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									      Preliminary Results
52 weeks ended 1 February 2009

         12 March 2009
                 2




Sir Ian Gibson
Chairman
Agenda
                                              3


• Introduction       –    Ian Gibson

• Results            –    Richard Pennycook

• Business highlights –   Marc Bolland

• Q&A
Overview 2008/09
                                                                4


• Continuing growth in sales and profits
• Underlying profit* up 13% to £636m
• Total dividend of 5.8p – up 21%
• Board changes
      – Roger Owen – retired January 2009
      – Philip Cox – appointed with effect from 1 April 2009

• Optimisation Plan going well


* Excluding property transactions and IAS 19 pension interest
                         5




Richard Pennycook
Group Finance Director
Financial summary
                                                             6


 £m                                 2008/09 2007/08
 Turnover                            14,528   12,969   12%
 Operating profit*                     669      580    15%
 Net finance costs                     -16        -
 Profit on property related
                                         2       32
 transactions                                          7%
 Profit before tax                     655      612


 Net debt                              642      543




* Excluding property transactions
Underlying earnings
                                                        7


£m                              2008/09 2007/08
PBT reported                       655     612
Underlying adjustments
• Profit on property related
                                    -2     -32
  transactions
• Net pension income (IAS 19)      -17     -17    13%
Underlying profit                  636     563
Tax (normalised 2007/08 30%)      -195    -180
Underlying profit after tax        441     383
Number of shares (m)              2,645   2,664   16%
Underlying basic eps               16.7    14.4   21%
Dividend per share                 5.8p    4.8p
Dividend cover                      2.9     3.0
Operating profit
                                                                      8


                                     2008/09          2007/08
                                     £m         %     £m         %
 Gross profit
 – H1                                436       6.1    370       6.2
 – H2                                477       6.4    448       6.4
 – Total                             913       6.3    818       6.3
 Other operating income               37       0.2     30       0.2
 Administrative expenses            -281   -1.9      -268   -2.0
 Operating profit*                   669       4.6    580       4.5




* Excluding property transactions
Turnover bridge
                                                                         9


£m

                         7.9%
                                                     273
                                          346

                           726
                                                                14,528
             214

 12,969


  07/08   New stores   Like for like   Fuel price Fuel volume   08/09
                         growth
Cash flow
                                                              10


£m                                    2008/09 2007/08
Cash flow from operations               1,064    856    24%
Special pension contribution            -100    -100
Proceeds from disposals                   22      94
Capital expenditure                     -678    -402
Sale and issue of shares                   3      17
Shares repurchased                      -146       -
Tax, interest, servicing of finance     -133    -128
Dividends                               -131    -108
Cash flow                                -99     229

Opening net debt                         543     772
Closing net debt                         642     543
Optimisation plan 2 - status
                                                                11


Impact on EBITDA vs.
                               Actual Delivery
05/06
                                                       Total
£m                          07/08   08/09 To date
                                                       target
Gross margin                  44        18       62     100
In store efficiency
                              23        12       35      50
  benefits
Manufacturing                  -         5        5      15
Distribution                  38         2       40      25
Centre                         -         3        3      10
Total incremental benefit    105        40       145    200


Gross margin                  68      182        250    450
Capital plans
                                          12


2009/10 projection                  £m
Completion of Optimisation Plan    200
Organic space growth               350
Co-op/Somerfield acquisition       320
Other normal capex                 230
Total investment plan             1,100
               13




Marc Bolland
CEO
The Morrisons journey
                                                       14


2006 Morrisons/Safeway
• Strong retail skills
• Consumer perception still weak
2007 strategy: ‘Food specialist for everyone’
• Optimisation Plan target: improve operating margin
 whilst shaping for growth
• Focus on fresh, value and service
2008 year of strong growth
• Our performance brought us closer to our vision
Sales performance
                                                            15


                               Group like for like
                         52 weeks ended 52 weeks ended
                         1 February 2009 3 February 2008
Sales – exc. fuel                  7.9%              4.6%
Sales – inc. fuel                11.1%               5.0%
Customers                          4.2%              2.6%


