Jb Hi-fi Limited · ASX:JBH
Jb Hi-fi — H1 2012 Earnings Presentation
27 slides from Jb Hi-fi's earnings presentation, Feb 13, 2012
Slide 1: Half Year Results Presentation 31 December 2011
For personal use only JB Hi-Fi Hi Fi Limited Half Year Results Presentation 31 December 2011 13 February 2012
Slide 2: Agenda
Agenda For personal use only 1. Performance Summary 2. Profit and Loss Statement 3. Trading Performance 4. Outlook 5. Success Fundamentals 6. Cash Flow and Balance Sheet 7. Dividends 8. Store Update 9. Investment Checklist Terry Smart Richard Murray CEO CFO
Slide 3: Performance Summary
1. PERFORMANCE SUMMARY For personal use only Sales up 5.5%, EBIT in line with guidance and EPS flat HY11 HY12 Growth Sales $1.68b $1.77b +5.5% Gross Margin 21 5% 21.5% 21 2% 21.2% -30 30 bps Cost of Doing Business 13.2% 13.6% +37 bps EBIT $127 0m $127.0m $120.7m -4 4.9% 9% EBIT M
Slide 4: Profit and Loss Statement
2. PROFIT AND LOSS STATEMENT For personal use only 1 Australia New Zealand (NZD) CONSOLIDATED AUDm HY11 HY12 Growth HY11 HY12 Growth HY11 HY12 Growth Sales 1,606.5 1,677.3 4.4% 97.5 124.9 28.1% 1,682.6 1,774.7 5.5% Gross Profit 350.0 360.7 3.1% 15.9 20.8 30.9% 362.5 377.0 4.0% Gross Margin 21.8% 21
Slide 5: Trading Performance – Sales
3. TRADING PERFORMANCE For personal use only Sales – Total JB Hi-Fi branded store growth of 6.7% Sales Growth Total Comps. Australia: HY12 1Q12 2Q12 HY12 JB Hi-Fi branded store sales grew by 5.6% to $1.65b. JB Hi-Fi - Australia 5.6% (4.2%) (2.3%) (3.1%) - JB Hi-Fi branded store hardware1 sales gre
Slide 6: New Zealand – Gaining traction
3. TRADING PERFORMANCE… For personal use only New Zealand – Gaining traction Sales grew by 28.1% to NZ$124.9m. Comp stores grew 16%. We are getting good traction with the JB Hi-Fi Brand resonating with the NZ consumer. Solid market share gains. Market remained aggressive. 6
Slide 7: Gross Margin – Competitive environment
3. TRADING PERFORMANCE… For personal use only Gross Margin – Competitive environment Consolidated gross margin was 21 2% a 30 bps1 21.2%, HY11 HY12 G Growth th decrease on the prior period. Australia 21.8% 21.5% -28 bps In Australia gross margin was impacted by two factors: New Zealand 16.3% 16.
Slide 8: Cost of Doing Business – Customer service is the key
3. TRADING PERFORMANCE… For personal use only Cost of Doing Business (CODB) – Customer service is the key Consolidated CODB was up 37 bps to 13.6%. HY11 HY12 G Growth th We have maintained our high levels of service to ensure a Australia 13.1% 13.6% +50 bps New Zealand 16.4% 13.9% -247 bps conti
Slide 9: Earnings – In line with December trading update
3. TRADING PERFORMANCE… For personal use only Earnings – In line with December trading update HY11 HY12 Growth Consolidated EBIT decreased 4 4.9% 9% to $120 $120.7m. 7m Australia ($m) 127.9 119.0 -6.9% This was a pleasing result considering the impact of - margin (%) 8.0% 7.1% -86 bps negative c
Slide 10: Online – 87.7% growth!
3. TRADING PERFORMANCE… For personal use only Online – 87.7% growth! Our multichannel strategy continues to develop and has delivered some good results for the half. Vital to give customers a choice on how they wish to shop with JB Hi-Fi – making t transacting ti as easy as possible. ibl Onlin
Slide 11: Digital – Future growth opportunity
3. TRADING PERFORMANCE… For personal use only Digital – Future growth opportunity JB HI HI-FI FI NOW music subscription streaming service was launched on 13 December 2011. JB HI-FI NOW Music is part of our ongoing innovation and future growth opportunities. Key to the success of our music serv
Slide 12: Outlook – new stores in FY12
4. OUTLOOK For personal use only Outlook – 16 new stores in FY12 Store Rollout: We anticipate opening 16 new JB Hi-Fi stores in FY12 (Aust: 16, NZ: 0) with 10 opened in the first half. Stores opened in the past 6 months have achieved a return on assets in line with stores opened in prior periods
Slide 13: Category Outlook – Continued technology innovation
4. OUTLOOK… For personal use only Category Outlook – Continued technology innovation The market is expected to remain very competitive across all categories. Constant technology innovation will drive continued industry growth. Computers – Ultrabooks drive further replacement, continued growth
Slide 14: Innovation – Continues both in store and out of store
4. OUTLOOK… For personal use only Innovation – Continues both in store and out of store. We continue to innovate We have a proven history of constant innovation Store evolution Online transactional site since September 2005 Use of PDAs to assist transactional productivity In store mercha
