Slide 1: 2020 Full-year results briefing presentation
2020 Full-year results briefing presentation To be held on Thursday 20 August 2020
Slide 2: Presentation outline
Presentation outline Item Presenter Page Group performance overview Rob Scott 3 Group balance sheet and cash flow Anthony Gianotti 13 Bunnings Michael Schneider 23 Kmart Group Ian Bailey 30 Officeworks Sarah Hunter 35 Chemicals, Energy and Fertilisers Ian Hansen 40 Industrial and Safety Tim Bult 45
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 s
Slide 5: Demonstrably performing, consistent with our values
Demonstrably performing, consistent with our values During this challenging year, our businesses and team members played a critical role in supporting customers, partners and the communities in which our businesses operate Anticipating the needs Looking after our team Engaging fairly with of our cus
Slide 6: Impact of COVID-19 on operations and financial results
Impact of COVID-19 on operations and financial results • Implementation of additional measures to protect the health and safety of team members and customers Focus on safety • Extension of a range of additional leave and benefits to affected team members and support • Resulted in some additional ope
Slide 7: Financial overview
Financial overview 2020 2020 2019 Variance Year ended 30 June ($m) Post AASB 16 Pre AASB 16 Reported %1 Results from continuing operations excluding significant items2 Revenue 30,846 30,846 27,920 10.5 EBIT (after interest on lease liabilities) 2,942 2,964 2,974 (0.3) NPAT 2,083 2,099 1,940 8.2 Basi
Slide 8: Divisional sales performance
Divisional sales performance Sales performance ($m) 2019 Year ended 30 June1 2020 Retail sales (excludes Catch)2 Revenue +13.9% +5.4% (2.6%) +20.4% +0.3% (0.4%) 14,996 13,162 5,759 6,068 2,763 2,692 2,305 2,775 2,078 2,085 1,752 1,745 Bunnings Kmart Target Officeworks WesCEF Industrial and Safety •
Slide 9: Divisional earnings performance
Divisional earnings performance Earnings Before Tax (EBT) ($m) 2020 2020 2019 Variance % of divisional Year ended 30 June1 Post AASB 16 Pre AASB 16 Reported %2 EBT Bunnings 1,826 1,852 1,626 13.9 Kmart Group3 410 413 540 (23.5) Officeworks 197 190 167 13.8 WesCEF4 394 393 433 (9.2) Industrial and Sa
Slide 10: Divisional return on capital
Divisional return on capital Rolling 12 months to 30 June1 2020 2019 EBT2 Cap Emp3 RoC EBT2 Cap Emp3 RoC Variance4 ($m) ($m) (%) ($m) ($m) (%) (ppt) Bunnings 1,852 2,997 61.8 1,626 3,220 50.5 11.3 Kmart Group 413 1,978 20.9 540 1,853 29.1 (8.2) Officeworks 190 969 19.6 167 980 17.0 2.6 WesCEF 393 1,
Slide 11: Managing businesses for long-term success
Managing businesses for long-term success While addressing the near-term requirements of COVID-19, the divisions remain focused on managing their businesses for long-term success and value creation Building on unique A relentless focus Investing for the capabilities and on customers long term platfo
Slide 12: Group performance summary
Group performance summary 2020 2020 2019 Variance Year ended 30 June ($m) Post AASB 16 Pre AASB 16 Reported %1 Results from continuing operations2 EBIT 2,744 2,530 2,974 (14.9) EBIT (after interest on lease liabilities) 2,507 2,529 2,974 (15.0) EBIT (after interest on lease liabilities) (excl. signi
Slide 13: Group balance sheet and cash flow
Group balance sheet and cash flow Anthony Gianotti Chief Financial Officer, Wesfarmers Limited
Slide 14: Significant items and discontinued operations summary
Significant items and discontinued operations summary Year ended 30 June 2020 ($m) Pre-tax Tax impact Post-tax Non-cash impairment in Kmart Group (525) 88 (437) Non-cash impairment in Industrial and Safety (310) 12 (298) Restructuring costs and provisions in Kmart Group (110) 27 (83) Gain on sale of
Slide 15: Other businesses performance summary
Other businesses performance summary Holding 2020 2020 2019 Variance Year ended 30 June ($m) % Post AASB 16 Pre AASB 16 Reported %1 Share of profit of associates and joint ventures Coles2 4.9 111 111 128 (13.3) BWP Trust 24.8 52 52 42 23.8 Other associates and joint ventures3,4 Various 38 38 45 (15.
