Howden Joinery Group Plc · LSE:HWDN
Howden Joinery — H1 2019 Earnings Presentation
45 slides from Howden Joinery's earnings presentation, Jul 25, 2019
Slide 1: 2019 Half Year Report
2019 Half Year Report 25 July 2019
Slide 2: Andrew Livingston, Chief Executive Officer
Andrew Livingston Chief Executive Officer 1 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 3: A positive first half for Howdens
A positive first half for Howdens Operating Profit increased at a higher rate than revenues Sales +5.5% Operating Profit +11.5% More profitable balance between volume and price Continued to make investments in the business 2 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 4: Our customers
Our customers 470,000 Credit and Cash Trade Accounts Improved customer loyalty Sales per customer increased More kitchens per customer Higher returns on customer acquisition New Customer Spend Profit per new account 3 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 5: Helping our trade customers achieve exceptional results
Helping our trade customers achieve exceptional results Locally empowered depot management with dedicated supply Customer partnerships - Trade only Customer feedback sessions - Over 1,000 of our customers have attended these sessions 4 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 6: Initiatives to increase volumes and profits
Initiatives to increase volumes and profits DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 5 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 7: Depot Evolution, Range Management, Marketing & Digital
DEPOT EVOLUTION RANGE MANAGEMENT MARKETING & DIGITAL INTERNATIONAL 6 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 8: New depot format to create best business environment for our customers
New depot format to create best business environment for our customers Total of 88 depots have been re-racked (including new format depots) 7 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 9: New depot openings
New depot openings Romsey depot 14 new UK depots including 5 in Northern Ireland On track to open around 40 UK depots this year 8 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 10: Smaller sized depots
Smaller sized depots 4 smaller sized depots opened c.16 in 2019 in total Potential for 850 UK depots 9 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 11: Testing roll-back opportunity
Testing roll-back opportunity Converted 3 older depots Park Royal Positive feedback from Depot teams and customers A further 8 by September Trade these 11 through P11 Swansea Guildford 10 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 12: Depot Evolution, Range Management, Digital Development
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 11 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 13: New product introductions
New product introductions 12 Howdens 2019 Interim Results
Slide 14: New product introductions
New product introductions 13 Howdens 2019 Interim Results
Slide 15: New product introductions
New product introductions 14 Howdens 2019 Interim Results
Slide 16: Updated our traditional cabinet
Updated our traditional cabinet 15 Howdens 2019 Interim Results
Slide 17: Introduced new anthracite coloured storage systems
Introduced new anthracite coloured storage systems 16 Howdens 2019 Interim Results
Slide 18: Extended range of worktops
Extended range of worktops 17 Howdens 2019 Interim Results
Slide 19: 25 new Lamona appliances
25 new Lamona appliances 18 Howdens 2019 Interim Results
Slide 20: Lamona products now have 3 year guarantee
Lamona products now have 3 year guarantee 19 Howdens 2019 Interim Results
Slide 21: Roll-out of new hardware lines
Roll-out of new hardware lines Best performing lines identified from initial trial results 250 lines being introduced across estate Roll-out completed ahead of Period 11 20 Howdens 2019 Interim Results
Slide 22: Pre-finished doors save fitting time
Pre-finished doors save fitting time Installation time reduced by 25 mins per door 21 Howdens 2019 Interim Results
Slide 23: Disciplined kitchen range management: service & profits
Disciplined kitchen range management: service & profits 8 new ranges in H1 Total of 12 new ranges for the year 15 ranges exited in H1 21 exited by year end Around 65 current ranges by year end 22 Howdens 2019 Interim Results
Slide 24: New commercial structure with leadership in place
New commercial structure with leadership in place Clearer accountability for ranging decisions Accessing of Supply Chain benefits Longer term product planning First to market at best value for customer 23 Howdens 2019 Interim Results
Slide 25: Depot Evolution, Range Management, Digital Development
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 24 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 26: Reinforcing Howdens' model and depot relationships
