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Strategic Agenda • Current Trading & Outlook 2 June 2011 The Manager Company Announcements Office Australian Securities Exchange Dear Sir, PRESENTATION TO BE GIVEN AT INVESTOR BRIEFING - SYDNEY Following is a presentation that is to be given today at an investor briefing in Sydney. This briefing will be webcast and can be accessed at: Investor Briefing at 8:45 am (EST) http://www.thomson- webcast.net/au/dispatching/?event_id=83f77f1450d53a3f3830ff69fce14f28&portal_id=cff2 f208e945b0c05d992e6231cc3d44 Yours faithfully, L J KENYON COMPANY SECRETARY Enc. Wesfarmers Limited Investor Briefing Day 2 June 2011 Richard Goyder Managing Director, Wesfarmers Limited Agenda 8.45 Introduction 9.00 Coles 9.55 Home Improvement & Office Supplies 10.50 Morning Tea 11.15 Target 12.00 Kmart 12.45 Lunch 1.30 Resources 2.15 Chemicals, Energy & Fertilisers 2.45 Industrial & Safety 3.15 Afternoon Tea 3.30 Insurance 4.00 Capital Management 4.15 Q&A 4.30 Close 4 Wesfarmers – an overview • Eight autonomous divisions FY2010 total value created of $10,799m • Employing 207,614 individuals across: – 3,400 retail locations – Industrial operations in every state $1,080 (1) • Generating $51.8 billion in annual revenue $1,512 • Creating $10.8 billion(1) of value including: $648 – $6.5 billion in employee payments $6,479 – $1.1 billion in government taxes & $1,080 royalties – Returning $1.5 billion to shareholders – Reinvesting $1.1 billion in the business Employees Government for future growth Lenders Shareholders Reinvested in the business All values are in $m & are based on FY2010 results (1) During FY2010 5 Wesfarmers’ centenary vision A Portfolio of Quality Robust Financial Businesses Capacity Positioned for future growth Access to competitively (e.g. in fast-growth Superior Long-Term priced debt & equity. sectors/industries or with Financial Performance unexploited competitive Above market TSR over Superior People opportunities). five years. Resources Growth in ROE. Ability to attract, motivate & retain great people. A Value-Creating A Most-Admired Business Model Company Strong Corporate Ability to recognise & Superior reputation Infrastructure acquire undervalued among customers, Systems, processes & assets. employees & the culture to support Skill to turn around & grow community. innovative initiative & those assets. disciplined execution. Discipline to exit when value has been maximised. Strong sustainability focus for future 6 success Five sustainability priorities identified at a Group level with actions & accountability held at a divisional level: 1. The importance of people 2. Carbon emissions reduction & energy management 3. Community investment 4. A reduced overall environmental footprint 5. A strong economic contribution Tailored approach by division to ensure industry & business positioning Coles Ian McLeod Managing Director Coles 8 Coles’ three phase strategy Building a Solid Delivering Driving the Coles Foundation Consistently Well Difference • Create a strong top team • Embed the new culture • Culture of continuous improvement Performance • Cultural change • Team member development • Strong customer trust & • Availability & store standards • Improved customer service loyalty • Value & customer trust • Appealing Fresh food offer • Strong operational efficiency • Store renewal development • Stronger delivery of value • Innovative & improved offer • Liquor renewal • Scale rollout of new formats • New stores, new categories • IT & supply chain • Improved efficiency infrastructure • Easy ordering completed • Efficient use of capital Year 1 - 2 Year 2 - 4 Year 4 - 5 Coles 9 Building sustainable sales momentum • $4 billion incremental sales • Three year headline sales CAGR of 6.3% • Eight consecutive quarters of industry outperformance • Two million more transactions every week • Double digit increase in basket size • Australia‟s fastest growing fresh food retailer! Source: Coles data & Australian Bureau of Statistics Coles 10 Saving Australians $800 million • Investment in lower prices to help Australian families – Historical(1) market food inflation of 4.4% – Market food inflation of 3.3% since FY2007 – Coles prices flat since early 2009 • “Australia First” sourcing policy – Partnering to deliver efficient & quality supply – 96% Australian grown fresh produce – 75% of Coles brand Australia sourced – Coles brand has most “Australian made” products in the country Source: Coles data & Australian Bureau of Statistics (1) FY2002 – FY2007 average Coles 11 A five year turnaround plan • Multi-faceted challenge • Complex issues to fix Fresh Value Range Efficiency Service Culture Store Capability Infrastructure Formats Coles 12 A five year turnaround plan • Multi-faceted challenge • Complex issues to fix Fresh Value Range • Converted to a comprehensive six point