Currys PLC · LSE:CURY
Currys — FY2023/24 Earnings Presentation
56 slides from Currys's earnings presentation, Jun 27, 2024
Slide 1: Currys plc 2023/24 Results
Currys plc 2023/24 Results 27 June 2024
Slide 2: We help everyone enjoy amazing technology
We help everyone enjoy ~ mazing technology. | a ¥: or a | *
Slide 3: Summary: Strengthening performance
Group Summary: Strengthening performance International UK&I Outlook Nordics getting back on track Continuing UK&I momentum Planning prudently but confidently after a challenging year Focussing on profit and cash Greece disposal completed at generation attractive price Balance sheet strong Well set f
Slide 4: Financial Results
Financial Results Bruce Marsh Group Chief Financial Officer 4
Slide 5: Group performance continues to strengthen
Financial performance Group performance continues to strengthen Revenue Adjusted PBT(1) Free cash flow(1) £8,476m £118m £82m Currency neutral (2)% YoY +10% YoY +£174m YoY Net cash Adjusted EPS(1) Dividend £96m 7.9p £0m +£193m YoY +7% YoY £(35)m YoY (1) Adjusted profit before tax, free cash flow and
Slide 6: UK & Ireland - performance summary
Financial performance UK & Ireland - performance summary Underlying profit development robust, cash flow strengthening Currency Reported 2023/24 2022/23 Like-for-like neutral change YoY change YoY Revenue £4,970m £5,067m (2)% (2)% (2)% Online share of business 45% 45% - - - Adjusted EBIT £142m £170m
Slide 7: UK & Ireland adjusted EBIT margin driven through underlying improvements
Financial performance UK & Ireland adjusted EBIT margin driven through underlying improvements As expected, non-repeat on Mobile one-offs drove profit decline UK&I adjusted EBIT margin bridge Movements Gross margin (40)bps 3.4% • (60)bps headwind for non-repeat of Mobile 2.9% revaluations (40)bps (1
Slide 8: iD Mobile growth is positive in medium term
Financial performance iD Mobile growth is positive in medium term Impact in-year profits and cash flow – growth of iD reduced cashflow by £30m in 2023/24 Profit and cash flow negative on day one: Profit and cash flow over two years: Recognise some revenue Recognise remaining revenue = profit Recogni
Slide 9: UK&I progress can be seen on two-year view
Financial performance UK&I progress can be seen on two-year view Gross margin increases and net cost savings have more than offset sales decline UK&I adjusted EBIT from 2021/22 to 2023/24 Movements £142m Revenue declined £515m, c.£100m headwind 2.9% £117m 2.1% Gross margin has increased +120bps Sign
Slide 10: Nordics - performance summary
Financial performance Nordics - performance summary Strong recovery of both profit and cash despite tough market Currency Reported 2023/24 2022/23 Like-for-like neutral change YoY change YoY Revenue £3,506m £3,807m (3)% (2)% (8)% Online share of business 27% 25% - - - Adjusted EBIT £61m £26m - +163%
Slide 11: Nordics adjusted EBIT margin recovering strongly
Financial performance Nordics adjusted EBIT margin recovering strongly Significant improvement in gross margin has offset operating deleverage Nordics adjusted EBIT margin bridge Movements +190bps Gross margin +190bps • Gross margin recovering strongly • Market stock levels normalising 1.7% (90)bps
Slide 12: Nordic profit remains behind peak year
Financial performance Nordic profit remains behind peak year Clear path to further EBIT% growth Nordics adjusted EBIT from 2021/22 to 2023/24 Movements Profit decline driven by softer market and £142m FX headwinds 3.5% EBIT recovery will come from: • Market recovery £61m • Sales growth 1.7% • Margin
Slide 13: Strong focus on cash generation
Financial performance Strong focus on cash generation Return to positive free cash flow Reported 2023/24 2022/23 change Operating cash flow £246m £244m +£2m Increase in Nordics offset by decrease in UK&I Significantly reduced due to tight cash control and lower Capital expenditure £(48)m £(103)m +£5
Slide 14: Disposal of Kotsovolos
Financial performance Disposal of Kotsovolos Generated £156m net proceeds at attractive valuation Kotsovolos Impact of disposal 22/23 revenue: £637m 96 stores Strengthens balance sheet Year-end net cash £96m Limited dilution Group earnings and cash dilution limited as EBIT reduction offset by lower
