Slide 1: Company Results – Half Year ended 4 January 2009
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Half Year ended 4 January 2009
Slide 2: Highlights – Financial Half Year ‘09
Highlights – Financial Half Year ‘09 This is a strong result reflecting increasing customer acceptance of our retail offer underpinned by continued investment in all our businesses In this half year we have opened 122 new stores and completed 190 refurbishments We continued to add new stores,
Slide 3: Highlights – Half Year ‘09
Highlights – Half Year ‘09 Strong result underpinned by continued investment HY09 Growth Sales $26.1b Ç 8.8% EBITDA $1,887.7m Ç 11.7% EBIT $1,515.2m Ç 10.2% NPAT $983.3m Ç 10.3% EPS 80.9¢ Ç 9.3% Well positioned for the future 3
Slide 4: Highlights for the half year
Highlights for the half year 4
Slide 5: Rollout of 2010c Format
Rollout of 2010c Format "We continue to invest in our store network Results from our accelerated refurbishment program are pleasing with improvement in Currently 263 stores in new format sales and gross margin" A further 60 stores (including 28 refurbishments) expected in FY09 5
Slide 6: Supply Chain / Distribution Centres
Supply Chain / Distribution Centres RDC LDC DC NDC Distribution Centres Townsville Produce Brisbane Perth Wyong Adelaide Sydney Wodonga Melbourne Melbourne Liquor DC Hume Mulgrave Produce Devonport Produce Hobart Ambient The financial benefits from the supply chain investment are continuing The
Slide 7: Cards Program – Customer Engagement
Cards Program – Customer Engagement Behaviour Customer Customer Card Engagement Customer Program Rewards Knowledge (who buys what, when, Increased where) Share Of Wallet Increased Market Share New More Business Ideas Transactions New Store Formats Better Ranging A Competitive Better Pricing Advantag
Slide 8: Cards Program – Everyday Rewards
Cards Program – "Everyday Rewards" "New opportunity to engage with our customers 2.8 million cards registered Exclusive offers that are relevant to our customers" 8
Slide 9: Cards Program – Alliance with Qantas
Cards Program – Alliance with Qantas Woolworths and Qantas world- leading loyalty alliance Allows registered Woolworths "Customers to Everyday Rewards members to be rewarded earn Qantas Frequent Flyer points from check-out when they shop at participating to check-in" Woolworths group businesses
Slide 10: Cards Program – Everyday Money
Cards Program – "Everyday Money " The credit card fresh from Woolworths "Everyday Money" Credit Card was launched on the 1st September 2008 Card Issuer is HSBC Card Scheme Partner is Mastercard 10
Slide 11: Repositioning of Consumer Electronics
Repositioning of Consumer Electronics Rollout of new format now underway. 79 stores in new "Best price format by end of financial year and you’ll pay Comparable sales growth in the no more for 33 stores we have completed are the right well in excess of the network advice!" Training program foc
Slide 12: New Zealand Supermarkets
New Zealand Supermarkets Repositioning of the New Zealand Supermarkets business for future growth has continued Major business transformation involving the conversion to Woolworths core systems has been completed on time This milestone and other significant activities currently underway underp
Slide 13: Financial results
CALLIN] SHLIOMIOOM, Financial results
Slide 14: Report Card
Report Card Goals HY05 HY06 HY07 HY08 HY09 Sales will grow in the upper single digits assisted by bolt-on 7.0% 18.4% 15.9% 8.6% 8.8% acquisitions EBIT will outperform sales growth 11.8% 31.5% 27.0% 20.0% 10.2% assisted by cost savings EPS will outperform EBIT growth 7.5% 16.1% 16.6% 25.9% 9.3% assis
Slide 15: Profit after tax – up 10.3%
Profit after tax – up 10.3% $m 983.3 1,000 891.3 900 Ç 10.3% Ç 28.1% 800 695.6 3 700 Ç 28.1% 600 543.1 2 500 444.81 Ç 22.1% 400 Ç 11.8% 300 200 100 HY05 HY06 HY07 HY08 HY09 1. Includes ALH from 31 October 2004 2. Includes Progressive (NZ) business and 20 Australian ex-FAL store results from 2 Novemb