Reinforcing Howdens’ model and depot relationships Increase awareness Improve communications Streamline process 25 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 27: Increasing builder and consumer awareness
Increasing builder and consumer awareness Appearing in more search 8x results per week Growth in weekly visits 42% to website Contact engagements 30% per week 26 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 28: Product content enriched and search facilities improved
Product content enriched and search facilities improved 80% Visits now direct to category pages Views of under- Hardware 50% represented product categories increasing Refining style & product selection easier 27 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 29: Streamline operating processes to improve productivity
Streamline operating processes to improve productivity Improve communication with local depots Manage payment and access invoices More efficient account opening process 28 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 30: Depot Evolution, Range Management, Digital Development
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 29 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 31: Potential for a viable business in France
Potential for a viable business in France 1 depot opened in H1, 4 planned for H2 Re-branding New business leader appointed Germany & the Netherlands closures 30 completed Howdens 2019 Interim Results
Slide 32: Mark Robson, Deputy CEO and Chief Financial Officer
Mark Robson Deputy CEO and Chief Financial Officer My CEO and Chief Financial Officer
Slide 33: Highlights
Highlights Revenue, £m Gross profit, £m, and margin, % Operating profit, £m 675 HJ UK Continental Europe 425 80 652.6 650 61.9% 14.5 619.4 400 75 77.7 625 14.7 638.1 61.3% 404.2 600 604.7 375 70 575 379.5 69.6 550 65 350 525 500 325 60 2018 2019 2018 2019 2018 2019 HJ UK: +5.5% Profit before tax, £m
Slide 34: Revenue
Revenue Total +5.5% 2019 UK depot revenue £638.1m LFL +3.4% France & Belgium 2019 continental Europe revenue £14.5m +4.0% in €s 33 Howdens 2019 Interim Results
Slide 35: Profit before tax; Group gross profit margin
Profit before tax Group gross profit margin 2018: 61.3% 2019: 61.9% Profit before tax Gross profit £m £m Price Gross 37 Change profit £25m 25 Volume Volume & mix Currency & mix (revenue) (COGS) (2) 404.2 Change (4) 2 Cost pressures, £9m cost savings, Interest etc. etc. (8) 1 78.1 68.8 Operating cost
Slide 36: Operating costs
Operating costs Netherlands Change & Germany £17m closure costs Other 5 (3) £m Growth 326.5 related 4 Older depots 4 New depots 7 309.9 • 2018 2019 35 Howdens 2019 Interim Results
Slide 37: Income statement
Income statement £m H1 2019 H1 2018 Revenue 652.6 619.4 Cost of goods sold (248.4) (239.9) Gross profit 404.2 379.5 Operating costs (326.5) (309.9) Operating profit 77.7 69.6 Net interest 0.4 (0.8) Profit before tax 78.1 68.8 Tax (16.4) (14.3) Profit after tax 61.7 54.5 36 Howdens 2019 Interim Resul
Slide 38: EPS, dividends & share repurchase
EPS, dividends & share repurchase £m H1 2019 H1 2018 Earnings per share 10.3p 8.9p Interim dividend per share 3.9p 3.7p Shareholder Returns 2018 H1 2019 Total Feb 2017 £80m programme b/fwd 32 - 32 Mar 2018 £60m programme 30 30 60 Feb 2019 £50m programme - 16 16 Total share repurchases 62 46 Dividend
Slide 39: Net cash and cash flow
Net cash and cash flow £m H1 2019 H1 2018 Opening net cash 231.3 241.1 Operating cash flows before movements in working capital 96.7 85.4 Working capital (9.8) (33.4) Capital expenditure (24.1) (17.1) Interest (net) 0.4 0.3 Tax paid (20.8) (21.1) Share repurchases (46.3) (38.3) Pension contribution
Slide 40: Working capital
Working capital Working capital increased £9.8m - stock up £21.3m - debtors up £17.0m - creditors up £28.5m 39 Howdens 2019 Interim Results
Slide 41: Pension scheme deficit
Pension scheme deficit £m Asset returns 126 IAS19 basis Contribution 19 Current service costs + admin + interest 9 Net discount 36.0 rate Change 107 £29.1m 6.9 • Dec Jun 2018 2019 40 Howdens 2019 Interim Results
Slide 42: Recent trading and outlook for 2019
Recent trading and outlook for 2019 UK depot sales in Period 7 up 7.5% (LFL +4.8%) 2019 plans on track Brexit planning 41 Howdens 2019 Interim Results
Slide 43: Andrew Livingston, Chief Executive Officer
Andrew Livingston Chief Executive Officer 42 Howdens Howdens 2019 2019 Interim Interim Results Results
Slide 44: Summary
Summary Positive first half Invested in infrastructure, people, depots and product Pleased with responses to initiatives P7 UK depot sales +7.5% Cautious on market conditions With Period 11 ahead of us, on track with our plans for the full year 43 Howdens 2019 Interim Results
Slide 45: 2019 Half Year Report
2019 Half Year Report 25 July 2019