Metcash Limited · ASX:MTS
Metcash — H1 FY2005 Earnings Presentation
38 slides from Metcash's earnings presentation, Nov 25, 2004
Slide 1: Financial Results
Financial Results 26 Weeks Ended October 2004
Slide 2: Agenda
Agenda Financial Highlights Operating Performance Update on: 9 Logistics 9 Our People 9 Collaboration
Slide 3: Financial Highlights
Financial Highlights $3.52b $91.8m $77.1m 2.19% $50.1m 5.5cps 9.7% From 2.3% 9.1% 2.04% 9.5% 10% Sales Growth Ebita P.B.T. P.B.T. % to P.A.T. Dividend Sales
Slide 4: Sales Growth
Sales Growth 3600.00 $3,520 2.23% 3500.00 $3,443 3400.00 3300.00 First Half FY 2004 First Half FY 2005
Slide 5: EBITA Margin
EBITA MARGIN 3.00% 2.60% 2.44% 2.50% 2.28% 2.04% 2.00% 1.70% 1.50% 1.35% 1.00% 0.50% 0.00% FY2000 FY2001 FY2002 FY2003 First Half First Half FY 2004 FY2005
Slide 6: Cost of doing business as a % of Gross Profit
Cost of doing business as a % of Gross Profit 100.00% 95.00% 90.00% 85.00% 82.40% 80.50% 80.00% 75.20% 75.00% 71.00% 70.00% 69.20% 70.00% 65.00% 60.00% FY2000 FY2001 FY2002 FY2003 First Half First Half FY2004 FY2005
Slide 7: PBT and Goodwill amortisation as a % of Sales
PBT and Goodwill amortisation as a % of Sales 3.00% 2.50% 2.50% 2.33% 2.17% 1.87% 2.00% 1.53% 1.50% 1.19% 1.00% 0.50% 0.00% FY2000 FY2001 FY2002 FY2003 First Half First Half FY2004 FY2005
Slide 8: Half Year Earnings Per Share before Goodwill (cents)
Half Year Earnings Per Share before Goodwill (cents) 12.00 9.55 10.00 8.83 7.77 8.00 5.91 6.00 4.00 2.16 2.00 0.00 2001 2002 2003 2004 2005
Slide 9: Half Year Dividends Per Share
Half Year Dividends Per Share 6 5.5 5 5 4 4 Cents 3 2 2 1 0 0 0 2000 2001 2002 2003 2004 2005
Slide 10: First Half Operating Cashflow
First Half Operating Cashflow 100 $88.00 $87.00 90 80 $30m Retailer Support $65.00 $31m Cutoff Variation 70 60 $16m Payment Term Variation 50 40 30 $24.10 20 $13.50 10 0 2001 2002 2003 2004 2005
Slide 11: Targets
Target First Half Targets FY2005 Sales Growth 3.0 % 2.23% PBT and Goodwill amortisation as a percentage of sales 2.5 % 2.50 % Int-bearing Debt: Equity 50 % 21.1 % Return on Capital employed 35 % 38.5 % Return on Equity 25 % 21.0 % (ROCE = EBITA/Average capital employed) (ROE = PAT / Average sharehol
Slide 12: Operating Performance – IGA Distribution
Operating Performance – IGA Distribution 26 Weeks ended October 2004 Sales up 4.25% on the first half of last year (excluding Franklins). EBIT $69.3 million up 9.0% on last year. Successful market positioning of Supa IGA and IGA as a two tier chain of independents. Strong marketing, branding
Slide 13: Operating Performance – IGA Distribution
Operating Performance – IGA Distribution 26 Weeks ended October 2004 21 new stores, 17 major store refurbishments and 4 extensions completed this half. Strong investment by retailers in their business. 52 new stores, 51 major store refurbishments and 23 extensions on our books as work in progres
Slide 14: Operating Performance – IGA Distribution
Operating Performance – IGA Distribution 26 Weeks ended October 2004 Continued growth in corporate brands – first half growth of 10.2% and new ranges launched. IGA Way of Life – Identify nutritional requirements and life choices. IGA Deli Shoppe – Deli prepacked self service range. IGA Kool
Slide 15: AUR/Foodworks: The case for Merger
AUR/Foodworks The case for Merger Fundamental change to the way they deliver their offer. Merger opportunity – deliver value: ¾ Financial (costs down, revenue growth) ¾ Scale – buying power ¾ Market influence – brand investment Re-engineered Metcash Trading contract inclusive of strategic init
Slide 16: AUR/Foodworks Merger
AUR/Foodworks Merger Merger currently being operationalised: ¾ Re-engineered organisation to deliver greater retailer value. ¾ Operational efficiency. ¾ Re-invigorate brand – FoodWorks. Some metrics: ¾ 693 stores ¾ Queensland, NSW, Victoria, Tasmania, WA (under brand licence.)
