Wesfarmers Limited · ASX:WES
Wesfarmers — Investment Conference, London, New York, Singapore and Hong Kong, March 2009
33 slides from Wesfarmers's conference presentation, March 2009
Slide 1: Investment Conference: Philosophy, Performance and Direction
Investment Conference Philosophy, Performance and Direction Citigroup, London – 9 & 10 March Goldman Sachs JBWere, New York – 12 & 13 March JPMorgan, Singapore and Hong Kong – 16 & 17 March March 2009
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Wesfarmers Limited. The information contained in this presentation is for information purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products, nor is it intended to constitute legal, tax or
Slide 3: Philosophy Based On A Single Focus
Philosophy Based On A Single Focus Satisfactory Returns To Shareholders
Slide 4: Long-term, consistent strategies
Long-term, consistent strategies MANAGING BALANCE SHEET EFFECTIVELY 4
Slide 5: Returns focus
Returns focus Objective: Satisfactory Returns to Shareholders Measured by TSR performance over the long term Efficiency: Growth: Improvement in ROE Growth in Invested Capital Growing divisional ROC Acquisitions and Expansion 5
Slide 6: Portfolio of leading brands
Portfolio of leading brands Retail Businesses Industrial Businesses Hotels Insurance 6
Slide 7: Management Team
Management Team Managing Director Richard Goyder Finance Director Gene Tilbrook* Divisional Managing Directors Home Improvement & Office Supplies John Gillam Coles Ian McLeod Target Launa Inman Kmart Guy Russo Insurance Rob Scott Chemicals & Fertilisers Ian Hansen Coal Stewart Butel Industrial & Saf
Slide 8: Group Results
Group Results
Slide 9: Group Performance Highlights
Group Performance Highlights • Significant increases in revenue and earnings – Inclusion of full period of Coles, Target, Kmart and Officeworks • Operating revenue of $26.4 billion • Group profit after tax of $879 million, up 46.3% – After inclusion of $125 million of writedowns and provisions • Ope
Slide 10: Group Performance Summary
Group Performance Summary Half Year ended 31 December ($m) 2008 2007* % ^ Operating revenue 26,363 9,808 168.8 EBITDA 2,236 1,266 76.6 EBIT 1,759 1,046 68.2 Net profit after tax 879 601 46.3 Operating cash flow 1,770 1,241 42.6 Earnings per share (excl. employee res. shares) 106.4 127.3 (16.4) Earni
Slide 11: Divisional EBIT
Divisional EBIT Half Year ended 31 December ($m) 2008 2007* % Home Improvement & Office Supplies 395 332 19.0 Coles 431 130 n.m. Target 215 118 n.m. Kmart 75 101 n.m. Resources 686 112 512.5 Insurance 67 64 4.7 Industrial & Safety 68 61 11.5 Chemicals & Fertilisers 4 48 (91.7) Energy 30 48 (37.5) Ot
Slide 12: Provisions and write-downs
Provisions and write-downs Period ended 31 December ($m) 2008 Comment Coles (65) Coles Property writedown DC Closure and Kmart (14) restructure costs Non-trading items (79) Self Insurance (48) Increase in provisions Mark-to-market of Investments (21) investments One-off trading items (69) Total Sign
Slide 13: Operating Divisions
Operating Divisions
Slide 14: Coles
Coles • Intensive period of change 1. Building a solid foundation led by new management Strategies 2. Delivering consistently well • Encouraging signs in early phase of recovery 3. Driving the Coles difference programme • Food & Liquor comp sales growth of • Meaningful and sustainable 2.6% (3.8% in
Slide 15: Coles – Strategy
Coles – Strategy 5 years – 3 phases of recovery Building a Solid Delivering Driving the Coles Foundation Consistently Well Difference Performance • Culture of continuous • Embed the new culture improvement • Create a strong top team • Team member development • Strong customer trust and • Cultural ch
Slide 16: Coles – Strategy progress
Coles – Strategy Phase 1 Progress Create a strong top team 100% of leadership team new to Coles/role with over 125 years of retailing experience. 45% of top 200 managers new to Coles/role. Cultural change 1,500+ non-store positions removed. Store manager authority improved. Store and store manager c
Slide 17: Home Improvement and Office Supplies: Bunnings
Home Improvement and Office Supplies Bunnings 1. Profitable sales growth • Bunnings continuing to 2. Building a stronger team perform strongly Strategies 3. Lifting effectiveness and efficiency • Focus on delivering on 4. Sustainability focus strategic agenda • 10.3% cash sales growth with store-on-
Slide 18: Home Improvement and Office Supplies: Officeworks
