Slide 1: Company Results
Company Results Michael Luscombe Chief Executive Officer Half Year Ended 30 December 2007 Tom Pockett Finance Director
Slide 2: Highlights
Highlights • Excellent result reflecting strong business momentum 9 Sales + 8.6% 9 EBIT + 20.0% 9 NPAT + 28.1% 9 EPS + 25.9% • Focussed and well positioned for achieving sustainable profitable growth 2
Slide 3: Growth Initiatives
Growth Initiatives • Key initiatives 9 Continued investment in price, range, merchandise and quality 9 National rollout of ‘everyday rewards’ program 9 Expansion & repositioning of BIG W 9 Further investment in our supply chain in all businesses 9 Leverage significant strategic advantage in our supp
Slide 4: Sales – another strong sales result
Sales – another strong sales result 24.0 24 (3) 22.1 (2) 8.6% 21 19.1 15.9% (1) 18 16.1 18.4% 15.0 $ Billions 15 7.0% 6.4% 12 9 6 3 HY2004 HY2005 HY2006 HY2007 HY2008 (1) Includes ALH for 2 months. (2) Includes FAL (NZ) business and 20 Australian ex-FAL store results from 2 November 2005, and ALH re
Slide 5: EBIT – up 20% growing faster than sales
EBIT – up 20% growing faster than sales 1,400 1,374.9 (3) 20.0% 1,200 1,145.6 1,000 (2) 27.0% 902.4 $ Millions 800 (1) 686.4 31.5% 613.8 600 11.8% 13.7% 400 200 HY2004 HY2005 HY2006 HY2007 HY2008 (1) Includes ALH for 2 months. (2) Includes FAL (NZ) business and 20 Australian ex-FAL store results fro
Slide 6: EBIT Margin
EBIT Margin Margin has increased an average of 38bps per period over the last 5 half years. EBIT margin excluding Hotels for the half year 2008 is 5.36%, an increase of 55bps, underpinned by Supermarkets in Australia and New Zealand & BIG W. 5.90% 5.73% 5.60% (4) EBIT (3) 5.36% margin ex 5.30% 5.19%
Slide 7: Profit After Tax – up 28.1%
Profit After Tax – up 28.1% 891.3 900 850 28.1% 800 750 (3) 695.6 700 $ Millions 650 28.1% 600 (2) 543.1 550 500 (1) 22.1% 444.8 450 397.8 400 11.8% 13.8% 350 HY2004 HY2005 HY2006 HY2007 HY2008 (1) Includes ALH for 2 months. (2) Includes FAL (NZ) business and 20 Australian ex-FAL store results from
Slide 8: Earnings Per Share – up 25.9%
Earnings Per Share – up 25.9% 75 74.06 70 25.9% 65 60 58.83 55 Cents 50.46 16.6% 50 45 43.45 16.1% 40.41 40 7.5% 35 17.0% 30 25 HY2004 HY2005 HY2006 HY2007 HY2008 EPS GROWTH RATE EXCEEDS EBIT GROWTH RATE AS TARGETED Note: HY2004 reflects EPS pre-goodwill. 8
Slide 9: CODB / Sales
CODB / Sales Our targeted CODB reduction of 20 basis points continues to be achieved when the distorting impacts of Petrol and Hotels are excluded. 21.00% 20.82% Down 19bps in HY08 Down 148 bps in 5 half 20.50% years 20.25% 20.09% 20.02% 20.00% 19.83% 19.50% 19.00% HY2004 HY2005 HY2006 HY2007 HY2008
Slide 10: Gross Profit Margin
Gross Profit Margin As expected Gross Margin has improved reflecting improved buying, shrinkage, the success of our private label offering, the change in sales mix achieved through the rollback campaign, offset by price reinvestment and varying levels of pricing activity in the market. Up 35bps in H
Slide 11: Gross Profit Margin (excluding Hotels)
Gross Profit Margin (excluding Hotels) As expected Gross Margin has improved reflecting improved buying, shrinkage, the success of our private label offering, the change in sales mix achieved through the rollback campaign, offset by price reinvestment and varying levels of pricing activity in the ma
Slide 12: Sales Summary
Sales Summary Half Year HY07 HY08 Increase Comp Sales $ Millions $ Millions (%) (%) Australian Food and Liquor 14,340 15,495 8.1% 6.8% New Zealand Supermarkets 1,989 2,158 6.8% (1) 7.7%(1) Petrol 2,510 2,671 6.4% 3.7% Supermarket Division 18,839 20,324 7.9% BIG W 1,934 2,187 13.1% 5.9% (2) Consumer
Slide 13: EBIT Summary
EBIT Summary $ Millions HY07 HY08 Increase % Australian Food and Liquor 836.9 998.7 19.3% Petrol 41.9 43.5 3.8% Australian Supermarket Division 878.8 1,042.2 18.6% New Zealand Supermarkets 69.3 86.6 25.0% BIG W 107.6 129.2 20.1% Consumer Electronics – Aust/NZ 40.7 43.1 5.9% Consumer Electronics – In
Slide 14: Australian Supermarkets
Australian Supermarkets (Including Liquor & Petrol) Strong momentum being sustained, with further re-investment (1) HY07 HY08 Change Sales ($ million) 16,849.9 18,166.3 7.8% Gross Margin (%) 23.30 23.69 39bps Cost of Doing Business (%) 18.09 17.95 -14bps EBIT to sales (%) 5.21 5.74 53bps EBIT ($ mil
