Slide 1: FY18 Half Year Results
FY18 Half Year Results 4 December 2017
Slide 2: 1H18 Group update and divisional results
1H18 Group update and divisional results Ian Morrice Group Chief Executive Officer 2
Slide 3: Our purpose and vision
Our purpose and vision SUCCESSFUL INDEPENDENTS OUR VALUES OUR VISION BEST STORE IN EVERY TOWN INTEGRITY IS THE FOUNDATION OF OUR VALUES: ▪ Differentiated offer & service ▪ Supporting our customers and suppliers ▪ Celebrating Individuality ▪ Our people are empowered and accountable ▪ Loved by Locals
Slide 4: Best store in Town
Best store in Town Cellarbrations Kilmore, Vic Mitre 10 Heidelberg, Vic Taylor Road IGA, WA Ritchies IGA Mt Eliza, Vic 4
Slide 5: Group overview
Group overview ▪ Group sales, including the acquisition of HTH, increased 7.6% to $7.1bn ▪ Group EBIT increased 18.7% to $152.0m ▪ Food EBIT up $4.9m (5.8%) to $89.4m – reflects improved Convenience earnings, while the continuing difficult trading conditions in Supermarkets were largely offset by Wo
Slide 6: Results overview by pillar
Results overview by pillar 1H18 1H17 Change Sales Revenue (%) $m $m Sales Revenue 15% Food1 4,355.0 4,417.9 (1.4)% Food Liquor 1,639.2 1,559.8 5.1% 23% Liquor 62% Hardware 1,064.2 581.6 83.0% Total sales revenue 7,058.4 6,559.3 7.6% Hardware EBIT EBIT (%) Food 89.4 84.5 5.8% Liquor 27.6 27.1 1.8% 19
Slide 7: FOOD - overview
FOOD - overview Market conditions Initiatives update ▪ No let up in competitive environment ▪ DSA stores continue to deliver average sales uplift of ▪ Heightened level of promotional activity and loyalty offers >10% ▪ Further expansion of competitor footprint in SA and WA ▪ Rollout skewed to 2H18, a
Slide 8: FOOD - sales
FOOD - sales Supermarkets 1H18 1H17 ▪ Sales down 0.8% to $3.63bn Change $m $m ▪ Continued impact from intense competition in all states ▪ Further rollout of competitor footprint in SA and WA Sales Revenue ▪ Decline in wholesale sales (excluding tobacco) largely offset by Supermarkets 3,631.4 3,659.4
Slide 9: FOOD - EBIT
FOOD - EBIT ▪ EBIT increased $4.9m (5.8% ) to $89.4m 1H18 1H17 Change $m $m ▪ Supermarkets earnings broadly flat on prior year with Working Smarter benefits offsetting impact of Sales revenue1 4,355.0 4,417.9 (1.4%) decline in non-tobacco sales ▪ Positive contribution from Convenience in 1H18 EBIT 8
Slide 10: LIQUOR - overview
LIQUOR - overview Market conditions Network growth ▪ Strong price competition in 1H18, particularly from ▪ Continued focus on converting existing wholesale major retailers customers to IBA network and consolidation strategy ▪ Consumer trend to lower consumption, but higher ▪ Progressing the integrat
Slide 11: LIQUOR - financials
LIQUOR - financials Sales 1H18 1H17 Change ▪ Sales increased 5.1% to $1,639.2m $m $m Sales Revenue 1,639.2 1,559.8 5.1% ▪ Wholesale sales through the IBA bannered network increased 8.7%, driven by conversion of contract customers to the IBA network EBIT 27.6 27.1 1.8% ▪ LfL retail sales in IBA banne
Slide 12: HARDWARE - overview
HARDWARE - overview Market conditions Network expansion ▪ Strong construction and DIY activity in the period ▪ Porters (QLD) joined the Mitre10 network in April ▪ Favourable weather conditions versus prior corresponding ▪ 7 independent stores located in North Queensland period ▪ Specialises in build
Slide 13: HARDWARE - financials
HARDWARE - financials Sales 1H18 1H17 ▪ Sales increased $482.6m to $1,064.2m Change $m $m ▪ 1H18 includes full period of HTH sales versus 1 month in 1H17 ($51.5m) Sales Revenue1 1,064.2 581.6 83.0% ▪ Wholesale sales up 7%3 ▪ Strong sales growth in Mitre 10 (LfL up ~6%) EBIT2 27.1 12.5 116.8% ▪ Turna
Slide 14: Financials
Financials Brad Soller Group Chief Financial Officer 14
Slide 15: Financial overview
Financial overview ▪ Reported profit after tax increased $18.0m (24%) to $92.9m ▪ Working Smarter and HTH integration costs of $6.1m (post tax), disclosed separately as guided ▪ Underlying profit after tax1 increased $16.2m (19.6%) to $99.0m ▪ Strong operating cash flows ▪ Strong balance sheet ▪ Int
Slide 16: Profit & Loss
