2002 a nnual g eneral m eeting

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2002 ANNUAL GENERAL MEETING 2002 ANNUAL GENERAL MEETING

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2002 A NNUAL G ENERAL M EETING. 2002 A NNUAL G ENERAL M EETING. WOOLWORTHS LIMITED. W OOLWORTHS L IMITED. Annual General Meeting. ROGER CORBETT Chief Executive Officer. 22 November 2002. WOOLWORTHS LIMITED. DELIVERING VALUE TO:. SHAREHOLDERS AND CUSTOMERS. 1. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: 2002 A NNUAL  G ENERAL  M EETING

2002 ANNUAL

GENERAL MEETING

2002 ANNUAL

GENERAL MEETING

Page 2: 2002 A NNUAL  G ENERAL  M EETING

Annual General Meeting

WOOLWORTHS LIMITED

ROGER CORBETTChief Executive Officer

22 November 2002

WOOLWORTHS LIMITED

Page 3: 2002 A NNUAL  G ENERAL  M EETING

DELIVERING DELIVERING VALUE TO:VALUE TO:SHAREHOLDERS SHAREHOLDERS AND AND CUSTOMERSCUSTOMERS

1

WOOLWORTHS LIMITED

Page 4: 2002 A NNUAL  G ENERAL  M EETING

Sales Year to30 June 2002

$M’s

Store Numbers(current)

Food and Liquor 19,595.0 686 Supermarkets146 Liquor Stores

(including Dan Murphy)

Plus Petrol 1,119.3 269

Big W 2,280.5 104

Consumer Electronics 659.0 360

Continuing (1)Operations 23,653.8 1,565

•Woolworths employed over 145,000 people across Australia as at 30 June 2002, or 1 in59 working Australians, 50,000 in regional and rural areas

•During the year we welcomed 7,000 Franklins employees

(1) Excludes Wholesale Operations

2

WOOLWORTHS BUSINESS PROFILE

Page 5: 2002 A NNUAL  G ENERAL  M EETING

WOOLWORTHS VICTORIAN BUSINESS

Stores Warehouses Employees

Supermarkets 174 4 29,616

Dan Murphy 12 - 520

BWS/First Estate 10 - 82

Plus Petrol 85 - 790

Big W 16 - 3,980

ConsumerElectronics

74 - 821

Total 371 4 35,809

Woolworths has a $1.5 billion investment in Victoria

3

Page 6: 2002 A NNUAL  G ENERAL  M EETING

RESULTS HIGHLIGHTS Y/E 30/6/02

• Sales up 17.0% to $24.5 billion• Costs down 38 basis points to 21.84%• Earnings before Interest and Tax (EBIT) up 17.8%• Net Operating Profit after Tax and servicing Income

Notes up 22.2% to $523.2 million• Earnings per share up 25.1% to 50.24 cents• Dividends per share up 22.2% to 33 cents• Days inventory down 3.3 days to 37.3 days• Average Return on Funds Employed (ROFE) up to

38.1%• Average Return on Equity (ROE) up to 48.1%

4

Page 7: 2002 A NNUAL  G ENERAL  M EETING

24,473.0

20,915.1

18,988.8

17,527.3

16,001.1

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

1998 1999 2000 2001 2002

$ M

illio

nSALES GROWTH

+10.2%

+9.5%

+10.1%

+8.3%

* 52 weeks comparable# #

# Adjusted to exclude WST

*

+14.9%*

$3½ billion sales growth driven by- $2 billion organic & bolt ons- $1 billion ex-Franklins stores- $½ billion 53rd week

#

5

Page 8: 2002 A NNUAL  G ENERAL  M EETING

FIRST QUARTER SALES RESULTS

*

($ Millions)

FY2002 FY2003 Increase

Comparable Store Sales

Increase

Food and Liquor 4,751 5,387 13.4% 5.5%

Petrol 211 373 76.8% Supermarkets 4,962 5,760 16.1%

BIG W 521 587 12.7% 6.4%

Consumer Electronics 153 188 22.9% 12.3%

General Merchandise 674 775 15.0% Continuing Operations 5,636 6,535 16.0%

Wholesale Division 195 130 -33.3%

Total Quarter Sales 5,831 6,665 14.3%

6

Page 9: 2002 A NNUAL  G ENERAL  M EETING

CODB / SALES

21.8422.22

23.09

23.9523.59

19

20

21

22

23

24

25

1998 1999 2000 2001 2002

%

# Adjusted to exclude WST

###

Cost 0.86%x $19.0 b 1.73%x $20.9 b 2.11%x $24.5 b

` Reduction $163 m $362 m $517 m = $1042 m

Down 38pts in FYO2

Down 211pts in

3yrs

Cumulative Reductions $1,042 mil

7

Costs = The Key Enabler

Page 10: 2002 A NNUAL  G ENERAL  M EETING

GROSS PROFIT MARGIN

# # #

# Adjusted to exclude WST

Margin 0.67%x $19.0 b 1.43%x $20.9 b 1.79%x $24.5 b

Reduction $127 m $299 m $438 m = $864 m83% OF

REDUCTION TO CUSTOMERS

25.2425.60

26.36

27.0326.82

23

24

25

26

27

28

1998 1999 2000 2001 2002

%

8

DOWN 36PTS IN

FYO2

DOWN 179PTS IN

3YRS

Cumulative Reductions

$864 mil

LOWERING THE COST OF LIVING

INCREASE

Page 11: 2002 A NNUAL  G ENERAL  M EETING

3.23

3.08

3.27

3.38 3.40

2.6

2.8

3.0

3.2

3.4

3.6

1998 1999 2000 2001 2002

% M

arg

inEBIT MARGIN SUMMARY

# Adjusted to exclude WST

# # #

EBIT MARGIN UP 2 BASIS POINTS.FRANKLINS CONTRIBUTES 2% ON $1B SALES,

EQUATED TO 3.46% EX-FRANKLINS - UP 8 BASIS POINTSOR 3.49% OF SALES FOR CONTINUING BUSINESSES (EXCLUDING WHOLESALE)

9

Page 12: 2002 A NNUAL  G ENERAL  M EETING

EBIT SUMMARY

After AfterGoodwill Goodwill

$m

Food & Liquor 734.7 19.7%Petrol 12.7 176.1%Total Supermarkets 747.4 20.8%

BIG W 93.5 12.1%Consumer Electronics 28.0 -9.1%Total General Merchandise 121.5 6.4%

Total Trading Result 868.9 18.6%Property 34.2 3.3%Central overheads (77.8) 31.9%Continuing operations 825.3 16.7%Wholesale 7.4 48.0%Discontinued operations - -

Group EBIT 832.7 17.8%

FY02 Increase

10

Page 13: 2002 A NNUAL  G ENERAL  M EETING

FRANKLINS ANALYSIS• 72 ex Franklins stores acquired, current status:

– 13 trading as Food for Less

– 54 trading as Woolworths / Safeway Supermarkets

– 1 store to reopen as Woolworths Supermarket in F03 (now open)

– 1 store converted and reopened as Dan Murphy (Belconnen)

– 3 stores to be converted to Dan Murphy in F03 (Eltham, Vermont Sth and

Frankston) (2 now open)

• Smooth transition overall was very pleasing, however as always

several areas could have been handled better

• 4 existing Supermarkets were sold in accordance with ACCC

undertakings

• Capital conversion costs of $117 milion ($105 mil in F02) vs original

estimate $126 mil

11

Page 14: 2002 A NNUAL  G ENERAL  M EETING

FRANKLINS ANALYSIS

• Store sales results for F02 slightly above our acquisition

expectation at $1.05 bil ($1.01 bil excluding sales in respect of 4

stores sold in accordance with ACCC undertakings)

• Store costs higher than existing Woolworths / Safeway stores

but in line with acquisition expectation and will improve to

Woolworths norms in F03

• F02 EBIT of $20 mil was at the top end of our acquisition

expectation

12

Page 15: 2002 A NNUAL  G ENERAL  M EETING

523.2

428.0

364.0

312.3300.5

200

250

300

350

400

450

500

550

1998 1999 2000 2001 2002

$ M

illio

nPROFIT AFTER TAX (AFTER WINS)