Slide 15: Balance sheet focus has improved liquidity
Financial performance Balance sheet focus has improved liquidity Positive free cash flow supported by disposal of Greece Reported 2023/24 2022/23 change Free cash flow £82m £(92)m +£174m Shareholder returns £0m £(35)m +£35m No shareholder return during year Pension £(36)m £(78)m +£42m Scheduled cont
Slide 16: Medium term ambitions & capital allocation
Medium term ambitions & capital allocation 16
Slide 17: Clear medium term margin ambitions
Capital allocation Clear medium term margin ambitions Returning to 3% margins is achievable based on historic performance UK&I adjusted EBIT margin % Nordics adjusted EBIT margin % 4.2% 26.8% 3.5% 3.6% 3.5% 3.4% 3.2% 2.9% 2.9% >3.0% 3.0% 26.0% >3.0% 2.1% 25.5% 1.9% 1.7% 25.0% 0.7% 0.3% £276m £188m £
Slide 18: Confident in opportunity to drive free cash flow over medium term
Capital allocation Confident in opportunity to drive free cash flow over medium term Controlled expenditure and higher profit will drive improved free cash flow £34m £82m Source: Currys internal information 18
Slide 19: Capital allocation priorities
Capital allocation Capital allocation priorities Priorities have not changed Invest to grow business/profits/ Maintain prudent balance sheet cash flow Pay and grow ordinary dividend Pay required pension contributions Surplus capital available to return to shareholders 19
Slide 20: Strong balance sheet expected to stay in a net cash position
Capital allocation Strong balance sheet expected to stay in a net cash position Pension deficit will continue to reduce in line with contributions Net debt & pension deficit Progress over five years: Cash 400 • Year end net cash £96m from 200 £(182)m net debt Working capital facilities 0 • No longer
Slide 21: Financial strength is improving
Capital allocation Financial strength is improving Group met its indebtedness criteria for last 12 months Group assesses its financial strength on a total indebtedness basis Total indebtedness fixed charge cover Total indebtedness leverage Fixed charge cover Leverage >1.5x <2.5x (Operating cash flow
Slide 22: Shareholder returns
Capital allocation Shareholder returns Board has taken decision not to declare a dividend at this year end • Benefitting from lower pension contributions and relaxed lending • Remain focussed on generating free cash flow • Intend to meet our total indebtedness fixed charge cover • Intend to announce
Slide 23: Outlook & guidance
Financial performance Outlook & guidance We expect profit and free cash flow growth Current year outlook • Group trading in early part of the new financial year has been in line with expectations • Group planning confidently for year ahead, expect profit and free cash flow growth • Capital expenditu
Slide 24: Technical cash flow guidance
Financial performance Technical cash flow guidance 2023/24 Guidance Depreciation & amortisation £276m Around £290m Rent P&L £4m Around £5m Cash payments of leasing costs, £(247)m Around £(260)m Increase due to inflation linked rents in Nordics debt & interest Other non-cash items in EBIT £10m Around
Slide 25: Confident in delivering improved cash flow
Summary Confident in delivering improved cash flow Margin improvement alongside tight discipline on capital expenditure, exceptional cash and working capital Adjusted EBIT margin Growing Steady growth At least 3% free cash flow Capital expenditure & Strong balance exceptionals Shareholder returns sh
Slide 26: CEO Update
CEO Update Alex Baldock Group Chief Executive 26
Slide 27: The technology market has been tough
Group The technology market has been tough UK electricals market size(1) Nordics electricals market size(2) 23 170 22 160 (3)% Sales (bnNOK) 21 YoY (3)% Sales (£bn) 150 20 YoY 140 19 130 18 17 120 18/19 19/20 20/21 21/22 22/23 23/24 18/19 19/20 20/21 21/22 22/23 23/24 (1) Source: GfK - UK total mark
Slide 28: Currys is still #1 in the UK&I…
UK&I Currys is still #1 in the UK&I… UK Electricals market share(1) Improving trajectory 1.1% 25.6% 25.6% 25.0% 0.7% 24.1% 24.0% 23.3% (0.5)% (0.8)% (0.9)% (1.2)% 18/19 19/20 20/21 21/22 22/23 23/24 H1 21/22 H2 21/22 H1 22/23 H2 22/23 H1 23/24 H2 23/24 Source: GfK and company reports (1) UK total ma
