briefing day presentation - wesfarmers · 2016-07-13 · investor briefing 7 may 2004...

Investor Briefing7 May 2004InterContinental Hotel, Sydney

May 2004 Investor Relations

David Robb

May 2004

3May 2004

Wesfarmers Energy

4May 2004

Wesfarmers Energy Objective

P G T

Profitable Growth Over Time

5May 2004

Production

0

2

4

6

8

10

12

14

Mt

Coal

0

100

200

300

400Kt

WLPG

1999 2000 2001 2002 2003 9Mths2004

1999 2000 2001 2002 2003 9 Mths2004

6May 2004

Saleable Coal Production

Mine Beneficial Interest

Coal Type

% ('000 tonnes)

Premier 100 Steam 2,540 2,478

Curragh 100 Coking 2,949 3,412

Steam 1,539 1,808

Bengalla 40 Steam 1,332 1,682

9 MonthsMar-03 Mar-04

7May 2004

Sales Volumes9 Months 2004 versus 9 Months 2003

Kleenheat Gas +4%

Wesfarmers LPG -1%

Air Liquide* -2%

Premier -2%

Curragh +16%

Bengalla +5%

*Pipeline Sales

8May 2004

Financial Performance

EBITA/Capital

0

5

10

15

20

25

30

35

1999 2000 2001 2002 2003 R12Mar

%

0

50

100

150

200

250

300

1999 2000 2001 2002 2003 9 Mths2004

EBITA*$m

* Excludes Girrah $80.5m in 2003

9May 2004

Logistics Bottlenecks

Demurrage Mar-03 Mar-04

Gladstone 1.46 2.09

Newcastle (40%) 1.56 2.40

9 Months

($m)

10May 2004

Energy 2003/04 Outlook

Gas

International prices lower than pcp…..maybe

Coal

Demand strong, logistics bottlenecks continue

Contract and spot prices up significantly

Minimal unallocated tonnage

11May 2004

Energy 2003/04 OutlookSaudi Contract Price

150

200

250

300

350

400

US$/t

Propane 2002/2003 Propane 2003/2004

Jul Dec JunSep Mar

12May 2004

Energy 2003/04 OutlookHard Coking Coal Prices

JRP US$/Tonne FOB nominal

Japanese Financial Year

30

35

40

45

50

55

60

83 85 87 89 91 93 95 97 99 01 03 04

13May 2004

Energy 2003/04 OutlookThermal Coal Prices

Source: Barlow Jonker

Apr-04-

10

20

30

40

50

60

US$/Tonne FOB nominal

Spot Price

Apr-00 Apr-01 Apr-02 Apr-03Apr- 96 Apr-97 Apr-98 Apr-99

0

14May 2004

0.4

0.5

0.6

0.7

0.8

0.9

Jul Dec Jun

AUD/USD 2002/2003 AUD/USD 2003/2004

Energy 2003/04 OutlookExchange Rates

$A/$US

15May 2004

Energy 2003/04 OutlookCoal Sales

(million tonnes) Domestic

Steam Export Steam

Export Coking

Total

Premier, WA 3.4 3.4

Bengalla*, NSW 0.6 1.6 2.2

Curragh, QLD 2.4 4.7 7.1

Total 6.4 1.6 4.7 12.7

*Wesfarmers 40% share

16May 2004

Energy Issues Last Quarter

LPG prices and demand

• Atypical price trend

• Autogas weakness

• Supermarket success

Coal volumes, prices, costs

• Production performance (dragline shutdown)

