 46 Vintage Cellars 87 - - 87 Liquorland 615 17 4 628 Hotels 91 2 - 93 Total Liquor 835 23 4 854 Convenience 616 5 - 621 33
Slide 34: Coles - Strategy Update
Coles - Strategy Update • Whole of business approach to strategy and implementation • Early focus – Starting Divisionalisation and support integration (particularly supply chain) – Christmas trading • Current focus – Key customer focussed strategies – Divisionalisation and operating model (particula
Slide 35: Coles - Strategy Update (cont.)
Coles - Strategy Update (cont.) • DC Network upgrade continued – 2 National Distribution Centres (NSW & Vic) – 1 Chilled Composite Distribution Centre (SA) – 1 Regional Distribution Centre and 1 Chilled Distribution Centre (Vic) – 1 Chilled Distribution Centre in commissioning (NSW) • Continuation o
Slide 36: Coles Outlook
Coles Outlook • Continuing focus on product availability and cost management • Customer focussed strategies • Restructuring to occur • New stores planned to open in second half – 10 supermarkets – 7 1st Choice – 10 convenience 36
Slide 37: Target
Target 37
Slide 38: Target Performance Summary
Target Performance Summary 23 November to 31 December ($m) 2007 Revenue 605 EBITDA 123 Depreciation & Amortisation (5) EBIT 118 Comparative store sales growth (%) 3.1 EBIT margin (%) 19.5 Store numbers 274 38
Slide 39: Target Highlights
Target Highlights • New store openings since July 31, 2007: – 7 Target – 2 Target Country • Profit from Christmas trading period comfortably ahead of last year • All high margin departments continue to perform well • Outstanding growth in electrical department (consumer digital products) • Ongoing u
Slide 40: Target Store Network
Target Store Network at December 2007 2 54 31 25 93 64 274 Target stores (incl 118 Target Country) 5 40
Slide 41: Target Outlook
Target Outlook • Continuation of solid store roll out programme – expecting further three Target stores to open this financial year • New “Designers for Target” • Preparing for potential slow down in retail spending – controlled stocks in higher risk areas • Continued strategy of differentiation 41
Slide 42: Kmart
|< .e ws Tyre & Auto Service where good times start Wesfarmers
Slide 43: Kmart Performance Summary
Kmart Performance Summary 23 November to 31 December ($m) 2007 Revenue 692 EBITDA 106 Depreciation & Amortisation (5) EBIT 101 Comparative store sales growth (%) 5.0 EBIT margin (%) 14.6 Store numbers (incl. Kmart Tyre & Auto) 450 43
Slide 44: Kmart Highlights
Kmart Highlights • Improvement in performance commenced second half FY07 • Strategic adjustments to the business are generating improved results • Returned to comp sales increase • Customers are responding well to the improved product offer • Consistently strong performance across destination catego
Slide 45: Kmart Store Network
Kmart Store Network at December 2007 2 3 37 54 20 31 13 20 49 74 12 42 80 183 Kmart stores 5 5 3 267 KTAS centres 45
Slide 46: Kmart Outlook
Kmart Outlook • Evolve product offer • Focus on improving the in-store customer experience • Expanded refit programme – 19 refits to commence in 2H08 • More aggressive store opening program • Create stand-alone capacity 46
Slide 47: Resources
Resources Wesfarmers
Slide 48: Resources Performance Summary
Resources Performance Summary Half Year ended 31 December ($m) 2007 2006 % Revenue 530 587 (9.7) EBITDA 179 267 (33.0) Depreciation & Amortisation* (67) (99) 32.3 EBIT 112 168 (33.3) ROC (R12 %) 30.3 52.9 (22.6pt) Coal Production (‘000 tonnes) 6,963 7,133 (2.4) Safety (R12 LTIFR)^ 4.4 3.7 * Includes
Slide 49: Resources Highlights
