Metcash Limited · ASX:MTS
Metcash — Investor Day (October 2022)
128 slides from Metcash's investor day presentation, Oct 17, 2022
Slide 1: ASX cover letter: Investor Day presentation including trading update
Metcash Limited ABN 32 112 073 480 1 Thomas Holt Drive Macquarie Park NSW 2113 Australia 17 October 2022 Market Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam METCASH LIMITED - INVESTOR DAY PRESENTATION, INCLUDING TRADING UPDATE Please fin
Slide 2: Investor Day 17 October 2022
INVESTOR DAY 17 OCTOBER 2022
Slide 3: Acknowledgement of country
Acknowledgement of country I would like to acknowledge and pay our respects to the Kaurna people, the Traditional Custodians of the land on which we meet today, and pay my respects to Elders, past, present and emerging.
Slide 4: Agenda
Agenda 11:00 01. Welcome & Group Overview Doug Jones | Group CEO 12:00 02. Food Scott Marshall | CEO Metcash Food 12:45 LUNCH BREAK 13:30 03. Hardware Annette Welsh | CEO Hardware 14:15 04. Total Tools Paul Dumbrell | CEO Total Tools 15:00 AFTERNOON TEA BREAK 15:20 05. Liquor Chris Baddock | CEO Liq
Slide 5: Group Overview
GROUP OVERVIEW Doug Jones Group CEO
Slide 6: Group overview
Group overview Our purpose Our values Our vision Best store in town Championing We believe Business partner of choice Successful Independence is worth fighting for; in treating our people, retailers and Passionate about independents Independents suppliers the way we like to be treated; and in giving
Slide 7: Our management team
Doug Jones Simon Burton Group CEO Chief Strategy & Transformation Officer • Joined Metcash Feb 2022. Extensive wholesale, • Joined Metcash in 2022 retail & eCommerce experience • >25yrs global experience in FMCG, retail • Previous senior roles in Massmart in South business and transformation Africa
Slide 8: Our current position
Our current position Food Hardware Liquor Group • 4th largest market participant, • Clear #2 in market with strong • Clear #2 in market • Complementary businesses in positioned as alternative to Trade focus attractive sectors majors • Supply ~25% of Australia’s liquor • Total Tools #1 in professiona
Slide 9: Future success
MFuture success A key driver of continued strong performance through COVID Commenced in 2019 and focused on delivering a pathway to sustainable growth Group Sales1 & Group Underlying EBIT Key initiatives designed to improve competitiveness 18.0 472 500 of retail networks 17.5 401 450 Group Underlyin
Slide 10: Investment highlights
Investment highlights Well positioned for future growth Total Shareholder Returns1 • Retail network growth • Growth from strategic acquisitions 120% • Investment in digital and technology Experienced 101.7% • MFuture momentum management team and Board 100% • Benefits from new ERP (Project Horizon) •
Slide 11: Supporting one of the largest retail footprints in ANZ
Supporting one of the largest retail footprints in ANZ Retail network sales of our independent retailers ~$30bn in FY22 Supplier partners >4,400 >10 million transactions per week Extensive capital deployed across business by both Metcash and retailers Supplier to: • ~5,400 bannered retail stores acr
Slide 12: Creating value - our flywheel
Creating value - our flywheel 03 02 Supply Demand Provide a multi-channel 01 Generate and capture B2B platform for our customers Provide an effective and efficient Our core Provide best possible range of route-to-market choice for wholesale products to independent customers suppliers through our sca
Slide 13: Our flywheel
Our flywheel Underpins our competitive advantages • Retailer One Stop Shop (ROSS) • Community engagement and • Property services support – IGA Community Provide the services and • Rapid delivery partnerships – Chest program, disaster relief programs 03 support that add value and DoorDash and Uber, U
Slide 14: Value drivers
The Metcash economic model is comprised of various value drivers. Our strategy leverages the competitive advantages within the flywheel and acts on these value drivers Value drivers The Metcash economic Volume Product mix Exclusive and CODB • Margin • Grocery/tobacco owned brands model is comprised
Slide 15: Strategy - Group
Strategy - Group Purpose Championing Successful Independents To create long term value for our stakeholders and shareholders by supporting Australia’s independent retailers with the best Aspiration range and value offering to meet the needs of their shoppers and enabling them to best manage and grow
Slide 16: Strategy – Pillars
Strategy – Pillars Strategy Goals Priorities • Network of the Future – format clarity Build on momentum and • DSA – refresh stores to match format standards and improve CVP drive growth following Grow to #3 in grocery • Relevance and competitiveness of network – range, price, convenience stabilisati
Slide 17: Group initiatives to drive further value
