Slide 1: ASX cover letter: 2017 Half Year Results Presentation
Metcash Limited ABN 32 112 073 480 1 Thomas Holt Drive Macquarie Park NSW 2113 Australia 28 November 2016 Market Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam METCASH LIMITED – 2017 HALF YEAR RESULTS PRESENTATION Please find attached the
Slide 2: FY17 Half Year Results
FY17 Half Year Results 28 November 2016 1
Slide 3: 1H17 Group Update
1H17 Group Update IAN MORRICE GROUP CHIEF EXECUTIVE OFFICER 2
Slide 4: Our purpose and vision
Our purpose and vision OUR PURPOSE OUR VALUES INTEGRITY IS THE FOUNDATION OF OUR VALUES: SUCCESSFUL INDEPENDENTS • Supporting our customers and suppliers • Our people are empowered and accountable Independence is worth fighting for! • Adding value in our community OUR MODEL OUR VISION OUR MARKETS Be
Slide 5: Group overview
Group overview Highly competitive trading conditions continued through 1H17, particularly in Food & Grocery Group EBIT down 4% to $128.1m Liquor EBIT up 5% – driven by retailer conversion strategy, well positioned for further consolidation and margin improvement Hardware EBIT up 8% – solid p
Slide 6: Financials
Financials BRAD SOLLER GROUP CHIEF FINANCIAL OFFICER 5
Slide 7: Home Timber & Hardware ('HTH') acquisition
Home Timber & Hardware (‘HTH’) acquisition HTH acquisition completed 2 October 2016 Net assets acquired1 $m Trade receivables and loans 171.1 Purchase consideration of ~$163m including Inventories 125.6 estimated working capital adjustment Property, plant and equipment 26.1 Funded through a co
Slide 8: Profit & Loss – Group overview
Profit & Loss – Group overview 1H17 1H16 Change $m $m Sales1 6,629.0 6,606.0 0.3% EBITDA 159.7 165.0 (3.2%) Depreciation and amortisation (31.6) (31.3) (1.0%) EBIT 128.1 133.7 (4.2%) 2 Net finance costs (12.9) (12.8) (0.8%) Tax (31.7) (33.5) 5.4% Non-controlling interests (0.7) (0.5) nm Underlying p
Slide 9: Cashflows
Cashflows 1H17 1H16 $m $m Net cash from operating activities 130.6 3.1 Net cash from/(used in) investing activities (141.6) 237.0 Disposal of businesses 1.6 239.7 Disposal of surplus assets and loan repayments 30.7 33.0 Acquisitions of businesses (154.9) (9.6) Capital expenditure (19.0) (26.1) Divid
Slide 10: Balance Sheet
Balance Sheet 1H17 FY16 1H16 $m $m $m Trade receivables and prepayments 1,150.9 967.7 1,055.0 Inventories 917.6 673.6 803.5 Trade payables and provisions (1,974.8) (1,632.0) (1,801.6) Net working capital 93.7 9.3 56.9 Intangible assets 1,125.0 1,127.5 1,141.4 Property, plant and equipment 262.8 251.
Slide 11: Borrowings
Borrowings 1H17 FY16 Net debt reduced to $198m NET DEBT $m $m Gross debt (243.8) (301.9) Average net debt of ~$375m Cash and cash equivalents 46.2 26.4 Retired additional $140m of debt facilities Net debt (197.6) (275.5) Total available facilities 1,044.4 1,184.6 Refinanced $270m of existing
Slide 12: Divisional Results
Divisional Results IAN MORRICE GROUP CHIEF EXECUTIVE OFFICER 11
Slide 13: Results – overview by pillar
Results – overview by pillar Sales Revenue (%) 1H17 1H16 9% Change Sales $m $m Food & Grocery 4,487.6 4,540.2 (1.2%) Food & Grocery 23% Liquor 1,559.8 1,535.1 1.6% 68% Liquor Hardware 581.6 530.7 9.6% Total 6,629.0 6,606.0 0.3% Hardware 1H17 1H16 Change EBIT $m $m EBIT (%) Food & Grocery 84.5 91.9 (
Slide 14: Food & Grocery - overview
Food & Grocery - overview Market Conditions Network investing for growth Further increase in competitive intensity Multi-store owners investing for growth Deflation in retail prices continued Ritchies acquired Fishers and completed 3 DSA refurbishments Promotional activity, including Loyal
Slide 15: Food & Grocery – Best Store in Town
Food & Grocery – Best Store in Town Happy Valley Foodland, SA Tramsheds – Harold Park, NSW Taylor Road IGA, WA Dromana IGA, VIC Peregian Beach IGA, QLD 14
Slide 16: Food & Grocery – sales
Food & Grocery – sales Supermarkets 1H17 1H16 Change Sales $m $m Total sales declined 1.0% Supermarkets 3,729.1 3,766.2 (1.0%) Increased weighting of tobacco in sales mix, Convenience 758.5 774.0 (2.0%) reflective of excise price increase Total 4,487.6 4,540.2 (1.2%) Wholesale sales (excluding
Slide 17: Food & Grocery - EBIT
Food & Grocery - EBIT Food & Grocery 1H17 1H16 Change Sales $m $m Food & Grocery EBIT declined $7.4m to $84.5m Supermarkets 3,729.1 3,766.2 (1.0%) due to lower earnings in both Supermarkets and Convenience 758.5 774.0 (2.0%) Convenience Total Sales 4,487.6 4,540.2 (1.2%) Supermarkets Total EBIT 84