• Inventory effects

• Logistics performance

17May 2004

PGT Challenges

Asset & People Productivity

Aligning Stakeholders

Acquiring New Competencies

Changing the Business Model

A Sense of Urgency

18May 2004

Performance Drivers

TIME

PE

RF

OR

MA

NC

E

Costs

Volumes & Margins

People & Processes

19May 2004

Safety LTIFR

0

5

10

15

20

25

30

1995 1996 1997 1998 1999 2000 2001 2002 2003

Kleenheat Gas

0

5

10

15

20

25

30

35

1995 1996 1997 1998 1999 2000 2001 2002 2003

WLPG

0

5

10

15

20

25

30

35

40

45

1996 1997 1998 1999 2000 2001 2002 20030

2

4

6

8

10

12

14

16

18

1996 1997 1998 1999 2000 2001 2002 2003

Premier Curragh

20May 2004

Strategy Summary

Premier - contracts, new markets, unit costs

Curragh - Curragh North delivery and optimisation

Bengalla - JV Alignment, mine plan, sales mix

KHG - “focus on fundamentals” III

WLPG - flexible operation

ALWA - delivering new projects

21May 2004

PGT ActivitiesGas & Power

LPG market development post excise decision

WLPG post 2005

LNG for road transport

HIsmelt

MidWest

WA base load power

22May 2004

LNG

23May 2004

Update on HIsmelt Project

• No lost time injuries

• Project on schedule and within budget

• All major equipment now on site

• Fourteen days lost (RIO IR)

• October completion date unchanged

24May 2004

StateWest PowerMid West project

5 diesel power stations:

Cue, Meekathara, Sandstone, Wiluna and Yalgoo

1 gas power station:

Mt Magnet

25May 2004

PGT ActivitiesCoal

Premier Market Development

• Mineral sands

• Hismelt

• Char

Curragh North

26May 2004

Coal Market Development

1998/1999

0%Coking Export

4%Steaming Export

96%Steaming Domestic

98/99

Premier

Curragh Export

Curragh Domestic

Bengalla Export

Bengalla Domestic

9 Months 2003/2004

9M 03/04

51%

14%

35%

27May 2004

Curragh

28May 2004

The Key Focus – Curragh North• Award of Mining Lease

• Marketing program underway

• Project management – scope, timetable, procurement

• Selection of infrastructure delivery mechanisms

• Logistics

• Integration with Curragh operations

• Recruitment

29May 2004

Overview of Curragh North

N

McKenzie River

Curragh

Yarrabee

30May 2004

Reserves History

0

50

100

150

200

250

Acquisition

(2000)

Post Girrah Sale

(2003)

With CN

(2004)

Curragh Girrah Curragh North

MT ROM

31May 2004

Curragh ProductionROM tonnes

0

2

4

6

8

10

12

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

mtp

a

Curragh stand-alone

32May 2004

Curragh ProductionROM tonnes

0

2

4

6

8

10

12

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

mtp

a

Curragh plus Curragh North Curragh stand-alone

33May 2004

Mining Lease

Completed:

• Environmental Impact Statement

• Qld EPA Environmental Authority

• Cultural Heritage Management Plan

• Confirmation – native title extinguished

• 6 Compensation agreements

Outstanding

• 1 landowner objector to Mining Lease

• Resolved through negotiation or LRT

34May 2004

Coal Processing

Fine coalcircuit

DeslimingScreens

PrimaryDMC

SecondaryDMC

Reject10 t

Steaming coal

Product21 t

Coking coal Product

58 t

Tailings

11 t

CHPP Plant Feed

Raw Coal Distribution2 Modules4 Loops

Fine coalcircuit

DeslimingScreens

PrimaryDMC

SecondaryDMC

Reject

Steaming coal

Product

Coking coal Product

TailingsCHPP Plant Feed

Raw Coal Distribution2 Modules4 Loops

Yield upgrade in 2002

Capacity (1600tph) and yield upgrade now for CN

35May 2004

Export Sales

Curragh brand name and reputation

Positioned as “independent” supplier

World leading steel makers as key customers

Contracts secured to underpin CN expansion

New PCI product

36May 2004

Export Customer Mix

Japan

Other NorthAsia

Europe

South Asia

19%

18%

13%

50%

37May 2004

Export Customer ContractsDuration

5 Years

3 – 5 Years

Annual

1 – 3 Years

32%

40%15%

13%

38May 2004

w w w . w e s f a r m e r s . c o m . a u

Chemicals and Fertilisers

John GillamManaging Director

40May 2004

41May 2004

CSBP’s Objective

42May 2004

CSBP Background

Established 1910

Member of Wesfarmers Group since 1980

Only major fertiliser supplier in WA until ~ 1990

Diversification into chemicals from 1987

Major chemicals investments post 1996

Post 1999, around 60% of EBITA generated from chemicals activities

WA’s leading fertiliser supplier in a competitive market

43May 2004

CSBP Background

Manufacturer of mining & processing chemicals

• ammonia, ammonium nitrate, sodium cyanide, chlorine

Manufacturer and importer of fertilisers

• phosphate, nitrogen, potassium and compounds

Manufacturing operations at:

• Kwinana, Albany and Esperance - WA

• Moura, QLD (joint venture)

540 employees

44May 2004

EBITA and EBITA/Capital5 Year Trend

0

20

40

60

80

100

1999 2000 2001 2002 2003

$m

0

2

4

6

8

10

12

14

16

18%

EBITA EBITA/Capital

EBITA EBITA/Capital

45May 2004

CSBP July 2003 – March 2004 Results

Chemicals

• volumes up 7% on last year

• margin pressure on sodium cyanide continuing• steady production performance

Fertilisers

• volumes up 10% on last year

• strong market focus, liquid fertiliser growth

Revenue and earnings (9 months to March 2004)

• revenue:$319m ($290m pcp)

• EBITA: $49.4m ($40.2m pcp)

R12 LTIFR 2.6 (6.9 pcp)

Chemicals

47May 2004

Ammonia/Ammonium Nitrate

Nitric Acid Plant

AN SolutionPlant

PrillingPlant

Sodium Cyanide

Production

FertiliserProduction

Ammonia sales to nickel industry and export

AN Solution sales to Dynofor explosives

Ammonia Plant

AN Prill sales to Dyno for explosives

Air

Water

NaturalGas

48May 2004

Ammonia Background

Sole WA manufacturer and supplier

Replacement plant commissioned in 2000

• original plant capacity 650 tpd / 225,000 tpa

• debottlenecked to 240,000 tpa

• further expansion now underway

40,000 tonnes import / export storage terminal

External customers

• primarily nickel industry and exports

Internal customers

• ammonium nitrate, sodium cyanide and fertilisers

49May 2004

Ammonium Nitrate Background

Sole WA manufacturer

160,000 tpa nitric acid plant / 200,000 tpa AN plant commissioned 1997

AN plant debottlenecked to 230,000 tpa

• distribution for mining explosives via Dyno Nobel

• Flexi-N liquid fertiliser consumes balance of production

Queensland Nitrates plant at Moura

• project financed 50:50 joint venture with Dyno Nobel

• recent incremental debottlenecking successful

• 185,000 tpa integrated facility

50May 2004

Sodium Cyanide

Solution salesto WA gold mines

Solid sales toAustralian and overseas gold mines

Sodium CyanideSolution

Plants 1 & 2

CausticSoda

Ammonia

NaturalGas

Sodium CyanideSolids Plant

51May 2004

Sodium Cyanide Background

Australian Gold Reagents - sole WA manufacturer

75 : 25 joint venture with Coogee Chemicals

• plant operation and marketing by CSBP

First solution plant commissioned in 1988

• progressively expanded to ~ 48,000 tpa solution

• further expansion possible with limited expenditure

Investment in solid sodium cyanide plant in 2002

• 20,000 tpa nameplate capacity

• reviewing debottlenecking opportunities

Strong Australian market position

Developing export markets for solid product

52May 2004

Industrial Chemicals Background

5,000 tpa chlorine plant commissioned 1987

• baseload production for WA Water Corporation

• co-production of caustic soda, hydrochloric acid, sodium hypochlorite, hydrogen

Traded products

• Sulphuric acid

• Industrial urea

• Fluorosilicic acid

• Sulphur

• Ammonium sulphate

53May 2004

ChemicalsCurrent Influences

Strong resource sector conditions

• short term softness in local ammonia offtake

• export excess ammonia production

Good ammonia / AN plant performances

• continued lift in Queensland Nitrate operations

Sodium cyanide solids plant at design expectations

54May 2004

ChemicalsStrategies

Profitably build on existing businesses

• examining AN & sodium cyanide production

expansion opportunities

• debottlenecking of ammonia plant underway

Evaluating growth opportunities

• exploit core competencies

• expand product range in existing markets

• assess opportunities in new markets

Fertilisers

56May 2004

Fertilisers Background

Only major fertiliser supplier in WA until ~ 1990

• manufacturing focus at that time

Market share and profit erosion in last decade

• emergence of import-based competitors

Post 2000, market share and profit stabilisation

• strong market and distribution focus

• working capital, cost base and supply chain efficiencies

• around 50% sales (by volume) imported

Cropping driven nutrient growth in WA market

57May 2004

Fertilisers Background

Unmatched infrastructure in WA market

• volume growth readily handled

Extensive distribution network

• commission based reward structure

• AWB Landmark, Elders & independents

• all collections ex-CSBP facilities

CSBP market support

• field staff supporting distribution network and account managing key customers

• agronomic advisory services, product development, soil and plant testing services.

