Wesfarmers Limited · ASX:WES
Wesfarmers — Wesfarmers Ltd Old — FY2023 Earnings Presentation
66 slides from Wesfarmers's earnings presentation, Aug 25, 2023
Slide 1: 2023 Full-year results briefing presentation
2023 Full-year results briefing presentation To be held on 25 August 2023
Slide 2: Presentation outline
Presentation outline Item Presenter Slide Group performance overview Rob Scott – Managing Director, Wesfarmers Limited 3 Financial performance Anthony Gianotti – Chief Financial Officer, Wesfarmers Limited 10 Outlook Rob Scott – Managing Director, Wesfarmers Limited 18 Q&A Rob Scott – Managing Direc
Slide 3: Group performance overview
Group performance overview Rob Scott Managing Director, Wesfarmers Limited
Slide 4: Primary objective is to deliver a satisfactory return to shareholders
Wesfarmers’ primary objective is to deliver a satisfactory return to shareholders We believe it is only possible to achieve this over the long term by – Anticipating the needs of Looking after our team Engaging fairly with our our customers and members and providing suppliers, and sourcing deliverin
Slide 5: 2023 Full-year highlights
2023 Full-year highlights Group NPAT growth of 4.8% to $2.5b $43.5b $3.85b $1.91 as businesses Revenue Divisional EBT Full-year dividend respond well to +18.2% YoY +12.9% YoY +6.1% YoY market conditions (+7.4% excl. (+10.8% excl. Fully-franked Wesfarmers Health) Wesfarmers Health) Strong value crede
Slide 6: Results underpinned by strong divisional performance
Results underpinned by strong divisional performance Combined divisional earnings growth of 12.9% as the Group’s operating businesses continue to respond well to trading and market conditions Strong execution from Continued investment to support Realised benefits from productivity well-positioned bu
Slide 7: Divisional highlights
Divisional highlights Bunnings Kmart WesCEF Officeworks Group Group • Significant growth in B2B, and above-market growth in tech • Performance highlights • Significant sales and earnings • Strong operating performance • Improved back-to-school and resilience of demand across growth reflects strong u
Slide 8: Focus on long-term value, consistent with our objective
Focus on long-term value, consistent with our objective Climate and environment People Communities 2.4% reduction in Scope 1 and Scope 2 market-based 11.3 total recordable injury frequency rate (TRIFR) and a $75m direct and indirect community contributions emissions supported by continued focus on s
Slide 9: Group performance summary
Group performance summary Year ended 30 June ($m)1 2023 2022 Var % Revenue 43,550 36,838 18.2 Revenue (excluding Wesfarmers Health) 38,238 35,598 7.4 EBIT 3,863 3,633 6.3 EBIT (after interest on lease liabilities) 3,644 3,416 6.7 NPAT 2,465 2,352 4.8 Basic earnings per share (cps) 217.8 207.8 4.8 Re
Slide 10: Financial performance
Financial performance Anthony Gianotti Chief Financial Officer, Wesfarmers Limited
Slide 11: Divisional sales performance
Divisional sales performance Total sales Comp. sales 2H23 Year ended 30 June1 ($m) 2023 2022 growth (%) growth (%) growth2 (%) Bunnings 18,519 17,739 4.4 1.8 2.4 Kmart 8,333 6,832 22.0 14.5 13.7 Target 2,205 2,182 1.1 (0.5) (7.2) Kmart Group3 10,538 9,014 16.9 8.8 Officeworks 3,342 3,153 6.0 7.3 Cat
Slide 12: Divisional earnings performance
Divisional earnings performance EBT1,2 Performance and earnings results reflect: FY23 2H23 Bunnings • Strong commercial growth and continued consumer growth $2,230m $952m Group • Reflects resilience of model and ability to adjust operating costs to manage inflation ↑ 1.2% ↑ 0.7% • Strong execution o
Slide 13: Other business performance summary
