Slide 1: 2024 Half Year Results
2024 Half Year Results 25th July 2024
Slide 2: Andrew Livingston, Chief Executive Officer
Andrew Livingston Chief Executive Officer
Slide 3: Encouraging 1st Half performance in a challenging marketplace
Encouraging 1st Half performance in a challenging marketplace Results met expectations and we are on track for 2024 Group Sales + 4.3% v 2023 * and +48% v 2019 Gained kitchen market share in the UK, overall market size declined • Entry level kitchens accounted for more of the kitchens we sold • “Kit
Slide 4: Performance demonstrates strength of our in-stock model
Performance demonstrates strength of our in-stock model founded on local relationships Reflects combination of strong product line-up, high stock availability, industry leading service levels and a very engaged team Benefits of ongoing investment in customer focused strategic initiatives Record numb
Slide 5: Robust business model in markets with significant growth opportunities
Robust business model in markets with significant growth opportunities As expected, market conditions and trends so far broadly unchanged from those in 2023 Well-prepared for such market conditions Model capable of delivering sustainable market share gains Addressable UK markets in which we have an
Slide 6: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 7: Paul Hayes, Financial Review
FINANCIAL REVIEW Paul Hayes Chief Financial Officer
Slide 8: Financial highlights
Financial highlights Encouraging 1 st Half in more challenging markets Group sales were 4.3% ahead with further market share gains £m H1 2024 H1 2023 Growth Revenue 966.3 926.9 +4.3% Maintained sector leading gross margins Gross profit 587.3 565.4 Gross margin % 60.8% 61.0% Operating costs included
Slide 9: Revenue growth
Revenue growth Continued to deliver market share gains UK (£m) H1 2024 H1 2023 Growth Challenging macro-economic conditions Revenue 933.7 895.1 +4.3% Same depot basis 919.7 894.3 +2.8% Disciplined approach to pricing to optimise volumes Number of depots 850 816 +34 Ongoing investment in new depots,
Slide 10: Profit before tax
Profit before tax Continued investment in strategic initiatives to drive future growth Price increases and volume growth achieved in £m challenging markets Volume / mix Price Efficiency and productivity actions in COGS including (revenue) Strategic recent investments in manufacturing £16m Product co
Slide 11: Operating costs
Operating costs Inflationary cost increases broadly offset by productivity and efficiency savings Investment in strategic initiatives included: £m Change £22m Existing • New UK and international depots UK Other Other depots strategic • Depot revamps initiatives International growth • New product int
Slide 12: Cashflow
Cashflow Strong cash generation supports investments and progressive dividend growth £m 2022 Dividend of £89m paid in the period £m 2024 2023 Opening cash 282.8 308.0 Working capital movements : Operating cash flows1 189.5 170.8 • Stock increase £27m Working capital increase (106.7) (108.9) • Debtor
Slide 13: Earnings per share and dividends
Earnings per share and dividends Delivering sustainable dividend growth and attractive returns to shareholders H1 2024 H1 2023 Change Basic earnings per share 15.4p 15.4p - Earnings per share in line with prior year (p per share) FY2023 final dividend paid in May 2024 Share buybacks - £50.0m 2024 in
Slide 14: Technical guidance for 2024
Technical guidance for 2024 Income statement Revenue phasing from early start to 2024 Reverses in H2 Benefit of non-repeat of 53rd week in 2023 +£17m in H2 Continuation of higher freight costs -£5m in H2 A full year impact from foreign exchange sensitivity +/- €0.01 = £1.6m +/- $0.01 = £0.7m Cashflo
Slide 15: Summary
Summary Performed well in the 1st Half in a more challenging marketplace Ongoing productivity and efficiency savings Strong balance sheet and continued investment in growth Recent performance in line with our expectations Despite ongoing macro-economic headwinds, full year outlook unchanged 15
Slide 16: Andrew Livingston, Chief Executive Officer
Andrew Livingston Chief Executive Officer
Slide 17: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 18: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 19: Extending the UK footprint
Extending the UK footprint High service levels valued by customers Modern working and trading environment Cost effective updated format Scope for around 1,000 depots in the UK 840 trading at the end of 2023 Plan to open c. 30 new depots in 2024 10 depots opened in the 1 Half st 19
