Slide 1: Presentation at Investor Briefing, Sydney
Ws Wesfarmers Limited ABN 26 O06 984 049 LIK/hew 9 May 2005 The Manager Company Announcements Office Australian Stock Exchange Limited Level 4 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam PRESENTATION AT INVESTOR BRIEFING, SYDNEY — 16 MAY 2005 Following is a presentation that is to be given at an
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Slide 5: Two market segments
e Two market segments: - Industrial Products - Maintenance Repair & Operating (MRO) - Safety Products e Wesfarmers Industrial and Safety is the market leader in a highly fragmented market __ Estimated Market Shar Australia 8% 17% New Zealand 9% 37% lL rrt—“‘=“OREEEEERR''
Slide 6: Businesses: Industrial Products
BUSINESSES 7 Industrial Products 117 ge Protector Alsafe 56 HB Protector & NZ Safety 46 ZY Blackwoods Paykels (NZ) 27 Ii Packaging House il
Slide 7: Organisation
Organisation Fulfillment / Selling Trading Diverse Support Services Methods Streams Customers Common / Shared Infrastructure i | Blackwoods' Whig, q 1’ Atkins BAKERS ERATOR + NURUELCRAA Multings ©; MA Bienes eBusiness Trade Centres Beak iil : a Packaging Mowse ia ; Biackweosis c Paywets Investor Bri
Slide 8: Keeping Industry Working
Keeping Industry Working far 125 Investor Briefing May 2005.
Slide 9: MRO market leaders in eBusiness
e MRO market leaders in eBusiness « eBusiness - steady growth asa proportion of sales e Leading eBusiness implementation partner - customers /vendors Investor Briefing May 2005 Blaclavoeds ite sey
Slide 10: Distribution centres
Distribution centre « Complete - Scoresby Vic (IP), Altona Vic (PA), Canning Vale WA (IP), Wiri NZ (Safety), Smithfield NSW (PA & Import), Derrimut Vic (IP), Welshpool WA (PA) « In progress - Regency Park SA (IP), Wiri NZ (IP), Virginia Qld (PA), Wiri NZ (Packaging House) « Planned - Wacol Qld (IP),
Slide 11: Trading update and expected EBITA
* Increased sales revenue; EBITA is expected to be similar to last year * Industrial Products experienced continued strong sales growth in Qld and WA but tight market conditions in NSW and Vic * Improvements at Protector Alsafe - daily sales average higher than March and April last year ¢ Solid trad
Slide 12: Financial performance
Financial performance | EBITA/ Capital % Ly OY 2002 lta First HY EBITA 2003 tea Full Year EBITA _Ipvestor Briefing May 2005 As i 16 14 12 7 10 oe i ONE NTINE NN NC oO N SF 1H2005 ~@~ EBITA/Capital (R12) 2004
Slide 13: Grow market share in selected product categories
« Grow market share in selected product categories e Reduce expense to sales ratio - business improvement program * Reduce working capital - inventory e¢ Reduce LTIFR and improve employee retention
Slide 14: Strategic review by Port Jackson Partners
« Port Jackson Partners performing a strategic review - diagnostic completed ¢ Initial findings (broadly support WIS’ strategies): - Wholesale MRO (Industrial Products) good business, with the opportunity to grow market share - Further enhance common/shared fulfillment activities (inventory manageme
Slide 15: Australia and New Zealand outlook
« Australia - Solid market conditions - strong growth in mining, Qld and WA performing well - Improving results from Protector Alsafe - Continuing pressure on trading margins e New Zealand - Moderate growth - Improvement plan on track at Blackwoods Paykels (NZ) .. trti—‘i‘CNNOCOCCiCC
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Slide 18: Chemicals and fertilisers overview
Manufacturer of mining & processing chemicals - ammonia, ammonium nitrate, sodium cyanide, chlorine Manufacturer and importer of fertilisers - phosphate, nitrogen, potassium and compounds Manufacturing operations at: - Kwinana, Albany and Esperance (WA), Moura (Qld) 570 employees Post 1999, around 6
Slide 19: EBITA and EBITA/Capital