Slide 29: … and in the Nordics
Nordics … and in the Nordics Nordic market share Improving trajectory 26.8% 29.1% 1.0% 28.6% 28.1% 27.7% 27.5% 27.6% 26.0% 0.2% 25.5% 25.0% (0.5)% (0.9)% 24.2% (1.3)% (1.5)% 18/19 19/20 20/21 21/22 22/23 23/24 H1 21/22 H2 21/22 H1 22/23 H2 22/23 H1 23/24 H2 23/24 Source: GfK and company reports 29
Slide 30: We help everyone enjoy amazing technology
Group strategy We help everyone enjoy amazing technology Capable and Committed Easy to Shop Customers for Life Grow Profits Colleagues 30
Slide 31: Colleague engagement continues to grow
Capable and Committed Colleagues Colleague engagement continues to grow UK&I colleague engagement Nordic colleague engagement 26.8% 78 84 82 77 81 79 78 78 +4pts 77 76 +16 pts YoY Yo4Y 75 68 74 Oct-20 Apr-21 Oct-22 Apr-22 Oct-22 Apr-23 Oct-23 Apr-24 Apr-22 Oct-22 Apr-23 Oct-23 Apr-24 Source: Viva –
Slide 32: Customer satisfaction continues to grow
Easy to Shop Customer satisfaction continues to grow UK&I customer satisfaction Nordics customer satisfaction NPS(1) Happy or Not(2) 26.8% +2 pts Yo2Y +4pts YoY 19/20 20/21 21/22 22/23 23/24 21/22 22/23 23/24 (1) Source: Voice of customer 7 Day Survey 32 (2) Sources: DataWarehouse: Happy or Not cube
Slide 33: Our retail fundamentals are better
Easy to Shop Our retail fundamentals are better The right range… With improved availability UK&I SKUs In-store availability Online availability UK&I Big Box +67% 20k Yo4Y availability 12k +6pts +7pts Yo2Y Yo2Y 19/20 23/24 +20pts … at the right price Yo2Y UK&I price perception(1) +340bps Yo3Y 21/22 2
Slide 34: Customers prefer omnichannel…
Easy to Shop Customers prefer omnichannel… Customers channel usage(1) UK&I sales by channel(2) Nordics sales by channel(2) Total Market Total Market 49% 19% Both online In-store only 49% 24% 31% 33% 35% 35% 62% and in-store 77% 64% 63% 76% 70% 67% 65% 65% 51% 36% 38% 37% 23% 19/20 20/21 21/22 22/23
Slide 35: … and we’re investing to improve both channels
Easy to Shop … and we’re investing to improve both channels Stores Online 35
Slide 36: We’re increasingly selling solutions, and not just products alone
Easy to Shop We’re increasingly selling solutions, and not just products alone Across every major category With improved execution Adoption is growing Computing TVs Instore: Accessories adjacent to products UK&I “Sold with” adoption rate You’ll need: tech essentials 30% +10pts 20% YoY 22/23 23/24 Ap
Slide 37: “Right First Time” is improving customer satisfaction…
Easy to Shop “Right First Time” is improving customer satisfaction… UK&I customer satisfaction Nordics customer satisfaction CSAT(1) Happy or Not(2) Store Purchase Delivery In-store Delivery +2pts +4pts YoY flat YoY Yo2Y +5pts Yo2Y 22/23 23/24 22/23 23/24 21/22 23/24 21/22 23/24 Online Purchase Coll
Slide 38: … and growing profits
Easy to Shop … and growing profits What’s changed: “Right First Time” big box delivery & installation 1 Direct cost savings 2 Lower customer acquisition costs Improved tracking £8m Right First Time savings in 23/24 Better communications Reduces repeat visits and costs Reduced advertising spend Reduc
Slide 39: Services are big, growing and valuable
Customers for Life Services are big, growing and valuable to customers and to Currys We help you We help give We help you get We help get afford the your tech longer the most out of you started amazing tech life your tech 3.8m +6% YoY 4.7m +8% YoY 3.7m +1% YoY 1.8m +34% YoY Credit customers Orders c
Slide 40: Credit is valuable and growing
Customers for Life Credit is valuable and growing UK&I Credit adoption % Nordic Credit adoption % Benefits of Credit 20.1% 17.7% Customers are happier +680bps Yo2Y 13.3% 11.7% 11.9% Buy more 11.2% 10.8% +240bps 9.5% Yo2Y 8.0% 8.2% Adopt more services Shop more often 19/20 20/21 21/22 22/23 23/24 19/
Slide 41: Repair continues to grow
Customers for Life Repair continues to grow Customers value repair Repair is growing We have competitive advantage UK&I active repair plans 10.1m 9.8m 9.8m 9.5m 8.8m 8.9m 8.5m 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Nordics active repair plans 1.9m 1.8m 1.7m 21/22 22/23 23/24 Source: Currys intern