58May 2004

Fertilisers WA Infrastructure

Geraldton

Dongara

Kwinana

Bunbury

Carnamah

Gnowangerup

Manufacture Facility

Import Facility

Regional Sales RepsInland Depot

Esperance

Wagin

Narrogin

Merredin

Katanning

Lake Grace

Albany

Wongan Hills

Moora Dalwallinu

Corrigin

Tambellup

Northam

Goomalling

Soil and Plant Lab

Distribution Centre

(Not Including Sales Agents)

59May 2004

Fertilisers3 Year Sales Volumes

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2001 2002 2003

million tonnes

Western Australia Other

60May 2004

FertilisersCurrent Influences

Anticipate good 2004 conditions

record 2003 harvest

offset by strong $A

Solid sales programme

good distributor support

competitive pricing

enhanced range of products and services

Continued growth in liquid fertiliser

Cost base and supply chain improvements

61May 2004

FertilisersStrategies

Profitably build core WA business

Strong market focus

widest range of quality fertilisers

best services and technical support

competitive prices

Develop markets beyond WA for proprietary products

62May 2004


Wesfarmers Industrial & Safety

Bob Denby

Managing Director

64May 2004

Agenda

The Wesfarmers Industrial and Safety business

Third quarter F2004 results

WIS strategy

Current business outlook

66May 2004

Provider of innovative distribution solutions

Two markets

• Maintenance Repair & Operating (MRO)

• Safety

Market leader Aust & NZ

500,000 SKU’s $200m inventory

17 Product trading departments

10 trading streams

67May 2004

250+ Location Distribution Network

AUCKLAND

HASTINGS

NEW PLYMOUTH

LOWER HUTT

CHRISTCHURH

DARWIN

ALICE SPRINGS

CAIRNS

TOWNSVILLE

MACKAY

ROCKHAMPTON

BRISBANE

TAMWORTH

NEWCASTLE

SYDNEY

CANBERRA

MELBOURNE

LAUNCESTON

HOBART

ADELAIDE

PERTH

BUNBURY

WOLLONGONG

ORANGE

WHYALLA

GRIFFITH

ALBURYSHEPPARTON

BENDIGO

DANDENONG

GOSFORD

DUBBO

SOUTHPORTTWEED HEADS

COFFS HARBOUR

IPSWICH

TOOWOOMBA

GYMPIE

BUNDABERG

GLADSTONE

MT. ISA

WAGGA WAGGA

MORWELL

MARYBOROUGH

LISMORE

KWINANA

KARRATHA

KALGOORLIE

BURNIE

PORT HEDLAND

BELL BAY

ROXBY DOWNS

GERALDTON

PORTLAND GEELONG

MT GAMBIER

BALLARAT

MILDURA

BROKEN HILL

SINGLETON

TRADING STYLES:Blackwoods 64Atkins 3Blackwoods Atkins 23Bakers 7Motion 10Metals 1Mullings 10Protector Alsafe 49NZ Safety 24Blackwoods (NZ) 7Protector (NZ) 22Pkg House 11 Paykels 21

TOTAL 252BRANCHES

NSW 37VIC 30QLD 37WA 38SA 13 TAS 9NT 3NZ 85

TOTAL 252

Broome

Albany

Esperance

Newman

Kunnunurra

TAURANGA

PALMERSTON NTH

WANGEREI

GREYMOUTH

DUNEDIN

INVERCARGILL

NELSON WELLINGTON

ROTORUA

68May 2004

Business Environment

MRO market highly fragmented

No direct national competitor

WIS is market leader but not a market name

Strong price competition from specialists

Pressure on trading margins forces continuing focus on cost base

Working capital control essential

IT capability is a competitive edge: growing e-Business opportunities


Third Quarter 2004 Results

70May 2004

Financial Highlights (Year to Date)

Operating Revenue up 1.5% to $851m, normalised

Operating Revenue (excluding Metals) up 3.3%.

