Presentation by Edward Kennedy, President & CEO The North West Company October 5, 1999; Toronto
“WHY INVEST IN NORTH WEST?” 1. Who We Are 2. Growth 3. Income
# of stores Revenue Canada = 151 $494 million Alaska = 25 $135 million
“WHY INVEST IN NORTH WEST?” Who We Are ! 1. 2. Growth 3. Income
Population Under 25 Years of Age 34% 49% Canadian Average NWC Markets 2.3% 1.1% Source: Statistics Canada Census 1996 Northern Canada Canadian Growth Rate Growth Rate
ECONOMIC DRIVERS ECONOMIC DRIVERS URBAN MARKET Lower interest rates Increased housing Increased home improvement, Higher consumer turnover appliances, electronic sales confidence NATURAL RESOURCES MARKET Resource price cycle New capacity Jobs, overtime, increased employment and spending in all non-food categories. ABORIGINAL MARKET Increased employment, Population growth, Increased spending on spending in all non-food housing & infrastructure Political action, Land categories; claims Nunavut
“V2K+” GROWTH STRATEGIES " Achieve Canadian productivity gains # Increase Canadian market share $ Accelerate Alaska performance trend
" Achieve Canadian Productivity Gains % Admin. expenses reduced by $5 mm % Eliminate $35 million in under- performing assets % Gains from technology (central MMS, auto replenish, tickets-off, auto receiving)
# Increase Canadian Market Share % Expand in-store offer for food, everyday needs and financial services % Expand catalogue offer for apparel, AF&E % Shift to more “extreme value” price points % Build people capability in foods % Achieve 5% comp. sales growth by 2000
$ Accelerate Alaska Performance Trend EBITDA $7.0 $6.3 $6.0 $5.0 $3.6 $3.3 $4.0 $3.0 $2.2 $2.2 $1.8 $2.0 $0.6 $1.0 $0.0 1994 1995 1996 1997 1998 1998 1999 6Mos. 6Mos.
$ Accelerate Alaska Performance Trend % Leverage local market knowledge curve % Increase “mid-sized” new store growth rate % Move on opportunities created by local market consolidations % Exit “can’t be fixed” locations
EARNINGS PER UNIT* * Earnings per share for 1995 - 1997 Before Unusual Items $1.82 $2.00 $1.40 $1.50 $1.18 $0.92 $1.00 $0.70 $0.68 $0.50 $0.00 1995 1996 1997 1998 1998 1999 6Mos. 6Mos.
“WHY INVEST IN NORTH WEST?” Who we are ! 1. Growth ! 2. 3. Income
NWF STRUCTURE NWF STRUCTURE UNITHOLDERS EACH UNIT 100% - 15 M units 100% - 15 M units NWF NWF $11.67 sub debt @ 12.5% 100% - sub debt $175 M 1 common share 100% common 15 M shares NWC NWC Income distributable per unit: 1998 - 1.25 1999 - 1.44
PRE-TAX CASH FLOW $ in millions $44.1 $42.2 $45.1 50.00 $37.9 40.00 $33.3 30.00 $22.0 20.00 10.00 1994 1995 1996 1998 1999 0.00 1997 6 Mos.
DEBT : EQUITY 250 1.35 $ Millions 1.3 1.3 1.30 200 177 175 172 172 1.25 169 160 147 160 178 164 150 1.2 1.20 140 1.15 100 1.1 1.1 1.10 1.1 50 1.05 0 1.00 1994 1995 1996 1997 1998 SA 99 Debt Equity debt : equity
“WHY INVEST IN NORTH WEST?” Who we are ! 1. Growth ! 2. Income ! 3.
MERCHANDISING INDICES: MERCHANDISING INDICES: FOOD STORES 57.8% NWF.UN 18.5% SPECIALITY STORES 14.0% TSE 2.1% MERCHANDISING 0.3% DEPARTMENT STORES -21.1% WHOLESALE DIST. -31.1% HOSPITALITY -54.7%
OTHER COMPARABLES: Closed Apr.5 /99 Yield % P/E Canadian Tire 41.10 1.0 19.2 Sears Canada 26.00 0.9 18.3 Wal-Mart 95.38 0.4 49.7 Empire 25.30 1.1 5.5 Loblaws 40.50 0.5 38.2 Safeway 51.50 -- 32.9 NWF.UN 14.35 8.3 7.9* * Does not include a $0.74 charge related to Canadian re-structuring
QUESTIONS?
For additional information on the Fund or the Company, please call 204-934-1501 or toll-free 1-800-563-0002; fax 204-934-1317; e-mail rlaxdal@northwest.ca….or visit our web site www.northwest.ca.
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