Slide 20: Converting more depots to the updated format
Converting more depots to the updated format Positive feedback from depot teams and customers 274 depots reformatted by end of 2023 ~54% 52% of depots opened c. 85 revamps in 2024 in the old format revamped by end of 2024 26 revamps completed in the 1 Half st ~64% of all depots trading in the update
Slide 21: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 22: Sales of new product make a significant contribution
Sales of new product (“NPI”) make a significant contribution to our performance Upgraded new product programme in recent years 17% of total UK product sales were of new product introduced in the last 18 months 28% of total UK product sales were of new product introduced this year and two prior years
Slide 23: Efficient range management for best availability and profitability
Efficient range management for best availability and profitability Re-organised range architecture and removed duplications in recent years Improved the balance between introductions and discontinuations More efficient NPI testing enables us to bring more proven colours and styles to market more qui
Slide 24: Market leading and competitively priced product
Market leading and competitively priced product is a key feature of our model Price featured prominently in 2023 and as expected, is doing so again in 2024 For 2024 As enhanced by 2024 NPI, well positioned in all product categories Emphasis on value for money and choice at all price points Includes
Slide 25: Colours for our entry level ranges
2024: Colours for our entry level ranges Greenwich Marine Blue 25
Slide 26: Colours for our entry level ranges
2024: Colours for our entry level ranges Witney Reed Green 26
Slide 27: Best-selling paint to order colours added to Halesworth family
2024: Best-selling paint to order colours added to Halesworth family Halesworth Antique Rose 27
Slide 28: Best-selling paint to order colours added to Halesworth family
2024: Best-selling paint to order colours added to Halesworth family Halesworth Seafoam 28
Slide 29: Colours for mid-level ranges
2024: Colours for mid-level ranges Bridgemere Linen 29
Slide 30: Colours for mid-level ranges
2024: Colours for mid-level ranges Bridgemere Sage Green 30
Slide 31: Colours for mid-level ranges
2024: Colours for mid-level ranges Clerkenwell Super Matt Black 31
Slide 32: Colours for mid-level ranges
2024: Colours for mid-level ranges Clerkenwell Gloss Reed Green 32
Slide 33: New paint to order service for premium kitchens
New paint to order service for premium kitchens Favourable reception since launch in 2nd Half of 2023 Priced at a premium to colours available from stock For 2024 15 Paint to order colour choices + nine from stock Five new colours to refresh the palette in 2nd Half More bespoke look, competitively p
Slide 34: Developing a market leading solid work surface capability
Developing a market leading solid work surface capability Solid worktops often associated with sales of higher priced kitchens and a growing market segment Our manufacturing capacity for these products is now amongst the largest in UK Orders have increased again in 2024 Industry leading template to
Slide 35: Innovating in other product categories
2024: Innovating in other product categories Herringbone Timeless Oak Granite Composite Sink Dark Grey Karndean Coastal Fog Howdens Black 5 Panel Pre-Finished Tinted Glazed door Lamona Built In Bean to Cup Black Coffee Machine 35
Slide 36: Fitted bedroom ranges available nationwide
2024: Fitted bedroom ranges available nationwide Suits skills of customers who fit kitchens High cabinetry content, matching our manufacturing capabilities Ranges developed in-house utilising existing Bridgemere Greenwich manufacturing and supply infrastructure Navy Dove Grey 16 new ranges in four l
Slide 37: Reinforced focus on price and promotions
Reinforced focus on price and promotions which demonstrate the value we offer and promotes footfall 37
Slide 38: High stock availability is a key component of our offer
High stock availability is a key component of our offer; our service level from primary to UK depots was 99.97% in 1st Half of 2024 38
Slide 39: Enhancing customer service levels through Daily Traders initiative