Slide 17: Brand Re-Invigoration
Brand Re-Invigoration From To Single brand positioning, modernise FoodWorks brand Store size (channel) differences implemented operationally (price, range, handbill)
Slide 18: External Treatments
External Treatments Use existing sign panel, Background match to building colour*FoodWorks" to illuminate
Slide 19: Internal Treatments
Internal Treatments Dense end unitin Fresh Green Vinyl signage graphics treatment Ticket strips in fresh green mE AE Verret | ee can, ¥ | Vauesececeierses & an ry eed
Slide 20: Department Branding
Department Branding ” FOODWORKS Little things, big difference Little things, big difference {Little things, ig d * department branding FOODWORKS FOODWORKS FOODWORKS epartment branding
Slide 21: Store Network Performance
Store Network Performance • Sales - October 2004 YTD +5% like-for-like • Refurbishments – 40 currently Completion by • *New sites = 10 4 - Queensland February 2005 2 - NSW 4 - Victoria * “Knock down “rebuild” or new to industry
Slide 22: Operating Performance – Campbells Cash & Carry
Operating Performance-Campbells Cash & Carry 26 Weeks ended October 2004 38 Cash and Carry branches, 6 Convenience Store Distribution, 5 Specialist Confectionery Wholesale outlets. Sales flat with First Half last year due to Tobacco manufacturers going “direct” to the route trade and the impact
Slide 23: Operating Performance – Campbells Cash & Carry
Operating Performance-Campbells Cash & Carry 26 Weeks ended October 2004 Confectionery market: CCC now hold an estimated 22% of the confectionery route market, a 4.5% share gain. Continued drive to build a national network of specialist Confectionery Wholesalers: Alice Springs, Gladstone and Bun
Slide 24: Operating Performance – ALM
Operating Performance – ALM 26 Weeks ended October 2004 Sales up 1.80 % on last year despite the loss of ALH & LMG. EBIT $13.4 million, down 4.3% on last year. IBA created to consolidate all the ALM managed liquor store banners. IBA also now operates LiquorWise, our internally managed hotel
Slide 25: Operating Performance – ALM
Operating Performance – ALM 26 Weeks ended October 2004 Cellarbrations is the high compliance, consumer driven “retailer brand”. Cheeers is a disciplined marketing group but with narrower promotions. Liquor Force is a “buying group” with some members running promotions. The hotel group is sp
Slide 26: Operating Performance – ALM
Operating Performance – ALM 26 Weeks ended October 2004 Cellarbrations – 174 stores. Cheeers – 103 stores. LiquorWise – 148 hotels. Liquor Force – over 800 outlets.
Slide 27: Operating Performance – ALM
Operating Performance – ALM 26 Weeks ended October 2004 Specialist on-premise division showed growth of 8.4%. New warehouses have been opened in: South Australia – Kidman Park – 8,200m2 New Zealand – Christchurch – 5,700m2 Queensland – Crestmead – 24,000m2 Exe Warehouse Management operational
Slide 28: Our People
Our People Succession plans in place and working for: 9 Top 70 Management Group 9 Distribution Centre and Warehouse Management. Highly popular and successful launch of pro-fit programme: 9 Employee health and well being 9 Work/life balance 9 Service Awards (Live your Life Vouchers) A range of
Slide 29: Our People
Our People Occupational health and safety: 9 Renewed focus on training, hazard identification, pro-active committees and accurate reporting 9 Determining feasibility of self-insurance 9 New strategies and initiatives for: - Case management - Return to work programmes - Rehabilitation - Frontline i
Slide 30: Supply Chain Strategy
Supply Chain Strategy Review 4 years ago Metcash needed to focus on: Improve the ability to deliver the “promise” to our customers Provide a supply chain platform to grow our business Develop core competencies to give us sustainable competitive advantage The Result Metcash reviewed World’s best p
Slide 31: Supply Chain Strategy
Supply Chain Strategy Focus Enabler Outcome Infrastructure Hub & Spoke Lower Cost to Investment Voice Pick Serve Put To Light Inventory C.P.F.R Less Inventory (Collaborative Planning Management Forecasting & in Total Pipeline Replenishment) T.M.S Lower Inbound Primary Freight (Transport Management T
Slide 32: Supply Chain Infrastructure Investment
Supply Chain Infrastructure Investment DC Network Strategy – Hub & Spoke Centralised Stock Regional Independent Suppliers DC Melbourne Composite DC Retailers Key Message Slow-moving stock centres in Melbourne completed 2001 Cross-docking with fast moving lines into regional composite DCs
Slide 33: Supply Chain Infrastructure Investment
Supply Chain Infrastructure Investment Infrastructure Focus – Composite DC, Crestmead QLD Total Investment Total Benefits $ 36.8 million ALM productivity lift of 16% in the first weeks ALM at least 15% below market rental value Perishables 30% below market rental value 68% increase in foot
Slide 34: Supply Chain Infrastructure Investment
Supply Chain Infrastructure Investment Operational Focus - Voice Directed Picking Victoria Number of Errors (Cases / 10,000) 20 18 16 14 12 10 8 6 Voice Pick Implementation 4 2 - Week Ending Total Investment Total Benefits $5.1 million Error reduction from 15 to 3 per 10,000 Operating in 7 maj
Slide 35: Supply Chain Infrastructure Investment
Supply Chain Infrastructure Investment Operational Focus – Put To Light 101% Service Levels for NSW CSD 99% 97% 95% 93% 91% 89% 87% 20-Mar-03 24-May-02 5-Nov-01 28-Jun-03 28-Jul-01 13-Feb-02 6-Oct-03 14-Jan-04 10-Dec-02 1-Sep-02 Time Total Investment Total Benefits $1.4 million 30% reduction in
Slide 36: Supply Chain Inventory Management
Supply Chain Inventory Management C.P.F.R Program Steps Joint inventory planning and sales focus Streamline the exchange of data / information Enable efficient accurate data access Collaborate forecasting for optimal service levels Joint management of inventory for efficient replenishment
Slide 37: Supply Chain Primary Freight
Supply Chain Primary Freight Transport Management System Key Message Many suppliers working to deliver full truck loads to Metcash. Will only look to review primary transport if not optimised by load to Metcash. Metcash will focus on FGP for interstate linehaul routes.
Slide 38: TRADING LIMITED AUSTRALASIA
TRADING LIMITED AUSTRALASIA