Preliminary Results 2007/2008 - Presentation - Tesco PLC€¦ · Preliminary Results 2007/2008 -...
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Preliminary Results
15 April 2008
David Reid
Chairman
Highlights
• Sales increased by 11.1% to £51.8bn
• Group profit before tax up 15.3%*
• Underlying profit up 11.8% to £2,846m
•
Underlying diluted earnings per share up 13.1% (normal tax rate)
• Full year dividend up 13.1%
* excluding last year’s exceptionals; mainly Pensions A-Day credit
International
China
U.S.
UK
Non-food
• Tesco Personal Finance
• Telecoms
• Dot com
Retailing services
Strategy
• Core UK
• International
• Non-food
• Retailing services
• Community
Community
£4.4 millionraised
Labellingroll-out
Property
Our people
Andrew Higginson
Finance and Strategy Director
Results headlines
• Strong growth in sales, profits and earnings
• Returns are rising
• Increasing investment in new growth
•
Programme to release value from property progressing well
• Shareholders continue to benefit
Group performance
• Sales £51.8bn, up 11.1%
• Trading profit rose 11.0% to £2,751m
•
Start-up costs relating to U.S. and Direct totalled £87m
• Group underlying profit £2,846m, up 11.8%
06/07
98
(6)
92
47
139
Property profits
£m
07/08
UK
186
International 2
188
J.V.’s
0
188
Property
Group performance
•
Group operating profit up 5.4% and Group pre- tax profit up 5.7%
• Last year credit from Pensions A-day
Returns to shareholders
•
Underlying diluted earnings per share up 20.8% to 27.02p
•
Using a normalised tax rate, underlying diluted earnings per share up 13.1%
• Bought and cancelled 150 million shares
• Proposed final dividend is 7.70p, up 12.7%
• Full year dividend of 10.90p, up 13.1%
UK sales growth including petrol
Volume Inflation Like-for-like New stores Total sales
2.0%
1.9% 3.9%
2.8%
Sales up 6.7%
UK trading profit
•
UK trading profit £2,050m, up 7.1%, after start-up costs on U.S. and Direct
•
UK trading margin was 6.1%*, up on last year
* Excluding start-up costs on
U.S.
and Direct
US reporting
•
Sales and start-up losses reported in UK segment
•
US segmental reporting in current year – beginning with Interim Results
•
Expect trading losses to rise this year to around £100m
International
• Sales £13.8bn, up 25.3% at actual rates
•
Trading profits £701m, up 24.3% at actual rates
•
Trading margins rose by 15 basis points before including China
•
A quarter of Group sales and profit -
delivered more than half of Group growth
Asia
• Sales £6.0bn, up 27.2% at actual rates
•
Excluding China, sales up 12.3% at actual rates
•
Trading profit £304m, up 23.6% at actual rates
•
Margins strong, driven by performances in Korea, Thailand and Malaysia
Europe
• Sales £7.8bn, up 23.9% at actual rates
•
Strong sales growth of 22.5% in fourth quarter
•
Trading profit £397m, up 24.8% at actual rates
tesco.com
• Sales £1.6bn, up 31%
•
Profits up 49%* to £124m (includes international dot com operations)
• UK -
over one million regular customers
•
20% growth in new customers
* Before initial operating losses on
Direct
Tesco Direct
Telecoms
Tesco Personal Finance
• Delivering excellent returns to the group
•
Profits broadly flat on last year, after the £31m cost of household insurance claims
• Our share of the cost of flood liabilities £11m
• Reduced exposure on defaulting accounts
• Underlying bad debts down 15% on last year
• Credit card arrears low and falling
J.V.’s
and Associates
• Profits were £75m
•
One-off profits on asset sales were £47m last year
• Excluding these, profit up £16m
Finance costs
• Net finance costs down, at £63m
•
Reduction reflects favourable movements in the IFRS non-cash elements of finance costs
Tax