Enhancing customer service levels through “Daily Traders” initiative Daily Traders initiative rolled out to all UK depots in 2023 Initiative to improve customer service levels and sales By optimising in-depot stock holdings of best-selling items and associated range completers In 2024 Stock manageme
Slide 40: Network of XDCs and rebalancing of where we hold stock
Network of XDCs combined with a rebalancing of where we hold stock to facilitate best availability Weekly Daily 40 40
Slide 41: A key enabler to delivering high levels of service and availability
A key enabler to delivering the high levels of service and availability which differentiate our offer Mainland coverage in place Focus is now on using these assets most efficiently Annualised capacity reduced (enabled by “TED” re- ordering system and Daily Traders initiative) Lower operating costs B
Slide 42: Increased manufacturing capacity and broader capability
Increased manufacturing capacity and broader capability Full year capacity of the new furniture lines at Howden of c.2m pieces for 2024 v C.600,OOO pieces manufactured in 2023 Ability to make a variety of kitchen furniture Same quality as externally sourced product Lower cost and reduced lead time t
Slide 43: Full year paint to order capability
Full year “paint to order” capability Investment in two new lines in 2023 Facilitated our paint to order initiative for our premium kitchens Located in purpose-built facility Industry leading capability for these products Achieving the target turnaround time between order and the kitchen being ready
Slide 44: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 45: Increased usage of on-line trade account facilities
2024 Increased usage of on-line trade account facilities which are valued by customers & depots C. 44k new account registrations C. 50% of customers had an online account at the half year-end + 17% total user views of trade platform c. 80% of users looking at their individual confidential prices Onl
Slide 46: High levels of engagement with our web platform and social media
2024 High levels of engagement with our web platform and growing social media presence 11.6m site visits #1 for fitted kitchen site visits amongst specialists Page view metrics at consistently high levels c. 669k followers across social media sites 21% up on 2023 c. 5.5m monthly engagements 46
Slide 47: New digitised in-stock management system, Live-Stock
New digitised in-stock management system, “Live-Stock” Record and pick deliveries, check allocations and determine depot stock levels Frees up time for depots to use more productively (amongst other benefits) A System now operating in all UK depots Enables complete visibility of stock holdings throu
Slide 48: Upgraded Click and Collect capability
2024 Upgraded “Click and Collect” capability The stock surety Live-Stock and other initiatives provide enable us to upgrade significantly our “Click and Collect” service Now available to all online account holders Check real time availability of stock on a depot–by- depot basis Review their individu
Slide 49: Initiatives contributing to increase in digitally sourced leads
2024 Initiatives are contributing to an increase in digitally sourced leads for depots Digital depot leads of all types more than doubled in 1st Half (from a low base in 1st Half 2023) Represent high-quality leads for depots and customers including for kitchens Significant proportion convert to sale
Slide 50: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International
Slide 51: Performance of operations based in France
Performance of operations based in France progressed v 2nd Half of 2023 ; on track to deliver increased sales this year, in a challenging market c.€4bn kitchen market* City-based approach adopted from 2019 60 depots trading at end of 2022 (twice the 2020 total) Opened five more at the end 2023 Rate
Slide 52: Encouraging sales in the Republic of Ireland
Encouraging sales in the Republic of Ireland ; opening more depots in 2024 Market suits our differentiated model Opened for business in 2022, using a similar location strategy to France Supported by UK infrastructure and group digital platform Re do with five new Opened five depots around Dublin in
Slide 53: Strategic initiatives delivering value across all price points
Well planned on our strategic initiatives as we deliver value to customers across all price points Maintaining stock policies at 2023 levels to protect high availability All new kitchen ranges confirmed for 2024 in stock well ahead of peak trading Rooster promotional activity and other price initiat