Resources Highlights • Strong metallurgical coal demand in constrained infrastructure environment • Bengalla’s Wantana Pit Modified Development Consent approval • Feasibility studies continue into expanding Curragh and Bengalla mines • Central Queensland major flood events in Jan/Feb 2008 – Ongoing
Slide 50: Coal Production
Coal Production • Curragh: tonnes (m) 16 – Increased coal production 14 – CHPP shutdown in August 2007 12 • Premier: 10 – Reduced sales to Verve Energy 8 • Bengalla: 6 1H 2007 1H 2008 – Port congestion constrained coal 4 production 2 – Wet weather in November 2007 0 2002 2003 2004 2005 2006 2007 200
Slide 51: Coal – Production Volumes 1H 2008 versus 1H 2007
Coal – Production Volumes 1H 2008 versus 1H 2007 Half Year ended Mine Beneficial Coal Type ('000 tonnes) Interest Dec-07 Dec-06 Premier, WA 100% Steaming 1,323 1,661 Curragh, QLD 100% Metallurgical 3,184 3,203 Steaming 1,348 1,049 Bengalla*, NSW 40% Steaming 1,108 1,220 Total 6,963 7,133 * Wesfarmer
Slide 52: Seaborne Metallurgical Coal Market
Seaborne Metallurgical Coal Market CONSTRAINED SUPPLY STRONG DEMAND Australia rail & port issues New high growth markets Brazil, India Central Queensland floods Seaborne Metallurgical High levels of Canada production issues Coal Market steel production Low coal stocks Robust steel price Increasing s
Slide 53: Australian Hard Coking Coal Prices
Australian Hard Coking Coal Prices US$/Tonne (Nominal) FOB Australia (annual verse spot) 300 275 250 225 200 175 150 125 100 75 50 25 0 2003 2004 2005 2006 2007 2008 Spot Price Annual Reference Price Source: Barlow Jonker, Tex Report, Macquarie Research 53
Slide 54: Australian Steaming Coal Prices
Australian Steaming Coal Prices US$/Tonne (Nominal) FOB Australia (annual verse spot) 140 120 100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 Spot Price JPU Reference Source: Barlow Jonker 54
Slide 55: Coal – Sales Volumes
Coal – Sales Volumes 1H 2008 versus 1H 2007 Beneficial Half Year ended Mine Coal Type Interest ('000 tonnes) Dec-07 Dec-06 Premier, WA 100% Steaming 1,330 1,643 Curragh, QLD 100% Metallurgical 3,134 3,187 Steaming 1,348 1,107 Bengalla*, NSW 40% Steaming 1,214 1,313 Total 7,026 7,250 * Wesfarmers att
Slide 56: Curragh Production Costs
Curragh Production Costs Year ending December 2007 vs year ending December 2006 • Continued pressure on costs • Curragh maintains position in lowest quartile of industry cost curve Increase Total cash production cost * (1%) Total production volume 1% Cash production cost per product tonne * (2%) * e
Slide 57: Demurrage
Demurrage • Ongoing high demurrage costs due to constrained export coal chains $Am 20 18 16 $3.20/t 14 12 $3.28/t 10 8 $1.88/t 6 $2.89/t 4 2 0 FY07 1H08 Curragh Bengalla (40%) 57
Slide 58: Curragh “Carryover” Volumes Outlook
Curragh “Carryover” Volumes Outlook Export Sales (%) 100% 80% 60% 40% 20% 0% Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 YE June 2008 YE March 2008 Carryover YE March 2009 Carryover 556kt 58
Slide 59: Curragh Metallurgical Sales Mix
Curragh Metallurgical Sales Mix • Strong demand for PCI Coal in 1H08; FY09 mix is expected to revert to higher Hard Coking Coal % Hard Hard Hard 49% Semi Hard 44% Semi Hard 48% Semi Hard 20% 20% 20% PCI PCI PCI 31% 36% 32% 2006/07 2007/08 estimate 2008/09 estimate 6.5 million tonnes 6.1 to 6.5 milli
Slide 60: Wesfarmers Curragh Hedging Profile
Wesfarmers Curragh Hedging Profile Year end Current proportion of US$ Average 31 Dec revenue hedged* A$ / US$ hedge rate 2008 79% 0.7610 2009 68% 0.7777 2010 47% 0.7710 2011 25% 0.7802 2012 13% 0.8050 * calculated using known contract outcomes and long run pricing and volume assumptions * further he