Group initiatives to drive further value Acceleration of targeted growth and value creation initiatives Loyalty Digital Network optimisation Data Horizon value & eCommerce and development enablement • Leverage key existing • Accelerate Pillar Retail DCs • Drive common approach • Identify highest val
Slide 18: Digital engagement
Digital engagement • Loyalty, eCommerce and digital marketing are at varying stages of progress Loyalty across the pillars with pockets of excellence eCommerce • Our strategy is to build an ecosystem that allows our retailers and suppliers to enrich their relationships with shoppers on digital Loyal
Slide 19: Leveraging data
Leveraging data Core focus: Our core priorities: • Core analytics • Data engineering Harmonise and Empowered Data • Data science • Data and cyber security simplify decision-making governance • Decision science • Provisioning capabilities • Create a single Data • Democratise the • Embed an enterprise
Slide 20: Project Horizon – update
Project Horizon – update The business need Stage 1 status Ongoing value delivery • Critical group technical infrastructure • First deployments of Finance and Inventory • Following Stage 1, our focus will be on consolidation and replacement Management components performing well extracting additional
Slide 21: Organising for growth
Organising for growth Objectives • Support high performing operating businesses • Enable Metcash’s strategy and growth initiatives Rationale Key principles • Support for our strategic initiatives for accelerated growth • “Metcash First” • Ensure that we have the best skills and expertise to accelera
Slide 22: Disciplined capital management
Disciplined capital management Cash from Cash for Net interest operating investing & lease Significant growth opportunity in all pillars activities activities payments Cash realisation Sustaining capex Service obligations Risk and return profile different in each pillar Continued focus on maximising
Slide 23: Disciplined capital management
Disciplined capital management Net working capital (NWC) Capital expenditure Funding • Pillar inventory fully funded by Payables • Investment on basis of • Balance sheet capacity – DLR & bank • B2B sales = Receivables – means overall variable hurdle rates covenants negative NWC • WACC sets base, plu
Slide 24: Creating a sustainable future
Creating a sustainable future Increased focus Major initiatives • Long history of supporting local communities • Energy and emissions: • Focus increased significantly in 2020 ‒ 2030 science-based reduction target ‒ Net zero emissions by 2040 (scope 1&2) ‒ Sustainability added to corporate Vision ‒ 1
Slide 25: External environment
External environment Metcash has navigated the external Other material disruptors to trade environment of the last few years well and commerce are dissipating • Multiple COVID lockdowns • COVID restrictions lifted • Shift in shopper behaviour • Opening of borders • Booming regional areas • Easing of
Slide 26: On track to deliver our ambitious growth plans
On track to deliver our ambitious growth plans 01 02 03 Grow to MFuture and current Our core businesses Strong relationships with #3 in grocery strategies have helped are growing and our retailers and deliver more have significant support from suppliers competitive and healthy opportunity ahead driv
Slide 27: Food
FOOD Scott Marshall CEO Food
Slide 28: Overview
Overview About us Positive momentum Good growth opportunities • Largest supplier to independent • Faced and overcome significant challenges • Accelerating and leveraging current supermarkets in Australia and positioned with: initiatives • Widest distribution network in Australia to − A shift in cons
Slide 29: Our difference
Our difference Local independent Trusted partner of Partner of choice Leading logistics stores at the heart largest network of for suppliers and and distribution of their community independent retailers our customers capability • Everyday value, • Right brand, format and location • Broad range of wa
Slide 30: Together we are a force for good
“Together we are a force for good” IGA Network Social Responsibility vision and ESG framework adopted by the IGA independent supermarket network “Together we are a force for good in our local communities. We will continue to actively address our environmental, social and community impact and inspire
Slide 31: National store network
National store network Total IGA stores 1,341 National network of stores NT QLD WA SA NSW Wholesale customers VIC Supported through five major distribution centres & smaller TAS regional centres. Major Distribution centres Regional Distribution centres 5
Slide 32: Food Strategy
Food Strategy Purpose Championing Successful Independents Supporting our retail network to grow through a ‘best in class ‘ wholesale offer that includes the brands, ranges and prices to ensure they Aspiration meet the needs of their shoppers Indispensable partner to thriving independent food busines
Slide 33: Food flywheel initiatives
