Kingfisher Plc · LSE:KGF
Kingfisher — FY2023/24 Earnings Presentation
55 slides from Kingfisher's earnings presentation, Mar 25, 2024
Slide 1: Kingfisher plc Full Year Results
Kingfisher plc Full Year Results 12 months to 31 January 2024 25 March 2024
Slide 2: Welcome & agenda
Welcome & agenda Thierry Garnier (CEO) Key messages and financial highlights Bernard Bot (CFO) FY 23/24 results Outlook & guidance for FY 24/25 Thierry Garnier (CEO) Strategy update A clear plan to take France to the next level 2
Slide 3: Key messages
Key messages FY financial performance in line with guidance Executing against our strategic priorities at pace A clear plan to take France to the next level Cautious on the overall market outlook in 2024 Focused on market share, and managing costs & cash in the year ahead Strongly positioned for gro
Slide 4: FY financial highlights
FY financial highlights Resilient sales driven by positive UK & Ireland Total sales -1.8%(1) performance LFL -3.1% Sequential improvement in ‘core’ volumes as Core LFL –2.1% price growth tapers E-commerce sales +6.4% YoY, supported by 17.4% penetration strong marketplace sales growth Marketplace 31%
Slide 5: FY 23/24 results
FY 23/24 results Bernard Bot Chief Financial Officer
Slide 6: Key financials
Key financials Gross profit / Retail profit / Adjusted PBT(2) Sales margin % margin % / margin % £12,980m £4,776m 36.8% £749m 5.8% £568m 4.4% Total sales -1.8%(1) -1.6%(1) +10bps(1) -19.5%(1) -130bps(1) -25.1% -140bps LFL -3.1% Statutory profit Free cash flow Net debt Net leverage Pre-tax Post-tax £
Slide 7: Resilient 'core' trading
Resilient ‘core’ trading Sales affected by unseasonal Improving ‘core’ volume trends as weather during the year price growth tapers % of Group sales LFL YoY % Contribution Group ‘core’ LFL YoY change (%) to Group LFL 100% Volume (%) Average selling price inflation (%) Big-ticket 16% -3.8% -0.6% Seas
Slide 8: UK & Ireland: resilience supported by e-commerce & trade
UK & Ireland: resilience supported by e-commerce & trade UK & Ireland LFL +0.8% Market share(2) Category performance B&Q LFL +0.4%, driven Market share gains at Good performance and by positive ‘core’ sales, B&Q, TradePoint and volume improvement in trade and marketplace Screwfix ‘core’ catego
Slide 9: France: market impacted by low consumer confidence
France: market impacted by low consumer confidence France LFL (5.9)% Market share(2) Category performance Castorama LFL (4.8)%, Castorama broadly in Market weakness against weak backdrop line with market reflected broadly across Brico Dépôt LFL (7.1)%; Brico Dépôt weaker categories strikes
Slide 10: Poland: difficult trading environment; improved recent trends
Poland: difficult trading environment; improved recent trends Poland LFL (9.5)% Market share(2) Category performance Sales impacted by weak Market share remains Market weakness consumer sentiment up versus FY 21/22 reflected broadly across Strong comparatives YoY market share gains categor
Slide 11: Geographic summary
Geographic summary FY 23/24 sales Retail operating profit ROP margin % £m % chg(1) % LFL £m % chg(1) % bps chg(1) UK & Ireland 6,387 3.0% 0.8% 555 (8.0)% 8.7% (100)bps B&Q 3,849 0.3% 0.4% Screwfix 2,538 7.3% 1.4% France 4,246 (5.8)% (5.9)% 139 (29.7)% 3.3% (110)bps Castorama 2,219 (4.8)% (4.8)% Bric
Slide 12: Group profit bridge (FY)
Group profit bridge (FY) £m Net cost increase of £38m reflecting: Higher central costs Cost inflation, including YoY increases in pay rates and energy costs Higher Koçtaş JV Higher technology spend including depreciation interest and tax(4) Increase substantially offset through flexing sta
Slide 13: Group profit bridge (H2)
Group profit bridge (H2) £m H2 gross margin +60bps, up YoY in all key regions Net cost decrease of £7m in H2 (95) +0 +37 (5) (60) +96 (29) 288 232 H2 22/23 LFL sales LFL gross Pay rate Tech & other Operating New stores & Post-ROP H2 23/24 Adjusted decline at margin rate % inflation cost inflation co
Slide 14: Strong track record of delivering cost reductions
