Slide 1: Company Results Full Year ended 29 June 2008
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Full Year ended 29 June 2008
Slide 2: Highlights for Financial Year 2008
Highlights for Financial Year 2008 • This has been a successful year with our business performing well overall. • The result is the outcome of consistent delivery against our clearly defined strategies. • This result would not be possible without the many years of hard work in establishing the found
Slide 3: Highlights – Full Year 2008
Highlights – Full Year 2008 Excellent result reflecting strong business momentum FY08 Growth 9 Sales $47.0b + 10.7% × 9 EBIT $2,528.8m + 19.8% × 9 NPAT $1,626.8m + 25.7% × 9 EPS 134.9 cents + 24.0% × Well positioned for achieving sustainable profitable growth 3
Slide 4: Highlights for the year
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Slide 5: Rollout of 2010c Format
Rollout of 2010c Format Refurbishments are being well Currently have c180 stores in received by our customers new format Financial benefit through A further 149 stores (including improved sales and gross margin 134 refurbishments) expected in to be obtained in future years FY09 “Initial resu
Slide 6: Woolworths the fresh food people
ee OY Woolworths the fresh food people WOOLWORTHS LIMITED
Slide 7: Cards Program – “Everyday Rewards”
Cards Program – “Everyday Rewards” Nationwide rollout of “Everyday Rewards” Program is now Provides a new opportunity to complete engage with our customers This program replaces paper Marketing program now underway petrol dockets with a convenient card-based system Program numbers have exc
Slide 8: Cards Program
Cards Program “Everyday Money” Credit Card is due to be officially launched on the 1st September 2008 Card Issuer is HSBC Card Scheme Partner is Mastercard Compelling value offer to our customers Exclusive Benefits: – Rewards programs will provide customers with full redemption “shopping cards
Slide 9: Cards Program – Shopping cards
Cards Program – Shopping cards “Everyday money” shopping cards can be used in any of our stores across all our brands Supports our core retail business 9
Slide 10: Repositioning of Big W
Repositioning of Big W Opened 150th store during the Repositioning of our Big W year. business is progressing well. 16 stores refurbished in 2008 7 quarters of positive (2007: 3) comparable sales. 15 stores planned for 2009. Continue to maintain Everyday We continue to retrofit key Low
Slide 11: Supply Chain
Supply Chain The financial benefits from the supply chain investment are continuing. The intellectual property we have developed in Supermarkets is now being applied to other businesses. New Liquor Distribution Centres - Sydney in July 2008 and Melbourne in September 2008 These will be lease
Slide 12: Financial results
CALLIN] SHLIOMIOOM, Financial results
Slide 13: Report Card
Report Card In comparison with our regularly expressed goals 2000 2001 2002* 2003* 2004 2005 2006 2007 2008 Sales will grow in the upper single digits 8.3% 10.1% 14.9% 9.6% 6.1% 12.2% 20.4% 12.6% 10.7% assisted by bolt-on acquisitions EBIT will outperform sales growth assisted 15.2% 13.7% 15.7% 15.6
Slide 14: Profit after tax – up 25.7%
Profit after tax – up 25.7% 1,700 1,626.8 1,600 +25.7% 1,500 1,400 1,294.0 (3) 1,300 +27.5% 1,200 $ Million 1,100 1,014.6 (2) 1,000 +24.3% 900 816.2 (1) 800 +18.7% 687.8 700 +12.8% 600 500 400 2004 2005 2006 2007 2008 (1) Includes ALH from 31 October 2004 and MGW from 2 January 2005. (2) Includes Pr
Slide 15: CODB / Sales
CODB / Sales CODB includes certain one-off items, including the profit on sale of certain properties and costs associated with certain strategic initiatives. When these items are excluded the reduction in CODB is 38 bps. Our targeted CODB reduction of 20 basis continues to be achieved when the disto
Slide 16: Gross Profit Margin (excluding Hotels)
Gross Profit Margin (excluding Hotels) As expected Gross Margin has improved reflecting improved buying, the success of our private label offering, the change in sales mix achieved through the rollback campaign, and has been offset by significant price reinvestment activity. Total GP 26.00% margin 2
Slide 17: Dividends per share
Dividends per share FINAL DIVIDEND 2008: 48c 95 INTERIM DIVIDEND 2008: 44c 92 +24.3% 85 74 75 +25.4% 65 59 Cents 55 51 +15.7% 45 45 +13.3% +15.4% 35 25 15 5 2004 2005 2006 2007 2008 Dividend Pay-out ratio of 69.0% is in line with last year 17
Slide 18: Australian Supermarket Division
Australian Supermarket Division 2007 2008 Change Comparable Sales - up 6.3% (2007: 6.6%) Sales ($ m) 32,582 36,143 10.9% 2007 2008 8.2% 7.6% 6.7% 6.4% 6.6% Gross margin (%) 23.41 23.45 4 bps 6.0% CODB (%) 18.25 17.93 -32 bps 4.9% 4.9% EBIT to sales (%) 5.16 5.52 36 bps EBIT ($ m) 1,680.0 1,995.6 18.