Home Improvement and Office Supplies Officeworks 1. Improving the customer offer • Substantial work to address 2. Lifting service Strategy strategic impediments 3. Team development & engagement Develop- ment 4. Reducing complexity & cost of doing • Difficult trading conditions for business remainder
Slide 19: Target
Target 1. Focus on fundamentals • Continuing to perform well 2. Brand relaunch 3. Differentiation • Well positioned for slow Strategies 4. Store network development down in retail spending and 5. Customer service to benefit from Govt. 6. Team member performance 7. Business improvements stimulus pack
Slide 20: Kmart
Kmart 1. Fix the customer experience • Guy Russo, Managing 2. Significantly reduce the cost base Director, recently appointed Strategies 3. Rebuild customer trust • Senior management 4. Make every site a success changes complete 5. Right people and accountability • Comp sales growth of 0.4% (1.0% in
Slide 21: Resources
Resources • Resources benefiting from 1. Maximise export sales and optimise sales mix record export coal prices 2. Cost reduction programmes • Forecast Curragh Strategies 3. Expansion opportunities metallurgical sales of 6.5 – 4. Extend product and market reach 6.9mt in FY09 5. Sustainability • Timi
Slide 22: Insurance
Insurance Underwriting • Rate increases being 1. Single licensed entity for Aust. 2. LGNZ margin improvement achieved 3. Build technical capabilities Strategies Broking • Continuing consolidation of 1. Leverage combined capabilities brokers/distribution 2. Build the best team 3. Continue bolt-on acq
Slide 23: Chemicals & Fertilisers
Chemicals & Fertilisers • Demand for mining 1. Growth through expansions chemicals remains strong 2. Optimise cost and capital Strategies 3. Sustainability although growth softening 4. Improve capabilities and people • Fertiliser earnings development dependent on seasonal • 6 months of successful op
Slide 24: Industrial & Safety
Industrial & Safety 1. Increase sales to existing customers • Continuing to build stronger 2. Improve metropolitan sale performance business foundations Strategies 3. Target higher growth sectors 4. Improve competitiveness • Enhanced focus on growth • Revenue growth of 7.0% 1H09 • EBIT growth of 11.
Slide 25: Energy
Energy • WA LNG project 1. Improve – existing businesses operational Strategies 2. Expand – deliver projects 3. Evaluate - new opportunities • Impacted by Varanus Island gas disruption • Growth in industrial gas sales 1H09 • Gas disruption reduced earnings by Trading ~$15m but maintained LPG supply
Slide 26: Capital Management
Capital Management
Slide 27: Equity Raising
Equity Raising • 3 for 7 entitlement offer plus $900m placement • Institutional Entitlement raised $2.0bn • Retail Entitlement raised $1.7bn • Strengthens balance sheet and provides increased flexibility • Extension and refinancing of maturing debt facilities 27
Slide 28: Maturity Profile Analysis
Maturity Profile Analysis $bn 3 2 1 0 FY09 FY10 FY11 FY12 FY13 Facility B - Syndicated Facilities Bilateral Facilities Working Capital and Bill Facilities Bonds Note: $4.6bn equity raised however graph above reflects current repayments of $2.9bn. Remaining proceeds to be used to make further repayme
Slide 29: Capital Management
Capital Management • Net Debt to Equity of 49% at 31 December 2008 (20% on a pro-forma basis*) • Cash Interest Cover Ratio of 5.2 times (rolling 12 month basis) • Well within all debt covenants (pre equity raising) • S&P rating BBB+ (stable), Moody’s Baa1 (stable) • Weighted average cost of debt inc
Slide 30: Cashflow
Cashflow (Half Year to 31 Dec) • Focus on working capital management • Strong free cash flows 2,000 200% 1,600 160% 1,200 120% 800 80% 400 40% 0 0% 2004 2005 2006 2007 2008 NPATDA Operating Cash Flow Free Cash Flow Cash Realisation Ratio *adjusted for Stanwell and significant non-cash asset writedow
Slide 31: Capital Expenditure
Capital Expenditure Half Year ended 31 December (A$m) 2008 2007 • Continued focus on prudent Home Improvement & Office Supplies 214 173 capital expenditure Coles 204 93 • Coles capital expenditure Target 51 - Kmart 41 - weighted towards 2H09 Resources 109 95 • Completion of Ammonia Insurance 6 6 Ind
Slide 32: Outlook
Outlook • Challenging global economic environment • Expect turnaround in Coles to gather pace over next 12 months • Lower export coal prices from April 2009 • Lower borrowing costs from reduced debt levels 32
Slide 33: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au 33
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