Woolworths Group Ltd · ASX:WOW
Woolworths — H1 F21 Earnings Presentation
58 slides from Woolworths's earnings presentation, Feb 24, 2021
Slide 1: Half-Year Results Presentation
24 February 2021 ASX Market Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Half-Year Results Presentation Attached for release to the market is the Half-Year Results Presentation for the period ended 3 January 2021. Authorised by: Michelle Hall, Company Secreta
Slide 2: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 1 C O M PA N Y R E S U LT S H A L F -Y E A R 2 0 2 1
Slide 3: Woolworths Group Purpose
Woolworths Group Purpose What we mean by ‘we’ What we mean by What we mean by Our team and our partners ‘create’ ‘experiences’ We constantly innovate to make The moments we create in store and a positive impact on the lives of online for customers, communities and our customers and team shareholders
Slide 4: Contents
Contents H1 F21 Group Summary & Progress 4 Brad Banducci Group Financial Results & 10 Capital Management Stephen Harrison Business Performance Update 21 Outlook 50 Brad Banducci
Slide 5: H1 F21 summary
H1 F21 summary COMPANY RESULTS HALF-YEAR 2021 4 Strong Group customer, brand and reputation metrics Increased in-home consumption in H1 delivering double-digit Group sales and EBIT growth Scaling up of Digital and eCom capacity and services delivering strong sales growth Material profit improvement
Slide 6: Woolworths Group F21 priorities
Woolworths Group F21 priorities COMPANY RESULTS HALF-YEAR 2021 5 Better Together for a Better Tomorrow for our customers, teams and communities Maintain trust with our customers, team and Accelerate Digital, eCom and convenience communities for connected customers Deliver store and eStore propositio
Slide 7: Progress against key priorities (i)
Progress against key priorities (i) COMPANY RESULTS HALF-YEAR 2021 6 • December VOC NPS improved across all businesses supported by customer Care metrics • Woolworths named Australia’s most valuable brand (Brand Finance) and most trusted brand (Roy Morgan) 1 Better Together for a Better • Committed
Slide 8: Progress against key priorities (ii)
Progress against key priorities (ii) COMPANY RESULTS HALF-YEAR 2021 7 • Strong trading momentum in H1 in Drinks and progress in online and digital • Hotels more resilient than expected despite operating restrictions • Progress on operating model to build more effective shared capabilities across End
Slide 9: Woolworths Group Food and Everyday Needs Ecosystem
Woolworths Group Food and Everyday Needs Ecosystem COMPANY RESULTS HALF-YEAR 2021 8 1 Providing additional services 2 Leveraging our Food and points of presence for business for B2B customers so they can shop customers and foodservice when, where & how they want adjacencies both, domestic and intern
Slide 10: Working together to create a better tomorrow
Working together to create a better tomorrow COMPANY RESULTS HALF-YEAR 2021 9 Our guiding principles underpin our Group Sustainability Plan 2025 01 02 03 04 05 We act like a We care for, We have a We apply We embrace leader and speak and unlock the positive impact circular thinking the power of up o
Slide 11: Contents
Contents H1 F21 Group Summary & Progress 4 Brad Banducci Group Financial Results & 10 Capital Management Stephen Harrison Group financial results Key balance sheet metrics Capital management framework Cash flow summary Capital expenditure Capital management Business Performance Update 21 Outlook 50
Slide 12: Financial Results and Capital Management
Financial Results and Capital Management
Slide 13: H1 F21 results summary
H1 F21 results summary COMPANY RESULTS HALF-YEAR 2021 12 H21 H20 $ MILLION (27 WEEKS) (27 WEEKS) CHANGE Before significant items Sales 35,845 32,410 10.6% EBIT 2,092 1,893 10.5% NPAT attributable to equity holders of the parent entity 1,135 979 15.9% Basic EPS – cents 90.5 77.9 16.1% After significa
Slide 14: Strong improvement in Group EBIT despite Hotels decline
Strong improvement in Group EBIT despite Hotels decline COMPANY RESULTS HALF-YEAR 2021 13 H21 H20 $ MILLION (27 WEEKS) (27 WEEKS) CHANGE Before significant items Australian Food 1,329 1,177 13.0% New Zealand Food 181 175 3.0% New Zealand Food (NZD) 194 186 4.4% BIG W 133 50 165.7% Endeavour Drinks 4