Food Our flywheel underpins 01 Our core: Wholesale & logistics 03 Provide the services and support that add value and enable our competitive advantages • DC network – New DC investments – SA (Opened FY21), VIC (mid 2024); existing fleet expansion (QLD, independent retailers to compete WA, NT) agains
Slide 34: Value drivers
Value drivers Volume Earned through a mix of margin and fees Combination of direct (warehouse) and charge through Category mix Food / Grocery / tobacco Customer mix IGA, contract, food service, convenience Store format Large/small, regional/metro Logistics Fixed costs, labour, freight, productivity
Slide 35: MFuture initiatives
MFuture initiatives Store Store Range, price Accelerating Systems & Upgrades Formats & private label Digital Supply chain • Store refurbishment • Improved shopper • Low Prices Everyday • IGA Shop Online • New South Australian DC program supported by experience with consistent program continues to fu
Slide 36: Store upgrades
Store upgrades 730 DSA Store upgrades Store upgrades include implementation (~50% of network) already completed of brand clarity initiative Targeting a further 100-130 store Upgrades drive sustained store upgrades per year over next five years outperformance with average retailer sales growth ~15% ~
Slide 37: Store formats
Store formats Network of the Future • Endorsed by retailers • Tailored to target shopper preferences • New minimum Channel Standards for every brand − 283 stores fully aligned to New Channel Standards − Remaining stores now >90% aligned to New Channel Standards • Store refresh supported by Metcash i
Slide 38: We have evolved the IGA brands
We have evolved SHOPPER MISSION the IGA brands Stock up Weekly shop Top up Food for later Food for now To allow us to appeal to more shoppers x large large medium small STORE SIZE x small 12
Slide 39: Our new IGA brands
Our new SHOPPER MISSION IGA brands Stock up Weekly shop Top up Food for later Food for now Allow us to appeal to more shoppers x large large medium small STORE SIZE x small 13
Slide 40: Fundamental redesign of our retail network
Fundamental redesign of our retail network X Large Large /Medium Small Alternate Format format format brand(s) Tailored solutions based on target shopper mission, store size and retail offer 14
Slide 41: Best shopper-led range at the right price
Best shopper-led range at the right price Store format core Expanded Every Day Relaunch of Black & Partnering with Community Co Increased perishables range actively Low Price offer with Gold value tier with retailers and suppliers expansion with and cross-dock range managed to remain maximum shelf i
Slide 42: Value campaign relaunch
Value campaign relaunch Reinforcing our price credentials 01 03 Relaunching Price Match across Network participation our entire IGA network with an endorsed by Retailer extensive media campaign Representative forums 02 04 Developed a new Price Strengthening our Match “Essentials basket” for Independ
Slide 43: Positive momentum driven by improved retail network
Positive momentum driven by improved retail network Our wholesale business model thrives on the positive virtuous cycle effect of …driven by retail growth through a better volume growth… shopper experience • DSA store upgrades completed for ~50% of network delivering sustained store sales growth of
Slide 44: Digital acceleration: eCommerce
Digital acceleration eCommerce Rollout of the upgraded eCommerce platform now in Integrated last mile ~220 stores delivery partnership via DoorDash in place Provides store specific Sophisticated in-store order ranging and promotions fulfilment solution with store specific picking App • Location-base
Slide 45: Digital acceleration: Loyalty
Digital acceleration Loyalty Platform enables retailers to Program live in 315 stores engage with their shoppers with further rollout across through smart-driven marketing network underway • Personalised shopper communication based on actual in-store shopping behaviour and Complementary to existing
Slide 46: Digital acceleration: Rapid delivery partnerships
Digital acceleration Rapid delivery partnerships Partnership model, currently with Utilises partner databases DoorDash and Uber. (Deliveroo to secure new occasions coming soon) and incremental sales Retailers aligned on range and max. RRP Orders delivered in under for this channel 30 mins Marketing
Slide 47: Digital acceleration: platforms for retailers and suppliers
Digital acceleration Easy to use digital platforms for retailers and suppliers Sorted Retailer one stop shop (ROSS) • Business to business digital platform • New single sign-on retailer portal that makes for Retailers to browse, select and it simpler for retailers to manage and access order all the
Slide 48: Supply chain
Supply chain Providing our retailers with the best level of service at the lowest cost Leveraging Enhancing our our DC network network capability • Delivering productivity • Facility reconfiguration to benefits and expanded range expand range across Fresh from new DC in SA and Frozen and ramp up cro