Strong track record of delivering cost reductions; expect c.£120m of additional cost reductions in FY 24/25 Multi-year programmes with continuous monitoring …delivering significant cost and development… reductions, offsetting inflation Labour productivity – FTEs c.2,600 lower YoY across stores and h
Slide 15: Summary cash flows
Summary cash flows £m Decrease in inventory of £132m: 118 Net inventory down 4% (in constant currency) Net movement in payables and receivables of £14m (474) (97) (363) 1,330 (33) (237) 514 (160) 84 EBITDA Change Net rent Tax, interest Gross Free cash Adjusting Dividends Share FY 23/24 in working
Slide 16: Outlook and guidance for FY 24/25
Outlook and guidance for FY 24/25 Bernard Bot Chief Financial Officer
Slide 17: Majority of our sales from improvements in existing homes
Majority of our sales from improvements in existing homes Kingfisher Group Key demand drivers typical sales breakdown Least correlated to consumer / macro / housing environment Repairs & Age of housing stock maintenance More time spent at home & remote working driving shorter replacement cycles
Slide 18: Cautious on the overall market outlook in 2024
Cautious on the overall market outlook in 2024 Our expectation of total home improvement market – 2024 (YoY % change)(1) Low case High case Resilient consumer but some caution in spending UK & Low-single Improving housing market indicators, but lag expected Flat Ireland digit decline to home imp
Slide 19: FY 24/25 outlook & guidance
FY 24/25 outlook & guidance Low case High case Cautious on UK: low-single digit decline UK: flat overall market France: mid-single digit decline France: low-single digit decline outlook for FY 24/25 Poland: flat Poland: low-single digit growth Continued focus on market share gains Co
Slide 20: Strategy update
Strategy update Thierry Garnier Chief Executive Officer
Slide 21: Our investment thesis
Our investment thesis Attractive and growing Kingfisher has distinct Compelling shareholder home improvement market competitive advantages returns opportunity Large, fragmented and growing #1 and #2 leadership positions Multiple growth drivers industry – c.£160bn in our markets ― ― ― Diversity of ba
Slide 22: Delivering against our strategic priorities
Delivering against our strategic priorities Our strategy aims to maximise the benefits to our customers by combining our distinct retail banners with the scale, strength and expertise of the Kingfisher Group Differentiate Grow by Accelerate Build a data- and win building on our e-commerce led custom
Slide 23: Leveraging the strength, scale and expertise of Kingfisher
Leveraging the strength, scale and expertise of Kingfisher UK & Ireland France Poland Other Iberia & International Romania Margin Margin Key value driver LFL growth Expansion LFL growth Expansion Expansion strengthening strengthening Market leader Market leader Competitive Discount Market leader Com
Slide 24: Significant space opportunity, driven by Screwfix and Poland
Significant space opportunity, driven by Screwfix and Poland FY 23/24 highlights FY 23/24 highlights FY 23/24 highlights FY 23/24 highlights ‘B&Q Local’ sub-branding roll 51 new stores opened in the 5 new stores First two compact stores out to high street stores UK & Ireland; 15 in France ― (1,000 s
Slide 25: Screwfix International: building on our industry-leading model in the UK
Screwfix International: building on our industry-leading model in the UK Good progress in the Leveraging our Exciting long-term French market competitive advantages potential FY 23/24 highlights Brand awareness on par with Future potential 15 new stores; 20 in total closest peer within c.18 months ―
Slide 26: Screwfix International: clear roadmap to profitability in France
Screwfix International: clear roadmap to profitability in France France – approaching positive contribution in year 3 Economics in the UK are Store sales (£m)(1) Positive retail different, where the brand is contribution well known Year 1 store sales in France start slower than UK stores, where bran
Slide 27: Marketplace: more choice driving more customers
Marketplace: more choice driving more customers Winning proposition for Attractive opportunity for customers merchants Top visited sites 1.2+ million SKUs from ― c.1,100 selected merchants Trusted retail brand on diy.com ― c.£200m ― GMV(1) Sophisticated back-end Omnichannel proposition leveraging Mi
