Woolworths Group Ltd · ASX:WOW
Woolworths — FY2022 Earnings Presentation
52 slides from Woolworths's earnings presentation, Aug 25, 2022
Slide 1: ASX release: Full Year Results Presentation
25 August 2022 ASX Market Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Full Year Results Presentation Attached for release to the market is the Full Year Results Presentation for the period ended 26 June 2022. Authorised by: Kate Eastoe, Group Company Secretary
Slide 2: Woolworths Group Full Year Results 2022
Woolworths Group Full Year Results 2022 1 Woolworths Group Group Full Year Results 2022
Slide 3: Contents
Woolworths Group Full Year Results 2022 2 Contents F22 Group summary and progress 4 Brad Banducci Acknowledgement of Country Group financial results and capital management 18 Woolworths Group acknowledges the Stephen Harrison many Traditional Owners of the Lands on which we operate, and pay our resp
Slide 4: Woolworths Group Full Year Results 2022
Woolworths Group Full Year Results 2022 3
Slide 5: F22 summary
Woolworths Group Full Year Results 2022 4 F22 summary Another challenging year resulting in an inconsistent customer experience and H1 financial performance below our aspirations Our team demonstrated amazing resilience and showed Care for our customers Improved second half Group trading performance
Slide 6: A challenging operating environment due to supply chain disruption and team absenteeism
Woolworths Group Full Year Results 2022 5 A challenging operating environment due to supply chain disruption and team absenteeism DC outbound service level (%)1 H2 store team absenteeism2 7% 100 6.5% 6% 5.8% 5.5% 5.6% 90 5.3% 4.9% 5% 80 4% 3% 70 2% 60 1% 50 0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Slide 7: Customer scores were impacted by disruptions; strong Care scores a highlight
Woolworths Group Full Year Results 2022 6 Customer scores were impacted by disruptions; strong Care scores a highlight Voice of Customer: Net Promoter Score Voice of Customer: Customer Care Score 63 64 62 58 85 84 83 49 82 82 45 46 81 37 Jun-21 Jun-22 Jun-21 Jun-22 WooliesX eCommerce Woolworths Supe
Slide 8: Another record year for Digital and eCommerce
Woolworths Group Full Year Results 2022 7 Another record year for Digital and eCommerce eCommerce sales ($m) Average weekly digital traffic2 (m) 20 7,000 10 6,000 5,000 0 42%1 F20 F21 F22 4,000 WooliesX CountdownX BIG WX 3,000 eCommerce growth rates 2,000 F22 Profit growth F22 eCom 5-yr sales > Sale
Slide 9: Strong progress on our strategic agenda (i)
Woolworths Group Full Year Results 2022 8 Strong progress on our strategic agenda (i) Connect our customer Be better together for Reimagine our experience for good food a better tomorrow Food retail proposition and more everyday ● Customer Care VOC NPS remained strong ● Established ConnectedX to con
Slide 10: Strong progress on our strategic agenda (ii)
Woolworths Group Full Year Results 2022 9 Strong progress on our strategic agenda (ii) Evolve our Supply Chain Activate Everyday Grow food into and Retail Platforms for for our customers B2B channels the future ● Everyday Rewards members increased to ● PFD joined the Group in F22 with improved ● Sup
Slide 11: Woolworths Group Food and Everyday Needs Ecosystem
Woolworths Group Full Year Results 2022 10 Woolworths Group Food and Everyday Needs Ecosystem 1 B2C Food 2 More Everyday Our cornerstone B2C retail Helping our customers enjoy a food business, famous for little more value, more choice consistently good food, good and more good through prices, good a
Slide 12: Good progress on Primary Connect transformation despite various disruptions
Woolworths Group Full Year Results 2022 11 Good progress on Primary Connect transformation despite various disruptions PC3 commercialisation Melbourne Fresh DC Heathwood Chilled & Frozen DC, Qld Progress on growth strategy with over 1,200 customers and ~150,000 First 5 Star Green Star accredited DC
Slide 13: Strategic investments in digital, eCom and loyalty starting to scale