Slide 49: Potential capex
Potential capex Network of the future Digital Supply chain • Further DSA store upgrades (additional • Accelerate eCommerce for IGA retailers • New ‘best in class’ Distribution Centre in 100-130 stores targeted annually) including rollout of latest eCommerce Truganina, Victoria platform • Network ref
Slide 50: On track to deliver our ambitious growth plans
On track to deliver our ambitious growth plans Strategy execution and network responsiveness founded Continued focus on delivering best shopper-led range on trust and constructive culture – better together at the right price for our independent network MFuture programs underpinning Digital accelerat
Slide 51: Hardware
HARDWARE Annette Welsh CEO Hardware
Slide 52: Overview
Overview IHG is 2nd largest player in Company-owned/Joint Venture stores Australian Hardware market core to strategy Track record of successful acquisitions Diverse portfolio of store owners and end and delivering synergies customers reduces exposure Trade focused, with competitive DIY Continued foc
Slide 53: Our history
Our history In 1959 Eight Timber & Plumbing independents joined together to form a buying group. They met at Today the Mitre Tavern Melbourne. We have a network of 736 stores with network sales over $4.4bn* 1959 1965 2007 2012 2016 2017 2020 Metcash acquires Mitre 10 launched Stores now Mighty helpf
Slide 54: IHG network
IHG network A national network of 636 stores NT Wide distribution network QLD 2 1 3 88 31 Distribution centres 2 359 (rationalised from seven at WA time of HTH acquisition) 22 1 2 SA 34 21 154 17 1 42 17 NSW 20 4 Sales mix weighted to Trade 95 40 38 1 111 VIC 64% trade Mitre 10 76 43 21 1 2 12 Home
Slide 55: Market structure
Market structure Trade focus Dulux Dulux Trade Center Bretts Hume Paint Spot Reece Stratco Group Inspirations Paint H&G Haymes Trade Center Tradelink Warringah Timbers Taubmans Trade Center NHS Plumbing Plus Hazelwood & Hill Wattyl / Solver Paints Swan Plumbing North Shore Timber Yenckens Fox Hay Oz
Slide 56: Key drivers of strong performance
Key drivers of strong performance IHG1 Sales (includes charge-through) • Increased consumer interest in DIY 3,000 CAGR 9.6% • Consumers rediscovered their local hardware store 2,500 • Government stimulus boosted Trade demand $m 2,000 • Increased time at home alongside high disposable income levels d
Slide 57: MFuture initiatives – update
MFuture initiatives – update Grow DIY Build Trade • Expanding Sapphire store upgrades • Trade Centres – servicing the builder ‒ Committed to upgrade 300 stores by 2025 ‒ Completed 37 of targeted 50 Sapphire Trade ‒ 170 now completed / target 40 per year Centres • Network Growth • Two-brand strategy
Slide 58: Hardware flywheel initiatives
Hardware Provide the services and support Initiatives supporting 01 Our core: Wholesale & logistics • New Ravenhall (VIC) DC; 50,000m2 03 that add value and enable our flywheel purpose-built facility independent retailers to compete against scaled national chains • DC rationalisation program – reduc
Slide 59: Value drivers
Value drivers The Metcash economic Volume Category mix Retail sales CODB Earned through a mix Trade and DIY Sales through owned Support office, field model is comprised of of margin and fees. and JV stores allow support, supply various value drivers. Combination of participation in full chain, marke
Slide 60: Hardware strategy
Hardware strategy Purpose Championing Successful Independents Aspiration Accelerate growth to consolidate leadership position supplying small and medium builders, and remain the strong #2 in DIY Indispensable partner to thriving independent hardware businesses Preferred route to market for suppliers
Slide 61: Brand strategy
Brand strategy Delivering two strong brands 2017 2022 2024 target Positions Mitre 10 as the premier brand across Trade & DIY 51% sales 82% sales 85% sales Provides Members with a lower- cost strong DIY focused brand 46% sales 15% sales 15% sales Members have opportunity to fold into 2% sales 2% sale
Slide 62: Mitre 10 brand relaunch
Mitre 10 brand relaunch Purpose Campaign target Results With Deliberate reminder that: • Investment target at: • Campaign reached 4 out of 5 target 359 − DIY consumer audience • There is another hardware store − 25-54 age group • Share of voice increased to 26% − Awareness, consideration & purchase
Slide 63: Change in sales, brand and ownership mix
Change in sales, brand and ownership mix Continued strength in Trade 2019 Today DIY & DIY and Trade Trade 35% 65% 36% 64% Company Stores/JV & Corporate and Independent Independent 40% 60% 42% 58% Mitre 10 HH 4% 3% Brand 32% 15% Other 64% 82% Strong growth in Mitre 10 brand supported by Sapphire upgr
Slide 64: Market activity