Slide 16: EBIT – up 10.2%
EBIT – up 10.2% EBIT growth underpinned by strong growth in Australian Food and Liquor $m 1,600 Ç 10.2% Total 1,400 Ç 20.0% Group EBIT 1,200 Ç 27.0% 2 Ç 16.6% Australian 1,000 Ç 31.5% Food and Ç 19.3% 800 Liquor Ç 11.8%1 Ç 29.4% EBIT 600 Ç 17.0% Ç 7.4% 400 200 0 HY05 HY06 HY07 HY08 HY09 1. Group EBI
Slide 17: CODB / Sales
CODB / Sales Our targeted CODB reduction of 20 bps pa continues to be achieved when the distorting impacts of Petrol and Hotels and the prior year development profits (HY08: $9.2m) are excluded Percentage 20.50% Down 20.25% 31 bps in 20.09% HY09 20.02% 20.00% 19.83% 19.52% 19.50% 19.00% HY05 HY06 HY
Slide 18: Gross Profit Margin (excluding Hotels)
Gross Profit Margin (excluding Hotels) Gross Profit Margin has declined reflecting significant price reinvestment activity. Other initiatives such as our new 2010c format stores, the success of our market leading private label offer and the price rollback campaigns continue to improve margins Percen
Slide 19: Dividends per share – Interim
Dividends per share – Interim Cents 55 48 44 45 Ç 9.1% Ç 25.7% 35 35 28 Ç 25.0% 24 25 Ç 16.7% Ç 14.3% 15 5 HY05 HY06 HY07 HY08 HY09 Dividend pay-out ratio of 59.8% is in line with the previous half year 19
Slide 20: Australian Supermarket Division
Australian Supermarket Division HY08 HY09 Change Comparable Sales – Aust. Food & Liquor Sales ($m) 18,166.3 19,969.1 9.9% Percentage 7.6 7.1 Gross margin (%) 23.69 23.71 2bps 8 6.0 6.7 6.0 6 4.9 CODB (%) 17.95 17.65 (30)bps 4 EBIT to sales (%) 5.74 6.06 32bps 2 0 EBIT ($m) 1,042.2 1,209.9 16.1% Q1 Q
Slide 21: Petrol
Petrol Sales of $3.1 billion, up 15.0% Comparable sales increased by 11.2% Comparable volumes increased 1.9% reflecting the strength of our offer Petrol pump prices reduced in the second quarter relative to last year (Q209: $1.22/litre; Q208: $1.31/litre) EBIT increased by 5.1% to $45.7 mi
Slide 22: Liquor
Liquor "We continue to expand our range of exclusive brands and control labels" All our Liquor operations (Dan Murphy’s, BWS and attached liquor) recorded strong growth in sales and profit Group Liquor sales for the half were $2.8 billion (HY08: $2.5 billion) Woolworths operated 1,129 liquor o
Slide 23: New Zealand Supermarkets
New Zealand Supermarkets NZ$ HY08 HY09 Change Comparable Sales Sales ($m) 2,483.8 2,571.0 3.5% Percentage Gross margin (%) 21.42 21.38 (4)bps 9.9 CODB (%) 17.12 17.54 42bps 10 EBIT to sales (%) 4.30 3.84 (46)bps 8 5.7 6.2 6 3.5 Trading EBIT ($m) 106.8 98.8 (7.5)% 4 3.0 3.0 Less intercompany (7.1) (6
Slide 24: BIG W
BIG W HY08 HY09 Change Comparable Sales Sales ($m) 2,186.6 2,405.8 10.0% Percentage Gross margin (%) 30.10 28.89 (121)bps 9.6 10 8 6.4 CODB (%) 24.19 22.98 (121)bps 6 4.4 3.8 3.6 EBIT to sales (%) 5.91 5.91 - 4 2.6 2 EBIT ($m) 129.2 142.2 10.1% 0 Funds Employed ($m)1 307.3 533.9 73.7% Q1 Q2 Q3 Q4 20
Slide 25: Hotels
Hotels HY08 HY09 Change Comparable Sales Sales ($m) 586.1 591.9 1.0% Percentage 4.0 3.5 Gross margin (%) 82.27 83.17 90bps 2.3 2.0 0.9 1.0 CODB (%) 61.69 62.03 34bps 0.0 EBIT to sales (%) 20.58 21.14 56bps (2.0) (0.8) (1.6) EBIT ($m) 120.6 125.1 3.7% Q1 Q2 Q3 Q4 2008 2009 Strong portfolio of 276 hot
Slide 26: Consumer Electronics – Australia & NZ
Consumer Electronics – Australia & NZ HY08 HY09 Change Comparable Sales Sales ($m) 769.0 838.9 9.1% Percentage Gross margin (%) 27.39 25.59 (180)bps 10 8 6.5 CODB (%) 21.79 21.82 3bps 4.9 5.3 5.0 6 3.7 3.8 EBIT to sales (%) 5.60 3.77 (183)bps 4 2 EBIT ($m) 43.1 31.6 (26.7)% 0 Funds Employed ($m) 270
Slide 27: Consumer Electronics – India
Consumer Electronics – India Our business venture with TATA is still in its infancy with 26 retail stores operating under the "Croma" brand As part of this venture Woolworths Limited provides buying, wholesale, supply chain and general consulting services to TATA The wholesale operations are m