Slide 16: Operating and free cash flows
Operating and free cash flows • Divisional cash generation from continuing Divisional cash generation1 % operations increased 38 ppt to 135% excluding discontinued operations2 160 • Operating cash flows increased 32% to $3,597m 140 120 FY15 - FY19 average - 103% – Strong divisional operating cash fl
Slide 17: Working capital
Working capital 2020 2019 • Significant favourable but temporary working Year ended 30 June ($m) Pre AASB 16 Reported capital inflow of $723m driven by retail divisions Working capital movements (continuing operations)1 Cash movement inflow/(outflow) • Lower inventory levels at year end Receivables
Slide 18: Capital expenditure
Capital expenditure • Gross capital expenditure from continuing Year ended 30 June1 ($m) 2020 2019 Var % operations of $867m in line with prior period Bunnings 511 470 8.7 – Higher capital expenditure in Bunnings from Kmart Group 142 205 (30.7) development of digital offer – Higher capital expenditu
Slide 19: Net financial debt
Net financial debt Movements in net financial debt1 ($b) (0.7) 1.6 Working 0.6 capital Net capex inflows 1.0 Kidman and Catch (2.1) (2.9) acquisitions Trading and (0.2) 0 other operating cash flows 1.7 (3.6) Net financial debt1 Net capex and Net financial debt1 30 June 2019 acquisitions 30 June 2020
Slide 20: Balance sheet and debt management
Balance sheet and debt management • Maintained significant balance sheet flexibility Debt maturity profile1 $m • Extension of available committed bank debt 1,200 facilities by $1.95b to $5.3b in May 2020 0 – Secured at acceptable terms, with pricing (1,200) well below the Group’s overall cost of deb
Slide 21: Management of lease portfolio
Management of lease portfolio • Undiscounted lease commitments totalled Weighted average lease terms (%)2 $8.5b1 and represent 79% of Group fixed 3.1 2.2 1.7 0.6 0.3 financial obligations as at 30 June 2020 12.9 12.3 12.1 6.8 5.3 31.3 • Shorter average remaining lease tenure of 31.4 32.3 32.3 32.9 4
Slide 22: Dividends
Dividends • Fully-franked final ordinary dividend of Dividends1 $0.77 per share Demerger of Coles – Reflects strong underlying NPAT result $/share Nov 2018 3.50 2.78 • Fully-franked special Coles selldown dividend of 3.00 2.50 2.23 2.23 $0.18 per share 2.00 1.86 1.00 1.70 – Distributes after-tax pro
Slide 23: Bunnings
Bunnings Michael Schneider Managing Director, Bunnings Group
Slide 24: Bunnings performance summary
Bunnings performance summary 2020 2020 2019 Variance Year ended 30 June ($m) Post AASB 16 Pre AASB 16 Reported %1 Revenue 14,999 14,999 13,166 13.9 EBITDA2 2,601 2,053 1,818 12.9 Depreciation and amortisation (658) (201) (192) (4.7) EBIT2 1,943 1,852 1,626 13.9 Interest on lease liabilities (117) -
Slide 25: Bunnings sales overview
Bunnings sales overview • Revenue growth of 13.9% to $14,999m – Total store sales growth of 14.7% – Store-on-store sales growth of 14.7% – Provided a convenient offer for consumer and trade customers while operating safely in a COVID-19 environment • Second-half sales growth underpinned by strong gr
Slide 26: Bunnings earnings overview
Bunnings earnings overview • Earnings increased 13.9% to $1,852m with a significantly lower net property contribution • Earnings excluding property contribution increased 17.8% – Continued focus on disciplined cost control – $20m of additional costs in cleaning, PPE for team members and additional s
Slide 27: Bunnings progress on strategic agenda
Bunnings progress on strategic agenda • Even stronger offer – Continued network investment – Expanded ranges and more in situ displays – 3,500 additional in-store experts providing specialist advice • Data and digital – Rollout of Click and Deliver across Australia and New Zealand – Launched new con
Slide 28: Adapting to new COVID-19 environment
Adapting to new COVID-19 environment • Established in-store protocols to ensure customer and team safety – Limiting customers in stores, physical distancing measures – Installed perspex register guards in all Australian stores – Increased cleaning in-store and deep cleans every night across store ne
Slide 29: Bunnings outlook
Bunnings outlook • Outlook remains highly uncertain • Trading performance likely to moderate as extraordinary growth in the second half likely to have pulled sales forward from FY21 in some categories • Weaker economic conditions expected in Australia and New Zealand with gradual removal of financia