Slide 15: Success Fundamentals – Key Competitive Advantages
5. SUCCESS FUNDAMENTALS For personal use only JB Hi-Fi Key Competitive Advantages We will continue to innovate and adapt to changing markets but our past success fundamentals will always remain! Market Position – Value. Unique Brand Personality. Low Cost Operating Model. Great People – Motiv
Slide 16: Cash Flow Statement
6. CASH FLOW & BALANCE SHEET For personal use only Cash Flow Statement AUDm HY11 HY12 Mvt EBITDA 140.3 136.1 (3.0%) Change in Working Capital 97.7 107.5 N t IInterest Net t t Paid P id (2 1) (2.1) (7 2) (7.2) Income Tax Paid (22.4) (23.9) Other 5.1 3.4 Net Cash Flow from Operations 218.5 215.9 (1.2%
Slide 17: Working Capital
6. CASH FLOW & BALANCE SHEET… For personal use only Working Capital AUDm HY11 HY12 Inventory Management: (Increase)/decrease in current assets - Inventory levels and mix are in line with internal Inventory (55.1) (9.2) expectations. Receivables (67.2) (67.8) Other current assets (0.5) 0.7 - Averag
Slide 18: Key Ratios
6. CASH FLOW & BALANCE SHEET… For personal use only Key Ratios AUDm HY11 HY12 Performance Indicators: $173.3m buyback was completed in May 2011: Fixed Charge Ratio1 4.2x 3.7x - Resulted in the purchase of 10.8 million shares, Interest Cover 48.6x 16.7x q y Return on Equity 24.9% 38.4% representing
Slide 19: Balance Sheet
6. CASH FLOW & BALANCE SHEET… For personal use only Balance Sheet AUDm HY11 HY12 FY11 Cash 180.0 58.7 27.2 Receivables 130.3 125.7 58.3 Inventories 388 1 388.1 415 7 415.7 406 9 406.9 Other 5.1 8.0 8.6 Total Current Assets 703.4 608.2 501.1 Fixed Assets 176.8 183.2 169.6 Brandname & Goodwill 83 0 83
Slide 20: Dividends
7. DIVIDENDS For personal use only Dividends The interim dividend is 49.0 cents per share fully franked, up 1.0 cps from the prior period. This represents a payout ratio of 60% of HY12 earnings and further underlines the Board’s confidence in our strong cash flow generation. (i) Our strong bal
Slide 21: Store Update
8. STORE UPDATE For personal use only 10 new JB Hi-Fi stores opened in HY12 16 JB Hi-Fi stores to be opened in FY12 including: VIC: Greensborough#, Hoppers Crossing#, Traralgon#, Thomastown#, Springvale#, Waurn Ponds NSW: Caringbah#, Bankstown#, Jamisontown#, North Sydney, Shellharbour, Port M
Slide 22: Investment Checklist
9. INVESTMENT CHECKLIST For personal use only Strong and unique retail model. Operates mainly in the dynamic home entertainment and technology sector. Low cost of doing business – best of listed retailers. Many new store opportunities - JB Hi-Fi branded stores circa 214 (164 Tier 1 format an
Slide 23: Appendix I – Store movements and geographic breakdown
Appendix I For personal use only Store movements during HY12 Geographic breakdown# HY12 FY11 Opened Closed Total Australia JB - Tier 1 123 8 - 131 JB - Tier 2 16 2 ((1)) 17 139 10 (1) 148 Clive Anthonys 5 - (1) 4 144 10 (2) 152 New Zealand 1 JB - Tier 1 9 - - 9 34 JB - Tier 2 4 - - 4 13 - - 13 17 TO
Slide 24: Appendix II – Reconciliations
Appendix II For personal use only a) EBIT reconciliation c) NZ Profit and Loss statement (AUD) AUDm HY11 HY12 New Zealand (AUD) P fit for Profit f the th year (App (A 4D) 87.9 87 9 79 6 79.6 AUDm HY11 HY12 Growth add back - income tax expense (App 4D) 37.7 34.2 Sales 76.1 97.4 28.0% Profit before Ta
Slide 25: Appendix III – Profit and Loss Statement (5 years)
Appendix III For personal use only Profit and Loss Statement (5 years) AUDm HY08 HY09 HY10 HY11 HY12 Sales 988.5 1,261.6 1,553.8 1,682.6 1,774.7 Gross Profit 213 3 213.3 269 5 269.5 327 8 327.8 362 5 362.5 377 0 377.0 Gross Margin 21.6% 21.4% 21.1% 21.5% 21.2% EBITDA 71.6 97.9 122.6 140.3 136.1 Depr
Slide 26: Appendix III – Balance Sheet (5 years)
Appendix III… For personal use only Balance Sheet (5 years) AUDm HY08 HY09 HY10 HY11 HY12 Cash 46.4 90.8 127.4 180.0 58.7 Receivables 82.2 97.3 113.4 130.3 125.7 I Inventories t i 272 5 272.5 300 3 300.3 373 3 373.3 388 1 388.1 415 7 415.7 Other 4.4 4.6 6.4 5.1 8.0 Total Current Assets 405.5 493.0 6
Slide 27: Appendix III – Cash Flow Statement (5 years)
Appendix III… For personal use only Cash Flow Statement (5 years) AUDm HY08 HY09 HY10 HY11 HY12 EBITDA 71.6 97.9 122.6 140.3 136.1 Change in Working Capital 26.4 108.5 73.6 97.7 107.5 Net Interest Paid (3.7) (4.4) (2.7) (2.1) (7.2) Income Tax Paid (14.0) (21.5) (29.4) (22.4) (23.9) Other 1.3 9.1 4.4