Slide 61: Gladstone Coal Delivery System
Gladstone Coal Delivery System Performance update • Port capital works now completed • Wiggins Island Terminal proposed 2012 – EIS approval granted – Feasibility study through 2008 – Potential 75mtpa • Forecast ongoing rail constraints into 2008/09 – Additional below track duplication works – Capaci
Slide 62: Newcastle Coal Delivery System
Newcastle Coal Delivery System Performance update • Restricted system capacity ongoing – Large vessel queues and demurrage expense • Capacity balancing system extended to 31 December 2008 – Independent referee to mediate delivery system agreement • Nominated export capacity 95mt – Demand will exceed
Slide 63: Resources Outlook
Resources Outlook • Strong market outlook for 2008/09 • Constrained export coal logistics remain • Ongoing high demurrage cost • Awaiting 2008/09 price negotiation outcomes – Spot export coal prices increasing – 556kt Curragh carryover tonnage impact in Q4 2007/08 • Forecast Curragh metallurgical sa
Slide 64: Insurance
Insurance Wesfarmers
Slide 65: Insurance Performance Summary
Insurance Performance Summary Half Year ended 31 December* ($m) 2007 2006 % Gross Written Premium Underwritten 618 546 13.2 EBITA Underwriting 38 61 (37.7) EBITA Broking 28 4 n.m. EBITA Other 5 (2) n.m. EBITA Insurance Division 71 63 12.7 EBIT Insurance Division 64 60 6.7 Net Earned Loss Ratio (%) 6
Slide 66: Insurance Highlights
Insurance Highlights • Increased frequency of severe weather events • Continued acquisition of small broking operations in Australia, NZ and UK • Completed rollout of OAMPS brand across all Australian broking operations • Integration phase completed with portfolio transfer from AIIL to Lumley • Reco
Slide 67: Underwriting Performance Summary
Underwriting Performance Summary Half Year ended 31 December* ($m) 2007 2006 % Gross Written Premium 618 546 13.2 Net Earned Premium 464 406 14.3 Net Claims (313) (243) (28.8) Net Commission and Expenses (142) (124) (14.5) Underwriting Result 9 39 (76.9) Insurance Margin 27 54 (50.0) EBITA 38 61 (37
Slide 68: Broking Performance Summary
Broking Performance Summary Half Year ended 31 December* ($m) 2007 2006 % Commission and Fee Income 85 18 n.m. Other Income 18 8 n.m. Total Income 103 26 n.m. Expenses (75) (22) n.m. EBITA 28 4 n.m. Amortisation of Identifiable Intangible Assets (5) (1) n.m. EBIT 23 3 n.m. EBITA Margin (%) 27.4 15.2
Slide 69: Underwriting KPIs
Underwriting KPIs Half Year ended 31 December (%) 2007 2006 %pt Gross Earned Loss Ratio 69.6 63.3 (6.3) Net Earned Loss Ratio 67.4 59.9 (7.5) Reinsurance Expenses (% GEP) 23.6 24.1 0.5 Exchange Commission (% RI excl XOL) 24.9 28.2 (3.3) Commission Expense (% GWP) 13.5 14.2 0.7 Total Earned Expenses
Slide 70: Gross Written Premium (underwriting)
Gross Written Premium (underwriting) (for the six month period to 31 December 2007) Total $618m Personal Liability $113m $116m Marine $24m Engineering $41m Commercial $133m AMO $19m Crop $22m Commercial Motor $150m 70
Slide 71: Insurance Outlook
Insurance Outlook • Premium rates in Australia and NZ stabilising • Restructuring of Lumley NZ operations to improve underwriting performance • Continue programme of selective acquisitions that meet investment criteria • Difficult claims environment will remain if current La Niña weather continues 7
Slide 72: Industrial & Safety
Industrial & Safety Wesfarmers
Slide 73: Industrial & Safety Performance Summary
Industrial & Safety Performance Summary Half Year ended 31 December* ($m) 2007 2006 % Revenue 642 580 10.7 EBITDA 66 58 13.8 Depreciation & Amortisation of PPE (5) (7) 28.6 EBIT 61 51 19.6 EBIT margin (%) 9.5 8.8 0.7pt ROC (R12 %) 16.9 13.7 3.2pt Safety (R12 LTIFR) 4.9 4.1 * 2007 includes Bullivants