EBITA EBITA/ Capital $m % 100 25 + 20 +15 We ai, 2000 2001 2002 2003 2004 1H2005 Wim First HY EBITA Full Year EBITA ~®-— EBITA/ Capital (R12) investor Briefing May2005
Slide 20: Lost time injuries
100 80 60 40 20 Hl Lost Time Injuries 2002 R12 LTIFR SIN le Workplace Injuries investor Briefing May 2005 Mize. YTD 2005 ~@-R12 LTIFR ° OnpFt NW hh UD NO OO = sO a
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Slide 22: Sodium cyanide, ammonia and QNP projects
e Sodium cyanide - solids plant - solution plant - solids packaging e Ammonia plant ¢ QNP e Kwinana ammonium nitrate feasibility study
Slide 23: Fertiliser sales initiatives
e 3 year contract e Liquid fertiliser infrastructure e Interstate sales e Export sales e« Demand forecasting
Slide 24: Operational issues
e Ammonium nitrate shutdown e Water management e Kwinana infrastructure e Legacy waste management program e« Developing our people
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Slide 26: Increased demand for AN
e Increased demand for AN - WA iron ore industry - QLD/NSW coal industries - Liquid fertilisers e« Duplication of AN capacity at Kwinana to 470,000 tpa - If approved, expect completion June 2007 e Expansion or duplication of QNP being investigated e Evaluation of other opportunities .. trti—‘i‘CNNOC
Slide 27: North West and South West
North West South West il Coat investor Briefing May 2005
Slide 28: AN duplication timing
e Environmental approvals e Capital expenditure e Commissioning expected in 2007 ¢« Market opportunities e Timing on track
Slide 29: Liquid fertilisers
e Success story since introduction 5 years ago e Increasing penetration of existing products ¢« Development of new products e Infrastructure and logistics - Storage capacity at Kwinana and “on-farm” - Transport capacity e Impact of AN duplication .. trti—‘i‘CNNOCOCCiCC
Slide 30: CSBP liquid fertilisers tonnes
000's Tonnes CSBP Liquid Fertilisers 6 180 — 160 + 14 140 + n 120 + 10 100 + 48 80 + 60 + 78 40 + +4 20 + 42 0 0 2000 2001 2002 2003 2004 2005 Fcst Ls Liquid Fertiliser tonnes (LHS) --—~-% of Total Fertiliser tonnes (RHS) _ Investor ft Mey 2005 % of Total Sales Tonnes
Slide 31: Growth opportunities and capabilities
e Identify and evaluate growth opportunities ¢« Develop improved capabilities e Optimal cost and capital structure e Maintain “Licence to Operate” .. trti—‘i‘CNNOCOCCiCC
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Slide 33: Strong resource sector conditions
e Generally strong resource sector conditions - Iron ore expansion in Pilbara - Coal expansion in Bowen Basin - Opportunities available in gold sector - Nickel volumes driving ammonia sales - Qutlook underpins additional investment in chemical manufacturing
Slide 34: Fertiliser season outlook
e Encouraging rainfall in March / early April e Commodity prices e Continued focus on range and service - growth in liquid fertiliser e May and June sales critical to full year result .. trti—‘i‘CNNOCOCCiCC
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Slide 37: Insurance topics
¢ Current performance ¢« Competitor benchmarking e« Reinsurance programme « Koukia e Insurance outlook "Investor Briefing - May 2005
Slide 38: Strong underwriting results
e Strong underwriting results from all businesses ¢ Claims returning to long term averages ¢ Top line growth is under pressure e Commercial portfolios experiencing competition e Integration complete .. trti—‘i‘CNNOCOCCiCC
Slide 39: Loss ratios and operating ratio
Gross Earned Loss Ratio Net Earned Loss Ratio 60.0% 60.1% 70.9% 62.1% 66.5% Total Expenses inc. Ex Comm.(% GWP) 25.3% 30.4% 24.3% Combined Operating Ratio Insurance Margin (% NEP) 91.2% 95.9% 91.8% 13.4% 10.1% 16.7% WD all Year 59.9% "Investor Briefing - May 2005
Slide 40: Underwriting result
Underwriting Result 594 111 255 49 Income on Technical Reserves 314 163 263 11 Income on Shareholders’ Funds 194 154 287 6 EBITA (insurance actin) 1,102 428 805 66 8 SNA DIO CO ys ue pau Ce Le Wa os iy, Le ey Ly 7 yD Ty 7 Jy Ae me & i ei Ly) a ee Hs Me ay cs i i Lee We a, Ve Gy _ 7 ee) LLL DD Le, LL