• Tax charged at an effective rate of 24.0%
•
One-off benefit to deferred tax due to corporation tax change
• Settlement of prior year tax
•
Tax rate for the current year to be around 27.5%
Net debt
•
Increased to £6.2bn from £4.9bn at the last year-end
• Due to three factors– increase in capex– currency movements– Dobbies
acquisition
• Debt maturity –
70% fixed
Pensions
• Award-winning defined-benefit pension scheme
• Started triennial valuation
• IFRS deficit decreased by £112m pre-tax
•
Post-tax, IFRS pensions deficit now around £600m
Capital expenditure
US and China
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
03/04 04/05 05/06 06/07 07/08
£bn
3.0
2.3 2.4
2.8Europe
Asia
Group
UK
3.9US and China
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
03/04 04/05 05/06 06/07 07/08
£bn
3.0
2.3 2.4
2.8Europe
Asia
Group
UK
3.9
Capital outlay
0.0
1.0
2.0
3.0
4.0
5.0
06/07 07/08 08/09
Capex Via acquisitions
£bn
3.84.2 4.2
Operating cash flow
• Operating cash flow was £4.1bn
•
Up from £3.5bn last year and £0.2bn higher than capex
Terry Leahy
Chief Executive
International Operating/trading profit
701
0
200
400
600
800
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08
£m
International
• Sales up by more than 25%
• First time contribution from China
• Positive like-for-like growth 2%
• Profits advanced well, up 24%
• Good margin growth
• Returns on track
Central EuropePoland
CzechRepublic
Europe
Ireland
Hungary Turkey
AsiaMalaysia
Japan
China
International
• Flexible
• Local
• Focus
• Multi-format
• Capability
• Brand
Focus
Brand
Malaysia
Poland
Multi-format
Capability
11.4
13.1
12.712.5
12.2
11.0
12.0
13.0
03/04 04/05 05/06 06/07 07/08
LFL cash return on investment (CROI)* %
International returns progress
* CROI is measured as earnings before interest, tax, depreciation and amortisation, expressed as a percentage of net invested capital.
International returns –
2006/07£m capital invested
LFL CROIc.10% c.15%c.7-10%
Korea
SlovakiaJapan
Malays ia
Turkey
Czech Republic
Poland
ROI
Thailand
Hungary
0
500
1,000
1,500
2,000
2,500
Slovakia
Malaysia
Japan
Turkey
Poland
Czech Republic
Hungary
Thailand
ROI
Korea
0
500
1,000
1,500
2,000
2,500
3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% 21.0%
International returns –
2007/08£m capital invested
LFL CROIc.10% c.15%c.7-10%
Slovakia
Malays ia
Japan
Turkey
Poland
Czech Republic
Hungary
Thailand
ROI
Korea
0
500
1,000
1,500
2,000
2,500
3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% 21.0%
International returns –
2007/08£m capital invested
LFL CROIc.10% c.15%c.7-10%
Slovakia
Malays ia
Japan
Turkey
Poland
Czech Republic
Hungary
Thailand
ROI
Korea
0
500
1,000
1,500
2,000
2,500
3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% 21.0%
International returns –
2007/08£m capital invested
LFL CROIc.10% c.15%c.7-10%
United States
Fresh & Easy -
growing sales
80
90
100
110
120
130
140
150
160
Jan Feb Mar Apr
index
69
30
1 00
25
50
75
100
Extremelysatisfied
Very satisfied Somewhatsatisfied
Not satisfied
Source: AKO Capital/Ipsos
%
Customer satisfaction Asked: How satisfied were you with your shopping experience at Fresh & Easy?
United States
UK
Price
Service
Range
Availability
Step change
Non-food
Tesco Digital
Tesco Direct
Retailing services
• Dot com
• Tesco Personal Finance
• Telecoms
CommunityOn trackto save2 billion
10 millionsold in one
year
CommunityTrainTransport
by canal
Green stores
Summary
• Strong sustainable growth
• Growth is broadly-based
• Investing to drive long-term growth
• Improving returns and benefits for shareholders
• Tackling social and environmental challenges
•
A company for all seasons, well placed to meet the challenges ahead
Q & A
Preliminary Results
15 April 2008