EBITA down 2.6% to $79.8m, normalised EBITA

(excluding Metals) down 1.5%.

EBITA/Op. Rev. Margin improved from 9.2% (half year)

to 9.4%

EBITA/Capital up from 13.9% to 14.2%

71May 2004

Financial Highlights

Operating Revenue

0

200

400

600

800

1000

1st Qtr Half Year 9 Mths

$M

LY TY

72May 2004

Financial Highlights

EBITA

0

20

40

60

80

100

1st Qtr Half Year 9 Mths

$M

LY TY

73May 2004

Business Activity Highlights

Blackwoods

• Northern & Western regions strong growth

• Central & Southern regions flat sales

Protector Alsafe

• Business improvement plan beginning to

demonstrate improvement

New Zealand

• Significant sales & EBITA increase

• Paykels integration largely complete

74May 2004

Highlights for Year to Date

Rationalisation of distribution centres

Integration of Blackwoods & Paykels

Implementation of ERP system

• Acc Payable & Gen Ledger live 1/10/03

• Payroll live 15/10/03

• Acc Receivable live 1/12/03

Blackwoods Trade Fair


Strategy

76May 2004

WIS Strategies

Grow real sales and sustain gross margin

• Improved brand positioning

• Expand network

Shopfronts

• Alignment of sales force

• New catalogues

• Leverage e-business

• Customer service improvements

• Extend import programme

77May 2004

WIS Strategies

Reduce expense to sales ratio

• Extend operation deliver

• Rationalise distribution infrastructure

• Upgrade information systems

Reduce working capital

• Enhance category management

• Refine vendor management

78May 2004

WIS Strategies

Improve safety performance

• Improved OHS&E management

• Implementation of OHS&E systems

• Development of effective performance

management systems

79May 2004

WIS Values

Focusing on results

Passion for service

Empowering our people

Fostering creativity

Working safely


Current Business Outlook

81May 2004

Outlook for Balance of 2004

Australia

• Generally positive

• Positive sales trend

• Continued spending in mining and transport

infrastructure

New Zealand

• Robust

• EBITA improvement assisted by Paykels

82May 2004


Gene TilbrookExecutive Director, Business DevelopmentWesfarmers Limited

84May 2004

OUTLINE

Australian Railroad Group

Gresham Private Equity

85May 2004

ARG50% Interest with Genesee & Wyoming

Revenue

0

50

100

150

200

250

300

350

400

450

2003 2004

$m

9 Months Full Year

86May 2004


Performance continues to improve

• Large grain harvest

• New business gained, but with set up costs

• Improved safety / reduced incidents

87May 2004


Outlook:

• Continuing improvement

• Grain season – next 6-9 months

• New business contributions

• Operational initiatives

• Mineral tonnages

Ongoing capital expenditure

Industry rationalisation

88May 2004


Gresham Private Equity

90May 2004

Gresham Private Equity Fund 150% interest

No divestments in the quarter

Cashcard sold in April

Five investments remain

91May 2004

Gresham Private Equity Fund 1Remaining Investments

EROC - mining / infrastructure contractor

Norcros - building materials, coatings

Riviera - cruisers

Virgin Active - health clubs

Raywood - vehicle control systems

92May 2004

Gresham Private Equity Fund 2

Wesfarmers has committed up to $100m

(of 1st close $110m)