Slide 74: Industrial & Safety Highlights
Industrial & Safety Highlights • Operating revenue improved by 10.7% to $642m – Growth in all businesses – Inclusion of Bullivants • Earnings increased by 20% to $61m – Improvement in most businesses including New Zealand – Benefits of global sourcing and business improvement initiatives • Return on
Slide 75: Industrial & Safety Portfolio
Industrial & Safety Portfolio Australia New Zealand MRO “All your MRO, Hose & workplace needs” Conveyor Safety Safety Materials Handling, Lifting, Rigging Packaging & Fasteners Hygiene Engineering MRO: Maintenance, Repair and Operating 75
Slide 76: Industrial & Safety - Distribution Network
Industrial & Safety - Distribution Network 238 locations (161 Australia, 77 New Zealand) NEW ZEALAND BUSINESSES No. NZ Safety 24 Protector Safety 22 2 1 Blackwoods Paykels (NZ) 21 1 17 11 Packaging House 10 4 4 16 10 6 1 1 5 7 5 5 6 17 7 3 1 1 4 1 AUSTRALIAN BUSINESSES No. 11 7 24 22 Blackwoods 75 1
Slide 77: Business Activity Highlights
Business Activity Highlights • Improved safety performance with continued GetSAFE implementation • Enhanced customer service levels, particularly delivery performance – Supply Chain effectiveness improved – Distribution Centres & network upgrades on track – DIFOT improved by 9 percentage points over
Slide 78: Business Activity Highlights (cont.)
Business Activity Highlights (cont.) • Smooth transition of Bullivants • Successful Sales and Marketing initiatives – Improving “win rate” on new and existing contracts – Product ranges extensions – Rollout of National services: Protector Alsafe accredited training services, Blackwoods on-site servi
Slide 79: Industrial & Safety Outlook
Industrial & Safety Outlook • Market conditions remain mixed − Continued demand from resources and infrastructure in WA and QLD – Manufacturing conditions remain subdued in Australia and New Zealand • Ongoing strong competition and scarcity of skilled labour • However satisfactory growth is expected
Slide 80: Chemicals & Fertilisers
Chemicals & Fertilisers Wesfarmers
Slide 81: Chemicals & Fertilisers Performance Summary
Chemicals & Fertilisers Performance Summary Half Year ended 31 December ($m) 2007 2006 % Revenue Chemicals 218 125 74.4 Fertilisers 173 106 63.2 391 231 69.3 EBITDA 69 46 50.0 Depreciation & Amortisation of PPE (21) (18) (16.7) EBIT 48 28 71.4 Sales Volume (‘000t): Chemicals 281.4 227.6 23.6 Fertili
Slide 82: Chemicals & Fertilisers Highlights
Chemicals & Fertilisers Highlights • EBA successfully renegotiated • Ammonia plant production ahead of last year despite performance problems • Higher production, sales and earnings from AN despite delay in expansion • Good performance from Australian Vinyls (acquired Sept ’07) • Improved sodium cya
Slide 83: Fertiliser Sales
Fertiliser Sales kt 1,200 1,000 800 739 813 589 600 612 400 200 381 370 387 249 289 0 2004 2005 2006 2007 2008 1st Half 2nd Half 83
Slide 84: Global Fertiliser Pricing
Global Fertiliser Pricing USD/t 800 700 600 500 400 300 200 100 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Urea (FOB Middle East) DAP (FOB US Gulf) 84
Slide 85: Chemicals & Fertilisers Outlook
Chemicals & Fertilisers Outlook • Demand for mining chemicals remains strong • Demand for PVC strong • Completion of new prill plant in May 08 – Additional prill production – Total cost of AN expansion of around $400 million • Seasonal break critical for fertiliser sales • $15 million investment to
Slide 86: Energy
Wesfarmers
Slide 87: Energy Performance Summary