Slide 41: Review of Lumley programme
e Review of Lumley programme continuing « Complete review by May 2005 e Implement changes for 2005/06 programme
Slide 42: Koukia insurance software
e Insurance software specialist e 68% Wesfarmers owned e Koukia platform to be used by WFI and LGNZ e External contract signed with Australian Unity e Interest from insurance industry
Slide 43: Insurance outlook
e Top line growth difficult « Competitive environment e Premium rates are moderating e Gradual return to long term claim patterns .. trti—‘i‘CNNOCOCCiCC
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Slide 47: ARG overview
“ARG Overview | e Minerals tonnages continuing to grow e Grain lower in the second half than previous year, but strong contributor over the year « Cost pressures continue ¢ Derailment costs Investor Briefing May 2005
Slide 48: ARG capital expenditure
ARG Capital Expenditure: Midland « $60m for calendar year Ho. fo * Total capex higher than normal Mundijong Jct 43 NM 4, 4,,%%, %,
Slide 49: ARG outlook
e Continuing exposure to fuel costs (subject to resets) and other cost pressures e Refurbishment of track and rolling stock to raise efficiency e Expansion at Onesteel and Portman e Regulatory reviews - no changes anticipated e Encouraging start to grain season .. trti—‘i‘CNNOCOCCiCC
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Slide 51: Net investment by Wesfarmers
e Net investment of $40m by Wesfarmers e« Divestments expected over the next several years CURRENT INVESTMENT PORTFOLIO investor Briefing May2005
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Slide 53: Current investment portfolio
Gr e Current commitment $317m (Wesfarmers $150m) ¢« Good deal “pipeline” _CURRENT INVESTMENT PORTFOLIO Investor Briefing - May 2005
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Slide 57: Energy businesses
URRAGH WESFARMERS LPG _ AIR LIQUIDE. CEOS C CRE, BLLGT ORES enGen energy generation
Slide 58: Premier Coal
Premier Coal Production volume (MT) 2003/04 Actual 3.4 Sales volume (MT) 2003/04 Actual 3.4 Customers 2 Recent Achievements e Iluka tonnage increase ¢ Char project initiation « National Banksia & State environmental awards or Briefing May 2005.
Slide 59: Curragh
investor Briefing May 2005 __ Production volume (MT) 2003/04 Actual 7 Sales volume (MT) 2003/04 Actual Export 4.6 Domestic 2.3 Customers 14 Recent Achievements ¢ Curragh North commencement ¢ CHPP upgrade « 2005 price outcomes
Slide 60: Bengalla
cn _Ipvestor Briefing May 2005 ui Production volume (MT) 2003/04 Actual 5.7 Sales volume (MT) 2003/04 Actual Export Domestic Customers Recent Achievements ¢ Continued operational improvement « Updated mine plans
Slide 61: Kleenheat Gas
or Briefing May 2005. Sales volume (kT) 2003/04 Actual 225 Sites Depots 36 Branches 19 Commission agents 24 Dealers 578 Customers 235,000 Recent Achievements e Piloted vehicle tracking system - vTrack e Acquisition of Peters Gas (Vic/SA) ¢ Acquisition of Mobil LPG (Tas) assets
Slide 62: Wesfarmers LPG
Wesfarmers LPG. Production volume (kT) 2003/04 Actual 327 Sales volume (kT) 2003/04 Actual Export 221 Domestic 117 Customers 2 Recent Achievements ¢ Two years LTI free February 2005 ¢ 100th export shipment « Post 2005 negotiations
Slide 63: Industrial gases operations
__ Investor Briefing May 2005 Operations Air Separation Plants: Kwinana: Capacity 285 TPD Oxygen Hismelt: Capacity 880 TPD Oxygen Carbon Dioxide Plants: WNC: Capacity 12 TPD CSBP: Capacity 120 TPD Cylinder Filling Operations: 2 Branches 3 in WA 1 in NT Agents 85 Customers 8,000 Recent Achievements ¢
Slide 64: Power generation
__ Investor Briefing May 2005 MW installed 90 GWh generated p.a. 422 Power stations 14 Customers 7 Recent Achievements * No LTI’s * Coober Pedy Power Station » Sunrise Dam Stage 4 and Remote Towns Project at
Slide 65: Energy priorities by business