Slide 54: Encouraging start to 2024, on track to meet expectations
2024: Encouraging start to 2024, and we are on track to meet our expectations for the business this year We expect market conditions and trends will continue to be broadly unchanged from those in 2023 Well prepared for the challenges and opportunities that such market conditions may present Aim to r
Slide 55: Questions & Answers
bd HOWDENS Questions & Answers
Slide 56: The UK's #1 Specialist Kitchen and Joinery Supplier
Appendix The UK’s #1 Specialist Kitchen and Joinery Supplier An introduction to Howdens July 2024
Slide 57: UK's leading specialist trade-only kitchen and joinery supplier
We are the UK’s leading specialist trade-only kitchen and joinery supplier 2023 FINANCIAL HIGHLIGHTS ATTRACTIVE END MARKETS % Howdens revenue £2.3bn £340m 60.8% 90% 95% Revenue Operating profit Gross margin Repair Maintenance Residential & Improvement (RMI) 46.5p 21.0p £283m 10% Non-residential 5% N
Slide 58: Helping our trade customers achieve exceptional results
Our business is about helping our trade customers achieve exceptional results CORE STRENGTHS Empowered depot teams support the needs of the local builder Trade only focus and the best local prices. Local delivery model – 85% of customers are less than 5 miles from a Howdens depot. Product leadership
Slide 59: A unique business model focused on long-term customer relationships
A unique business model focused on long-term customer relationships and exceptional service Market leading Kitchen An empowered, depot-led business, close to the Trade only: focused on our customers’ needs and Joinery product ranges trade Products immediately Competitive available locally confidenti
Slide 60: Our markets are large and attractive with significant growth potential
Our markets are large and attractive with significant future growth potential UK market by revenue1 UK market revenue by vendor category1 Contract Trade specialists specialists 24% 10% 34% 32% Independents Retail Howdens £2.2bn £12bn* NEW + in 2024 * Established Kitchens and joinery markets only (ex
Slide 61: Long-term drivers of the kitchen and joinery market
The long-term drivers of the kitchen and joinery market support continued growth Structural drivers Recent trends Population growth (by 2030 UK population will grow by 5% Post-pandemic UK hybrid working up to 5 times the level and will have 2m new citizens – ONS). pre-pandemic (McKinsey) leads to in
Slide 62: Estimated UK kitchen market volumes in 2023
Estimated UK kitchen market volumes in 2023 were at the lower end of the longer-term cycle Approx. 15 year average Howdens has gained market share through the economic cycle Macroeconomic headwinds are persisting into 2024 Strategic initiatives to increase market share 2007 2008 2009 2010 2011 2012
Slide 63: Major steps to achieve net zero emissions
We have identified the major steps to achieve net zero emissions 63
Slide 64: Revenue growth and sector leading margins
We’ve delivered revenue growth and sector leading margins Revenue £2.3bn Return on sales (%) Gross margin (%) 60.8% £0.8bn 56.2% £340m 14.7% £80m 10.3% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 64
Slide 65: Sales performance has been robust in downturns
Sales performance has been robust in downturns Year over year UK revenue growth (%) 35% 35% Howdens had greater resilience …and during versus peers during the COVID-19 21% 19% 17% the GFC… pandemic 17% 14% 14% 14% 14% 13% 13% 11% 11% 12% 10% 11% 9% 10% 8% 8% 7% 7% 8% 7% 8% 6% 5% 6% 5% 5% 6% 4% 5% 4%
Slide 66: Strong track record of cash generation, investment and capital returns
We have a strong track record of cash generation, investment, and capital returns Over the past 10 years: £496m £3bn £730m Generated in operating Invested in capex cashflow £704m £674m £273m £283m Returned in ordinary Returned in buybacks dividends and special dividends £184m £187m £175m £164m £151m
Slide 67: Initiatives to increase market share and profits
Initiatives to increase market share and profits Depot Evolution Range and Supply Management Digital Development International 67
Slide 68: Extending the UK footprint
Extending the UK footprint Modern working and trading environment Cost effective updated format Scope for around 1,000 depots in the UK versus the 840 trading at year-end Plan to open around 30 new depots in 2024 Including some more in new smaller sized format In 2018, Howdens developed an updated d
