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2002 A NNUAL G ENERAL M EETING

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.

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2002 A NNUAL G ENERAL M EETING

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  1. 2002 ANNUAL GENERAL MEETING 2002 ANNUAL GENERAL MEETING

  2. WOOLWORTHS LIMITED WOOLWORTHS LIMITED Annual General Meeting ROGER CORBETTChief Executive Officer 22 November 2002

  3. WOOLWORTHS LIMITED DELIVERING VALUE TO: SHAREHOLDERS AND CUSTOMERS 1

  4. WOOLWORTHS BUSINESS PROFILE • Woolworths employed over 145,000 people across Australia as at 30 June 2002, or 1 in 59 working Australians, 50,000 in regional and rural areas • During the year we welcomed 7,000 Franklins employees • (1) Excludes Wholesale Operations 2

  5. WOOLWORTHS VICTORIAN BUSINESS Woolworths has a $1.5 billion investment in Victoria 3

  6. 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% RESULTS HIGHLIGHTS Y/E 30/6/02 4

  7. SALES GROWTH $3½ billion sales growth driven by- $2 billion organic & bolt ons- $1 billion ex-Franklins stores- $½ billion 53rd week +14.9%* +10.1% +8.3% * +9.5% +10.2% # # # * 52 weeks comparable # Adjusted to exclude WST 5

  8. FIRST QUARTER SALES RESULTS * 6

  9. CODB / SALES Down 38pts in FYO2 Down 211pts in 3yrs Cumulative Reductions $1,042 mil Costs = The Key Enabler # # # 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 # Adjusted to exclude WST 7

  10. GROSS PROFIT MARGIN 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 m LOWERING THE COST OF LIVING INCREASE 83% OF REDUCTION TO CUSTOMERS DOWN 179PTS IN 3YRS DOWN 36PTS IN FYO2 Cumulative Reductions $864 mil # # # # Adjusted to exclude WST 8

  11. EBIT MARGIN SUMMARY # # # 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) # Adjusted to exclude WST 9

  12. EBIT SUMMARY 10

  13. 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 FRANKLINS ANALYSIS 11

  14. 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 FRANKLINS ANALYSIS 12

  15. PROFIT AFTER TAX (AFTER WINS) 22.2% 17.6% 16.6% 3.9% 16.5% * * 53 Weeks 13

  16. EARNINGS PER SHARE 25.10% 24.10% 18.75% 2.68% 14.10% 14

  17. DIVIDENDS PER SHARE 22.2% 17.4% 27.8% 5.9% 6.3% 15

  18. DAYS STOCK ON HAND INVENTORY DOWN 3.3 DAYS WITH IN-STOCK POSITION RECORD HIGH Tandy & Liberty Liquor 16

  19. RETURN ON FUNDS EMPLOYED Based on average of opening and closing funds employed 17

  20. RETURN ON EQUITY Based on average of opening and closing Shareholders funds 18

  21. “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 PROJECT REFRESH Restatement of Project Refresh after three years: 19

  22. PROJECT REFRESH Cumulative savings $5.1 bil over 8 years Level III - Development 24.5% Level II - Logistics 24.10% 18.75% 2.68% Level I - Reorganisation / line items 14.10% 20

  23. PROJECT REFRESH 8 year cum savings = $5.1 bil 3.11% of sales Savings in years 4 to 8 = $4.1 bil Level II Additional 1% of sales to 3.11% cumulative Increasingly logistics driven 3 year Cum savings = $1.0 bil 2.11% of sales Level I Mainly line items and reorganisation 21

  24. 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 GROWTH 22

  25. 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 SALES AND EARNINGS GUIDANCE 23

  26. 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 SALES AND EARNINGS GUIDANCE 24

  27. 2002 ANNUAL GENERAL MEETING 2002 ANNUAL GENERAL MEETING

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