Other business performance summary Year ended 30 June ($m) Holding % 2023 2022 Var % Share of (loss)/profit of associates and joint ventures BWP Trust 24.8 9 121 (92.6) Other associates and joint ventures1 Various (13) 36 (136.1) Sub-total share of net (loss)/profit of associates and joint ventures
Slide 14: Working capital and cash flow
Working capital and cash flow • Divisional operating cash flows increased 45.6%, Net working capital cash movement with divisional cash generation of 101%1 Year end 30 June ($m) 2023 2022 – Excluding Wesfarmers Health, divisional cash flow Receivables and prepayments 41 (272) increased 40.7%, with c
Slide 15: Capital expenditure
Capital expenditure • Gross capital expenditure of $1.3b, up 12.6% Capital expenditure – WesCEF includes development capex of $394m Year ended 30 June1 ($m) 2023 2022 Var % and capitalised interest of $42m relating to the Mt Holland mine and concentrator and Bunnings 405 349 16.0 Kwinana refinery Km
Slide 16: Balance sheet and debt management
Balance sheet and debt management • Continue to focus on balance sheet and cost of funds Debt maturity profile2 – Weighted average cost of debt for the year increased $m 2,250 to 3.32% (FY22: 3.11%)1 1,750 – Weighted average debt term to maturity of 1,250 4.4 years (FY22: 5.0 years) 750 – Actively m
Slide 17: Shareholder distributions
Shareholder distributions • Fully-franked final ordinary dividend of $1.03 per Shareholder distributions1 share $/share – Reflects strong operating performance 5.00 – Takes full-year ordinary dividend to 4.00 3.78 $1.91 per share • Final dividend will also carry a New Zealand 3.00 2.78 2.00 franking
Slide 18: Outlook
Outlook Rob Scott Managing Director, Wesfarmers Limited
Slide 19: Well-placed portfolio
Well-placed portfolio Strong, value-based Strategic manufacturing Exposure to growing Businesses retail offers focused capabilities supporting demand in health and supporting global on everyday products critical industries wellbeing decarbonisation Underpinned by a strong balance sheet to support di
Slide 20: Group outlook
Group outlook • Wesfarmers remains focused on long-term value creation and continues to invest to strengthen its existing businesses and develop platforms for growth • First earnings from Lithium are expected in 2H FY24 as production of spodumene concentrate ramps up • WesCEF’s earnings from its exi
Slide 21: Questions
Questions
Slide 22: Appendix: Divisional summaries
Appendix: Divisional summaries
Slide 23: Bunnings Group
Bunnings Group Michael Schneider Managing Director, Bunnings Group
Slide 24: Bunnings Group performance summary
Bunnings Group performance summary Year ended 30 June1 ($m) 2023 2022 Variance % Revenue 18,539 17,754 4.4 EBITDA 3,127 3,057 2.3 Depreciation and amortisation (782) (740) (5.7) EBIT 2,345 2,317 1.2 Interest on lease liabilities (115) (113) (1.8) EBT 2,230 2,204 1.2 Net property contribution 38 52 (
Slide 25: Bunnings Group performance overview
Bunnings Group performance overview • FY23 continues a four-year period of significant growth: - Sales have increased more than $5.3b or 40.7% - Earnings (excl property) have increased more than $650m or 42.2% • Revenue growth of 4.4% to $18.5b - Total store sales growth of 3.7% and store-on-store s
Slide 26: Bunnings Group progress on strategy
Bunnings Group progress on strategy CARE SIMPLIFY - Safety remains a key priority - Driving tech-enabled productivity initiatives to reinvest in price and service - New EBA for Australian warehouse and trade centre teams to be effective from November 2023 - Global supply chain stabilisation supporti
Slide 27: Bunnings Group outlook
Bunnings Group outlook • Bunnings continues to be well positioned, benefitting from: – The breadth and diversity of its business – Focus on necessity products – Strength of offer across consumer and commercial customers • Sharpened focus on operational execution and business productivity to combat i