Slide 69: Converting more depots to the updated format
Converting more depots to the updated format Positive feedback from depot teams and customers 274 depots reformatted by end of 2023 Investment to be recouped in less than four years 54% Depots motivated to deliver incremental sales of depots opened in the old format revamped by end of (local P&L cha
Slide 70: A significant opportunity to win market share in kitchens
A significant opportunity to win market share in kitchens ‘Good’ Entry level (0-£4k) ‘Better’ Mid-ranges (£4-8k) ‘Best’ Higher price £8k+ HIGH MED LOW RMS* RMS* RMS* Greenwich Hockley Chelford Clerkenwell Witney Elmbridge Chilcomb PAINT TO ORDER Allendale Halesworth Bridgemere * Relative Market Shar
Slide 71: New colours for our entry level ranges
GOOD (£0-4k) New colours for our entry level ranges Witney Reed Green 71
Slide 72: Refreshed look for best-selling shaker family
B E T T E R ( £ 4 k - £8 k ) Refreshed look for best-selling shaker family Halesworth Charcoal 72
Slide 73: New market-leading colours for premium kitchens
BEST (£8k+) New market-leading colours for premium kitchens Chilcomb Marine Blue 73
Slide 74: Premium kitchen paint to order capability
New: Premium kitchen paint to order capability Investment in two new lines, now operational Facilitates our paint to order initiative for our premium kitchens Located in purpose-built facility Industry leading capability for these products Range of 15 colour choices with a short delivery lead time 7
Slide 75: Bedroom ranges now stocked in all UK depots
New: Bedroom ranges now stocked in all UK depots Bridgemere Navy 75 75
Slide 76: Investing in manufacturing and more vertical integration
We are investing in manufacturing and more vertical integration Increased manufacturing volume (as % COGS) to Distribution 35% in 2023 Raunds: 144k pallets 15k SKUs 44m pieces Investment in additional capacity including door frontals, laminated worktops, skirting and architraves Runcorn: 6.2k pallet
Slide 77: Rebalancing stock levels and delivery pattern
Rebalancing stock levels and the delivery pattern of some lines for best availability Depots can hold deeper stocks of faster selling lines Simpler and more efficient for depots to: • deliver superior service • improve availability of all products Frees up time and resources spent on stock managemen
Slide 78: Online services valued by customers and depots
Online services valued by customers and depots 75,000 new account registrations in 2023 48% of customers have an online account Weekly trade platform logins +7% c. 75% of users looking at their confidential prices Online account holders trade more frequently And spend more across more categories 78
Slide 79: International continues to make progress
International continues to make progress France: €3.9bn kitchen market* City-based approach adopted from 2019 Rapid expansion: 65 depots trading in France Increased recognition of our model’s advantages Focusing on trading existing depots and expanding footfall promoting products Opened in the Repub
Slide 80: Strong balance sheet and clear capital allocation priorities
We have a strong balance sheet and clear capital allocation priorities Invest in organic Grow a progressive and expansion in line with sustainable ordinary the strategy dividend through the cycle 1 2 Significant shareholder value creation Return surplus cash to 1 shareholders Invest selectively in -
Slide 81: Tax – patent box claim
Tax – patent box claim Patented cabinet leg is unique to the market and meets builders’ needs in three ways: • Strength: will withstand a lifetime fully laden and cabinet can be moved around across uneven flooring on legs • Speed: quick to install and adjust tool free • Ease: back legs adjustable fr
Slide 82: Group pension scheme moves into surplus
Group pension scheme moves into surplus at 15 June 2024 IAS19 basis £m Net discount rate Contribution Change £34m Asset returns Dec 2023 Admin cost June 2024 & interest 82
Slide 83: Howdens' investment case
Howdens’ investment case Sustainable growth, sector leading margins and strong cash generation A differentiated business model with benefits of scale and local trade relationships A well-established strategy to deliver profitable growth Leading positions in attractive markets with opportunities to g
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