Slide 28: Big ambitions for e-commerce and marketplace
Big ambitions for e-commerce and marketplace Continued scaling of marketplaces across banners FY 24/25 plan Future potential Reach 2 million SKUs on diy.com, opening to non-UK 30% e-commerce Group merchants sales penetration ― ― Launch and scale in France and One third of e-commerce Poland leveragin
Slide 29: Retail media: a new and exciting income stream
Retail media: a new and exciting income stream FY 23/24 highlights Launched in both banners in France and B&Q ― Building the Group partnerships with CitrusAd and Unlimitail foundations ― Created dedicated retail media team FY 24/25 plan Launch at Screwfix, Castorama Poland, Iberia Improving and Roma
Slide 30: Trade strategy showing proven success
Trade strategy showing proven success Extending trade proposition Growing trade to France and Poland… …with strong early results penetration Presence in 67% of B&Q estate Future potential ― 21 new trade counters Active members +6% YoY >£1bn TradePoint sales ― ― ― c.40 new dedicated sales partners H2
Slide 31: A clear plan to take France to the next level
A clear plan to take France to the next level Thierry Garnier Chief Executive Officer
Slide 32: Strong foundations established over the last 4 years
Strong foundations established over the last 4 years 2019 2020 2024 Phase 1: Fixing the basics Phase 2: Implementing Phase 3: Taking France “Powered by Kingfisher” to the next level Range correction and extension, with Rebalanced local/Group for greater Simplifying the ‘France’ organisation more loc
Slide 33: Now taking France to the next level – simplicity, performance and profitability
Now taking France to the next level – a new plan focused on simplicity, performance and profitability Simplifying ‘France’ structure ― All strategic and operational activities moving to banners, Simplifying the increasing autonomy and agility, and streamlining head offices France ― organisation Some
Slide 34: A clear and actionable plan for Castorama
A clear and actionable plan for Castorama Restructuring and Improving operating Growing sales No ‘big bang’ of capex modernising the margin efficiency densities required store network Focused on c.1/3 of Strengthening cost Enhancing and growing Spread over next Castorama’s 95 stores that reduction p
Slide 35: Rightsizing: encouraging initial results
1. Rightsizing Rightsizing: encouraging initial results Driving material uplift in Contribution margin Space reductions of c.25% sales densities improvement Total selling area(1) Sales densities(1) Retail contribution margin(1) 5% -25% +39% -1% Pre Post Pre Post Pre Post Commencing rightsizing of 3
Slide 36: New concept driving material uplift in performance at Castorama Englos
2. Modernising New concept driving material uplift in performance at Castorama Englos Simplified customer journey - 130 aisles to 6 areas, Reorganised focused on inspiration and projects sales area ― without c.6 months to complete, with store remaining open increasing store ― size High IRR - capex p
Slide 37: Simplifying the customer journey
2. Modernising Simplifying the customer journey “Catalogue”: fast & simple “Boutique”: inspiration & projects Come join us to tour Castorama Englos! 9-11 July 2024: store tours in Poland & France Contact the IR team 37
Slide 38: Transfer Castorama stores to Brico Dépôt
3. Brico Dépôt transfers Transfer Castorama stores to Brico Dépôt: creating more value for the Group Pontault-Combault Case study Reduced space More than 2x Material uplift in by c.50%(1) sales densities(2) profitability(3) Transferring 1 low-performing Castorama store to Brico Dépôt in FY 24/25 (
Slide 39: Franchising: a strategic option with significant upside
4. Franchising Franchising: a strategic option with significant upside Operating of store by franchisee partner with right of use of Castorama brand in exchange for a royalty fee ― Common practise Franchisee leverages Kingfisher’s “powers”: technology, in French retailing OEB (via wholesale) and buy
Slide 40: Building on the exciting potential of Brico Dépôt