Energy Performance Summary Half Year ended 31 December* ($m) 2007 2006 % Revenue 281 222 26.6 EBITDA 66 51 29.4 Depreciation & Amortisation^ (18) (13) (38.5) EBIT 48 38 26.3 ROC (R12 %) 12.0 33.2 (21.2pt) LPG production (kt) 82.3 93.8 (12.3) Safety (R12 LTIFR) 3.0 1.1 * Includes Coregas in 2007 for
Slide 88: Energy Highlights
Energy Highlights • WA LNG project remains on budget • Good progress on industrial gas supply projects • Record high energy prices • Agreement to sell UNIGAS interest • Integration of Coregas complete • Appointment of new General Manager at Coregas 88
Slide 89: World LPG prices – Saudi CP
World LPG prices – Saudi CP Average CP Jul 07 - Dec 07 USD/t Propane USD 658 1000 800 600 400 Average CP Jul 06 - Dec 06 200 USD 504 0 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Continued volume pressure on Kleenheat Gas 89
Slide 90: LPG Production
LPG Production kt Ave t/TJ 350 2.5 300 2.0 250 200 1.5 150 1.0 100 0.5 50 0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 WLPG production (kt) LPG content (t/TJ) YTD LPG content (t/TJ) Year to date WLPG production 12% below previous year 90
Slide 91: LNG Project
LNG Project • Construction delays – commissioning now scheduled for May • Cost pressure but project remains on budget • LNG road tankers construction on track • Power station construction progressing well 91
Slide 92: Energy Outlook
Energy Outlook • Full year contribution from Coregas • Dependent on: – international LPG prices – gas flow rates – LPG feed rates • LPG export sales – second half expected to be in line with last year • Lower autogas sales • Contributions from LNG project due in 2008/09 92
Slide 93: Other Businesses
Other Businesses Wesfarmers
Slide 94: Other Business Performance Summary
Other Business Performance Summary Half Year ended 31 December ($m) Holding% 2007 2006 Associates: Gresham Private Equity - Fund 1 50 3 0 Gresham Private Equity - Fund 2 67 23 (1) Gresham Partners 50 5 2 Wespine 50 3 4 Bunnings Warehouse Property Trust 23 8 26 Tax on relevant associates (4) (4) Asso
Slide 95: Breakdown of reported result
Breakdown of reported result Half Year ended 31 December ($m) 2007 2006 Divisional EBIT 1,014 615 Profit from associates 38 27 Other EBIT 34 7 Corporate overheads (40) (36) Group EBIT 1,046 613 Less: Finance costs - expense net of capitalisation (244) (58) - discounts* (6) (5) Reported profit before
Slide 96: Gresham Private Equity
Gresham Private Equity Fund 1 • Norcros divested, with some deferred consideration • Current investment $31m • Exit of Riviera expected within several years • Gross cash realised IRR 30+% CURRENT INVESTMENT PORTFOLIO Riviera Ocean Cruisers 96
Slide 97: Gresham Private Equity
Gresham Private Equity Fund 2 • Wesfarmers’ current commitment $180m; Capital invested $141m • New Investments: – Barminco – Experiential Group • Revaluations are to Wesfarmers’ earnings 97
Slide 98: Gresham Private Equity
Gresham Private Equity Fund 2 CURRENT INVESTMENT PORTFOLIO Noel Leeming Australian Pacific Paper Products GEON electrical retailer (Pacific Print Group) manufacturer & distributor (New Zealand) leading commercial printing of disposable nappies (Australia) business (NZ + Aust) Witchery Barminco Exper
Slide 99: Outlook
Outlook
Slide 100: Outlook
Outlook • Focus on bringing about substantial change in Coles • One-off transaction/restructure costs in 2H08 expected; too early to quantify • Continuing good results in most businesses • Impact of higher interest rates and fuel price volatility • Strengthening coal price outlook • $4bn to be refin
Slide 101: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au 101