Slide 18: Liquor - overview
Liquor - overview Market conditions Network investing for growth Consumer habits continue to shift to higher quality, less volume Consolidation strategy continued consumption (health and wellbeing trend) Acquisition of Thirsty Camel (NSW, Tas) in September Smaller, more frequent shopping beh
Slide 19: Liquor - financials
Liquor - financials 1H17 1H16 Sales $m $m Change Total sales increased 1.6% Sales 1,559.8 1,535.1 1.6% Wholesale sales through IBA bannered EBIT 27.1 25.9 4.6% network increased 6.1% pcp LfL retail sales1 in IBA bannered network EBIT (%) 1.7% 1.7% 5bps increased 2.5% Approximately 55% of sal
Slide 20: Hardware - overview
Hardware - overview Market conditions HTH Acquisition Ongoing high level of competition Acquisition (completed 2 October 2016) in line with strategy of Competitor stock liquidation negatively impacted market being leading independent wholesaler in each pillar Unseasonal adverse weather Cre
Slide 21: Hardware - financials
Hardware - financials Sales 1H17 1H16 Change $m $m Includes $51.5m HTH sales for post acquisition Sales 581.6 530.7 9.6% period Mitre 10 sales in line with pcp. Impacted by: EBIT 12.5 11.6 7.8% Unseasonal adverse weather Cycling of closed stores EBIT (%) 2.1% 2.2% (4bps) Competitor liquida
Slide 22: Working Smarter
Working Smarter On track to deliver targeted annualised savings of Working Smarter will make doing business with Metcash ~$100m over 3 years (FY17-FY19) simpler for customers, suppliers and our people through: Forecast to exceed FY17 target of $35m. Initiatives include: SMARTER BUYING Redesign
Slide 23: Group Outlook
Group Outlook IAN MORRICE GROUP CHIEF EXECUTIVE OFFICER 22
Slide 24: Group outlook
Group outlook FY17 includes a 53rd trading week1 Liquor pillar – positive momentum expected to continue in 2H17 Hardware pillar – earnings contribution from Home Timber & Hardware in 2H17 Food & Grocery pillar – despite significant headwinds, 2H17 earnings expected to be greater than 2H16
Slide 25: Appendices
Appendices 1. Financial highlights 2. Bannered store numbers 3. Hardware acquisition 4. Contact details 24
Slide 26: Financial highlights
Financial highlights 1H17 1H16 1H15 1H14 1H13 Financial Performance Sales ($m) 6,629.0 6,606.0 6,515.3 6,471.9 6,246.3 EBIT ($m) 128.1 133.7 153.2 175.4 197.0 Net finance costs ($m) (12.9) (12.8) (24.0) (28.5) (29.8) Underlying profit after tax ($m) 82.8 86.9 92.5 99.6 113.3 Reported profit after ta
Slide 27: Bannered store numbers
Bannered store numbers October April 2016 2016 Pillar Supermarkets 1,684 1,678 Campbells 18 18 Liquor 2,571 2,674 Hardware 755 378 TOTAL 5,028 4,748 Supermarkets Liquor Hardware Store movement Number of stores at April 2016 1,678 2,674 378 Stores joined banner during the period 44 135 5 Stores left
Slide 28: Bannered store numbers
Bannered store numbers October April 2016 2016 Supermarkets Supa IGA 406 415 IGA 825 822 IGA-Xpress 203 202 Total IGA bannered stores 1,434 1,439 Friendly Grocer / Eziway 250 239 Total Supermarkets 1,684 1,678 Liquor Cellarbrations 544 518 Bottle-O & Bottle-O Neighbourhood 558 601 IGA Liquor 464 491
Slide 29: Hardware - acquisition creates significant scale
Hardware - acquisition creates significant scale Independent Metcash HTH Hardware Group Key Brands Sales ($m)1 ~$1,100m ~$970m ~$2b Trade | Retail sales split1 55% | 45% 62% | 38% 59% | 41% 30 majority owned 71 majority / wholly owned5 Company-Owned Stores2 41 wholly owned5 23 minority interest4 23
Slide 30: Food & Grocery – Best Store in Town
Food & Grocery – Best Store in Town 29
Slide 31: Disclaimer
Disclaimer This presentation contains summary information about Metcash Limited (ABN 32 112 073 480) (Metcash) and its activities current as at the date of this presentation. The information in this presentation is of general background and does not purport to be complete. It should be read in conju
Slide 32: Contact details
Contact details For additional information contact: Merrin Hodge, Investor Relations Manager Phone: +61 2 9647 0866 Email: Merrin.Hodge@metcash.com Cait Tynan, Head of Corporate Affairs Phone: +61 2 9741 3415 E-mail: Cait.Tynan@metcash.com Or visit our website: www.metcash.com 31
Slide 33: Metcash
Metcash FY17 Half Year Results 28 November, 2016 32