Woolworths Group Full Year Results 2022 12 Strategic investments in digital, eCom and loyalty starting to scale One of the top digital Largest 1P eCom A leading loyalty Investment in new Retail media pioneer retailers in Australia business in Australia program in Australia digital businesses #3 reta
Slide 14: Retail media is an increasingly important adjacency
Woolworths Group Full Year Results 2022 13 Retail media is an increasingly important adjacency Cartology revenue ($m)1 • Established in 2019 as the Group’s retail media business • Over 200 team members • Revenue doubled since F20 2.3x • Over 8,000 campaigns delivered across stores, screen, audio, pu
Slide 15: Good progress in unlocking our potential through advanced analytics
Woolworths Group Full Year Results 2022 14 Good progress in unlocking our potential through advanced analytics • Strengthened partnership with Quantium in June 2021 and increased shareholding to 75%1 • Established wiq (formerly Q-Retail), bringing together the best of Woolworths Group and Quantium’s
Slide 16: Building out our marketplace offer
Woolworths Group Full Year Results 2022 15 Building out our marketplace offer • Announced proposal to acquire 80% of online marketplace MyDeal in May • Established marketplace platform with ~1m customers, 1,900+ sellers offering 6m+ SKUs • To accelerate the Group’s marketplace ambition, particularly
Slide 17: Consistent progress on our sustainability goals
Woolworths Group Full Year Results 2022 16 Consistent progress on our sustainability goals1 People Planet Product Making a positive change to Ensuring we leave the Having a positive impact on the future of our people, our environment better off for people and the planet through the partners and our
Slide 18: Contents
Woolworths Group Full Year Results 2022 Contents F22 Group summary and progress 4 Brad Banducci Group financial results and capital management Stephen Harrison Group financial results COVID costs Key balance sheet metrics 18 Capital management framework Cash flow summary Capital expenditure Capital
Slide 19: Financial Results and Capital Management
Woolworths Group Full Year Results 2022 18 Financial Results and Capital Management
Slide 20: F22 results summary
Woolworths Group Full Year Results 2022 19 F22 results summary F22 F21 $ MILLION (52 WEEKS) (52 WEEKS) CHANGE Continuing operations before significant items Sales 60,849 55,733 9.2% EBIT 2,690 2,764 (2.7)% NPAT attributable to equity holders of the parent entity 1,514 1,504 0.7% Basic EPS (cents) 12
Slide 21: Strong EBIT improvement in H2 due to Australian Food recovery
Woolworths Group Full Year Results 2022 20 Strong EBIT improvement in H2 due to Australian Food recovery Group sales and EBIT1 H2 F22 F22 $ MILLION H2 F22 SALES CHANGE H2 F22 EBIT CHANGE F22 SALES CHANGE F22 EBIT CHANGE Before significant items Australian Food 21,681 5.6% 1,203 9.7% 45,461 4.5% 2,42
Slide 22: Improved sales momentum in H2 in Australia; cycling tough comps in Q1'23
Woolworths Group Full Year Results 2022 21 Improved sales momentum in H2 in Australia; cycling tough comps in Q1’23 in Food Australian Food comparable sales New Zealand Food comparable sales F20 F21 F22 F20 F21 F22 16% 11.8% 13.4% 13.9% 10.5% 14% 9.1% 9.0% 10% 7.3% 8% 5.8% 6.0% 6.5% 4.8% 4.5% 5.2% 4
Slide 23: Group COVID costs up on H2'21 but materially below H1'22
Woolworths Group Full Year Results 2022 22 Group COVID costs up on H2’21 but materially below H1’22 F22 H2’22 Q4’22 Q3’22 H1’22 F21 H2’21 $ MILLION (52 WEEKS) (25 WEEKS) (12 WEEKS) (13 WEEKS) (27 WEEKS) (52 WEEKS) (25 WEEKS) Cleaning and PPE 47 7 4 3 40 116 25 Contractors and security 13 2 - 2 11 20
Slide 24: Lower average inventory days; ROFE impacted by higher funds employed
Woolworths Group Full Year Results 2022 23 Lower average inventory days due to strong sales despite inventory build in H2; ROFE impacted by higher funds employed and flat EBIT Average inventory days1 Normalised ROFE2 Days Percentage (%) 39.0 39.5 16.8 36.0 37.2 37.0 36.2 15.1 31.5 31.0 13.7 13.7 30.