Slide 28: Kmart Group
Kmart Group Ian Bailey Managing Director, Kmart Group
Slide 29: Kmart Group performance summary
Kmart Group performance summary Year ended 30 June1,2 ($m) 2023 2022 Variance % Revenue 10,635 9,129 16.5 EBITDA 1,347 1,088 23.8 Depreciation and amortisation (498) (496) (0.4) EBIT 849 592 43.4 Interest on lease liabilities (80) (87) 8.0 EBT 769 505 52.3 EBT margin (%) 7.2 5.5 ROC (R12, %) 47.0 32
Slide 30: Kmart Group performance overview
Kmart Group performance overview • Revenue increased by 16.5% to $10,635m – Improved customer offer driving growth in transaction frequency – Strong underlying trading performance and normalisation post-COVID – Improved availability • Record earnings of $769m, up 52.3% – Strong sales growth, executi
Slide 31: Kmart Group progress on strategy
Kmart Group progress on strategy • Kmart Group is a product-centric retail business, underpinned by advancing technology capability • A strong product focus increased customer participation and share of wallet – Improvements in range curation and product design continue to resonate with customers –
Slide 32: Kmart Group outlook
Kmart Group outlook • Kmart is uniquely placed in an inflationary environment to extend its low-price leadership by: – Growing share of wallet by leveraging product development capability – Digitising supply chain and store operations – Developing a winning omnichannel proposition, enabled by loyalt
Slide 33: Chemicals, Energy and Fertilisers
Chemicals, Energy and Fertilisers Ian Hansen Managing Director, Wesfarmers Chemicals, Energy and Fertilisers
Slide 34: Chemicals, Energy and Fertilisers performance summary
Chemicals, Energy and Fertilisers performance summary Year ended 30 June1 ($m) 2023 2022 Variance % Revenue2 Chemicals 1,665 1,397 19.2 Energy 497 491 1.2 Fertilisers 1,144 1,153 (0.8) Total 3,306 3,041 8.7 EBITDA 769 634 21.3 Depreciation and amortisation (99) (93) (6.5) EBIT 670 541 23.8 Interest
Slide 35: Chemicals, Energy and Fertilisers overview
Chemicals, Energy and Fertilisers overview • Revenue of $3,306m was up 8.7% and earnings of $669m were up 23.9% on the prior year, supported by favourable global ammonia prices and strong plant performance • Chemicals: Earnings increased significantly on the prior year – Strong Ammonia earnings were
Slide 36: Chemicals, Energy and Fertilisers key commodity pricing
Chemicals, Energy and Fertilisers key commodity pricing • Ammonia price: USD/t Ammonia Price (Far East CFR nominal) 1,200 – 1H23 earnings benefitted from high global ammonia pricing 1,000 800 – 2H23 earnings positively impacted by a pricing lag 600 from the pass-through mechanism in some customer co
Slide 37: Chemicals, Energy and Fertilisers outlook
Chemicals, Energy and Fertilisers outlook • Chemicals earnings are expected to be adversely impacted in FY24 by lower global ammonia pricing • Increasing WA natural gas costs expected to impact both Chemicals and Energy earnings, with domestic market supply constraints likely to lead to continued el
Slide 38: Officeworks
Officeworks Sarah Hunter Managing Director, Officeworks
Slide 39: Officeworks performance summary
Officeworks performance summary Year ended 30 June1 ($m) 2023 2022 Variance % Revenue 3,357 3,169 5.9 EBITDA 335 303 10.6 Depreciation and amortisation (124) (113) (9.7) EBIT 211 190 11.1 Interest on lease liabilities (11) (9) (22.2) EBT 200 181 10.5 EBT margin (%) 6.0 5.7 ROC (R12, %) 18.3 17.8 Tot
Slide 40: Officeworks performance overview
Officeworks performance overview • Revenue growth of 5.9% to $3,357m – Improved Back to School trading results, including a benefit from NSW back-to-school voucher program – Significant growth in B2B sales – Above-market sales growth in technology products – Growth in demand across stationery, art,
Slide 41: Officeworks progress on strategy