Premier - renew contracts, new markets, unit costs Curragh - deliver and optimise Curragh North Bengalla - new mine plan, improve sales mix KHG - improve efficiency and workforce performance WLPG - implement new LPG supply arrangements ALWA - deliver new projects
Slide 66: Earnings trends by business
Kleenheat Gas WLPG \ \ A J \ V 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 YTD 2005 Premier 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 YTD 2005 Curragh \ \ N 1996 1997 1998 1999 2000 2001 2002 2003 2004 YTD 2005 Investor Briefing May 2005 1996 1997 1998 1999 2000 2001 2002 2003 2004 YTD
Slide 67: WLPG and coal volumes
WLPG Coal Kt Mt 400 14 300 ly nt, ay y a My yy 1 WV ile aM ae ™ : MV | Mie il, aM Me te o4 ee : r 1999 2000 2001 2002 2003 2004 YTD 1999 2000 2001 2002 2003 2004 YTD Mar 05 Mar 05 investor Briefing May2005
Slide 68: Premier, Curragh and Bengalla
Premier 100 Steam Curragh 100 Coking Bengalla 40 Steam .. trti—‘i‘CNNOCOCCiCC
Slide 69: Coal, gas and power outlook
Coal e Record high export sales prices - but 4Q “carryover” ¢ Infrastructure performance critical e Cost pressures, industrial relations impacts Gas and Power e High CP to continue e 7 LPG shipments only e Strong power demand
Slide 70: Contract pricing and exchange rate assumptions
99% 0.6961 2006 88% 0.7011 2007 63% 0.6539 2008 46% 0.6893 2009 25% 0.7184 « Calculated using known contract outcomes, long run pricing assumptions, and after adjusting for USD capital and operational expenditure and USD royalty payments. * 2 months .. trti—‘i‘CNNOCOCCiCC
Slide 71: Coking coal prices
Energy 2004/05 utloo Coking coal prices JRP US$/Tonne FOB nominal 130 120 110 100 90 | 80 70 60 50 Ne a 40 nN 30 T T T T T T T T T T T T T T T T T T T 85 87 89 91 93 95 97 99 01 03 05
Slide 72: Demand and markets
Demandand markets __ - «. : i Source: SSY MT 210 Other Asia 180 150 @ Japan 120 B Africa 90 5 Americas 60 E.Europe 30 @ W.Europe 1970 1975 1980 1985 1990 1995 2000 2004 tol Briefing May 2005
Slide 73: Supply and competitors
Bebome melee Supply andcompetitors MT 210 Source: SSY USA 180 @ Poland 150 @ CIs / Other 120 @ South Africa 90 & China 60 m@ Canada 30 Z Australia 0 1970 1975 1980 1985 1990 1995 2000 2004 oe rr—~—.—C—“( NOB 7 |
Slide 74: Thermal coal prices
Thermal coal prices USS/Tonne FOB nominal 70 60 | A 50 + 40 + “he “ey on, | ; 7 30 a 7 - van 20 + 10 + Mar-96 Feb-97 Jan-98 Dec-98 Dec-99 Nov-00 Oct-01 Sep-02 Aug-03 Jul-04 vues Spot Price _ Investor ft Mey 2005
Slide 75: Total 6.3 1.7 4.7 12.7
Total 6.3 1.7 4.7 12.7 *Wesfarmers 40% share te ft Mey 2005
Slide 76: Curragh export coal sales contract pricing
Curragh Export Coal Sales Contract Pricing Export Sales (%) 8 li ai ‘i a ‘MF aes a anne sm cme TH sm aie Ie 10% 5 ne Hl YE March 2006 Hl YE March 2005 : @ Carryover ite EM YE June 2005 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Carryover 450kt "Investor Briefing - May 2005 Jun-05
Slide 77: Cost increases by category
% Increase Major Category 30 25 5 20 - 15 5 10 - Contract Maint. Explosives Truck and Fuel Labour Materials Shovel Overall increase in cash costs YTD= 9% "Investor Briefing - May 2005
Slide 78: Industrial disputes - Premier
ustrial disputes - Premier _ Estimated Impact 2004/05 « Employees involved « Days of strike action e Overburden shortfall ¢ Coal sales lost e EBITA Impact Miners 161 Miners 20 days 2.7M BCM 340KT $15M Trades 62 Trades 79 days .. trti—‘i‘CNNOCOCCiCC
Slide 79: Propane prices
Sep ~>< Propane 2003/2004 Dec Mar —@ Propane 2004/2005 Jun
Slide 80: Progress on Curragh North
—ProgressonCurraghNorth =——i(‘“tstié ¢ Ahead of schedule ¢ 350kt coal exposed ¢ 180kt coal mined « Conveyor cost up * CN Project capex +24% Curragh North March 2005 Ll. rrrrr—~—.——..L.L.CUCOCONrCCCC 79 |
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