Slide 30: Kmart Group
Kmart Group Ian Bailey Managing Director, Kmart Group
Slide 31: Kmart Group performance summary
Kmart Group performance summary 2020 2020 2019 Variance Year ended 30 June1 ($m) Post AASB 16 Pre AASB 16 Reported %2 Revenue 9,217 9,217 8,598 7.2 EBITDA3 1,122 639 733 (12.8) Depreciation and amortisation (601) (216) (193) (11.9) EBIT3 521 423 540 (21.7) Interest on lease liabilities (102) (1) - n
Slide 32: Kmart and Target performance summary
Kmart and Target performance summary • Revenue growth of 3.0% to $8,853m Year ended 30 2020 2019 Variance – Kmart sales growth of 5.4% June ($m) Pre AASB 16 Reported % – Target sales decline of 2.6% Revenue 8,853 8,598 3.0 • Earnings decline of 22.0% to $421m1 predominantly EBITDA1 619 733 (15.6) dr
Slide 33: Catch performance summary
Catch performance summary 2020 • Strong growth across both in-stock and marketplace Year ended 30 June1 ($m) Post AASB 16 segments Gross transaction value 632 – Revenue of $364m since acquisition Revenue 364 – Gross transaction value increasing 49.2% since EBITDA 20 acquisition and 75.5% in the seco
Slide 34: Kmart Group outlook
Kmart Group outlook • In an uncertain environment, Kmart Group is well-positioned to deliver sustainable long-term returns • Kmart will continue to focus on investing for future growth – Ongoing investment in technology and digital capabilities, including online re-platform – Conversion of selected
Slide 35: Officeworks
Officeworks Sarah Hunter Managing Director, Officeworks
Slide 36: Officeworks performance summary
Officeworks performance summary 2020 2020 2019 Variance Year ended 30 June ($m) Post AASB 16 Pre AASB 16 Reported %1 Revenue 2,787 2,787 2,314 20.4 EBITDA 307 221 195 13.3 Depreciation and amortisation (99) (31) (28) (10.7) EBIT 208 190 167 13.8 Interest on lease liabilities (11) - - n.m. EBT 197 19
Slide 37: Officeworks overview
Officeworks overview • Sales growth of 20.4% Sustained sales growth – Every-channel approach continues to deliver strong 2,900 +20.4% sales growth in stores and online 2,700 – Online sales penetration of approximately 30%, 2,500 +7.6% including Click and Collect sales 2,300 +9.1% – Strong second hal
Slide 38: Officeworks progress on strategic agenda
Officeworks progress on strategic agenda • Our team – Prioritised focus on keeping the team safe – Approval and implementation of new Enterprise Agreement for stores • Customer experience – Redefined back-to-school – Improved online offer – Commenced building data and analytics platform • Connecting
Slide 39: Officeworks outlook
Officeworks outlook • Outlook for year ahead remains uncertain, with changing customer shopping patterns and COVID-19 measures expected to impact trading conditions • Continued investment to ensure COVID safe operations • Well-positioned for the future • Execution of strategy to drive long-term grow
Slide 40: Chemicals, Energy and Fertilisers
Chemicals, Energy and Fertilisers Ian Hansen Chief Executive Officer, Chemicals, Energy and Fertilisers
Slide 41: Chemicals, Energy and Fertilisers performance summary
Chemicals, Energy and Fertilisers performance summary 2020 2020 2019 Variance Year ended 30 June1 ($m) Post AASB 16 Pre AASB 16 Reported %2 Revenue3 Chemicals 1,022 1,022 1,000 2.2 Energy 424 424 468 (9.4) Fertilisers 639 639 610 4.8 Total 2,085 2,085 2,078 0.3 EBITDA4 481 474 513 (7.6) Depreciation
Slide 42: Chemicals, Energy and Fertilisers operational performance
Chemicals, Energy and Fertilisers operational performance Chemicals – Production Volume and Availability - • Further improvement in safety results supported by divisional framework – ‘Safe Person, Safe Process, Safe Place’ • Strong plant performance and continued benefits from debottlenecking initia
Slide 43: Chemicals, Energy and Fertilisers overview
Chemicals, Energy and Fertilisers overview • Revenue of $2,085m in line with prior period, with volume growth in Chemicals and Fertilisers, offset by lower prices (primarily Saudi CP1) and volumes in Energy • Earnings of $393m, down 9.2% on prior period driven by lower sales in Energy as well as com
Slide 44: Chemicals, Energy and Fertilisers outlook