Officeworks progress on strategy Our team – Continued focus on the safety, health and wellbeing of our team to deliver our safest year yet Customer experience – Utilising technology to deliver a step-change in NPS1 – Continued investment in convenient delivery options to over 3,000 postcodes across
Slide 42: Officeworks outlook
Officeworks outlook Well positioned to deliver value for customers during challenging economic conditions • Investing in everyday low prices, widest range (including private label), and easy and engaging customer experiences • Joining OnePass in 1H24 to deliver enhanced value for loyal customers • R
Slide 43: Wesfarmers Industrial and Safety
Wesfarmers Industrial and Safety Tim Bult Managing Director, Wesfarmers Industrial and Safety
Slide 44: Industrial and Safety performance summary
Industrial and Safety performance summary Year ended 30 June1 ($m) 2023 2022 Variance % Revenue 1,992 1,925 3.5 EBITDA 184 171 7.6 Depreciation and amortisation (80) (75) (6.7) EBIT 104 96 8.3 Interest on lease liabilities (4) (4) - EBT 100 92 8.7 EBT margin (%) 5.0 4.8 ROC (R12, %) 8.0 7.9 Safety (
Slide 45: Industrial and Safety overview
Industrial and Safety overview • Revenue growth of 3.5% to $1,992m – Blackwoods’ revenue increased due to growth across major trading regions and from strategic customers in Australia, particularly in mining, utilities and manufacturing, and continued demand in New Zealand – Workwear Group’s revenue
Slide 46: Industrial and Safety outlook
Industrial and Safety outlook • Near-term market conditions in Australia and New Zealand are expected to be impacted by ongoing economic pressures, particularly from the continued inflationary cost environment • The Industrial and Safety businesses remain focused on delivering continued improvements
Slide 47: Wesfarmers Health
Wesfarmers Health Emily Amos Managing Director, Wesfarmers Health
Slide 48: Wesfarmers Health performance summary
Wesfarmers Health performance summary Year ended 30 June1,2 ($m) 2023 2022 Revenue 5,312 1,240 EBITDA3 124 (2) Depreciation and amortisation (74) (22) EBIT3,4 50 (24) Interest on lease liabilities (5) (1) EBT3,4 45 (25) EBT3 (excluding purchase price allocation adjustments) 58 (14) EBT margin (%) (i
Slide 49: Wesfarmers Health performance overview
Wesfarmers Health performance overview • Strong sales in Pharmaceutical Wholesale – Underpinned by increased demand from trading partners and net customer acquisition, elevated demand for COVID-19 anti-viral products and price inflation in some categories • Priceline solid sales result – Supported b
Slide 50: Wesfarmers Health progress on strategy
Wesfarmers Health progress on strategy Win in Reinvigorate the wholesale customer proposition • Customer acquisition and • Optimise Priceline company store network retention strategies • Investment in unit fulfilment Leading • Optimise price positioning • Private label penetration and exclusive and
Slide 51: Wesfarmers Health outlook
Wesfarmers Health outlook • Wesfarmers Health has a complementary portfolio of health, wellbeing and beauty assets and is well positioned to deliver long-term growth and capitalise on health sector tailwinds • Near-term market conditions expected to remain challenging – Wesfarmers Health continues t
Slide 52: Wesfarmers OneDigital
Wesfarmers OneDigital Nicole Sheffield Managing Director, Wesfarmers OneDigital
Slide 53: Significant data and digital capabilities
Significant data and digital capabilities Driving value through Large scale Unique and complementary deeper customer connections digital reach member programs and operating efficiency 56% 34% % of sales to known customers FY18 FY19 FY20 FY21 FY22 FY23 Digital interactions / month, Rising penetration
Slide 54: Catch performance overview
