Wesfarmers Limited · ASX:WES
Wesfarmers — JP Morgan Australasian Investment Conference 2005
40 slides from Wesfarmers's conference presentation, October 2005
Slide 1: JP Morgan Australasian Investment Conference
JP Morgan Australasian Investment Conference Edinburgh, October 2005 Richard Goyder Managing Director David Robb Executive Director & Managing Director Wesfarmers Energy October 2005 1
Slide 2: Corporate Objective
Corporate Objective To provide a satisfactory return to shareholders October 2005 2
Slide 3: Performance Summary
Performance Summary Year Ended 30 June ($m) 2004 2005 % Operating Revenue* 7,706.6 8,190.4 6.3 Net Profit (before goodwill)* 654.7 708.7 8.2 Goodwill Amortisation* (85.5) (90.4) 5.7 Net Profit (after goodwill)* 569.2 618.3 8.6 Net Profit on Sale of Landmark 304.0 - nm Net Profit (after goodwill) 873
Slide 4: Capital Employed
Capital Employed June 2005 Hardware A$1,792m Energy A$851m Other Chemicals & A$585m Fertilisers A$494m Industrial & Insurance Safety A$430m Products A$801m October 2005 4
Slide 5: Share Price vs Earnings Per Share
Share Price vs Earnings Per Share (pre goodwill amortisation and abnormals) EPS Share (cents) Price(A$) 320 40 280 35 240 30 200 25 160 20 120 15 80 10 40 5 0 0 -40 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 -5 EPS Girrah EPS Landmark EPS Wesfarmers Share Price October 2005 5
Slide 6: Growth Philosophy: Logical Incrementalism
Growth Philosophy Logical Incrementalism October 2005 6
Slide 7: Corporate Strategies
Corporate Strategies 11. Improve performance of existing businesses 22. Expand existing businesses 33. Portfolio management 44. Ensure the company’s sustainability October 2005 7
Slide 8: Corporate Strategies
Corporate Strategies 11. Improve performance of existing businesses 22. Expand existing businesses 33. Portfolio management 44. Ensure the company’s sustainability October 2005 8
Slide 9: Integrated Shareholder-Focused Systems
Integrated Shareholder-Focused Systems Objective Project Setting Performance Evaluation Targets Integrated People Shareholder- Management Alignment Focused Accounts Systems Risk Cash Corporate Management Management Planning October 2005 9
Slide 10: Performance Targets 2005/06
Performance Targets 2005/06 Group Performance ROEA 22% Divisional EBITA/Capital 20% Performance (ROCA) Project IRR 10% after tax Evaluation October 2005 10
Slide 11: Divisional ROC & Capital Employed
Divisional ROC & Capital Employed (before goodwill amortisation) Year Ended 30 June 2005 2004 (A$m) Capital EBITA ROCA% ROCA% Employed Hardware 417.9 1,791.5 23.3 21.8 Energy 319.3 850.9 37.5 31.2 Insurance 138.8 430.2 32.3 25.4 Industrial and Safety 110.0 801.3 13.7 13.8 Chemicals and Fertilisers 8
Slide 12: Return on Shareholders' Funds
Return on Shareholders’ Funds (before goodwill amortisation) % 24 22.1 20 18.5 18.5 15.7 15.8 16 12 8 4 0 2001 2002 2003* 2004# 2005 Target * Excludes sale of Girrah # Excludes sale of Landmark October 2005 12
Slide 13: Corporate Strategies
Corporate Strategies 11. Improve performance of existing businesses 22. Expand existing businesses 33. Portfolio management 44. Ensure the company’s sustainability October 2005 13
Slide 14: Hardware
Hardware October 2005 14
Slide 15: Hardware - Store Network
Hardware - Store Network QUICK FACTS 2 134 warehouse stores 26 7 80 traditional stores 18 8 18 45,000 product lines 4 3 22,000 employees 41 25 CONTRIBUTION 9 TO GROUP EBITA WAREHOUSES 34 6 AND STORES No. Warehouses 134 28 37% 2 1 Traditional stores 80 WA Salvage stores 18 October 2005 15
Slide 16: Hardware Financial Performance
Hardware Financial Performance EBITA ROCA A$m % 500 30 25 400 20 300 15 200 10 100 5 0 0 2001 2002 2003 2004 2005 EBITA ROCA October 2005 16
Slide 17: Hardware Growth Strategies
Hardware Growth Strategies • Continued cash sales growth – tighter retail conditions – market broadening merchandising initiatives • Modest trade sales growth - difficult Australian market • Continued expansion of store network (10-14 new stores pa) • Accelerated store upgrades (25-30 planned for 20
Slide 18: Wesfarmers Energy
Wesfarmers Energy October 2005 18
Slide 19: Wesfarmers Energy Financial Performance
Wesfarmers Energy Financial Performance EBITA ROCA CONTRIBUTION TO GROUP EBITA A$m % 400 40 35 300 30 28% 25 200 20 QUICK FACTS 15 100 10 1,431 employees 5 3 coal mines 20 coal customers 0 0 2001 2002 2003* 2004 2005 750 gas locations EBITA ROCA 264,000 gas customers 14 remote power stations * Exclu
Slide 20: Wesfarmers Energy Growth Strategies