Market activity Government stimulus Constraints on supply and Working from home and Diversified portfolio of retailers drove strong housing labor significantly population movement to and end consumers limits exposure demand increased build times regional locations driving to any particular segment r
Slide 65: Customer segmentation profile
Customer segmentation profile Minimal exposure to volume builders ~5% Volume Builders 65% Trade ~30% Small & Medium Builders ~30% Renovations & Additions 35% DIY ~35% DIY 15
Slide 66: Key growth initiatives
Key growth initiatives NETWORK GROWTH BUILD TRADE GROW DIY Support existing and new Continue to open Sapphire Deliver Sapphire Members network growth standard Trade Centres store upgrade program Fill in network gaps via green/ Expand our share of Continued focus on shopper-led brownfield development
Slide 67: Network growth
Network growth Network plans Opportunities Results • Based on key market insights • Prioritise opportunities • Target additional 5 stores per year • Local knowledge and relationships • Determine appropriate format • Improving network quality • Determine network gaps • Independents engaged • Increase
Slide 68: Sapphire store upgrade program
Sapphire store upgrade program Objective Roll out plan Results • To keep stores modern and leading edge – • 170 completed by Sept 22 • Sapphire store sales up >25% predominantly DIY focus • Success of program has led to expansion of • Significantly outperformed non-Sapphire • ~50% investment contrib
Slide 69: Build Trade – Whole of House
Build Trade – Whole of House Strategy to grow categories not historically sourced through IHG Foundations Frame & Truss Lock Up Fix Fit Out Slab Hardware & Wall Frames, Roof Roofing, Facia, Plaster, Linings, Plumbing, Floor Systems Trusses & Gutters, Insulation, Doors, Architraves, Appliances, Paint
Slide 70: Build Trade – Whole of House
Build Trade – Whole of House Delivering growth and supporting our #1 position to small/medium builder FY22 260 TARGETED BUILDERS Whole of House 36% FY21 21% 20
Slide 71: Build Trade – trade technology
Build Trade – trade technology Enables connectivity with builder at all levels, and underpins IHG’s trade strategy ENGAGE CONNECT DELIVER LOYALTY INSIGHTS Umbrella for builders Customers can easily Efficient & Recognition of Customer data and to use our digital transact with us transparent logistics
Slide 72: DIY – Shopper-led range
DIY – Shopper-led range Delivering positive consumer experience and supports strong market position • Strong & confident in DIY • Range built on scan data • National Brands exclusive to Independents • Competitive price online & instore • Complete planogram offer supporting members and consumers • Su
Slide 73: DIY - Digital
DIY - Digital Consumer uptake Broadcaster Video and initiatives continue Loyalty On-demand to deliver growth Click ‘N’ Collect Buy Now Pay Later eCommerce • Technology ecosystem to improve operational efficiency / reduce cost for our Members’ suppliers Click ‘N’ Deliver Social Media • New sales chan
Slide 74: Potential capex (FY23-FY24)
Potential capex (FY23-FY24) Continued investment to grow network, build Trade and retain DIY gains Grow Retail Network Build Trade Grow DIY • Continue consolidation of the • Continue to open Trade Centre • Deliver Sapphire store upgrade fragmented market – Sapphire stores program • Fill in network g
Slide 75: On track to deliver our ambitious growth plans
On track to deliver our ambitious growth plans IHG clear #2 in Hardware market with an Focus on ‘Whole of House’ – well positioned extensive national footprint through existing network and relationships Strong focus on supporting Independent Digital & Technology programs have shown store owners stro
Slide 76: Total Tools
TOTAL TOOLS Paul Dumbrell CEO Total Tools
Slide 77: Overview
Overview Clear #1 in professional tools segment with growing Data insights provided via a single ERP drive fast national footprint and effective decision making Strong growth opportunities of 8-10 new stores per Strong omni-channel shopping experience year with target network size of ~130 stores by
Slide 78: Total Tools milestones
MTS moves to TOTAL TOOLS MILESTONES 85% of TTH Total Tools acquires A history of consistent store and sales growth 12 JV stores Metcash acquires Total Tools 70% of TTH acquires further 15 JV stores Pronto ERP $330m network $658m network Name changed upgrade sales reached sales reached to Total Tools
Slide 79: Total Tools today
Total Tools today #1 professional tools retailer in Australia 101 stores $1bn+ 133,000m²+ 89% 100,000+ 20 stores opened Network revenue Retail footprint across the Loyalty Program penetration SKUs available across the in 2 years since Metcash network (excl. Commercial) from 1.6m Total Tools network
Slide 80: The Total Tools Store
The Total Tools Store Store format • Large store format to offer ”Every Tool, Every Trade” • Highly trained staff providing differentiated expert advice • 87 Stores aligned to Gen 2 instore experience • Store size – Total Tools: >1,500m²; Bunnings: <250m²; TKD 1,500m2 + 10,000+ $11m+ ~2,000m²; Sydne