Other metrics
Sales per customer (£)           £23.92          £23.07
Sales (£ per sq. ft.)            £21.65          £20.31
Regional performance
                                                             16


Total grocery sales exc. fuel
                                                      9.1%
2008/09
South                                                11.1%
London                                               18.6%
 Scotland
Source TNS: Grocery Till Roll 52we 25 January 2009   12.7%


• Good performance across the whole country
• Particularly strong in the South
  (especially London) and Scotland
Customers
                                                                               17


Customer switching to Morrisons


Main competitor 1


Main competitor 2


Main competitor 3


Premium segment


        Discounter
         segment
                                              £25m                      £50m



Source TNS: Grocery Till Roll 52we 25 January 2009   Net switching £m
Customers
                                                                            18


Growing younger customers
                                                     17.1%
Customer growth %




                    14.8%

                                                                  Broader
                                                                  appeal


                    Pre-family           Young family 0-4 Years




Source TNS: Grocery Till Roll 52we 25 January 2009
Category performance
                                                                               19


Like for like sales growth %


                                11.1%      11.4%
                                                       10.9%       10.9%
                       9.8%

    7.9%




    Group              Pizza   Salad bar   Butchery    Bakery &   Pre packed
                                                      cake shop   fresh food



Source Internal Data
Optimisation plan update – key building blocks
                                                                20


Manufacturing
• Spalding abattoir opened in Q2
• Vegetable pack house at Flaxby extended and re-opened in Q4
       Completed

Distribution
• Drive time planning systems implemented
• New South East RDC in Sittingbourne
   – operational by end of calendar year 2009

• New South West RDC in Bridgewater, Somerset
   – planning application filed December 2008
       On track
Optimisation plan update – key building blocks
                                                 21


New retail space

• 2008/09:
  – 9 stores opened
  – 207k sq. ft. of net new sales space
  – 90k sq. ft. of net sales extensions

• 3 year programme:
  – 1m sq. ft. by Jan 2010


       On track
Optimisation plan update – key building blocks
                                                    22


IT system replacement

• Development team is in place
• Payroll and HR systems were launched in Q4
• Roll out of new financial systems, distribution
 systems and EPOS systems this year




        On track
Optimisation plan update – key building blocks
                                                 23


• In-store
• Finished by July 2008:
   – range segmentation
   – refresh
   – shelf-ready packaging

• Rollout started:
   – IQM system
   – self scan checkouts

        On track
Optimisation plan update – key building blocks
                                                 24


Range Development


• ‘Value’



• ‘Fresh Ideas’



• Non-food
Optimisation plan update – key building blocks
                                                 25


CSR

• We are the only grocery
 retailer that has been
 awarded the new Carbon
 Trust Standard for carbon
 reduction




       On track
Optimisation plan update
                                              26


• The target
• “Strongly improve operating margin whilst
  shaping for growth”
• Where we are now
  – improving our operating margin
  – shaping building blocks
  – growing like for like sales


        Our strategy is working for us
Current market background
                                                      27


• Food market so far resilient to recession
• Consumers switching stores and products more than
 ever before to help their budgets stretch further
• Consumers choosing to dine and cook more at home
• Consumers buying more convenience food
• Consumers interested in treats
• Consumers still care about fresh and healthy food
 but less interested in ethical foods
Morrisons points of difference
                                  28


Vertical integration

• Industry leading availability
• Flexibility/competitive
 pricing

• Industry leading food deals
Morrisons points of difference
                                 29


Market Street
• Fresh Food Academy
• Fresh value food products


Innovative value promotions
•   Industry leading deals
•   Sun media promotion
•   Collector Card scheme
•   ‘Let’s Grow’ campaign
Opportunities – new customers
                                                       30


• Our perception among new customers has soared
 over the last 2 years

• New customers like our unique Market Street
 shopping experience, our fresh food and the great
 value we offer