Wesfarmers Energy Growth Strategies • Coal - Curragh North completion - Premier sales development - Bengalla production increase • Gas and Power - New gas products and markets - Remote power opportunities October 2005 20
Slide 21: Insurance
Insurance October 2005 21
Slide 22: Insurance Financial Performance
Insurance Financial Performance EBITA ROCA CONTRIBUTION TO GROUP EBITA A$m % 150 70 60 120 12% 50 90 40 QUICK FACTS 60 30 20 1,463 employees 30 10 105 branches 0 0 2001 2002 2003 2004 2005 EBITA ROCA October 2005 22
Slide 23: Insurance Growth Strategies
Insurance Growth Strategies • Implement optimised reinsurance programme for 05/06 • Bolt-on acquisition opportunities • Target new segments for profitable growth October 2005 23
Slide 24: Wesfarmers Industrial and Safety
Wesfarmers Industrial and Safety October 2005 24
Slide 25: Industrial and Safety Financial Performance
Wesfarmers Industrial and Safety Financial Performance EBITA ROCA CONTRIBUTION TO GROUP EBITA A$m % 150 16 10% 14 120 12 90 10 8 QUICK FACTS 60 6 4 100,000 customers 30 2 400,000 product lines 12,000 vendors 0 0 2002 2003 2004 2005 3,300 employees EBITA ROCA 255 locations October 2005 25
Slide 26: Industrial and Safety Growth Strategies
Wesfarmers Industrial and Safety Growth Strategies • Appointment of new CEO, Mr Terry Bowen (October 05) • Implementation of business improvement initiatives • Network expansion and consolidation • Benefits from continued spending in mining and infrastructure October 2005 26
Slide 27: Chemicals and Fertilisers
Chemicals and Fertilisers October 2005 27
Slide 28: Chemicals and Fertilisers Financial Performance
Chemicals and Fertilisers Financial Performance CONTRIBUTION EBITA ROCA TO GROUP EBITA A$m % 8% 100 20 18 80 16 14 60 12 10 QUICK FACTS 40 8 6 570 employees 20 4 360 chemical customers 2 2 major fertiliser 0 0 distributors servicing over 5,000 farmers 2001 2002 2003 2004 2005 EBITA ROCA 16 operation
Slide 29: Chemicals and Fertilisers Growth Strategies
Chemicals and Fertilisers Growth Strategies • Ammonium nitrate expansion – duplication of AN capacity at Kwinana, WA – expansion or duplication at QNP (50%) at Moura, QLD • Capacity expansion through debottlenecking • Liquid fertilisers – development of new markets • Development of export markets fo
Slide 30: Other Businesses
Other Businesses Australian Railroad Group (50% interest) Gresham Private Equity Wespine (50% interest) October 2005 30
Slide 31: Australian Railroad Group
Australian Railroad Group • Encouraging start to 2006 grain season • Improved performance from new contracts • Refurbishment of track and rolling stock to raise efficiency • Earnings growth offset by fuel and labour cost increases October 2005 31
Slide 32: Gresham Private Equity
Gresham Private Equity Fund Fund 1: 1 CURRENT INVESTMENT PORTFOLIO EROC mining / infrastructure • Net investment of A$40m contractor by Wesfarmers Norcros UK based building materials, coatings • Divestments expected Riviera ocean cruisers over the next several years Virgin health clubs in Europe Act
Slide 33: Corporate Strategies
Corporate Strategies 11. Improve performance of existing businesses 22. Expand existing businesses 33. Portfolio management 44. Ensure the company’s sustainability October 2005 33
Slide 34: Capital Expenditure & Depreciation
Capital Expenditure & Depreciation A$m A$2.0bn 900 800 700 600 500 400 300 200 100 0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06F Capital Expenditure Acquisitions Depreciation October 2005 34
Slide 35: Capital Expenditure Programme 2006 Budget
Capital Expenditure Programme 2006 Budget Total: A$909m Energy Other $407m $4m Insurance $32m Industrial & Safety $31m Hardware $301m Chemicals & Fertilisers $134m October 2005 35
Slide 36: Net Debt/Equity
Net Debt/Equity % 80 70 Target 60 50 40 78.1 72.6 30 55.8 43.8 45.5 20 28.2 10 0 2000 2001 2002 2003 2004 2005 October 2005 36
Slide 37: Corporate Strategies
Corporate Strategies 11. Improve performance of existing businesses 22. Expand existing businesses 33. Portfolio management 44. Ensure the company’s sustainability October 2005 37
Slide 38: Company Sustainability
Company Sustainability • Financial performance • Safe and rewarding workplaces • Good value products and services • Respect for customers and suppliers • Environmental responsibility • Ethical dealings • Community contribution October 2005 38
Slide 39: Key Success Factors
Key Success Factors 11. Financial Focus 22. Strict Disciplines 33. Building Growth-Enabling Competencies 44. Culture October 2005 39
Slide 40: For all the latest news visit www.wesfarmers.com.au
For all the latest news visit www.wesfarmers.com.au October 2005 40
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