Gresham Private Equity now has team of six

93May 2004


Wesfarmers Insurance Division

Bob BuckleyChief Executive Officer

95May 2004

96May 2004

Agenda

Wesfarmers Insurance Division overview

Industry comparisons

Market conditions

Overview of business units

Financial summary

Outlook

97May 2004

Wesfarmers Insurance Division

WESFARMERS INSURANCE DIVISION

(LGA)Lumley General

Australia

(LGNZ)Lumley GeneralNew Zealand

(LTL)Lumley

Technology

(WFI)WesfarmersFederationInsurance

(LFL)Lumley Finance

Australia

(LFNZ)Lumley FinanceNew Zealand

98May 2004

Gross Premium

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

IAG/C

GUSun

corp

ProminaAllia

nz

QBE

Zurich

Lloyds

WFI/L

umley

ING

$m

Source : Deloitte and Trowbridge 2003

Industry comparisons - Australia

99May 2004

Source : Insurance Council of New Zealand

Industry comparisons – New Zealand

Gross Premium

-

200

400

600

800

1,000

1,200

IAG Vero LGNZ AMI QBE AHA Tower ACE

NZ$m

100May 2004

Market conditions

Favourable economic climate

Signs of a softening market are emerging

Benign claims environment

Reinsurance market has stabilised

Major storm events in Victoria and NZ

101May 2004

LGA – Key issues

Softening rates and flat premiums

Overall claims below budget

Growing commercial account

FSRA licensing completed on schedule

Increasing burden of compliance

New system rollout completed in WA, SA & Qld

Business focus maintained during integration

102May 2004

LGA – Key Segments

Commercial Motor/Fleet

Other Commercial

AMO

Engineering

Personal Lines

Marine

Exposure

-Short Tail 88.4%

-Long Tail 11.6%

YTD GWP $414.7m

LYTD GWP $410.6m

103May 2004

LGA - KPIs

0.983.083.9%COR

%

%

%

%

(4.7)9.64.9Commission ratio

2.417.119.5Expense ratio

19.5

56.3

2004

1.418.1Insurance margin

3.259.5Net loss ratio

Change 2003YTD March

104May 2004

LGNZ – Key issues

Favourable economic climate

Rate increases slowing

Emerging competition

Severe storm in lower North Island

Annualised revenue now NZ$250m

Systems related decisions

105May 2004

LGNZ – Key SegmentsCommercial Motor/Fleet

Personal Lines

Liability

Other Commercial

Marine

Engineering

Exposure

-Short Tail 92.5%

-Long Tail 7.5%

YTD GWP NZ$186.0m

LYTD GWP NZ$158.5m

106May 2004

LGNZ - KPIs

(1.6)89.387.7%COR

%

%

%

%



12.0

63.1

2004

(0.9)12.9Insurance Margin

(1.3)61.8Net loss ratio


107May 2004

WFI – Key issues

Strong crop season

Non crop claims below budget

Continued growth from key alliances

System implementation on track

Workers compensation reforms in WA

FSRA license obtained

Compliance burden growing

108May 2004

WFI – Key Segments

Rural Packages

Commercial Packages

Personal Packages

Crop

Workers Compensation

Exposure

-Short Tail 77.1%

-Long Tail 22.9%

YTD GWP $191.9m

LYTD GWP $165.6m

109May 2004

WFI - KPIs

2.689.592.1%COR

%

%

%

%

0.38.79.0Commission ratio

(0.2)18.918.7Expense ratio

14.0

61.9

2004

2.211.8Insurance margin



110May 2004

Divisional - KPIs

1.515.313.8%Insurance margin

1.287.488.6%COR

%

%

%



59.4

2004



111May 2004

Divisional – Financial Summary

9.8Investment income on TR

56.2Insurance margin

(28.3)Net commission

(206.8)Net claims

367.9NEP

0.2Non - insurance activities

7.2Investment income on SHF

46.4U/W result

(86.4)Expenses

63.6

564.6

2004

EBITA

GEP

March YTD $m

112May 2004

Outlook

Increasing weather events (?)

Moderation of insurance cycle

Systems development and deployment

Efficient capital management

MCR = 1.8 times

Lower investment earnings

113May 2004


Peter DavisManaging Director, Bunnings

115May 2004

LOWEST PRICESWIDEST RANGEBEST SERVICE

116May 2004

Agenda

1. Year to Date Results

2. Year to Date Highlights

3. Key Issues

4. Outlook

5. Questions

117May 2004

10.3%

236.7

37.2

273.9

2,650.1

2003

0.0%10.3%EBITA/Sales Ratio

11.1%262.9EBIT

0.0%37.2Amortisation

9.6%300.1EBITA*

10.1%2,919.0Revenue*

Change2004($m)