Slide 28: Balance Sheet
Balance Sheet $m HY08 HY09 Inventory 3,230.3 3,488.5 Inventory growth of 8.0% vs sales growth of 8.8% Trade Payables (4,553.6) (4,270.3) Net investment in inventory (1,323.3) (781.8) Movement in net investment in inventory is distorted by timing of period end close Receivables 699.4 736.2 Other
Slide 29: Cash Flow
Cash Flow $m HY08 HY09 EBITDA 1,689.9 1,887.7 +11.7% 1 Net interest paid (including cost of income notes) (112.1) (123.7) Taxation paid2 (301.3) (456.8) 1,276.5 1,307.2 +2.4% Working capital items 676.0 20.0 Total cash provided by operating activities 1,952.5 1,327.2 (32.0%) Payments for the purchas
Slide 30: Cash Flow (Proforma)
Cash Flow (Proforma) Adjusted for timing of period end close $m HY08 HY09 EBITDA 1,689.9 1,887.7 +11.7% Net interest paid (including cost of income notes)1 (112.1) (123.7) 2 Taxation paid (301.3) (456.8) 1,276.5 1,307.2 +2.4% Working capital items (normalised) 379.0 360.1 Total cash provided by oper
Slide 31: Average Inventory Days
Average Inventory Days When we exclude the impact of incremental imported inventory and the incremental inventory associated with our new Liquor DC's the reduction in inventory days was 0.7 Number days Days 35 Down 0.7 34.1 days 34 33.1 33 32.5 32.4 32 31.81 31 30 HY06 HY07 HY08 HY09 Our target is t
Slide 32: Shareholder Payouts
Shareholder Payouts Franking credits available for distribution (after the interim dividend) = $1,094m Number 1,200 1,121 Buy Back 941 Dividend 894 800 693 534 604 588 538 141 400 346 407 463 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 HY09 Profit growth, coupled with balance sheet management, delivered $5
Slide 33: Capital Management
Capital Management Woolworths currently sets its capital structure with the objectives of enhancing shareholder value through optimising its weighted average cost of capital whilst retaining flexibility to pursue growth and capital management opportunities Our balance sheet, debt profile and str
Slide 34: Return on funds employed
1 Return on funds employed Percentage 24.00% 23.04% 22.00% 20.00% 17.85% 17.51% 3 18.00% 2 15.71% 16.00% 14.87% 14.00% 12.00% 10.00% HY05 HY06 HY07 HY08 HY09 1. Based on average opening and closing funds employed 2. Decline in ROFE is due to the inclusion of assets from the acquisition of FAL (NZ) 3
Slide 35: Return on equity
1 Return on equity Percentage 30.00% 28.09% 20.00% 14.18% 2 2 14.97% 15.08% 13.74% 10.00% 0.00% HY05 HY06 HY07 HY08 HY09 1. Based on closing Shareholders Funds 2. Decline in ROE is due to impact of 81.6 million shares issued to acquire Foodland, equity issued with the Dividend Reinvestment Plan and
Slide 36: Strategy and Growth
CALLIN] SHLIOMIOOM, Strategy and Growth
Slide 37: Strategy and growth
Strategy and growth Consistent and clear strategies that leverage our core strengths Woolworths targets the following key areas of performance measurement in the long term, namely Sales to grow in the upper single digits assisted by bolt-on Clearly stated acquisitions long term EBIT growth outpe
Slide 38: Key growth initiatives
Key growth initiatives Continuing to Continuing to re-invigorate our offer drive our core through investment business focusing in price, range, on our customers merchandise and quality Leveraging our Expansion of Expansion of supply chain Global Sourcing private label capabilities activities Develop
Slide 39: Key growth initiatives
Key growth initiatives We have completed a substantial portion of the end-to- end supply chain program in Australian Supermarkets The financial benefits of this world class supply chain Leveraging our will continue over future years supply chain The intellectual property is being leveraged acr
Slide 40: Key growth initiatives