* 53 Weeks

16.5%

17.6%

16.6%

3.9%

22.2%

*

13

Page 16: 2002 A NNUAL  G ENERAL  M EETING

26.54 27.25

32.36

40.16

50.24

15

20

25

30

35

40

45

50

1998 1999 2000 2001 2002

Cen

tsEARNINGS PER SHARE

14.10%2.68%

24.10%18.75%

25.10%

14

Page 17: 2002 A NNUAL  G ENERAL  M EETING

33

27

23

1817

12

15

18

21

24

27

30

33

36

1998 1999 2000 2001 2002

Cen

tsDIVIDENDS PER SHARE

5.9%6.3%

17.4%27.8%

22.2%

15

Page 18: 2002 A NNUAL  G ENERAL  M EETING

37.3

40.640.8

44.7

46.2

35

38

41

44

47

50

1998 1999 2000 2001 2002

Day

sDAYS STOCK ON HAND

Tandy &

Liberty Liquor

INVENTORY DOWN 3.3 DAYS WITH IN-STOCK POSITION RECORD HIGH

16

Page 19: 2002 A NNUAL  G ENERAL  M EETING

RETURN ON FUNDS EMPLOYED

38.07%

35.04%

29.08%

24.43%

26.83%

20%

24%

28%

32%

36%

40%

1998 1999 2000 2001 2002

%

Based on average of opening and closing funds employed

17

Page 20: 2002 A NNUAL  G ENERAL  M EETING

23.15 21.88

28.92

43.19

48.13

10

15

20

25

30

35

40

45

50

1998 1999 2000 2001 2002

%

RETURN ON EQUITY

Based on average of opening and closing Shareholders funds

18

Page 21: 2002 A NNUAL  G ENERAL  M EETING

PROJECT REFRESH

• “Refresh” savings over the next five years to be no less than 1% of annual sales ie 20+ bp’s per annum

• Refresh savings will be shared approximately 50/50 between customer and shareholder

Restatement of Project Refresh after three years:

19

Page 22: 2002 A NNUAL  G ENERAL  M EETING

99 00 01 02 03 04 05 06 07

PROJECT REFRESH

14.10%2.68%

24.10%18.75%

24.5%

Level I - Reorganisation / line items

Level II - Logistics

Level III - Development

Cumulative savings $5.1 bil over 8 years

20

Page 23: 2002 A NNUAL  G ENERAL  M EETING

807

925

1051

697595

517

368

163

0

300

600

900

1,200

00 01 02 03 04 05 06 07

PA

Sav

ing

s $

mPROJECT REFRESH

3 year Cum savings = $1.0 bil

Savings in years 4 to 8 = $4.1 bil

8 year cum savings = $5.1 bil

2.11% of sales

Additional 1% of sales to 3.11% cumulative

3.11% of sales

Level I

Mainly line items and reorganisation

Level II

Increasingly logistics driven

21

Page 24: 2002 A NNUAL  G ENERAL  M EETING

GROWTH

Considerable opportunities for continuing growth in both revenues and earnings

• Add 15 to 25 new Supermarkets per year for the foreseeable future

• Expand BIG W at a rate of 6 - 8 per year (10 for 2002/2003 year) growing the chain from its current level of104 to150

• Grow liquor from sales of $1.4bil to $2.5bil

• Grow petrol from 269 canopies currently open to 350 over 3 years

• Further potential to grow sales in existing core businesses:– Relatively low share of national fresh food market– Significant number of new stores yet to mature– Trend towards gradual deregulation of trading hours and product restrictions– New formats and ranges

• Strength of our balance sheet allows us to address larger acquisitions should they become available, these will be examined and pursued if they add to shareholder value

22

Page 25: 2002 A NNUAL  G ENERAL  M EETING

SALES AND EARNINGS GUIDANCE• As consistently stated previously, we anticipate sales will grow in the

high single digits and earnings (EBIT and EPS) will grow in the low double digits for the foreseeable future

• Sales and earnings guidance were reviewed at the end of the first quarter and left unchanged with the release of the first quarter sales

• It is not Woolworths normal practice to provide sales guidance, however sales guidance is given for this year only to help the market understand the impact of non comparable sales from ex Franklins stores, as well as the impact of moving from a 53 week year in FY02 to a 52 week year in FY03. Our normal practice of providing earnings guidance will of course continue

• Sales have continued to perform well and have grown in line with our expectations in the 6 weeks since the end of the first quarter

23

Page 26: 2002 A NNUAL  G ENERAL  M EETING

SALES AND EARNINGS GUIDANCE

• Subject to current trends continuing and a satisfactory Christmas trading period, we now expect normalised (52 week) sales growth for 2002 / 2003, for continuing operations, will be of the order of 10.5% to 11.0% (previous guidance anticipated a 10.0% increase)

• Our costs continue to reduce and in line with our objectives we anticipate that EBIT growth for the half year and full year will exceed sales growth, resulting in thickening EBIT margins

• We now anticipate EPS will grow in a range of 55.5 cps to 57.5 cps after goodwill (previously 55 cps to 57.5 cps) and 58 cps to 60 cps before goodwill (previously 57.5 cps to 60 cps). This improves our previous earnings guidance by 1% or 0.5 cent at the bottom of the range

• This guidance is given subject to a continuation of the current business and economic environment and a satisfactory Christmas trading period

24

Page 27: 2002 A NNUAL  G ENERAL  M EETING

2002 ANNUAL

GENERAL MEETING

2002 ANNUAL

GENERAL MEETING