Slide 15: Group COVID costs continue to moderate
Group COVID costs continue to moderate COMPANY RESULTS HALF-YEAR 2021 14 Q2’21 Q1’21 Q4’20 Q3’20 $ MILLION H1 F21 (13 WEEKS) (14 WEEKS) H2 F20 (12 WEEKS) (13 WEEKS) Cleaning and PPE 91 32 59 105 74 31 Contractors and security 13 5 8 54 39 15 Team costs1 60 21 39 117 86 31 Supply chain 61 20 41 49 29
Slide 16: Reduction in Group inventory days; ROFE up 74 bps
Reduction in Group inventory days due to strong sales growth; COMPANY RESULTS 15 HALF-YEAR 2021 ROFE up 74 bps on F20, down 25 bps on H1 F20 due to Hotels Average inventory days Normalised ROFE Days Percentage Continuing operations Continuing operations Group 41.3 14.6 40.3 40.5 14.4 39.3 38.9 38.3
Slide 17: Capital management framework
Capital management framework COMPANY RESULTS HALF-YEAR 2021 16 Strong market Growth One of Australia’s Strong defensive Strong cash flow position in opportunities in leading & most characteristics from AUS and NZ Investment Food, Drinks & eCom & trusted brands through the cycle businesses propositio
Slide 18: Strong free cash flow and cash realisation
Strong free cash flow and cash realisation COMPANY RESULTS HALF-YEAR 2021 17 H21 H20 $ MILLION (27 WEEKS) (27 WEEKS) CHANGE EBITDA 3,415 3,141 8.7% Significant items - (131) n.m. Group EBITDA 3,415 3,010 13.4% Working capital and non-cash movements 358 (59) n.m. Operating activities before interest
Slide 19: Operating capex increase due to Renewals, IT and Digital spend
Operating capex increase due to Renewals, IT and COMPANY RESULTS 18 Digital spend HALF-YEAR 2021 Operating capex Sustaining capex $ MILLION H21 H20 $ MILLION H21 H20 Sustaining capex 568 428 SIB 129 111 Growth capex 267 255 Renewals 191 156 Supply chain 58 42 Operating capex 835 683 IT 115 67 Proper
Slide 20: Primary Connect (Supply Chain) update
Primary Connect (Supply Chain) update COMPANY RESULTS HALF-YEAR 2021 19 Melbourne South RDC Melbourne Fresh DC Adelaide RDC (Ambient) (Ambient, Liquor, TC) • Opened ahead of schedule and • Expansion completed in • Carton throughput increasing operating well June’20 • Plans to transition volumes • Tr
Slide 21: Dividends and funding
Dividends and funding COMPANY RESULTS HALF-YEAR 2021 20 53 cps interim dividend up 15.2% Sources of funding and liquidity remain strong Dividends (cents per share) Debt maturity profile ($m) 102 10 8 2,000 100 94 1,500 80 57 48 60 1,000 8 40 500 20 45 46 53 0 -2 - F19 1 F20 F21 2021 2022 2023 2024 2
Slide 22: Contents
Contents H1 F21 Group Summary & Progress 4 Brad Banducci Group Financial Results & 10 Capital Management Stephen Harrison Business Performance Update 21 Outlook 50 Brad Banducci
Slide 23: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 22
Slide 24: Australian Food
COMPANY RESULTS Australian Food HALF-YEAR 2021 23 H21 H20 CHANGE Sales ($m) 23,449 21,200 10.6% EBITDA ($m) 2,128 1,929 10.3% EBIT ($m) 1,329 1,177 13.0% Gross margin (%) 29.2 29.1 11 bps CODB (%) 23.6 23.6 (1) bps EBIT to sales (%) 5.7 5.6 12 bps Sales per square metre ($) 18,538 17,236 7.6% ROFE b
Slide 25: Customer metrics strong reflecting well executed Christmas plan
Customer metrics strong reflecting well executed COMPANY RESULTS 24 Christmas plan and COVIDSafe focus HALF-YEAR 2021 VOC NPS - Store & Online1 Store-controllable VOC2 % promoters - % detractors % customers satisfied, 6 & 7 out of 7 +1 +1 53 52 51 50 80 82 80 81 44 n.m 03 Q2'20 Q3'20 Q4'20 Q1'21 Q2'
Slide 26: Strong sales growth in H1 with bigger baskets
Strong sales growth in H1 with COVID driving COMPANY RESULTS 25 less frequent shops and bigger baskets HALF-YEAR 2021 Total sales (% year on year) Comp transactions (% year on year) 0.7 0.5 12.9 11.3 9.3 8.3 -9.0 -9.3 -11.0 Q2'20 Q3'20 Q4'20 1 Q1'21 Q2'21 4.9 Comp items per basket (% year on year) 1
Slide 27: Living our core value of 'We Care Deeply'
Living our core value of ‘We Care Deeply’ COMPANY RESULTS HALF-YEAR 2021 26 COVID response OzHarvest WIRES Woolworths’ 6th annual OzHarvest A year after the devastating bushfires Christmas Appeal raised a record across Australia, Woolworths $3.4 million to fund 6.7 million meals for continues to sup
Slide 28: Australian Food F21 strategy