Slide 19: Petrol
Petrol Sales of $5.6 billion, up 16.6% Comparable sales increased by 11.1% reflecting higher pump petrol prices than last year Comparable volumes increased 0.6% reflecting strength of our offer and effect of higher prices EBIT decreased 1.2% to $81.9 million EBIT margins were lower at 1.5%
Slide 20: Liquor
Liquor All our Liquor operations (Dan Murphy’s BWS and attached liquor) recorded strong growth in sales and profit Group Liquor sales for the year were $4.7 billion (2007: $4.1 billion) Woolworths operated 1,077 liquor outlets at the end of the financial year We continue to expand our range
Slide 21: New Zealand Supermarkets
New Zealand Supermarkets $ NZD 2007 2008 Change Comparable Sales – up 6.4% (2007 : 3.3%) 9.9% Sales ($m) 4,527 4,859 7.3% 10.0% 2007 2008 Gross Margin (%) 21.77 21.87 10 bps 8.0% CODB (%) 17.54 17.68 14 bps 6.2% 5.7% 6.0% 4.9% EBIT to sales (%) 4.23 4.19 -4 bps 4.7% 3.8% 3.5% Trading EBIT ($ m) 191.
Slide 22: BIG W
BIG W 2007 2008 Change Comparable Sales – Up 4.7% (2007 3.4%) 12.0% Sales ($ m) 3,465 3,916 13.0% 10.0% 9.6% 2007 2008 Gross margin (%) 29.80 29.99 19 bps 8.7% 8.0% CODB (%) 25.80 25.87 7 bps 6.0% 6.0% EBIT to sales (%) 4.00 4.12 12 bps 3.6% 3.8% EBIT ($ million) 138.6 161.2 16.3% 4.0% 2.6% Funds Em
Slide 23: Hotels
Hotels Comparable Sales – up 1.3% (2007: 3.2%) 2007 2008 Change 5.0% 4.4% 2007 2008 Sales ($ m) 1,032 1,113 7.8% 4.0% 3.5% 3.3% 3.0% 3.0% Gross margin (%) 82.45 82.28 - 17 bps 2.3% 2.0% 1.5% CODB (%) 64.66 62.96 -170 bps 1.0% 1.0% EBIT to sales (%) 17.79 19.32 153 bps 0.0% Q1 Q2 Q3 Q4 EBIT ($ m) 183
Slide 24: Consumer Electronics - Australia & NZ
Consumer Electronics - Australia & NZ 2007 2008 Change Comparable Sales – up 4.4% (2007: 7.2%) 2007 2008 Sales ($ million) 1,285 1,427 11.1% 10.0% 7.3% 7.5% 7.7% Gross margin (%) 28.21 27.49 -72 bps 8.0% 6.8% CODB (%) 22.68 22.72 4 bps 5.3% 5.0% 6.0% 3.7% 3.8% EBIT to sales (%) 5.53 4.77 -76 bps 4.0
Slide 25: Consumer Electronics
Consumer Electronics The strategic review of our Consumer Electronics business is focussed on repositioning of the brands, engaging our customers with a new in-store experience and introducing new product and service offerings. Excellent results have been achieved to date with our trial stores.
