2002 ANNUAL
GENERAL MEETING
2002 ANNUAL
GENERAL MEETING
Annual General Meeting
WOOLWORTHS LIMITED
ROGER CORBETTChief Executive Officer
22 November 2002
WOOLWORTHS LIMITED
DELIVERING DELIVERING VALUE TO:VALUE TO:SHAREHOLDERS SHAREHOLDERS AND AND CUSTOMERSCUSTOMERS
1
WOOLWORTHS LIMITED
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
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
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
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- $½ billion 53rd week
#
5
FIRST QUARTER SALES RESULTS
*
($ 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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
2002 ANNUAL
GENERAL MEETING
2002 ANNUAL
GENERAL MEETING
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