Slide 15: Supermarkets – Australian Food & Liquor
Supermarkets – Australian Food & Liquor Strong momentum being sustained with further re-investment • Sales up 8.1% • EBIT up 19.3% • Comp sales of 6.8% (2007 5.7%) - real growth and market share gains • Lower inflation rate – 2.0% compared to 4.0% in FY07 • CODB has achieved its targeted reduction o
Slide 16: Liquor
Liquor Strong growth for all brands - Dan Murphy’s rollout accelerated • Excellent results for all brands in total sales, comp sales and profits • Group Liquor sales $2.5 billion (HY07: $2.1billion) (1) • 13 new Dan Murphy’s in first half. 13 more in second half. Currently 80 stores • Dan Murphy’s o
Slide 17: Petrol
Petrol Good result in a challenging and competitive market • Sales up 6.4% to $2.7 billion • EBIT up 3.8% to $43.5 million • EBIT margin constant at 1.6% - lower fuel margin offset by improved non-fuel sales and margins • EBIT equates to 1.9 cents profit per litre sold • Comp sales up 3.7%, with com
Slide 18: New Zealand Supermarkets
New Zealand Supermarkets Result demonstrates continued progress being made in improving our offer to our customers in New Zealand (1) H1’07 H2’07 H1’08 H1’08 vs $NZD $NZD $NZD H1’07 Sales 2,326.5 2,200.5 2,483.8 6.8 Gross Margin (%) 21.63 21.91 21.42 -21bps (2) Cost of doing business (%) 17.89 17.17
Slide 19: New Zealand Supermarkets
New Zealand Supermarkets Excellent progress in improving customer offer • Sales up 6.8% to NZD 2.48 billion • Comp sales up 7.7% (1) • Inflation 2.7% (prior half 1.1%) • Reduction in Gross Profit margins reflects continued investment in price • Price investment has significantly reduced price differ
Slide 20: New Zealand Supermarkets (cont'd)
New Zealand Supermarkets (cont’d) Excellent progress in improving customer offer • Business integration and repositioning initiatives on track • Petrol offer is very successful • Strong focus on store layouts, merchandising and ranging • Rollout of Select and Homebrand is being well received by our
Slide 21: BIG W
BIG W An excellent result which demonstrates the customer acceptance of our re-positioning efforts. The expansion and repositioning is continuing. HY07 HY08 Change Sales ($ million) 1,933.5 2,186.6 13.1% Gross margin (%) 29.01 30.10 109bps Cost of Doing Business (%) 23.45 24.19 74bps EBIT to sales (
Slide 22: BIG W
BIG W An excellent result which demonstrates the customer acceptance of our re-positioning efforts. The expansion and repositioning is continuing. • Double digit growth for sales and earnings • Sales up 13.1% Comp sales up 5.9% • EBIT up 20.1% • Continue to maintain “Everyday low price” position • G
Slide 23: Consumer Electronics – Australia & NZ
(1) Consumer Electronics – Australia & NZ Solid result in a highly competitive market HY07 HY08 Change Sales ($ million) 698.4 769.0 10.1% Gross margin (%) 27.31 27.39 8bps Cost of Doing Business (%) 21.49 21.79 30bps EBIT to sales (%) 5.82 5.60 -22bps EBIT ($ million) 40.7 43.1 5.9% Funds Employed
Slide 24: Consumer Electronics – Australia & NZ
Consumer Electronics – Australia & NZ Solid result in a highly competitive market • Sales up 10.1% to $769 million • Comp sales up 4.5% • EBIT up 5.9% • Gross margins up 8bps – a good result in light of continued price deflation • Strategic review underway (similar to BIG W) focusing on positioning
Slide 25: Consumer Electronics – India
Consumer Electronics – India • 13 retail stores now open under the ‘Croma’ brand • Provision of buying, wholesale, supply chain and general consulting services to TATA • Store sales of $46 million • Operating loss of $2.3 million • We currently have 4 warehouses operating in India 25
Slide 26: Hotels
Hotels Solid growth in a challenging market. (1) HY07 HY08 Change Sales ($ million) 540 586 8.5% Gross margin (%) 83.10 82.27 -83bps Cost of Doing Business (%) 62.82 61.69 -113bps EBIT to sales (%) 20.28 20.58 30bps EBIT ($ million) 109.5 120.6 10.1% (1) Includes Taverner hotel sales results for the
Slide 27: Hotels