Slide 26: Consumer Electronics
Consumer Electronics FROM TO 26
Slide 27: Consumer Electronics - India
Consumer Electronics - India Our business venture with TATA is still in its infancy with 22 retail stores operating under the “Croma” brand. As part of this venture Woolworths Limited provides buying, wholesale, supply chain and general consulting services to TATA. The wholesale operations are
Slide 28: Balance Sheet
Balance Sheet $ millions FY07 FY08 Funds Employed Average inventory down 0.8 days. Days creditors have Inventory 2,739.2 3,010.0 increased slightly to 47.3 days due to the timing of monthly Trade Payables (3,277.4) (3,878.1) creditor payments (due to the 53rd week) Net investment in inventory (538.2
Slide 29: Cash Flow
Cash Flow $ millions FY07 FY08 EBITDA 2,700.6 3,178.9 +17.7% Net interest paid (249.8) (215.5) Taxation paid (522.4) (573.9) 1,928.4 2,389.5 +23.9% Working capital items 309.7 265.6 Other non-cash items 56.1 (1.1) Total cash provided by operating activities 2,294.2 2,654.0 +15.7% Payments for the pu
Slide 30: Average Inventory Days
Average Inventory Days Average inventory reduction of 0.8 days 33 32.7 32.5 32 31.7 31 30 2006 2007 2008 Average inventory based on 13 months rolling over average Target inventory reduction remains 1-2 days, however this may be impacted as we ramp up our overseas buying offices 30
Slide 31: Shareholder Payouts
Franking credits available for Shareholder Payouts distribution = $823m. (after the final dividend) Buy Back Dividend 1200 1,122 1,122 1000 941 894 534 894 800 $ millions 693 633 604 693 600 349 538 141 538 400 346 463 407 346 284 200 0 2001 2002 2003 2004 2005 2006 2007 2008 PROFIT GROWTH, COUPLED
Slide 32: Capital Management
Capital Management Our objective of maintaining a capital structure that will preserve our capital strength which gives us the flexibility to pursue further growth opportunities remains unchanged. Our balance sheet, debt profile and strength of our credit ratings (S&P A-, Moodys A3) ensure we ar
Slide 33: Return on funds employed
(1) Return on funds employed 60% 49.3% 50% 42.6% 40% Percentage 31.4% 28.6% 30% 27.1% 20% 10% 0% 2004 2005 2006 2007 2008 (1) Based on average of opening and closing funds employed. 33
Slide 34: Return On Equity
Return On Equity (1) 60% 51.0% 50.9% 50% 40% 33.8% Percentage 27.8% 28.9% 30% 20% 10% 0% 2004 2005 2006 2007 2008 (1) Based on average of opening and closing Shareholders Funds. AVERAGE ROE DOWN DUE TO THE DRP UNDERWRITING IN 2006 AND OPTIONS BEING EXERCISED 34
Slide 35: Strategy and Growth
CALLIN] SHLIOMIOOM, Strategy and Growth
Slide 36: Strategy
Strategy Development Logistics 24.5% 24.10% Reorganisation / line items 18.75% 2.68% 14.10% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 36
Slide 37: Growth
Growth Key elements that underpin our strategy Woolworth’s core strengths include its world class supply chain capability; low cost culture and its depth of talent. There are many opportunities for Woolworths to leverage these strengths and augment our existing business plans to drive growth bot
Slide 38: Growth – Key growth initiatives
Growth Key growth initiatives We are in the early stages of evaluating opportunities internationally. Any such opportunities must leverage these core strengths and would be high volume, low margin businesses. Any acquisition would have full oversight from the Board, be undertaken in a prudent and
Slide 39: Growth – Defined plans for space growth
Growth Key growth initiatives Defined plans for space growth Adding 15-25 new supermarkets each year and expanding Supported by existing stores (greater than 3% space rollout p.a.) detailed plans for the next three to Adding 6-10 BIG W stores each year (6% to 8% space rollout five years p.a.) id
Slide 40: Growth – Performance targets
Growth Performance targets Our long term targets remain unchanged. Woolworths targets the following key areas of performance measurement for its business in the long term, namely: Sales to grow in the upper single digits assisted by bolt on acquisitions; EBIT growth outperforming sales growth as
Slide 41: Sales and Earnings Guidance FY09
Sales and Earnings Guidance FY09 Whilst we are pleased with the momentum in the business, we are mindful that discretionary spending continues to be influenced by macro-economic factors such as inflation, fluctuating petrol prices, interest rates, and lower consumer confidence levels. Subject to the
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Slide 43: Appendices
CALLIN] SHLIOMIOOM, Appendices
Slide 44: Sales of $47.0bn – up 10.7%
Sales of $47.0bn – up 10.7% Full Year $ Millions 2007 2008 Increase Normalised Comp Sales (52 weeks) (53 weeks) Australian Food and Liquor 27,745 30,501 9.9% 7.9% 6.3% New Zealand Supermarkets 3,940 4,170 5.8% 3.9% 6.4% Petrol 4,837 5,642 16.6% 13.9% 11.1% Supermarket Division 36,522 40,313 10.4% 8.