Slide 81: Total Tools network
Total Tools network Significant NT 1 expansion QLD 23 opportunities • Potential of ~130 stores by 2025 WA 10 • Strong opportunities in NSW, QLD, WA and VIC SA 6 NSW 25 101 Existing network stores 1 ACT VIC Revenue: 33 ~40% regional ~60% metro TAS 2 6
Slide 82: Retailer of choice for major tool distribution partners
Retailer of choice for major tool distribution partners Long-term relationships with many major tools distribution partners Largest Tool Specialist ANZ retailer for majority of our distribution partners 7
Slide 83: Range / specialisation
Market leader A differentiated market position that is complementary to IHG #1 in a specialised segment High Category leader in professional tools 101 stores 34 stores 65 stores Leading retail channel for the best professional tool brands Professional 12 stores 19 stores Range / specialisation Tool
Slide 84: Drivers of strong growth since acquisition
Drivers of strong growth since acquisition Network sales & Total Tools Group Underlying EBIT ($m) Expansion of store footprint High level of new infrastructure,, 972 ‒ Strong reinvestment from refurbishment and renovation activity 1000 868 70 network 60 800 63.5 585 50 600 40 Acquisition of joint ve
Slide 85: Vision and Mission
Vision and Mission Mission Every day delivering the right range of tools & advice for our customers who are building the future Brand Essence Every Tool, Every Trade Own it Get Values Customer First Be the difference One team it Done! Build ultimate Joint Grow User Led Work Strategy customer venture
Slide 86: Total Tools strategic initiatives
Total Tools is strengthened by our strategic initiatives 01 Our core: Wholesale & logistics 03 Provide the services and support that add value and enable • Leverage IHG supply chain and new independent retailers to compete Ravenhall DC against scaled national chains • Network optimization and co-loc
Slide 87: Value drivers
Value drivers The Metcash economic Volume Product range Retail sales COBD Current supplier Cordless power tools & Sales through JV and Support office, model is comprised of direct and offshore accessories, outdoor owned stores allow freight and marketing various value drivers. EB 3PL powered equipme
Slide 88: Key initiatives and potential capex (FY23-FY24)
Key initiatives and potential capex (FY23-FY24) Grow Store Network Customer Engagement In Store Experience JV Conversions Synergies • Strong growth • Online conversion • Customer Value • 30 Stores September 22 • Joint ranging and sourcing opportunities of 8-12 stores Proposition opportunities with I
Slide 89: Network growth
Network growth 170+ Average ~9 stores per year 140 130 120 110 100 89 79 81 68 59 49 41 33 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23F FY24F FY25F FY26F Future Track record of network growth: Significant growth path remaining 170 • Opened 59 stores from FY15 to FY22 • History of existing fran
Slide 90: Network growth through joint locations
Network growth through joint locations Merimbula + • Forms part of our acquisition strategy and is a NT growth opportunity for both Mitre 10 and Total QLD Tools WA SA Matraville ‒ Delivers a stronger hardware offer in NSW regional locations VIC ‒ Attracts a broader customer base ‒ Drives improved fl
Slide 91: Customer & digital
Customer & digital A step ahead of the pack Insider Rewards Full Omni- Leading eCommerce Long Tail Digital Marketing Social Media Loyalty Program channel Offering & APP Range AI Driven Order Tracking Customer Journey Customer Behaviour Segmentation Benchmarking Personalisation Optimisation Insights
Slide 92: Best in class loyalty program
Best in class loyalty program Loyalty Penetration Total Members (millions) 90% 1.6 1.5 1.4 80% 1.3 1.1 1.2 1.2 1.0 1.1 0.9 1.0 0.8 0.8 70% 0.7 60% 50% DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 FY14 FY15 FY16 FY17 FY1
Slide 93: JV growth program
JV growth program Background: Revenue split • One of the key objectives of the joint venture with MTS for the TTH shareholders was to provide a path for succession for its network of franchise stores over time, and to partner with retailers to support future growth • MTS provided a $65m debt facilit
Slide 94: Synergies
Synergies Network Ranging, Optimisation Brands & & co-located Supply sites Chain Core Synergies Further synergy opportunities available Group Loyalty, Network savings from eCommerce Synergies MTS partnership & Cross Promotions through non-trade 19
Slide 95: On track to deliver our ambitious growth plans
On track to deliver our ambitious growth plans 01 Clear #1 in Professional Tools segment 06 Strong affinity with ‘Tradie customer’ 02 Continued strong history of sustainable growth 07 New products and technology shifts continue to provide growth opportunities Network Growth to 130 stores by FY25 wit
Slide 96: Liquor
LIQUOR Chris Baddock CEO Liquor