Building on the exciting potential of Brico Dépôt Capturing trade Driving LFL sales opportunity and Improving productivity developing new formats Established “discounter” Nationwide roll-out of trade Head office optimisation and credentials through offer proposition (including benefits from France a
Slide 41: Summary
Summary Thierry Garnier Chief Executive Officer 41
Slide 42: Summary
Summary FY financial performance in line with guidance Executing against our strategic priorities at pace A clear plan to take France to the next level Cautious on the overall market outlook in 2024 Focused on market share, and managing costs & cash in the year ahead Strongly positioned for growth i
Slide 43: Strongly positioned for growth in 2025 and beyond
Strongly positioned for growth in 2025 and beyond Significant structural changes Much enhanced offer for Investments in key areas to in last 4 years our customers drive growth Rebalanced: Clear responsibilities More convenience: New stores Screwfix & Castorama Poland: for each banner, supported by a
Slide 44: Strongly positioned for growth in 2025 and beyond
Strongly positioned for growth in 2025 and beyond Significant structural Much enhanced offer for Investments in key areas to changes in last 4 years our customers drive growth Strong cash generation Free cash flow in FY 25/26 of c.£450m and >£500m per annum from FY 26/27 Disciplined and clear capita
Slide 45: Q&A
Q&A
Slide 46: Appendices
Appendices
Slide 47: FY 24/25 technical guidance
FY 24/25 technical guidance(1) Space Sales impact of c.+1.5% from net space growth, largely from Screwfix and Castorama Poland New businesses ‘Other’(2) retail losses of c.£30m (FY 23/24: £30m) Depreciation and Anticipate c.£680m (FY 23/24: £641m) amortisation Central costs Anticipate c.£65m
Slide 48: Confident in medium-term growth and cash generation opportunity
Confident in medium-term growth and cash generation opportunity LFL sales growth driven by our strategic focus areas including e-commerce and marketplace, OEB, trade Sales to grow ahead of ― our markets Sales impact of c.+1.5% to +2.5% from annual net space growth over the medium term, primarily dri
Slide 49: Disciplined approach to capital allocation
Disciplined approach to capital allocation Invest in attractive Sustainable Returns to growth opportunities dividend growth shareholders Prioritise growth Progressive growth Surplus capital to be opportunities that of dividends returned via share accelerate our strategy ― buybacks or ― Target cover
Slide 50: Disciplined approach to capital allocation
Disciplined approach to capital allocation Majority of our capex spend is “growth”, driven by two key priorities: our store estate and technology £m £363m £363m Other(1), 6% We appraise returns on Maintenance, Refreshing a range of metrics c.40% existing stores, 35% NPV, payback period vs hurdle and
Slide 51: Surveys highlight improvement in sentiment, but mixed intentions
Surveys highlight improvement in sentiment, but mixed intentions to move home and undertake home improvement Significantly improved outlook on personal Broadly stable intent to move home or buy finances in UK & Poland a home for the first time in UK & France % of consumers thinking state of personal
Slide 52: ADR programme
ADR programme Kingfisher ADRs trade on OTCQX – the premier tier of the U.S. Benefits of ADRs to U.S. investors: over-the-counter market under the following information: Symbol KGFHY Clear and settle according to normal U.S. standards CUSIP 495724403 Ratio 1 ADR : 2 ORDs Offer the convenience of stoc
Slide 53: Contacts
Contacts Investor Relations Media Relations Teneo Tel: +44 (0)20 7644 1082 Tel: +44 (0)20 7644 1030 Tel: +44 (0)20 7420 3184 Email: investorenquiries@kingfisher.com Email: corpcomms@kingfisher.com Email: Kfteam@teneo.com 53
Slide 54: Disclaimer
Disclaimer You are not to construe the content of this presentation as investment, legal or tax advice and you should make your own evaluation of the Company and the market. If you are in any doubt about the contents of this presentation or the action you should take, you should consult a person aut
Slide 55: Thank you
Thank you