Slide 25: Woolworths Group capital management framework
Woolworths Group Full Year Results 2022 24 Woolworths Group capital management framework Growth One of Australia’s Leading market Defensive Strong cash flow opportunities in leading and most position in Food & characteristics from AUS and NZ eCom and Investment proposition trusted brands Everyday Ne
Slide 26: Net cash outflow due to investment and capital management
Woolworths Group Full Year Results 2022 25 Net cash outflow due to investment and capital management F22 F21 $ MILLION (52 WEEKS) (52 WEEKS) CHANGE EBITDA – continuing operations EBITDA – continuing operations 5,052 4,902 3.1% increased by 3.1% driven by EBITDA – discontinued operations 6,387 1,428
Slide 27: Operating capex marginally below F22 guidance of $2b
Woolworths Group Full Year Results 2022 26 Operating capex marginally below F22 guidance of $2b Group capex (continuing operations) Sustaining capex $ MILLION F22 F21 $ MILLION F22 F211 SIB 242 215 Sustaining capex 1,396 1,228 Renewals 423 352 525 528 Supply chain 358 232 Growth capex IT 197 253 Ope
Slide 28: Dividend and shareholder returns
Woolworths Group Full Year Results 2022 27 Dividend and shareholder returns 92 cps full year dividend $3.2b returned to shareholders in F22 Dividends (cents per share) Shareholder cash distributions paid ($m) • Fully franked final dividend of 53 cps, up 3.9% on F211 108 3,170 • Full year dividend of
Slide 29: Strong funding profile with substantial available liquidity
Woolworths Group Full Year Results 2022 28 Strong funding profile with substantial available liquidity Debt maturity profile ($m)1 Mix by interest type2 1,200 A solid investment-grade credit rating 800 39% S&P: BBB (stable outlook)3 Moody’s: Baa2 (stable 61% 400 outlook)3 There is currently signific
Slide 30: Contents
Woolworths Group Full Year Results 2022 29 Contents F22 Group summary and progress 4 Brad Banducci Group financial results and capital management 18 Stephen Harrison Business performance update 30 Outlook 46 Brad Banducci
Slide 31: Woolworths Group Full Year Results 2022
Woolworths Group Full Year Results 2022 30
Slide 32: Australian Food
Woolworths Group Full Year Results 2022 31 Australian Food F22 F21 (52 WEEKS) (52 WEEKS) CHANGE F22 FINANCIAL METRICS Total sales ($m) 45,461 43,509 4.5% EBITDA ($m) 4,055 3,954 2.5% EBIT1 ($m) 2,420 2,413 0.3% Gross margin (%) 30.4 29.7 74 bps CODB1 (%) 25.1 24.1 96 bps EBIT to sales1 (%) 5.3 5.5 (
Slide 33: We are reimagining Woolworths for the future
Woolworths Group Full Year Results 2022 32 We are reimagining Woolworths for the future Build advocacy as Reimagine our Simplify our E2E processes, Today’s Fresh Food People core customer offer leveraging data and analytics Caring for our communities and teams Get your Woolies Worth Rolling out new
Slide 34: Strong year for Woolworths Food Company's own brands
Woolworths Group Full Year Results 2022 33 Strong year for Woolworths Food Company’s own brands F22 sales growth COOK, BBQ, Macro >900 products redesigned, ranges growing strongly reformulated or new to market +4.8% COOK/BBQ +7.5% vs. F21 ~1,900 own brand products vs. F21 Macro +9.1% vs. F21 on Low
Slide 35: We continue to evolve our network
Woolworths Group Full Year Results 2022 34 We continue to evolve our network Opened 11 net new stores and completed 60 Launched new eStore in Maroochydore, Qld in Q1 F22 supporting up to 4,000 orders per week renewals across Woolworths Supermarkets and Metro Food Stores, bringing the total Opened la
Slide 36: WooliesX F22 highlights
Woolworths Group Full Year Results 2022 35 WooliesX F22 highlights ConnectedX eComX EverydayX Digital traffic +22% Active customers eCom B2C sales 13.7 million vs. F21 +22% +42% +628,000 or 4.8% vs. F21 +840,000 vs. F21 (up $1.4b) vs. F21 Rolling out new real-time Everyday Rewards app active loyalty
Slide 37: Australian B2B
Woolworths Group Full Year Results 2022 36 Australian B2B
Slide 38: Australian B2B
