Woolworths Group Announces Fresh Development Plan | KOSEC

Industry News

& Articles

Woolworths Group Announces Fresh Development Plan

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC - Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

Facebooktwitterlinkedin

In a time where companies make a conscious effort to scale back on capital expenditure, Woolworths Group is clearly doing the opposite. The Group has today, 23rd June 2020, released its latest trading update alongside fresh plans it intends to implement. More notably, Woolworths Group has announced the development of an automated regional distribution facility alongside a semi-automated national distribution centre located at Moorebank Logistics Park in Sydney, New South Wales.

The $700-$800 million investment in technology and construction of both centres, is due for completion before 2023 and will yield benefits in the 2025 financial year. Additionally, the project will be developed by Qube Holdings, who has exchanged four agreements with the Woolworths Group. Specifically, two out of four agreements are related to Lease with the remainder surrounding Development Management Agreements.

Woolworths Group Chairman, Mr Gordon Cairns, believes that pending government approval, the new development will substantially boost its capacity for growth. Additionally, employees stand to benefit through a safer and more conducive working environment. The considerable scale of the upcoming project will, in turn, replace current operations across several distribution centres.

These include the Woolworths’ Sydney Regional Distribution Centre (Minchinbury), Sydney National Distribution Centre (Yennora) as well as its Melbourne National Distribution Centre (Mulgrave). Meanwhile, Wooworths’ temperature-controlled fresh food distribution will continue to operate out of its Sydney Regional Distribution Centre at Minchinbury.

More broadly speaking, the funding for this initiative will come from the Group’s existing capital expenditure and will not affect the Group’s financial health over the construction and installation period. Instead, this long-term investment will, bring down expenses related to the Group’s supply chain over time and generate considerable returns above the cost of capital. Nevertheless, the decision to proceed with the project will result in a one-off pre-tax cost of $176 million and itemised as a significant item in FY20.

Meanwhile, aside to Hotels whose venues remain shut until the end of May, operations across the Group remains strong. Specifically, Australian Food, New Zealand Food and BIG W have all recorded 8.6 per cent, 15.1 per cent and 27.8 per cent increase in Q4 sales respectively. Similarly, Endeavour Drinks posted a 21.4 per cent surge in the same period. Despite a softer April, sales growth for both Australian Food and Endeavour Drinks made a gradual turnaround in the months of May and June.

Likewise, sales in New Zealand Food remained stable throughout the quarter have as restrictions ease, these have trended towards high-single-digit growth. Leading the gains is Big W, who reported exceptionally robust growth during the quarter across all major categories. While inventory levels are running low, the Group is adopting swift measures to address the issue. With the above considerations in mind, Woolworths Group is, therefore, anticipating Earnings before Interest & Tax to fall between $3,200 - $3,250 million.

By Caroline Wong 

Click here for a 7 days access to our Lotus Blue Portal.

Comment on this company

Latest Stories

Iberdrola Receives FIRB Approval for $864m Infigen Takeover

As of the 7th of July, Iberdrola’s takeover bid for Infigen Energy Limited has received.. …

Magellan Financial Releases Funds Under Management Update

Since Magellan Financial suffered its worst monthly net outflows in April, the group was pleased to witness a.. …

Qantas and Afterpay Join Hands For Points

As of the 6th of July, Qantas Airways Limited (ASX: QAN) and Afterpay Limited (ASX: APT)…..

More for you

Infigen Energy Reiterates Stand Towards Takeover Offer

The battle surrounding the takeover offer for Infigen Energy continues.. …

Qantas Opens Share Purchase Plan to Retail Investors

Qantas Airways Limited (ASX:QAN) has on 02 July 2020, opened its Share Purchase Plan to.. …

Cochlear Successfully Obtains FDA Approval for Four New Products

Cochlear has today, 03rd July 2020, been given the green light from the US Food and Drug… …

WiseTech CEO Sells $46m of Shares

WiseTech Global Ltd (ASX: WTC) chief executive and founder Richard White has sold.. …

Woolworths Faces Scrutiny from Media Regulator

In its recent trading update announced last week, Woolworths Group revealed the additional.. …

Brickworks Announces 20-year Deal with Amazon

As of the 30th of June, Brickworks Limited (ASX:BKW) has announced that it has entered.. …

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial