Dfs Furniture Plc · LSE:DFS
Dfs Furniture — H1 2022 Earnings Presentation
23 slides from Dfs Furniture's earnings presentation, March 2022
Slide 1: Delivering Sustainable Growth
DFS FURNITURE PLC Delivering Sustainable Growth INTERIM RESULTS - MARCH 2022 1
Slide 2: Our agenda
INTERIM RESULTS Our agenda CMD HIGHLIGHTS Tim Stacey H1 HIGHLIGHTS Tim Stacey FINANCIAL OVERVIEW Mike Schmidt OPERATIONAL UPDATE Tim Stacey 2
Slide 3: Capital Markets Day highlights
INTERIM RESULTS Capital Markets Day highlights A new £1.4bn revenue ambition Ambition: to lead furniture retailing in the digital age Growth & capital returns + New ‘Pillars & Platforms’ New strategic plan & delivery strategy 3 3
Slide 4: Our agenda
INTERIM RESULTS Our agenda CMD HIGHLIGHTS Tim Stacey H1 HIGHLIGHTS Tim Stacey FINANCIAL OVERVIEW Mike Schmidt OPERATIONAL UPDATE Tim Stacey 4
Slide 5: Proving our new scale
INTERIM RESULTS Proving our new scale New c.£1.15bn of scale established 1300 Substantial, sustainable growth: 5 year Dec-21 CAGR: 7.2% £1.15bn market share gain & store 1200 roll-out delivered (Stated in Revenue Equivalent Terms) LTM Order Intake 1100 Scaled-up supply chain: 1000 Logistics investme
Slide 6: Sustainable development
INTERIM RESULTS Sustainable development STRATEGIC PROGRESS FINANCIAL HIGHLIGHTS New scale of business +17.4% +33.1% £123m established Y-o-2Y Y-o-2Y L18M Revenue uPBTA Free Cash Flow Growth* Growth Overcoming operational pressures c.£80m c.£175m Platform set for future Incremental Overall growth Orde
Slide 7: H2 momentum continues
INTERIM RESULTS H2 momentum continues Order Intake Growth H2 FY22 vs. FY20 (Pre-Pandemic) H2 trading: material volume & value growth (vs pre-pandemic comparator periods) Weather Volume growth despite impact inflationary pressures through ranging & price management Positive trend in both stores & onli
Slide 8: Our agenda
INTERIM RESULTS Our agenda CMD HIGHLIGHTS Tim Stacey H1 HIGHLIGHTS Tim Stacey FINANCIAL OVERVIEW Mike Schmidt OPERATIONAL UPDATE Tim Stacey 8
Slide 9: Revenue performance drives profit and deleveraging
FINANCIAL OVERVIEW Revenue performance drives profit and deleveraging (£m) unless stated H1 2022 H1 2021 H1 2020 26 weeks to 26 weeks to 26-weeks to Revenue and profit 26- Dec-21 27- Dec-20 29- Dec-19 growth relative to pre-pandemic comparator Revenues1 561.1 572.6 477.9 Growth vs. FY201 17.4% n/a n/a
Slide 10: Offset of inflationary pressure on finished goods input prices
FINANCIAL OVERVIEW Offset of inflationary pressure on finished goods input prices Cash Gross Profit ( £m) Cash gross margin reduction …reported gross margin driven by lower volumes and percentage however is one-off disruption; underlying cash additionally diluted by inflation gross margin is stable… pass-
Slide 11: Scale brings better cost margins
FINANCIAL OVERVIEW Scale brings better cost margins Operating cost : sales ratio reducing relative to pre-pandemic Operating Costs (ex-CoGS, £m) from efficiency of growing revenue base H1 costs impacted by one-offs of cost:sales cost:sales 49.5% £12.1m from customer service and cost:sales 46.2% (% 53.8
Slide 12: Cash utilisation in reinvestment and returns
FINANCIAL OVERVIEW Cash utilisation in reinvestment and returns Free cash flow before tax includes: - 21.6m Profit before tax Normal seasonal - (4.9m) Working Capital/Other H1/H2 working capital trend - Capex 25.2m - Sofology Acquis’n 4.8m Capital investment, dividends and share buy-backs are the key
Slide 13: Continuing order intake and order bank providing ongoing resilience
FINANCIAL OVERVIEW Continuing order intake and order bank providing ongoing resilience This Year Prior Year Order intake has remained strong in Revenue outturn the second half compared to dependent pre-pandemic periods giving a Incremental c.£175m order bank currently vs. upon significant incremental
Slide 14: Outlook scenarios
FINANCIAL OVERVIEW Outlook scenarios Two-year outlook unchanged with FY22/FY23 profit split dependent upon production progress Low Mid High £m (2 week delay (1 week delay (No Remain on track to deliver in production) in production) Disruption) significant profit growth relative to pre-pandemic FY22 Rev
Slide 15: Driving significant cash returns to shareholders
FINANCIAL OVERVIEW Driving significant cash returns to shareholders LTM ordinary dividend at 11.2p (3.7p interim) £28.9m Strong trading and outlook drive Special dividend declared of 10.0p £25.5m increased annual profit generation Up to £25m share buyback commencing today £25.0m TOTAL 12 MONTH RETURN
Slide 16: Our agenda
INTERIM RESULTS Our agenda CMD HIGHLIGHTS Tim Stacey H1 HIGHLIGHTS Tim Stacey FINANCIAL OVERVIEW Mike Schmidt OPERATIONAL UPDATE Tim Stacey 16
Slide 17: H1 Operational Update
OPERATIONAL UPDATE H1 Operational Update 1. New scale of business Market share gains, new showrooms and market growth established support £1.15bn+ revenue base 2. Overcoming operational Weekly production and deliveries pressures now at long-term target levels 3. Platform set for future Prioritisatio
Slide 18: 1. New scale of business now established
OPERATIONAL UPDATE 1. New scale of business now established Market share capture and geographical roll-out underpin new levels of order intake Measurable market share gain continues to underpin our growth in order intake; Lockdown 3 lead-time impact in November “Format 1” DFS now proven across 37 lo
Slide 19: 1. New scale of business now established
OPERATIONAL UPDATE 1. New scale of business now established Fulfilment being supported by enlarged manufacturing partner base & logistics network Successful launch of new partner ranges giving increased production capacity, despite macro constraints Sodelco investment including three new large “hub”
Slide 20: 2. Overcoming operational pressure
OPERATIONAL UPDATE 2. Overcoming operational pressure Significant international shipping, UK logistics and manufacturing disruption especially in Q1 H1 Delivered Revenues: 10% Far East Shipping and UK Q1 vs Q2 growth HGV disruption, coupled with increased colleague +24% H1 Logistics Absences absence
Slide 21: 3. Disciplined investment for future growth
OPERATIONAL UPDATE 3. Disciplined investment for future growth Accelerating progress in home, data and manufacturing Beds Dining Living Increase presence in Home markets Leverage data to drive LFL performance Integrated Retail Intelligence Solutions & efficiency Upgrade of Doncaster Upholstery factory
Slide 22: 3. Disciplined investment for future growth
OPERATIONAL UPDATE 3. Disciplined investment for future growth Consultation on Potential Closure of Netherlands Operations Commencing Shortly DFS NETHERLANDS: KEY FACTS Pathway to NL profitability was identified, however relative financial returns look poor ● Six stores and online operation / c. £2m co
Slide 23: Conclusion and Outlook
OPERATIONAL UPDATE Conclusion and Outlook Increasing our scale through sustainable development H1 SUMMARY ● Strong performance in Sales and Profits: 17% revenue growth and and 33% PBT growth on pre-pandemic comparator ● Achieved against backdrop of industry wide operational challenges from Covid disr