Profit & Loss 1H18 1H17 $m $m Change Sales revenue 7,058.4 6,559.3 7.6% EBITDA 185.3 159.7 16.0% Depreciation and amortisation (33.3) (31.6) EBIT 152.0 128.1 18.7% Net finance costs (11.0) (12.9) Tax expense on underlying profit (40.9) (31.7) Non-controlling interests (1.1) (0.7) Underlying profit a
Slide 17: Working Smarter update
Working Smarter update ▪ Increased confidence over targeted gross savings for program Working Smarter will make doing business with Metcash of $120m (annualised) through FY17 – FY19 simpler for customers, suppliers and our people through: ▪ Working Smarter is helping to mitigate the impact of extern
Slide 18: Cashflows
Cashflows 1H18 1H17 $m $m Net cash from operating activities1 161.4 130.6 Net cash used in investing activities (18.5) (141.6) Proceeds from disposal of businesses - 1.6 Proceeds from disposal of surplus assets and net loans 0.4 30.7 Acquisitions of businesses and associates - (154.9) Capital expend
Slide 19: Balance Sheet
Balance Sheet 1H18 FY17 1H17 $m $m $m Trade receivables and prepayments 1,270.9 1,133.3 1,150.9 Inventories 902.3 759.2 917.6 Trade payables and provisions (2,105.5) (1,811.4) (1,974.8) Net working capital 67.7 81.1 93.7 Intangible assets 1,139.1 1,152.7 1,133.1 Property, plant and equipment 232.6 2
Slide 20: Borrowings
Borrowings 1H18 FY17 Key changes in debt profile Net debt $m $m ▪ Net debt reduced by $95m to deliver a net cash Gross debt (118.6) (177.3) position of $14m (~$780m reduction since FY14) Cash and cash equivalents 132.6 96.5 ▪ October is a low point for debt due to seasonal cycle Net cash / (debt) 14
Slide 21: Dividend and capital management
Dividend and capital management Interim dividend ▪ 6.0 cents per share, fully franked (~60% of Underlying EPS) ▪ Ex-dividend date: 14 December 2017 ▪ Record date: 15 December 2017 ▪ Payment date: 19 January 2018 Capital management ▪ Strong cashflows expected to result in continuation of low debt pos
Slide 22: Group Outlook
Group Outlook Group ▪ FY18 earnings will cycle inclusion of 53rd trading week that occurred in 2H17 Liquor ▪ Modest growth in overall Liquor market expected ▪ Continued focus on building and improving quality of IBA network ▪ Some uncertainty over impact of NSW container deposit scheme ▪ Earnings ex
Slide 23: Appendices
Appendices 1. Five year financial history 2. Sales revenue reconciliation 3. Bannered store numbers 4. Contact details 23
Slide 24: 1. Financial history
1. Financial history 1H18 1H17 1H16 1H15 1H14 Financial performance Sales revenue ($m)1 7,058.4 6,559.3 6,541.0 6,453.1 6,409.4 EBIT ($m) 152.0 128.1 133.7 153.2 175.4 Net finance costs ($m) (11.0) (12.9) (12.8) (24.0) (28.5) Underlying profit after tax ($m) 99.0 82.8 86.9 92.5 99.6 Reported profit
Slide 25: 2. Sales revenue reconciliation
2. Sales revenue reconciliation WA Supplier Income ($m) FY17 FY16 FY15 FY14 FY13 1H 69.7 65.0 62.2 62.5 62.6 2H 77.4 73.8 63.3 67.4 62.7 FY Total 147.1 138.8 125.5 129.9 125.3 In FY17 the Group revised the presentation of a specific category of supplier income in Western Australia, resulting in a re
Slide 26: 3. Bannered store numbers
3. Bannered store numbers October April 2017 2017 Pillar Supermarkets 1,698 1,683 Convenience 18 18 Liquor 2,707 2,517 Hardware 730 740 TOTAL 5,153 4,958 Supermarkets Liquor Hardware Store movement Number of stores at April 2017 1,683 2,517 740 Stores joined banner groups during the period 45 474 16
Slide 27: 3. Bannered store numbers
3. Bannered store numbers October April 2017 2017 Supermarkets Super IGA 397 397 IGA 809 823 IGA-Xpress 207 206 Total IGA bannered stores 1,413 1,426 Friendly Grocer / Eziway 285 257 Total Supermarkets 1,698 1,683 Liquor (IBA banner) Cellarbrations 559 553 Bottle-O & Bottle-O Neighbourhood1 330 457
Slide 28: Contacts
Contacts For additional information contact: Steve Ashe, Head of Corporate Affairs and Investor Relations Phone: +61 2 9751 8368 E-mail: Steve.Ashe@metcash.com Merrin Hodge, Investor Relations Manager Phone: +61 2 9647 0866 Email: Merrin.Hodge@metcash.com Or visit our website: www.metcash.com 28
Slide 29: 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