• We have strongly grown customer numbers but 40%
 (10m) of households have not yet been in one of our
 refreshed stores


       Big potential to attract new
       customers
Opportunities - new locations
                                                       31


                    • 382 stores (11.1m sq. ft.)
                    • We are a national company but
                      we are not yet nationwide
                    • There are approximately 25m
                      households living in the UK
                    • 16.6m (66%) households live
                      within 15 minutes drive of our
                      stores
                          8.4m (34%) households do
                          not have the same access to
                          any of our existing stores
Opportunities - smaller stores
                                            32


• 60 stores (11k - 20k sq. ft.) - 16% of
  our estate
• Highest sales density growth
• Higher fresh food participation than
  standard stores
• Recently developed Northallerton,
  Blandford, Gorleston & Clifton (all
  11k-18k sq. ft.) with full Market
  Street
• Bespoke range and segmentation
• Out of town, edge of town and in town


     Not convenience shops but convenient
     shopping
Potential new representation to
become nationwide
                                                     33


                    • We now have the flexibility to
                     operate a wider range of
                     stores (10k – 40k+ sq. ft.)
                    • We can now reach many more
                     places and households
                    • The blue areas represent more
                     than 100 potential new sites
                     for bigger and smaller stores
Our focus
                                                    34


• Morrisons is currently under represented in key
 areas nationwide

       Focus in the coming years will be on space
       growth

       “National”        to “Nationwide”
Integration of Co-op/Somerfield stores in
2009/10
                                                       35


                    • Co-op/Somerfield stores
                       – c.500k sq. ft. of new sales
                         space this year
                       – An extra 1.2m (5%)
                         households within 15 mins
                         drive of these stores
                       – Largest number in the South
                         East, Greater London & the
                         South West
                       – We will use the knowledge
                         from our recent rebuilds,
                         spending £2.5m per store
Space growth
                                                                      36


• We will accelerate growth from 350k to 500k sq. ft.
  in 2010/11

Space growth                                          Sq. ft.(‘000)
Optimisation Plan to date                                     650
2009/10: c.10 new stores and 75k sq. ft. extensions           350
Optimisation Plan target met                                1,000


2009/10: Co-op/Somerfield stores                              500
2010/11: additional space growth                              500
Additional space growth over 4 years to 2010/11             2,000
Summary
                                                   37


• Strong LFL sales exc. fuel up 7.9%
• Underlying profit up 13%
• Healthy cash flow and strong balance sheet
• Dividend growth of 21%
• Morrisons is now embraced by a wider audience
       Our strategy is working for us

• Flexibility to develop a wider range of stores
• Opportunity to move from:


     “National”              to “Nationwide”
Supplementary Slides
Balance sheet
                                                                              40


 £m                                                        2008/09 2007/08
 Fixed assets and investments                                7,079    6,683
 Working capital                                            -1,868   -1,694
 Pensions deficit                                             -49      -68
 Net debt                                                    -642     -543
 Net assets                                                  4,520    4,378
 Gearing                                                      14%      12%
 Interest cover                                               41.9       -
 Interest cover adjusted*                                     20.3     34.1
 Dividend cover - underlying                                   2.9      3.0



* Excluding property profits and IAS 19 pension interest
Stores analysis
                                           41


                                  Group
Estate at 3 February 2008           375
New openings                          9
Replacements                         -2
Estate at 1 February 2009           382
Total sales area (‘000 sq. ft.)   11,131
Freeholds and long leaseholds       92%
Petrol filling stations             287
Depreciation
                                                                      42



£m
                282                     289                     290

        153               163                            160
  129                           126               130




  H1    H2      FY        H1     H2     FY        H1     H2     FY
        06/07                   07/08                   08/09

• H2 06/07 & H1 07/08 – accelerated depreciation of branded
  assets
• H2 07/08 – Safeway structural assets fully depreciated
• H1 08/09 – Business as usual
• 06/07 &08/0926 weeks
*
    H2 07/08 – – Optimisation Plan investments accelerating
Recognition
                         43


• Industry recognition

								
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