Howden Joinery Group Plc · LSE:HWDN
Howden Joinery — H1 2007 Earnings Presentation
26 slides from Howden Joinery's earnings presentation, Sep 6, 2007
Slide 1: 2007 Interim Results
2007 Interim Results 6 September 2007
Slide 2: Overview
Overview A good first half • Profit, cash, costs improved ahead of expectations • Continuing to trade well in growing DFY market • Depot opening programme on track • New products and sales support • Restructuring of Supply and MFI contract exit well under way • Renewed focus allows Howdens culture t
Slide 3: Mark Robson, Chief Financial Officer
Mark Robson Chief Financial Officer
Slide 4: Highlights
Highlights H1 H1 £m 2007 2006 Continuing operations: Revenue 429.0 285.3 Gross profit* 190.0 141.8 Operating profit* 29.5 12.7 Profit before tax* 24.8 8.5 * Before exceptionals 16 June 30 Dec £m 2007 2006 Net funds/(borrowings) 3.7 (4.1)
Slide 5: Profit before tax and exceptional items
Profit before tax and exceptional items* £m Change £16.3m Supply Corporate 0.3 12.2 24.8 Other Interest, operating etc losses (0.5) (0.1) Howdens 4.4 8.5 H1 2006 H1 2007 * Continuing operations
Slide 6: Howden Joinery operating performance
Howden Joinery operating performance Operating Revenue £314.5m profit £m • total +10.7% • LFL +6.6% Depot Gross margin as per 2006 7.8 Change +£4.4m Product promotion New 55.1 material initiatives Other non- (0.7) (1.1) depot costs 50.7 (1.6) H1 2006 H1 2007
Slide 7: Supply and Corporate
Supply and Corporate Net cost of Supply down £12.2m to £13.2m • external sourcing of fascias and appliances • currency gains* Corporate cost down £0.3m to £10.7m * US$ and € 2007 rates vs. rates used in standard price calculation EXCHANGE RATES USED TO CALCULATE CURRENCY GAIN € US$ Base rate 1.43 1.
Slide 8: Income Statement
Income Statement H1 H1 £m 2007 2006 Continuing operations: Operating profit 29.5 12.7 Net interest and other finance charges (4.7) (4.2) Profit before tax and exceptional items 24.8 8.5 Tax (8.4) (16.6) Profit/(loss) after tax before exceptional items 16.4 (8.1) Discontinued operations: Loss after t
Slide 9: Earnings per share
Earnings per share H1 H1 Pence 2007 2006 Continuing operations: - excluding exceptionals 2.7 (1.4) - including exceptionals 7.0 (7.1) Continuing and discontinued operations: - excluding exceptionals 2.7 (4.5) - including exceptionals 7.0 (0.1)
Slide 10: Borrowings and cash flow
Borrowings and cash flow H1 H1 £m 2007 2006 Opening net borrowings (4.1) (55.5) Operating cashflows before movements in working capital 37.8 10.2 Working capital* (20.6) 69.1 Capital expenditure (6.6) (13.2) Asset disposals 0.1 12.6 Sale of Hygena Cuisines - 74.6 Receipt from Revenue & Customs - 21.
Slide 11: Working capital
Working capital Working capital* up £20.6m • debtors up £44.6m • creditors up £9.7m • stock down £14.3m * Stock, debtors and creditors
Slide 12: Current trading and outlook
Current trading* and outlook Howdens continues to trade well • gross margin similar to 2006 • sales now up 11.9% y-t-d (same depot up 7.7%)* • recent benefit from wet weather • economic uncertainty Supply • has seen full benefit of fascia/appliance outsourcing • lower currency gain Corporate • 7 per
Slide 13: Matthew Ingle, Chief Executive
Matthew Ingle Chief Executive
Slide 14: The working kitchen
The working kitchen the process that provides working kitchens to domestic households We sell kitchens to builders who get them to work …for people who need them to work
Slide 15: Our marketplace
Our marketplace Housing Lifestyle Economics • shortage • time • inflation • ageing stock • functionality • interest rates • changing new / • design • outlook timing of DFY demographics renew decisions • expectations • rain Lots of factors are driving demand for kitchens
Slide 16: Routes to market
Routes to market Kitchen Renovations, home improvements, New builds market maintenance (RMI) Private & domestic Beneficiary New home buyers Tenant / landlord households Landlord / developer / Home owners / Customer Big builder small builder individuals Kitchen Direct / Merchants, Showroom / supplier
Slide 17: Ongoing depot rollout
Ongoing depot rollout Depot opening programme on track 342 382 409 442 500+ ++? Jan 06 Jan 07 Now Dec 07 27 depots opened since January 100 depots opened over the two years Jan 06 → Jan 08
Slide 18: Initiatives during H1
Initiatives during H1 New product • 9 new kitchens to meet needs of dynamic market • Studio range – opportunity to mix and match frontals • Range cookers • Wider choice of doors New concepts • Expo • Prototype facility New tools • Catalogues • Website
Slide 19: The restructuring of Supply
The restructuring of Supply April 2006 Expected position at April 2008 percentage number millions of sq ft number 50 5 50 4000 5.0 4300 3000 3400 40 4 3000 30 3 33 2000 2000 2.8 20 2 1000 1300 10 1000 1 1100 0 0 0 0 Proportion of Number of Manufacturing & Headcount manufactured product manufactured
Slide 20: Our opportunities
Our opportunities METAMORPHOSIS… MFI → Galiform ORGANIC GROWTH… - refinancing - reorganisation 7-year depot maturity curve - restructuring Better retailing …the full benefits Increasing efficiencies Continuing market shift to DFY BEYOND… Ranges NEW... Services Locations 60 new depots p.a. …? New pro
Slide 21: In summary
In summary Strategy is working Business continuing to grow in many ways Significant further opportunities ahead
Slide 22: Appendix
Appendix
Slide 23: Revenue – continuing operations
Revenue – continuing operations H1 H1 £m unless stated 2007 2006 Total Same depot Howden Joinery 314.5 272.9 +10.7%1 +6.6%1 Supply2 111.1 9.3 Other 3.4 3.1 Total 429.0 285.3 Notes 1. Adjusted for depots trading in week 1 of 2007 but closed in week 1 of 2006. 2. External sales – MFI part of Galiform
Slide 24: Operating profit/(loss) - continuing operations
Operating profit/(loss)* - continuing operations H1 H1 £m 2007 2006 Howden Joinery 55.1 50.7 Supply (13.2) (25.4) Corporate (10.7) (11.0) Other (1.9) (2.0) 29.3 12.3 Share of joint venture 0.2 0.4 Operating profit 29.5 12.7 * Before exceptionals
Slide 25: Capital expenditure
Capital expenditure H1 H1 £m 2007 2006 Howden Joinery 4.6 3.1 Supply 1.0 1.0 Corporate 0.9 1.7 Other - 0.2 Total – continuing operations 6.6 6.0 Discontinued operations - 7.2 6.6 13.2
Slide 26: Depreciation and amortisation
Depreciation and amortisation H1 H1 £m 2007 2006 Howden Joinery 2.7 2.1 Supply 2.7 4.8 Corporate 2.2 3.4 Other 0.2 0.2 Total – continuing operations 7.8 10.5 Discontinued operations - 7.9 7.8 18.4