Slide 45: EBIT – up 19.8% growing faster than sales
EBIT – up 19.8% growing faster than sales $ Millions 2007 2008 * Change Australian Food and Liquor 1,597.1 1,913.7 19.8% New Zealand Supermarkets 155.1 169.2 9.1% Petrol 82.9 81.9 (1.2%) Supermarkets Division 1,835.1 2,164.8 18.0% BIG W 138.6 161.2 16.3% Consumer Electronics – Aust/NZ 71.1 68.1 (4.2
Slide 46: Earnings per share – up 24.0%
Earnings per share – up 24.0% 140 134.9 130 +24.0% 120 108.8 110 +19.7% 100 90.9 90 Cents 79.2 +14.8% 80 70.1 +13.0% 70 +15.5% 60 50 40 30 20 2004 2005 2006 2007 2008 REFLECTS STRENGTHENING OF OUR BALANCE SHEET DURING A PERIOD OF MAJOR ACQUISITIONS, INTEGRATION AND BUSINESS CHANGE. 46
Slide 47: Capital Expenditure
Capital Expenditure Actual v Forecast 2008 2008 2009 Forecast 2006 2007 2008 2009 $m Fcst Actual Diff $m Actual Actual Actual Fcst New Stores 260 291 31 New Stores 202 222 291 294 Stay in Business 374 308 (66) Stay in Business 182 291 308 390 Refurbishments 534 550 16 Refurbishments 245 246 550 542
Slide 48: Gross Profit Margin
Gross Profit Margin Gross Margins have declined 2 bps reflecting the impact of higher fuel prices on Petrol revenues. Down 2 pts in 2008 25.5% 25.32% 25.30% Percentage 25.03% 25.0% 24.91% 24.89% 24.5% 2004 2005 2006 2007 2008 48
Slide 49: Continuing growth
Continuing growth Sales EBIT $m $b 2,529 2,600 50.0 47.0 42.5 2,111 2,200 37.7 40.0 1,722 31.4 1,800 27.9 30.0 1,302 1,400 1,065 20.0 1,000 10.0 600 0.0 200 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 EBIT Margin 6.00% 5.38% 5.40% 4.97% 4.80% 4.56% 4.16% 4.20% 3.81% 3.60% 3.00% 2004 2005 2006
Slide 50: New Zealand Supermarkets
New Zealand Supermarkets $ NZD 2007 2008 Change Comparable Sales – up 6.4% (2007 : 3.3%) 9.9% 2007 2008 Sales ($m) 4,527 4,859 7.3% 10.0% Gross Margin (%) 21.77 21.87 10 bps 8.0% CODB (%) 17.54 17.68 14 bps 6.2% 5.7% EBIT to sales (%) 4.23 4.19 -4 bps 6.0% 4.9% 4.7% Trading EBIT ($ m) 191.3 203.7 6.
Slide 51: ACCC Grocery Inquiry Report
ACCC Grocery Inquiry Report Inflation “Grocery retailing (in Australia) is workably competitive.” “The evidence shows a range of domestic and international factors “ACCC has not identified anything have significantly contributed to that is fundamentally wrong with food price inflation” the grocery s
Slide 52: Health Ratios
Health Ratios FY07 FY08 Fixed charges cover X 2.72 2.94 Days inventory (average) (1) Days 32.5 31.7 Days creditors (to sales) Days 45.6 47.3 Return on Funds Employed (ROFE) % 27.1 31.4 Return on Total Equity % 26.8 28.1 Return on Shareholders Equity % 27.8 28.9 Net working capital $M (2,086.4) (2,34
Slide 53: Fixed Charges Cover
Fixed Charges Cover 2004 2005 2006 2007 2008 EBIT 1,065.1 1,302.1 1,722.2 2,111.3 2,528.8 D&A 407.6 416.0 522.2 589.3 650.1 EBITDAR 2,282.5 2,618.3 3,314.5 3,906.9 4,494.8 Interest 52.8 157.8 246.3 230.5 214.0 WINs contingent coupon 42.9 - - - - Rent - base 730.8 819.6 972.4 1,121.1 1,223.3 Rent - t