Slide 97: Overview
Overview Strong market Competitive Attractive growth position advantage opportunities • Strong #2 in liquor market • 14 distribution facilities across Australia (11) • Significant growth achieved in past 2 years, • Diversified channel and customer portfolio and NZ (3). Five shared with Food, creatin
Slide 98: Continued strong performance
Continued strong performance 50% Retail gains consolidated, on-premise sales Continued growth in retail & contract sales continued to recover Recovery in on-premise sales • Sales growth in IBA and contract customers has been strong and 35% maintained at the start of FY23 • On-premise growth strong i
Slide 99: Liquor market and sales mix
Liquor market and sales mix The Liquor market Market Share Metcash sales mix ~3% 100% Retail Wholesale ~27% Total sales 89.5% 10.5% FY22 Retail Sales $4.8b (est) $19.3b $14.4b Total sales 91% 9% FY21 On-Premise sales (est) $13.9b $3.1b $4.4b ~70% Total Market Total sales 88% 12% FY20 (est) $33.2b $1
Slide 100: IBA brands (Australia)
IBA brands (Australia) IBA network of stores NT 538 483 259 28 QLD 224 140 22 31 WA SA 133 83 NSW 389 VIC 524 IBA national network of stores Distribution centres TAS NZ 1,473 350 (An additional 350 stores are supported Stores numbers as at Apr 22 92 350 NZ AU in NZ and under other banners) A wide po
Slide 101: Liquor flywheel initiatives
Liquor Initiatives supporting 01 Our core: Wholesale & logistics 02 Create, build & support brands and our flywheel • DC network – New DC investments – SA (Opened FY21), VIC (mid 2024); existing formats across channels that shoppers love, and independents want to own fleet expansion (QLD, FNQ, WA, N
Slide 102: Value drivers
Value drivers Volume Mix of margin and fees Price inflation Some impact on dollar margins, allows our wholesale scale to deliver value to network Driven by six monthly excise CPI Customer growth Driver of sales and, through IBA in particular, support the growth ambitions of suppliers Channel mix Ret
Slide 103: Liquor strategy
Liquor strategy Purpose Championing Successful Independents Aspiration Consolidate 2nd largest liquor position in ANZ; grow IBA, on premise and support contract customers through wholesale excellence Indispensable provider of scale economics Preferred route to market for liquor suppliers to thriving
Slide 104: Acceleration of digital capability
ACCELERATION OF DIGITAL CAPABILITY eCommerce offers new business to IBA Retailers Quick Commerce • Being active with hyper local delivery, the next-generation of eCommerce • 200+ stores in NSW, VIC, QLD and growing • Tapping into a younger demographic c • Elevated basket size of $45 eCommerce • Bann
Slide 105: Loyalty
Loyalty Cellarbrations Top Drop Rewards & The Bottle-O Rewards IBA has launched a loyalty program pilot which will drive foot traffic, increase retention of retailers, and derive consumer insights and data. Full launch Feb 2023 The loyalty program solution features: 01 02 03 04 Mobile First: Persona
Slide 106: Supply chain flexibility and efficiency
Supply chain flexibility and efficiency Greater retailer choice and efficiency driving increased competitiveness Partner with key Evolve supply chain Enhanced technology suppliers to realise capability to support to improve customer operational efficiencies ‘One Invoice’ experience through: • ‘Endle
Slide 107: Renowned brands with character
Renowned brands with character Each of our brands has a reason for being with this communicated 'through the line’ • Regional TV • Regional TV • National TV (Food) • Subscription TV • Hyper-local Awareness • Subscription TV • Local Sponsorship • Metro Digital • Outdoor • Metro Digital Screen • Radio
Slide 108: A taste for discovery
A TASTE FOR DISCOVERY PORFERS LIQUOR ALEXANDRIA, TRY SOMETHING DIFFERENT, wh, ez!! ALEXANDRIA, TRY SOMETHING 7 se! a PORTERS
Slide 109: Ruby Renno's
Ruby Renno’s Winning in the LAST 20 FEET is a priority for delivering programs which add value to our retailers Metcash Food Pillar have led the way in defining what exceptional retail standards look like in their banner strategy. Liquor is undertaking a similar exercise to ensure our banner strateg
Slide 110: Owned and Exclusive brands
Owned and Exclusive brands Creating stickiness with Build Brand creation and Grow IBA volumes shoppers and retailers Momentum leveraging supplier exclusives and create new channels – quality products • Created Independent Beverage Partners (IBP) • Rationalised poor performing brands • Utilise suppli
Slide 111: On track to deliver our ambitious growth plans
On track to deliver our ambitious growth plans 01 Position of strength – 2nd largest player in Australia with demonstrated ability to manage growth 05 ALM Connect building the endless aisle, offering retailers differentiation in every store across a wider range Continuing to build brand awareness an
Slide 112: Project Horizon
PROJECT HORIZON Doug Jones Group CEO