plan • Delivering far-reaching Efficiency Service Culture change across Coles Store Capability Infrastructure Formats Coles 13 A five year turnaround plan Renewed, • Multi-faceted challenge Right Stores, Clean, Easy to Right Place Shop Stores • Complex issues to fix Deliver Great • Converted to a Service with Value Great People comprehensive six point plan • Delivering far-reaching Marketing / change across Coles Brand Better Buying Re-build • Underpinned by 10 detailed cross-functional Customer Led Fresh and programs Supply Chain Only at Coles • Consistent direction Working Smarter Working over three years Support Centre Smarter Stores “Fresh” Produce doom loop before Coles 14 2008 Variable sourcing Cost cutting Inconsistent De-skilling Supplier QC De-motivation Lower sales Systematic Lower margin Over-ordering Higher prices Higher waste Lower stock-turn Poorer quality Older product Coles 15 Fresh Produce at Coles now Outcomes so far Partnership sourcing • $300 million Better presentation Diligent QC incremental sales Improved efficiency • Double digit growth in basket size • Better availability of Higher sales Demand led fresher produce Stronger profit ordering • Better quality • 50% reduction in waste & markdowns Lower waste Lower prices Better quality Faster stock turn • Double digit growth in profitability Coles 16 Bakery & Deli at Coles now Driving freshness & quality Outcomes so far • Stronger pricing Value • Improved promotions • $400 million Better Buying • Development of supplier partnerships incremental sales • Stronger QC • Double digit growth Fresh and Only • Baked today, sold today • Slice on demand in customers at Coles • NPD • Better availability Working • Improved production planning Smarter Stores • Investment in skill & hours • Better quality Customer Led • Late night & weekend focus Supply Chain • Development of consistent standards • 50% reduction in waste & markdowns Deliver Great Service with • Craft skills programs Great People • Customer interaction encouraged • Double digit growth in profitability Renewed, Clean, Easy to • $50m invested in bakeries, $80m in delis Shop Stores • Open bakeries – lower deli counters Coles 17 Meat & Seafood at Coles now Driving freshness & quality Outcomes so far • Better prices Value • Better customer communication • $700 million Better Buying • Stronger upstream control • Improved quality incremental sales • Better supplier support • Double digit growth Fresh and Only • Sustainable husbandry • RSPCA chicken in customers at Coles • HGP-free beef • Sow stall-free pork • Better availability Working • Improved in-store packaging & operating standards Smarter Stores • Better yield • Better quality Customer Led Supply Chain • Integration of meat through DCs • 40% reduction in waste & markdowns Deliver Great Service with • Higher calibre team Great People • Training program development • Double digit growth in profitability Renewed, Clean, Easy to • $50m investment in refrigeration for meat alone Shop Stores • Open meat & seafood counters (renewal) Coles 18 Grocery, Dairy & General Merchandise • Prices customers can trust – 5,000+ prices reduced by more than 10% – 2,100 price increased by 4% – State-based pricing • Customer-driven ranging – Better choice through improved availability & reduced duplication – Greater availability through demand led ordering – Double digit Coles brand growth • Investing in under-indexed categories – $50 million investment in improving 675 Health & Beauty & Baby departments – 115 upgraded entertainment & paper shops Coles 19 Only at Coles – Coles brand • $800 million incremental sales You’llColes love brand Coles in inFY2011 FY2007 • Double digit growth in participation • Reinvigorating the Coles brand ranges – Three tier brand positioning – Quality, value & innovation focus – Trialling pool of 2,500 „Mums‟ Coles brand in FY2011 – Investment in test kitchen & food science – Packaging redesign – 28 quality awards in the last six months Coles 20 Only at Coles – Coles brand • $800 million incremental sales Smart Buy in FY2007 • Double digit growth in participation • Reinvigorating the Coles brand ranges – Three tier brand positioning – Quality, value & innovation focus – Trialling pool of 2,500 „Mums‟ – Investment in test kitchen & food science Smart Buy in FY2011 – Packaging redesign – 28 quality awards in the last six months Coles 21 Marketing / brand re-build Coles in FY2008 Industry average • Previously uncoordinated use of a large Coles in FY2011 number of smaller campaigns • Shift to fewer, bigger & better campaigns with a unique Coles personality • More effective advertising expenditure • Significant increase in TVC cut-through Coles 22 Marketing / brand re-build Did they know it was Coles? 100% Coles in FY2008 80% 81% 81% 84% 60% 71% 40% 20% 41% 43%
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