Woolworths Group Full Year Results 2022 37 Australian B2B B2B Food PFD Food Services Woolworths International Woolworths at Work Australian Grocery One of Australia’s leading International export business, A B2B procurement solution Wholesalers (AGW) food service suppliers exporting a broad range of
Slide 39: Australian B2B
Woolworths Group Full Year Results 2022 38 Australian B2B F22 F21 (52 WEEKS) (52 WEEKS) CHANGE F22 FINANCIAL METRICS Sales ($m) B2B Food 2,878 618 366% B2B Supply Chain 1,085 604 79% Total Australian B2B 3,963 1,222 224% EBITDA ($m) 143 45 217% EBIT1 ($m) 42 12 242% EBIT to sales (%) 1.1 1.0 6 bps F
Slide 40: Woolworths Group Full Year Results 2022
Woolworths Group Full Year Results 2022 39
Slide 41: New Zealand Food
Woolworths Group Full Year Results 2022 40 New Zealand Food NZD ($) F22 F21 (52 WEEKS) (52 WEEKS) CHANGE F22 FINANCIAL METRICS Total sales ($m) 7,563 7,146 5.8% EBITDA ($m) 611 633 (3.4)% EBIT ($m) 316 361 (12.5)% Gross margin (%) 25.4 25.3 17 bps CODB (%) 21.3 20.2 104 bps EBIT to sales (%) 4.2 5.0
Slide 42: F22 highlights
Woolworths Group Full Year Results 2022 41 F22 highlights Living Livingour purpose our purpose Digital, eCom and innovation Foundations for the future Supporting our teams and communities during COVID disruption Wanaka image Opened Palmerston North DC, Hilton meat plant and state-of-the-art Auckland
Slide 43: Woolworths Group Full Year Results 2022
Woolworths Group Full Year Results 2022 42
Slide 44: BIG W
Woolworths Group Full Year Results 2022 43 BIG W F22 F21 (52 WEEKS) (52 WEEKS) CHANGE F22 FINANCIAL METRICS Total sales ($m) 4,431 4,583 (3.3)% EBITDA ($m) 245 348 (29.3)% EBIT ($m) 55 172 (68.2)% Gross margin (%) 33.4 33.6 (28) bps CODB (%) 32.1 29.9 223 bps EBIT to sales (%) 1.2 3.7 (251) bps Sale
Slide 45: F22 highlights
Woolworths Group Full Year Results 2022 44 F22 highlights Substantial progress on our four key strategic priorities in F22 Good progress in building Turbocharging digital, Continuing to simplify our Continuing to demonstrate core foundations to unlock upholding a safe and offer to align with custome
Slide 46: Contents
Woolworths Group Full Year Results 2022 45 Contents F22 Group summary and progress 4 Brad Banducci Group financial results and capital management 18 Stephen Harrison Business performance update 30 Outlook 46 Brad Banducci
Slide 47: F23 outlook
Woolworths Group Full Year Results 2022 46 F23 outlook Australian Food sales in the first 8 weeks of F23 broadly flat (-0.5%) reflecting the cycling of two years of COVID. 3-yr CAGR of ~5% remains strong COVID-related costs expected to continue to decline in F23 as conditions normalise. Focus on pro
Slide 48: Thank you
Woolworths Group Full Year Results 2022 47 Thank you
Slide 49: Glossary
Woolworths Group Full Year Results 2022 48 Glossary AGW Australian Grocery Wholesalers CAGR Compound annual growth rate Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Comparable sales Measure of sales which excludes store
Slide 50: Glossary continued
Woolworths Group Full Year Results 2022 49 Glossary continued Net Promoter Score (NPS) A loyalty measure based on a single question where a customer rates a business on a scale of zero to 10. The score is the net result of the percentage of customers providing a score of nine or 10 (promoters) less
Slide 51: Glossary continued
Woolworths Group Full Year Results 2022 50 Glossary continued VOC NPS VOC NPS is based on feedback from Woolworths Rewards members. VOC NPS is the number of promoters (score of nine or 10) less the number of detractors (score of six or below) Voice of Supplier (VOS) A survey of a broad spectrum of s
Slide 52: Disclaimer
Woolworths Group Full Year Results 2022 51 Disclaimer This presentation contains summary information about Woolworths Group Limited (Woolworths Group) and its activities current as at the date of this presentation. It is sourced from and should be read in conjunction with Woolworths’ other periodic