Key growth initiatives We continue to expand our global sourcing activities. As we increase our capabilities in this area we continue to secure cost price savings and improvements in both Expansion of quality and range Global Sourcing Focus on improving international logistics activities We ha
Slide 41: Key growth initiatives
Key growth initiatives We continue to invest in our financial services capabilities with a well developed product roadmap that leverages our cards program Financial Financial switch provides very high reliability for Services processing of financial transactions (at a lower cost) capabilities
Slide 42: Key growth initiatives
Key growth initiatives Woolworths is focussed on our core businesses in Australia and New Zealand and continues to re-invest in Measured and each of the businesses. Woolworths will continue to disciplined assess both Domestic and International opportunities as approach to they arise and has a disc
Slide 43: Key growth initiatives
Key growth initiatives We have defined plans for space growth, with minimal cannibalisation expected Adding 15-25 new supermarkets each year and expanding existing stores (greater than 3% space Defined rollout pa) plans for Targeting 200+ BIG W stores space growth Plan to have approximately 15
Slide 44: Trading Update
Trading Update Trading overall in the third quarter has continued along similar trends to that experienced in the first half Each of our businesses has the flexibility to adapt to further changes in the economic environment We have completed a review of capital expenditure plans and are committed to
Slide 45: Sales and Earnings Guidance FY09
Sales and Earnings Guidance FY09 We are mindful that discretionary spending continues to be influenced by macro- economic factors and by recent events in global financial markets. Factors such as inflation, fluctuating petrol prices, interest rates (including the non-cash impact on certain discounte
Slide 46: Appendices
CALLIN] SHLIOMIOOM, Appendices
Slide 47: Sales of $26.1b – up 8.8%
Sales of $26.1b – up 8.8% Half Year $m HY08 HY09 Increase Comp Sales Australia Food and Liquor 15,495 16,897 9.0% 6.6% New Zealand Supermarkets (NZD) 2,484 2,571 3.5% 3.0% New Zealand Supermarkets 2,158 2,132 (1.2)% 3.0% Petrol 2,671 3,072 15.0% 11.2% Supermarkets Division 20,324 22,101 8.7% BIG W 2
Slide 48: EBIT – up 10.2% growing faster than sales
EBIT – up 10.2% growing faster than sales $m HY08 HY09 Change Australia Food and Liquor 998.7 1,164.2 16.6% New Zealand Supermarkets (NZD) 99.7 91.9 (7.8)% New Zealand Supermarkets (AUD) 86.6 68.4 (21.0)% Petrol 43.5 45.7 5.1% Supermarkets Division 1,128.8 1,278.3 13.2% BIG W 129.2 142.2 10.1% Consu
Slide 49: Earnings per share – up 9.3%
Earnings per share – up 9.3% Cents 100 80.93 80 74.06 Ç 9.3% Ç 25.9% 58.83 60 50.46 Ç 16.6% 43.45 Ç 16.1% 40 Ç 7.5% 20 HY05 HY06 HY07 HY08 HY09 49
Slide 50: Capital Expenditure – Half Year
Capital Expenditure – Half Year New Stores1 Refurbs HY08 HY09 $m Actual Actual Store numbers 2009 2008 2009 2008 New Stores 140 165 Supermarkets Australia 2 15 19 98 48 Refurbishments 276 376 Growth Capex 416 541 Liquor 49 38 53 34 Stay in Business 201 185 PEL - NZ Supermarkets - - 9 5 Supply chain
Slide 51: Capital Expenditure – Full Year
Capital Expenditure – Full Year Current Current Previous 2006 2007 2008 2009 $m - 2009 Fcst Fcst Diff $m – Full Year Actual Actual Actual Fcst New Stores 307 317 (10) New Stores 214 223 299 307 Refurbishments 752 684 68 Refurbishments 323 306 643 752 Growth Capex 1,059 1,001 58 Growth Capex 537 529
Slide 52: Capital Expenditure – Notes
Capital Expenditure – Notes Reflects the continued rollout of new stores across all our brands New Stores Reflects the acceleration of refurbishment activity across our brands following rigorous in-market testing of our new format initiatives including the 2010c format for Refurbishment Australi
Slide 53: Gross Profit Margin
Gross Profit Margin Down 24bps Percentage 26.00% 25.56% 25.32% 25.21% 25.00% 24.82% 24.51% 24.00% 23.00% HY05 HY06 HY07 HY08 HY09 53