Year to Date ResultsSegment Result

*Includes Revenue and EBITA from property and other

118May 2004

10.1%

223.8

37.2

261.0

2,576.1

2003

0.0%10.1%EBITA/Sales Ratio

13.1%253.1EBIT

-0.0%37.2Amortisation

11.2%290.3EBITA*

11.9%2,883.4Revenue*

Change2004($m)

Year to Date ResultsTrading Result

*Excludes Revenue and EBITA from property and other

119May 2004

Cash store on store growth 12%

• Strong result – Queensland, New South Wales,

Western Australia & New Zealand

• Difficult trading conditions – Victoria

Clearance sale March 2003

• Seasonal and deleted stock (ex-BBC)

• Sales impact – mainly NSW

Year to Date Results

120May 2004

Industry Performance

National Retail Sales vs Bunnings Cash Sales (Indexed to 100)

020406080

100120140160180200

Jul-0

2Aug

-02Sep

-02Oct-

02Nov

-02Dec

-02Ja

n-03Feb

-03Mar-

03Apr-

03May

-03Ju

n-03Ju

l-03

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

National Retail Sales Bunnings Cash Sales

121May 2004

Trade credit sales increased by 1%

• Australia –2%

• New Zealand +16%

• Trade strategy development – next 6 months

Store network refits and upgrades

• Customer disruption

• One-off costs

• Increased average cash transaction

Year to Date Results

122May 2004

Industry Performance

Bunnings Credit Sales vs National Housing Commencements (Indexed to 100)

0

20

40

60

80

100

120

140

Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03

Housing Commencements Bunnings Credit Sales

123May 2004

Store Network Development

• 11 new warehouse openings (to end April)

NSW 5

VIC 2

QLD 2

NZ 2

• 3 warehouse closures

QLD, VIC, NSW

• 7 traditional store closures

QLD & NSW

Year to Date Highlights

124May 2004

Store Network Development

• Bunnings Warehouse upgrades

3 completed (QLD, SA)

• Former Hardwarehouse refits

5 completed (NSW)

• Traditional store upgrade

3 completed (VIC, NSW)

Year to Date Highlights (cont.)

125May 2004

1

32

17

84

Totals

TraditionalStores

Warehouses124

86

3

2

2

7

41

923

25

5

31

18

WA SalvageStores18

As At 1 May 2004Excludes Frame & Truss Operations

Store Network Update

126May 2004

Key Issues

1. Inventory management

2. Trade business strategy

3. Store network development

4. Safety – attitudes, awareness, culture

5. Quality team members – attract, develop, retain

127May 2004

1. Inventory management

Data warehouse

New system 2-3 years

Stockturn and working capital management

Review logistics model

Key Issues

128May 2004

2. Trade business strategy

New East Coast Manager

Review international best practice

Develop/implement business plan (6 – 8 months)

Key Issues

129May 2004

3. Store network development

Continue 8 –12 new warehouse openings

Series 3000 developments

Format and development adaptability

Store upgrades and refits

Key Issues

130May 2004

4. Safety

Senior Safety Leadership Team

DuPont leadership training

BSAFE management system

Team level safety process training

Key Issues

131May 2004

5. Attracting, developing and retaining quality people

Recruitment Manager in New South Wales

Vacancy rate targets

Accelerated Management Development

Programme

Corporate "University” and e-learning system

Key Issues

132May 2004

Continued growth in DIY and renovation markets

Rising interest rates affecting new housing

Store development pipeline

Store network upgrades and conversions

Continuous improvement

Outlook

133May 2004

Industry Outlook

+4.0%+5.2%3. Renovation Expenditure

-5.8%-2.0%2. Housing Starts

+4.0%+5.6%1. Retail Sales

2004/052003/04Indicator

Sources: 1. BIS Shrapnel; 2&3 Housing Industry Association

Forecast Annual Growth Rates

134May 2004

In summary:

• Drive costs down through growth in sales and

productivity improvements

• Continued market share development and

upgrade

• Focus on key strategic platform – price, range

and service

Outlook

135May 2004

Increase Sales

Reduce Prices

Reduce Operating

Expenses

InvestmentBITS

Productivity Loop

InventoryLogistics

Processes

136May 2004

137May 2004

Questions

138May 2004


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