Hotels Solid growth in a challenging market. • Sales up 8.5% to $586 million • Comp sales up 2.9% - a good result considering the impact of smoking bans • Comp gaming sales up 3.7% • Results continue to exceed the experience of the broader market • Gross margins down 83bps – recent hotel acquisition
Slide 28: Dividends Per Share – Interim
Dividends Per Share – Interim 44.0 44 40 25.7% 36 35.0 32 28.0 25.0% 28 Cents 24.0 24 21.0 16.7% 20 14.3% 16 16.7% 12 8 4 HY2004 HY2005 HY2006 HY2007 HY2008 Dividend payout ratio of 60.0% in line with the previous half year. 28
Slide 29: Balance Sheet
Balance Sheet HY07 HY08 $ Millions Inventory 3,043.3 3,230.3 Average inventory down 0.6 days Trade Payables (3,792.8) (4,553.6) Creditors were boosted by the timing of year end creditor payments post 30 Dec 07. Net investment in inventory (749.5) (1,323.3) Receivables 748.2 699.4 Other creditors (1,
Slide 30: Capital Management
Capital Management • Woolworths currently sets its capital structure with the objectives of minimising its weighted average cost of capital whilst retaining flexibility to pursue growth and capital management opportunities. • Consistent with these objectives, Woolworths has targeted, achieved and ma
Slide 31: Cash Flow Half Year
Cash Flow Half Year HY07 HY08 (27 weeks) (27 weeks) ($ Millions) EBITDA 1,441.1 1,689.9 +17.3% Net interest paid (incl. cost of income notes) (129.9) (112.1) Taxation paid (252.1) (301.3) Working capital items 350.4 676.0 (1) Total cash provided by operating activities 1,409.5 1,952.5 +38.5% Payment
Slide 32: Average Inventory Days (Half Year)
Average Inventory Days (Half Year) 35 34.1 Reduction of When we exclude the impact 34 0.6 days of incremental imported inventory, the reduction in average days was 0.8 days. 33.1 Target Inventory reduction Days remains 1-2 days, however 33 this may be impacted as we 32.5 ramp up our overseas buying
Slide 33: Return On Equity (Half Year)
(1) Return On Equity (Half Year) 35.00% 29.61% 30.00% 28.09% 25.00% 20.00% (2) (2) 14.18% 14.97% 15.00% 13.74% 10.00% 5.00% 0.00% HY2004 HY2005 HY2006 HY2007 HY2008 (1) Based on closing shareholders funds. (2) Decline in ROE is due to impact of 81.6 million shares issued to acquire Foodland, equity
Slide 34: Return On Funds Employed (Half Year)
(1) Return On Funds Employed (Half Year) 30.00% 24.59% 24.00% (2) 18.07% 18.09% 18.00% 15.07% (3) 12.44% 12.00% 6.00% 0.00% HY2004 HY2005 HY2006 HY2007 HY2008 (1) This measures the pre-tax return on funds employed regardless of how they are financed. (2) Decline in ROFE in the HY statutory numbers i
Slide 35: Four Year Report Card
Four Year Report Card In comparison with our regularly HY05 HY06 HY07 HY08 expressed goals Sales will grow in the upper single digits supported by bolt on acquisitions. +7.0% +18.4% +15.9% +8.6% EBIT will outperform sales growth driven by cost savings. +11.8% +31.5% +27.0% +20.0% EPS will outperform
Slide 36: Guidance FY08
Guidance FY08 Sales • We expect overall group sales to grow in the range of 8% to 10%. Earnings • We expect that EBIT will continue to grow faster than sales in FY08. • Net profit after tax for FY08 is expected to grow in the range of 19% to 23%. In stating this guidance it should be noted that the
Slide 37: Company Results
Company Results Half Year Ended 30 December 2007
Slide 38: Capital Expenditure
Capital Expenditure $ Millions HY08 Full Year 2008 Actual Current Previous Forecast Forecast New Stores 139 260 (a) 224 Stay in Business 142 374 (b) 315 Refurbishments 228 534 (c) 459 Supply Chain 23 105 (d) 91 Hotels - Acquisitions 195 268 (e) - Hotels - Other 46 77 75 Supermarkets (NZ) 84 156 146
Slide 39: Shareholder Payouts
Franking credits available for Shareholder Payouts distribution at 30 December 2007 estimated to be $830 million (after the interim dividend) 1000 941 894 Buy Back Dividend 791 800 693 633 534 604 $ Millions 600 538 534 548 141 349 894 400 346 693 538 534 463 200 346 407 243 284 0 FY00 FY01 FY02 FY0
Slide 40: Space Growth
Space Growth Defined plans to continue space roll out Supported by • 15-25 new supermarkets a year plus expansion of existing detailed plans for stores (3% pa) the next three to five years • 6-10 BIG W stores a year (6% to 8% space rollout p.a.) identifying specific sites • Up to 15 Dan Murphy’s sto