Slide 42: Awareness of our repair is growing with much further to go
Customers for Life Awareness of our repair is growing with much further to go In the UK&I… … and in the Nordics 42
Slide 43: Mobile is back into profit and now gaining share
Customers for Life Mobile is back into profit and now gaining share Currys Mobile market share is growing Driven by iD Mobile – our award winning MVNO Our ‘value’ based network that focuses on what customers really Total handset market share % want from their network provider. Great customer benefit
Slide 44: iD Mobile growth has accelerated
Customers for Life iD Mobile growth has accelerated iD Mobile subscribers by acquisition year Benefits of iD Mobile 2.0m £19.00 25% RPU(1) 1.8m Provides complete customer solution 1.6m 20% 1.4m £13.60 RPU(1) 1.2m 15% Source of recurring revenue 1.0m 0.8m 10% 0.6m Generates profit and cash flow 0.4m
Slide 45: Services have further headroom for growth
Customers for Life Services have further headroom for growth We help you We help you get We help get We help give your afford amazing the most out of you started tech longer life tech Protection | Repair | Refurbish your tech Delivery | Installation | Set-up Connectivity | Help & support Credit Trad
Slide 46: Our strategy drives higher gross margins
Grow Profits Our strategy drives higher gross margins 1 2 Solution selling Higher Services adoption Credit adoption (%) Active protection plans UK&I ‘Sold With’ adoption Nordics accessories adoption rate 20.1% 17.7% +12% +10pts +680bps 1.9m 1.7m 1.8m YoY YoY +80bps 13.3% Yo2Y YoY 10.1m 8.8m 8.9m 22/
Slide 47: Significant cost savings have more than offset inflation
Grow Profits Significant cost savings have more than offset inflation UK&I costs, Yo3Y Actions taken on costs 20/21 Inflation Savings 23/24 Supply chain and service operations +£268m Central IT £(177)m GNFR Nordics operating costs, YoY 22/23 Inflation Savings 23/24 Stores +£30m Marketing £(34)m Sour
Slide 48: Cost savings have further scope
Grow Profits Cost savings have further scope Outsource partners Group synergies Right First Time AI Partnering with Microsoft and Accenture Outsourcing partners +£6m savings targeted in 24/25 Software providers Repeat Visit Rate GNFR suppliers 21/22 22/23 23/24 Long Term First use case = after sales
Slide 49: Increasing reasons to believe in growth, but our plans don’t count on it
Growth Profits Increasing reasons to believe in growth, but our plans don’t count on it AI products Solutions Improvements in both channels B2B UK&I ‘Sold With’ adoption B2B Group share of Nordics B2C and26.8% B2B(1) markets business NOK152Bn 6% NOK122Bn +10pts YoY B2C 26.0% B2B 25.5% B2C B2B 22/23
Slide 50: Outlook
currys Outlook
Slide 51: A leading omnichannel retailer of tech products and services
Summary A leading omnichannel retailer of tech products and services Strategic priorities International Capable and Easy to Shop Customers for Life Robust balance market leader Committed Colleagues sheet(1) Active repair plans 84 UK product sales 10.1m £(805)m £(346)m £(75)m 8.8m 8.9m 21/22 22/23 23
Slide 52: We help everyone enjoy amazing technology
We help everyone enjoy ~ mazing technology. | a ¥: or a | *
Slide 53: 2023/24 tech trends
Group 2023/24 tech trends 80”+ 53
Slide 54: Leading brand in all our markets
Group Leading brand in all our markets 28.2m(1) Households 13.0m(3) Households Tech £20.0bn(2) Annual spend £11.0bn(2) Annual spend Market 63% Online share 35% Online share Our 14,500 Colleagues 9,800 Colleagues 298 Stores 421 Stores(4) Footprint 5.4m Store area sq ft 4.9m Store area sq ft UK&I mark
Slide 55: UK&I: significant cost savings have more than offset inflation
Appendix UK&I: significant cost savings have more than offset inflation Delivered vast majority of £300m target Operating Colleague hourly rates Cumulative three years Gross margin Total expense £11.50 Wages £(32)m £(37)m £(69)m Energy £(5)m £(13)m £(18)m Shipping £(15)m - £(15)m +29% Yo3Y Other £(1
Slide 56: Visit our corporate website
Visit our corporate website www.currysplc.com 56