Chemicals, Energy and Fertilisers outlook • Product demand expected to remain robust in iron ore and gold mining sectors • Chemicals volumes are expected to moderate marginally • Increase in AN sales to fertiliser and export markets as a result of lower EGAN sales now that the competing Burrup plant
Slide 45: Industrial and Safety
Industrial and Safety Tim Bult Managing Director, Industrial and Safety
Slide 46: Industrial and Safety performance summary
Industrial and Safety performance summary 2020 2020 2019 Var Year ended 30 June ($m) Post AASB 16 Pre AASB 16 Reported %1 Revenue 1,745 1,745 1,752 (0.4) EBITDA2 136 93 124 (25.0) Depreciation and amortisation (77) (38) (38) - EBIT2 59 55 86 (36.0) Interest on lease liabilities (5) - - n.m. EBT2 54
Slide 47: Industrial and Safety overview
Industrial and Safety overview • The performance of Industrial and Safety was below expectations • Industrial and Safety businesses focused on supporting customers to respond to the Australian bushfires and COVID-19 during the year by – Sourcing critical products, including personal protective equip
Slide 48: Industrial and Safety outlook
Industrial and Safety outlook • Market conditions in Australia and NZ are expected to be uncertain and remain challenging in FY21 • Blackwoods continues to focus on improving the customer value proposition – Continued investment in data and digital – Implementation of the ERP system • Workwear Group
Slide 49: Group outlook
Group outlook Rob Scott Managing Director, Wesfarmers Limited
Slide 50: Outlook
Outlook • The continued impact of COVID-19, and potential government responses, presents significant uncertainty for the operating environment • The Group will continue to prioritise the safety of customers and team members in a COVID-19 environment • Customers spending more time at home, and tradin
Slide 51: Questions
Questions
Slide 52: Appendix: Supplementary information
Appendix: Supplementary information
Slide 53: AASB 16 Leases – Balance sheet impact on initial application
AASB 16 Leases – Balance sheet impact on initial application • Wesfarmers has applied AASB 16 from Balance sheet impact at 1 July 2019 $m 1 July 2019 Right-of-use assets 6,352 • Adopted the ‘modified retrospective approach’ Deferred tax asset 222 – Comparative periods have not been restated Lease li
Slide 54: AASB 16 Leases – P&L impact
AASB 16 Leases – P&L impact • Occupancy expenses reduce by $1,192m, offset by: Year ended 2020 2020 Var 30 June ($m) Pre AASB 161 – Increase in depreciation on right-of-use Post AASB 16 $m asset of $960m Revenue 30,846 30,846 - – Increase in interest on leases of $236m Other income and associates 87
Slide 55: AASB 16 Leases – Cash flow impact
AASB 16 Leases – Cash flow impact • AASB 16 results in a Year ended 2020 2020 Var 30 June ($m) Post AASB 16 Pre AASB 161 $m reclassification of some cash flows from ‘operating’ cash flows to Receipts from customers, 34,365 34,365 - dividends and interest income ‘financing’ cash flows Payments to sup
Slide 56: Group management balance sheet
Group management balance sheet 2020 2019 Year ended 30 June1 ($m) Post AASB 16 Reported2 Commentary • Decrease due to strong demand for Bunnings, Kmart Inventories 3,844 4,246 and Officeworks products in the second half Receivables and prepayments 1,261 1,203 • Increase due to higher purchases in Bu
Slide 57: Retail store networks
Retail store networks As at 30 June 2020 More than 1,000 locations across Australia and New Zealand Brand NSW/ACT VIC QLD SA WA TAS NT NZ Total Bunnings Warehouse 78 61 49 18 31 7 3 27 274 Smaller format 18 14 13 3 8 - - 12 68 Trade 7 3 7 2 3 1 - 7 30 Adelaide Tools - - - 6 - - - - 6 Total Bunnings
Slide 58: Revenue reconciliation – Kmart Group
Revenue reconciliation – Kmart Group Year ended 30 June1 ($m) 2020 2019 Segment revenue (Gregorian) 9,217 8,598 Less: Non sales revenue (65) (56) Headline sales (Gregorian) 9,152 8,542 Add: Gregorian adjustment2 (40) (20) Headline sales revenue (Retail)3 9,112 8,522 1. 2020 includes Catch from 12 Au
Slide 59: Retail calendars
Retail calendars Business Retail sales period Bunnings, Officeworks and Catch FY20 1 July 2019 to 30 June 2020 (12 months) FY19 1 July 2018 to 30 June 2019 (12 months) FY18 1 July 2017 to 30 June 2018 (12 months) Kmart FY20 1 July 2019 to 28 June 2020 (52 weeks) FY19 25 June 2018 to 30 June 2019 (53
Slide 60: Wesfarmers
We Wesfarmers