Slide 1: Coles Group Limited – 2023 Half Year Results Presentation
21 February 2023 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2023 Half Year Results Presentation Please find attached for immediate release to the market the 2023 Half Year Results Presentation for Coles Group Limited. This announce
Slide 2: 2023 Half Year Results Presentation
2023 Half Year Results Presentation 21 February 2023 Steven Cain, Chief Executive Officer Charlie Elias, Chief Financial Officer PG1 | Through the purchase of $2 donation cards, Coles and its customers raised more than $1.8 million through the SecondBite Christmas appeal.
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its controlled entities (collectively, ‘Coles’, ‘Coles Group’ or ‘the Group’) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not
Slide 4: Coles wishes to acknowledge the Traditional Custodians of this land
Coles wishes to acknowledge the Traditional Custodians of this land We recognise their strength and resilience and pay our respects to their Elders past and present. Coles extends that respect to all Aboriginal and Torres Strait Iskander people, and recognises their rich cultures and their continuin
Slide 5: 1H23 highlights
1H23 highlights Group sales revenue and EBIT growth from continuing operations of 3.9% and 9.9% respectively with sales momentum strengthening through the half as we cycled out of COVID-19 lockdowns We continue to face global and local supply chain challenges from COVID-19 and floods Our team respon
Slide 6: 1H23 financial highlights
1H23 financial highlights EBIT growth from continuing operations of 9.9% with Smarter Selling benefits and COVID-19 cost unwind supporting investments in value, digital and eCommerce, while helping to offset inflationary cost pressures Total sales revenue – continuing EBIT – continuing operations1 N
Slide 7: Improving supply chain resilience is a key focus
Improving supply chain resilience is a key focus Supplier DIFOT below pre-COVID-19 levels due to worker, pallet and raw materials shortages, inflationary pressures and flood related impacts Driver Impact Detail Availability metrics – Pallet, transport and packaging challenges in • Pet food (dry) add
Slide 8: Sustainable Strategy
Sustainable Strategy Our vision is to become the most trusted retailer in Australia and grow long term shareholder value Our values Our behaviours Our purpose is to sustainably help all Australians lead healthier, happier lives. Customer Passion Health and Energise Deliver with Responsibility Look a
Slide 9: Sustainable Strategy
Sustainable Strategy Strategic differentiators • Unified customer experience through website and app enhancements Win in food and drink with a unique and continued investment in automated CFCs omnichannel offering • Target net new space growth of ~1.5% p.a. Be a great value exclusive brands powerhou
Slide 10: Strategic progress: Inspire Customers
Strategic progress: Inspire Customers Delivering trusted value and enhanced customer experience ▪ Ranked as one of Australia’s most trusted brands in the Dec. 2022 Roy Morgan ‘Net Trust’ rankings ▪ Value campaigns focused on lowering the cost of living – ‘LOCKED’ and ‘DROPPED & LOCKED’ campaign with
Slide 11: Strategic progress: Smarter Selling
Strategic progress: Smarter Selling On track to deliver $1 billion of cumulative benefits by the end of FY23 across our four year program ▪ Delivered Smarter Selling benefits of ~$100 million during the half (~33% GP, ~67% CODB). Key initiatives included: – Continued roll out of trolley assisted che
Slide 12: Strategic progress: Win Together
Strategic progress: Win Together Introduced safety index and 8% reduction in TRIFR compared to 2H22 Safer choices together Great place to work Together to Zero Better Together We are committed to providing a safe We are passionate about being a great We have set ambitions and targets across We seek
Slide 13: Major projects – Two Automated Distribution Centres
Major projects – Two Automated Distribution Centres Redbank (QLD) handover complete and Kemps Creek (NSW) progressing well in line with schedule Progress update • Redbank facility (Qld) – Construction and fit out completed – Successful recruitment of leadership team and initial team members – First
Slide 14: Major projects – Two Automated CFCs
Major projects – Two Automated CFCs Front end systems and integration with Ocado Smart Platform progressing well, external building works complete at both sites and some delays to fit out Progress update • Ocado Smart Platform integration with Coles’ eCommerce systems and digital customer experience
Slide 15: Coles’ strategy tracker
Coles’ strategy tracker KPIs Progress Reduced safety TRIFR • 8.0% reduction in TRIFR compared to 2H22 Increased team member • Continued to record increased team member engagement in our mysay employee engagement Pulse Survey in engagement October 2022, with next full survey to be conducted in May 20
Slide 16: Group financial overview
Group financial overview Coles is proud to raise money through our supermarkets and Express stores for children’s cancer support organisation, Redkite.