Australian Food F21 strategy COMPANY RESULTS HALF-YEAR 2021 27 We bring a little good to everyone, everyday Better customer and team experience for a better tomorrow Accelerate Digital and eCom for our connected customers Deliver core propositions to meet changing customer needs Personalise Value Sa
Slide 29: Progress against F21 priorities
Progress against F21 priorities COMPANY RESULTS HALF-YEAR 2021 28 Better customer and team experience for a better tomorrow SHARING THE SPIRIT OF REWARDS ENGAGEMENT ACCELERATED ECOM 627 CHRISTMAS 24stores Days of Good Acts in 12.8 m 1.5m 91.8% recognising team, and Total Everyday Members H1 eCommerc
Slide 30: Format and network highlights
Format and network highlights COMPANY RESULTS HALF-YEAR 2021 29 Expanded Pick up with 377 new 13 Direct to boot enabled stores and trial of first temperature controlled self-service locker Opened 13 (net) new stores and Launched first eStore at Carrum Downs completed 35 Renewals in Woolworths (VIC)
Slide 31: WooliesX highlights
WooliesX highlights COMPANY RESULTS HALF-YEAR 2021 30 Digital & Media eCom & Fulfilment Loyalty & FinTech Front door to Woolies Easy shopping when & where you want it Seamless experiences to enjoy a little more, every day 12.4m Expanded convenience offering • 209 Delivery Now stores 12.8m +69.8% vs
Slide 32: Australian Food H2 F21 focus
Australian Food H2 F21 focus COMPANY RESULTS HALF-YEAR 2021 31 Accelerate Digital and eCom Tailor our Stores Fresh, Health and Sustainability Evolve Simpler
Slide 33: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 32
Slide 34: New Zealand Food
New Zealand Food COMPANY RESULTS HALF-YEAR 2021 33 NZD H21 H20 CHANGE Sales ($m) 3,717 3,564 4.3% EBITDA ($m) 333 316 5.3% EBIT ($m) 194 186 4.4% Gross margin (%) 25.0 24.7 31 bps CODB (%) 19.8 19.5 31 bps EBIT to sales (%) 5.2 5.2 - Sales per square metre ($) 17,863 16,704 6.9% ROFE (%) 8.9 8.1 79
Slide 35: New Zealand Food highlights
New Zealand Food highlights COMPANY RESULTS HALF-YEAR 2021 34 H1 F21 highlights Customer 1st Innovative and Great Prices Strong Team 1st Convenient and Good Acts Foundations VOC NPS: 50 New Palmerston North Regional (+3 vs Q2’20) Store-controllable VOC: 83% 47.7% H1 eCom sales growth vs last year >
Slide 36: New Zealand Food F21 priorities
New Zealand Food F21 priorities COMPANY RESULTS HALF-YEAR 2021 35 Customer 1st Team 1st Innovate to create a great brand to work Innovative, Convenient and Helpful Ways to Shop for and shop Differentiate our core customer proposition Prices I Trust, Good For Me - Good for My Rewards I Value, with a
Slide 37: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 36
Slide 38: BIG W
BIG W COMPANY RESULTS HALF-YEAR 2021 37 H21 H20 CHANGE Sales ($m) 2,581 2,149 20.1% EBITDA ($m) 224 138 61.7% EBIT ($m) 133 50 165.7% Gross margin (%) 33.7 32.6 118 bps CODB (%) 28.6 30.2 (165) bps EBIT to sales (%) 5.1 2.3 282 bps Sales per square metre ($) 4,430 3,609 22.7% ROFE before significant
Slide 39: BIG W highlights
BIG W highlights COMPANY RESULTS HALF-YEAR 2021 38 Good progress against key priorities during H1 F21 Our H2 F21 priorities Demonstrated real care in our communities with 2.4 million Continue to simplify our business and ‘free books for kids’ distributed, 1,000 filled backpacks donated 1 establish o
Slide 40: BIG W F21 priorities
BIG W F21 priorities COMPANY RESULTS HALF-YEAR 2021 39
Slide 41: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 40
Slide 42: Endeavour Drinks
Endeavour Drinks COMPANY RESULTS HALF-YEAR 2021 41 H21 H20 CHANGE Sales ($m) 5,683 4,775 19.0% EBITDA ($m) 564 465 21.6% EBIT ($m) 419 338 24.1% Gross margin (%) 24.0 23.2 76 bps CODB (%) 16.6 16.2 46 bps EBIT to sales (%) 7.4 7.1 30 bps Sales per square metre ($) 21,251 18,487 14.9% ROFE (%) 18.0 1
Slide 43: Dan Murphy's highlights
Dan Murphy’s highlights COMPANY RESULTS HALF-YEAR 2021 42 H1 F21 highlights 5 Continued strong customer Five new stores Strong innovation in Record eCom sales My Dan's growing 26% vs scores with more opened, including Pinnacle through products supported by a positive Q2’20 reaching 5.1 million custo
Slide 44: BWS highlights