Slide 113: Project Horizon
Project Horizon Implementation Program Going Why Horizon status update forward • Multiple legacy ERP systems • Stage 1 well progressed with • Continue to assess delivery • Post Stage 1 (value creation across Metcash – backbone to first roll outs in program management and phase): critical operations
Slide 114: Project Horizon – Stage 1 benefits: Finance
Project Horizon – Stage 1 benefits Finance In conjunction with operations, expected to enable a range of enhancements across our core Finance functions, within a modern and scalable ecosystem Standardised processes Insights Knowledge • Access to centralised data through single ERP, • Multi-dimension
Slide 115: Project Horizon – Stage 1 benefits: Operations
Project Horizon - Stage 1 benefits Operations Anticipated benefits including operating cost efficiency, working capital improvement and transformation of customer experience across critical operational areas Forecasting & planning Order management Pricing • Enhanced stock tracking and management • A
Slide 116: Beyond Stage 1
Beyond Stage 1 Leveraging platform to create value Horizon creates a • New technology backbone opens up a wide range of opportunities to create value with customers leading edge, value and suppliers (includes operating efficiencies through removal of complexity and manual creation platform processes
Slide 117: Financial Framework
FINANCIAL FRAMEWORK Alistair Bell Group CFO
Slide 118: Key focus areas
Key focus areas Active capital Maintaining a Maintaining a allocation disciplined approach strong and flexible to working capital balance sheet • Delivering long term earnings and cash • Maintain appropriate inventory to • Maintain net debt levels within flow growth ensure our retailers have access
Slide 119: Track record of delivering attractive returns
Track record of delivering attractive returns FY18 FY19 FY20 FY21 FY22 • Growth in EBIT and acquisition of Total Tools key drivers Group Sales ($b) of improved ROFE (incl. charge-through) 14.4 14.6 14.9 16.4 17.4 • FY22 was an extraordinary year in terms of our Group EBIT ($m) 334.62 33
Slide 120: Capital management framework
Free cash flow from operations less lease & interest obligations and less Cash from Cash for Net interest sustaining capex operating investing & lease activities activities payments Cash realisation ratio dependent on working capital management, significant items and trading results - achieved 91% i
Slide 121: Active capital allocation – approach
Active capital allocation – approach Capex investment is categorised to focus on achieving attractive portfolio returns Sustaining Major growth projects Stay In Business Core growth initiatives Strategic growth • Replacement of capital items that have reached • Initiatives to deliver synergies, • In
Slide 122: Active capital allocation - capital expenditure
Active capital allocation - Capital expenditure ($m) capital expenditure 200 18 17 150 16 100 15 • Capital investment categories/projects have differing 14 50 rates of returns but are expected to achieve hurdle rates 13 well above the long term WACC, and overall achieve 0 12 attractive blended retur
Slide 123: Working capital
Working capital Inventory ($m) and inventory days 1200 35 30 • Continue to generate strong operating cash through focus on 1000 25 managing working capital fluctuations from seasonal sales and 800 29.0 28.4 buying opportunities 25.7 20 600 22.4 22.5 15 • Achieved pleasing cash realisation ratio of 9
Slide 124: Debt management
Debt management Debt facility maturity profile 400 350 • Continuing to focus on optimisation of debt book 300 ‒ Maintaining flexibility at competitive average cost of debt – credit 250 $m 200 margins improving but substantial increase in BBSY since Feb. 2022 150 ‒ Maintaining a solid credit profile
Slide 125: Shareholder distributions
Shareholder distributions Distributions • Focus on delivering superior shareholder returns 1 Dividend payout ratio 60% 60% 60% 70% 70% • Our objective is to pay reliable dividends to shareholders 500 30 DPS ‒ Target dividend payout ratio ~70% of underlying profit after tax ‒ Fully franked dividends
Slide 126: Trading Update & Summary
TRADING UPDATE & SUMMARY Doug Jones Group CEO
Slide 127: Trading update – YTD FY23
Trading update – YTD FY23 23 weeks to 9th October Group Strong sales momentum has continued in 1H23 in all pillars, Group sales supported by continued preference for local neighbourhood shopping and underpinned by the improved competitiveness of our +7.7% independent retail networks, and by inflatio
Slide 128: Focus now on further growth, with ambitious plans to win market share
Focus now on further growth, with ambitious plans to win market share in our independent networks Our strategy is sound and working – MFuture and existing pillar strategies, together with key acquisitions have materially improved the competitiveness of our independent networks and delivered good fin