Catch performance overview • Reported loss of $163m, including restructuring costs of Year ended 30 June1,2 Var $40m relating to inventory provisions, redundancies and 2023 2022 asset write-offs ($m) (%) – Disappointing financial performance, impacted by poor Gross transaction value 733 989 (25.9) r
Slide 55: OnePass performance and outlook
OnePass performance and outlook • Significant progress in development of OnePass program with incremental benefits for divisions during the year • Value proposition resonating with customers: – Over 70% of accounts linked to multiple retail brands – Higher annual online spend, more than twice as man
Slide 56: Appendix: Supplementary information
Appendix: Supplementary information
Slide 57: Group management balance sheet
Group management balance sheet ($m)1,2 FY23 1H233 FY223 Inventories 6,039 6,634 6,084 Receivables and prepayments 2,300 2,281 2,364 Trade and other payables (5,268) (5,689) (5,362) Other 252 263 238 Net working capital 3,323 3,489 3,324 Property, plant and equipment 5,365 5,034 4,750 Intangibles 4,6
Slide 58: Movements in net financial debt
Movements in net financial debt Movements in net financial debt ($b) Net financial Operating cash Lease Dividends paid Net capex Proceeds from Other Net financial debt flows payments sale of shares debt 30 June 2022 in Coles 30 June 2023 • Net financial debt position of $4.0b as at 30 June 2023, com
Slide 59: Management of lease portfolio
Management of lease portfolio • Lease liabilities totalled $6.7b and Lease liabilities ($m) 2023 2022 represented 60% of Group fixed financial Bunnings 3,568 3,692 obligations as at 30 June 2023 Kmart Group1 2,341 2,616 • Average remaining committed lease term of WesCEF 61 61 4.1 years3 (FY22: 4.4 y
Slide 60: Divisional return on capital
Divisional return on capital Rolling 12 months to 30 June 2023 2022 EBT Cap Emp1 ROC EBT Cap Emp1 ROC Var ($m) ($m) (%) ($m) ($m) (%) (ppt) Bunnings 2,230 3,410 65.4 2,204 2,854 77.2 (11.8) Kmart Group2 769 1,635 47.0 505 1,569 32.2 14.8 WesCEF3 669 3,091 21.6 540 2,503 21.6 - Officeworks 200 1,092
Slide 61: Retail store networks
Retail store networks As at 30 June 2023 1,782 locations across Australia and New Zealand Brand NSW/ACT VIC QLD SA WA TAS NT NZ Total Bunnings Warehouse 81 64 52 19 29 7 3 30 285 Smaller format 19 14 11 2 9 - - 12 67 Trade 7 3 6 2 3 1 - 9 31 Tool Kit Depot - 1 1 5 7 - - - 14 Beaumont Tiles1 33 31 30
Slide 62: Revenue reconciliation – Kmart Group
Revenue reconciliation – Kmart Group Year ended 30 June1,2 ($m) 2023 2022 Segment revenue (Gregorian) 10,635 9,129 Less: Non-sales revenue (64) (68) Headline sales (Gregorian) 10,571 9,061 Add: Gregorian adjustment3 (33) (47) Headline sales revenue (Retail) 10,538 9,014 1. Refer to slide 63 for rele
Slide 63: Retail calendars
Retail calendars Business Retail sales period Bunnings, Officeworks and Catch FY23 1 Jul 2022 to 30 Jun 2023 (12 months) FY22 1 Jul 2021 to 30 Jun 2022 (12 months) FY21 1 Jul 2020 to 30 Jun 2021 (12 months) Kmart FY23 27 Jun 2022 to 25 Jun 2023 (52 weeks) FY22 28 Jun 2021 to 26 Jun 2022 (52 weeks) F
Slide 64: Glossary of terms (1 of 2)
Glossary of terms (1 of 2) Term AASB Australian Accounting Standards Board Australian Light Minerals. ALM is the company holding WesCEF’s 50 per cent share in the ALM Covalent lithium project and is responsible for the sales and marketing of lithium products as well as undertaking exploration activi
Slide 65: Glossary of terms (2 of 2)
Glossary of terms (2 of 2) Term kt Kilotonne ktCO2e Kilotonnes of carbon dioxide equivalent LNG Liquefied natural gas LPG Liquefied petroleum gas m Million n.m. Not meaningful n.r. Not reported Interest-bearing loans and borrowings less cash at bank and on deposit and held in joint operation, Net fi
Slide 66: Wesfarmers
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