BWS highlights COMPANY RESULTS HALF-YEAR 2021 43 H1 F21 highlights 15 Achieved record brand Grew store network Supported local suppliers Strong eCom sales and Team safety focus with NPS with VOC with 15 net new stores and expanded our range, high number of app 15% reduction in injuries continuing st
Slide 45: Endeavour Drinks F21 priorities
Endeavour Drinks F21 priorities COMPANY RESULTS HALF-YEAR 2021 44 Customer 1st Brand, Team and Culture Innovate our customer and team Deliver increasingly effortless, personal experience and inspiring experiences Differentiate our core Regain trend Offer trusted value Deliver consistent, customer of
Slide 46: Company Results Half-Year 2021
COMPANY RESULTS HALF-YEAR 2021 45
Slide 47: Hotels
Hotels COMPANY RESULTS HALF-YEAR 2021 46 H21 H20 CHANGE Sales ($m) 667 919 (27.5)% EBITDA ($m) 244 342 (28.5)% EBIT ($m) 122 224 (45.4)% Gross margin (%) 84.8 83.7 112 bps CODB (%) 66.4 59.2 717 bps EBIT to sales (%) 18.4 24.4 (606) bps ROFE (%) 1.7 9.0 (731) bps • Continued impact from COVID operat
Slide 48: Operations have recommenced in all states and territories
Operations have recommenced in all states and territories, however, some restrictions remain in place* COMPANY RESULTS HALF-YEAR 2021 47 4 Hotels F&B: OPEN 128 Hotels EGMs: 100% No patron cap F&B: OPEN 1.5m social EGMs: 100% distancing 28 Hotels F&B: OPEN No patron cap 1 person /2 sqm No patron cap
Slide 49: Well progressed for the Endeavour Group's transformation
Well progressed for the Endeavour Group’s transformation COMPANY RESULTS HALF-YEAR 2021 48 Stage 1 Stage 2 Stage 3 Restructure ALH Merger Separation • Internal reorganisation of • Endeavour to acquire BMG’s • Separation of Endeavour Woolworths Group to create a interest in ALH in exchange for Group
Slide 50: Endeavour Group demerger update
Endeavour Group demerger update COMPANY RESULTS HALF-YEAR 2021 49 Intention to complete the separation of Endeavour Group by June 2021 via a demerger or value- accretive alternative. A dedicated internal team and advisor group continues to progress transaction execution and operational separation Th
Slide 51: Contents
Contents H1 F21 Group Summary & Progress 4 Brad Banducci Group Financial Results & 10 Capital Management Stephen Harrison Business Performance Update 21 Outlook 50 Brad Banducci
Slide 52: Current trading and outlook
Current trading and outlook COMPANY RESULTS HALF-YEAR 2021 51 Current trading – first seven weeks of H2 F21 Outlook • Group sales for the first seven weeks of H2 F21 • Sales for all Group businesses (except Hotels) are remained strong; however, growth rates have expected to decline in March to June
Slide 53: H2 F21 sales growth expected to be impacted by cycling COVID uplift
H2 F21 sales growth expected to be impacted by COMPANY RESULTS 52 cycling material COVID-driven sales uplift in H2 F20 HALF-YEAR 2021 Australian Food New Zealand Food H2 F20 sales growth H2 F20 sales growth (NZD) Q3’20: 11.3% Q4’20: 9.3% Q3’20: 13.7% Q4’20: 13.9% 40 40 20 20 0 0 February March April
Slide 54: Thank you
COMPANY RESULTS HALF-YEAR 2021 53 Thank you
Slide 55: Glossary
Glossary COMPANY RESULTS HALF-YEAR 2021 54 ACCC Australian Competition and Consumer Commission Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Measure of sales excluding stores that have been opened or closed in the last 1
Slide 56: Glossary (cont.)
Glossary (cont.) COMPANY RESULTS HALF-YEAR 2021 55 On-demand/express delivery An express or scheduled delivery service providing online orders at the customer's convenience Pick up A service which enables collection of online shopping orders in store or at selected locations RDC Regional Distributio
Slide 57: Glossary (cont.)
Glossary (cont.) COMPANY RESULTS HALF-YEAR 2021 56 Other non-IFRS measures used in describing the business performance include: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • Cash flow from operating activities before interest and tax • Significant items • Fixed assets and
Slide 58: Disclaimer
COMPANY RESULTS Disclaimer HALF-YEAR 2021 57 This presentation contains summary information about Woolworths Group Limited (Woolworths Group) and its activities current as at the date of this presentation. It is sourced from and should be read in conjunction with Woolworths’ other periodic and conti