Slide 17: 1H23 results – Group
1H23 results – Group Sales revenue growth from continuing operations of 3.9% and NPAT growth of 11.4% $m 1H23 1H22 Change Continuing operations Sales revenue 20,805 20,015 3.9% EBITDA1 1,809 1,681 7.6% EBIT1 1,058 963 9.9% EBIT margin % 5.1% 4.8% 27bps Net profit after tax 616 553 11.4% Basic earnin
Slide 18: 1H23 results – segment financials
1H23 results – segment financials Sales revenue and earnings driven by Supermarkets performance $m 1H23 1H22 Change 3-yr change1 Sales revenue Supermarkets 18,853 18,016 4.6% 13.6% Liquor 1,952 1,999 (2.4)% 15.4% Sales revenue – continuing operations 20,805 20,015 3.9% 13.8% Express – discontinued o
Slide 19: Operating cash flow
Operating cash flow Cash realisation of 108% Cash flow Cash realisation1 Comments $m 1H23 1H22 117% • Working capital movement reflects 108% higher payables consistent with EBIT 1,114 975 seasonal Christmas and New Year trading activity and timing of year end payments Depreciation and amortisation 7
Slide 20: Capital expenditure
Capital expenditure Continued focus on growth and efficiency initiatives Capital expenditure Key capital expenditure initiatives $m 1H23 1H22 Store renewals • Store renewals across Supermarkets (15) and Liquor (128) Store renewals 93 98 • New stores across Supermarkets (10) and Liquor (16) Growth in
Slide 21: Balance sheet
Balance sheet Balance sheet continues to provide flexibility for future growth Balance sheet summary Comments 1 Jan 26 Jun 2 Jan • Inventories increased largely due to cost $m 2023 2022 2022 price increases and increased stock Inventories 2,825 2,448 2,387 holdings to provide additional support for
Slide 22: Capital management
Capital management Coles has extended its debt maturity profile and has a strong and flexible balance sheet Dividend Debt facility maturity profile ($m) Leverage ratio2 • Fully-franked 1H23 interim dividend of 36.0 cents per share Bank facilities AMTN SLL Bank facilities • Coles retains its industry
Slide 23: Supermarkets
Supermarkets The first Coles Local in Western Australia was opened during the half.
Slide 24: Supermarkets key metrics
Supermarkets key metrics EBIT growth of 10.6% driven by sales growth and gross margin improvement Total sales revenue 3-year sales growth Sales per sqm $18.9bn 13.6% $18,651 4.6% vs. pcp vs. 1H20 4.1% vs. pcp Exclusive to Coles Comparable sales growth EBIT 770 new products 4.9% $991m Range expanded
Slide 25: Supermarkets 1H23 results
Supermarkets 1H23 results Sales growth of 4.6% despite COVID-19 cycling with sales momentum improving throughout the period 1H23 results Key commentary $m 1H23 1H22 Change • Headline sales growth delivered despite cycling COVID-19 Key P&L items lockdowns in 1H22 and continued supply chain challenges
Slide 26: Liquor
Liquor PG25 | Coles Liquor team members outside a renewed Black and White Liquorland store in Southland, Victoria. 112 Black and White Liquorland renewals were completed during the half.
Slide 27: Liquor key metrics
Liquor key metrics Liquor EBIT impacted due to cycling of on-premise closures and restrictions in 1H22 and investment in transformation and team members during the period Total sales revenue 3-year sales growth eCommerce sales growth1 $2.0bn 15.4% 13.7% (2.4)% vs. pcp vs. 1H20 vs. pcp Exclusive Liqu
Slide 28: Liquor 1H23 results
Liquor 1H23 results Strong Christmas and New Year trading period 1H23 results Key commentary $m 1H23 1H22 Change • Sales impacted by cycling of on-premise closures and Key P&L items restrictions in 1H22. Growth was positive excluding Sales revenue 1,952 1,999 (2.4)% lockdown impacted states (Victori
Slide 29: Express
Express PG28 | Customers can now scan their fuel dockets through the Flybuys App.
Slide 30: Express key metrics – Discontinued operations
Express key metrics – Discontinued operations Cycling lower volumes and sales during COVID-19 lockdowns Total sales revenue 3-year sales growth EBIT – underlying1 $607m 6.0% $25m 5.0% vs. pcp vs. 1H20 ($2m on a pre-AASB 16 basis2) 1H23 weekly fuel volumes Comp fuel volume growth EBITDA – underlying
Slide 31: Express 1H23 results – Discontinued operations
Express 1H23 results – Discontinued operations Sales increased as business cycled lower fuel volumes and foot traffic in 1H22 as a result of COVID-19 lockdowns 1H23 results Key commentary $m 1H23 1H22 Change • Average weekly fuel volumes of 58.4mL per week with c- Key P&L items store sales revenue u
Slide 32: Current market environment
Current market environment Coles managers attend an Indigenous cultural immersion program in the Northern Territory.
Slide 33: Coles well positioned to navigate the macro environment
Coles well positioned to navigate the macro environment Actions in place to respond to cost of living pressures, cost inflation and COVID-19 Environment Coles response • Investing in trusted value for customers through: • High inflation – food moderating, mortgages / – Extensive Exclusive to Coles r
Slide 34: Outlook
Outlook PG33 | Coles is proud to be the presenting partner of Sydney WorldPride 2023 and Sydney Gay and Lesbian Mardi Gras.
Slide 35: Outlook
Outlook We are expecting more customers will be value conscious as increasing • Supermarkets volume growth returned to modestly positive from mid-January cost of living pressures, such as rising • Supplier input cost pressures remain. However, inflation is expected to moderate from peak levels mortg
Slide 36: Q&A
Q&A Value the Australian way | coles