Greggs Plc · LSE:GRG
Greggs — H1 2015 Earnings Presentation
24 slides from Greggs's earnings presentation, Jul 29, 2015
Slide 1: 2015 Interim Results
2015 Interim Results: For the 26 weeks ended 4 July 2015 Wednesday 29 July 2015 1
Slide 2: Agenda
Agenda • Highlights • Financial performance • Operational highlights • Outlook for 2015 2
Slide 3: 2015: A strong first half
2015: A strong first half • Total sales up 6.4% to £398m, own shop LFL up 5.9% • Pre-tax profit up 51.2%* to £25.6m • Continued strong cash generation • Special dividend of 20.0p per share paid 17 July • Ordinary interim dividend per share up 23.3% to 7.4p * Underlying profit growth excluding except
Slide 4: H1 2015 Financial Performance
H1 2015 Financial Performance Richard Hutton 4
Slide 5: Group sales and profit – H1
Group sales and profit – H1 2015 2014 £m £m Sales 398.4 374.4 +6.4% Operating profit before property & 25.5 15.4 +65.6% exceptional items Property disposal gains 0.1 1.4 EBIT before exceptionals 25.6 16.8 +51.2% Exceptional items* - (8.2) Finance income 0.0 0.1 Profit before taxation 25.6 8.7 * Exce
Slide 6: Strong H1 LFL, tougher comps ahead
Strong H1 LFL, tougher comps ahead 7 6 LFL sales growth % 5 4 2014 3 2015 2 1 0 Q1 Q2 Q3 Q4 • Strong first half growth • Step up seen in H2 2014 following successful relaunch of sandwich range • Expect continued growth in H2 but not at H1 levels 6
Slide 7: EBIT profit bridge
EBIT profit bridge £m 30.0 £25.6m • Strong LFL growth 25.0 contribution in H1 20.0 • Structural change £16.8m savings from activity 15.0 in 2014, now largely 10.0 annualised, further £0.6m in H2 5.0 • Continued good 0.0 progress in cost H1 2014* LFL impact Structural Other net Property H1 2015 reduc
Slide 8: Net margin
Net margin H1 2015 H1 2014 £m £m Sales 398.4 374.4 +6.4% Gross margin % 61.8% 60.5% Distribution & selling % -49.6% -51.0% Admin % -5.7% -5.0% Property disposal gains % 0.0% 0.4% EBIT before exceptionals 25.6 16.8 +51.9% Operating margin % 6.4% 4.5% • GM reflects further input cost deflation, strong
Slide 9: Input costs and inflation
Input costs and inflation First half: H2 outlook: 18% • Ingredient and packaging deflation 4% expected to continue in H2 41% • Wages & salary inflation +2.4% • Energy/fuel costs neutral overall 10% • Overall forward cover c.5 months Wage costs 27% • Standard hourly shop rate £7.11/hour - 9% higher t
Slide 10: Driving efficiencies through our change programme
Driving efficiencies through our change programme 2014 structural change benefits: • Delivered £2.4m cost reduction in H1 • Now largely annualised (further £0.6m in H2) • Total benefit over 2014/15 = £6m in line with plan Ongoing cost saving activity: • Progressing well, expect c.£5-6m savings for 2
Slide 11: H1 tax, earnings and dividend
H1 tax, earnings and dividend H1 H1 Forward tax rate^ guidance: 2015 2014 2015 21.50% 2016 22.25% 2017 21.50% Tax charge* 21.5% 25.0% 2018 21.25% Longer term c.20% Diluted EPS* 19.5p 12.5p +56.0% Interim ordinary dividend per 7.4p 6.0p +23.3% share Aim to maintain progressive Special dividend paid 1
Slide 12: Capital expenditure
Capital expenditure £m 2015 2014 Refits, conversions and shop equipment 19.1 13.1 New shops and relocations 3.0 1.6 Supply chain 4.9 4.7 I.T. 4.3 1.0 Total capital expenditure 31.3 20.4 Number of gross new shops opened £160k / shop 19 12 (incl. relocations, excl. franchises) Number of FOTG refits £9
Slide 13: Cash flow and balance sheet
Cash flow and balance sheet • Good cash generation: - £34.6m net cash inflow from operating activities (H1 2014: £30.5m) • Strong balance sheet position: - £41.4m net cash (June 2014: £21.6m) - Special dividend payment of £20.2m in July - Investment plans financed from cash generation 13
Slide 14: Operational progress
Operational progress Roger Whiteside 14
Slide 15: To be a winning brand in the food-on-the-go market
To be a winning brand in the food-on-the-go market
Slide 16: 1. Great tasting fresh food
1. Great tasting fresh food • Always Fresh. Always Tasty. • Changes to product range: • Breakfast menu extension, including free- range egg option • New Balanced Choice options, all under 400kcal and rate either green or amber on the FSA traffic light system. • Sandwich range performing well • Impro
Slide 17: 2. A great shopping experience
2. A great shopping experience • Improved availability and extended trading hours • Greggs Rewards membership growing • Refurbishment programme: • 118 shops refurbished to FOTG • Café conversions to FOTG – 12 completed • Reshaping estate profile: • 44 new shops (25 franchised) • Closed 30 shops • Re
Slide 18: Moving to "Bakery food-on-the-go"
Moving to “Bakery food-on-the-go” “Food-on-the-go” “Bakery food-on-the-go” “Bakery” (series 1) (series 2) 385 shops 689 shops 590 shops “Bakery” shops – 120 to relocate or close, 265 to refit by end 2016 18
Slide 19: 3. Simple and efficient operations
3. Simple and efficient operations • Change to four retail regions (from seven) working well • In-store bakeries now successfully absorbed into regional bakery network • Further gains in efficient operations from consolidation of activity 19
Slide 20: 4. Improvement through change
4. Improvement through change • 5 year change programme to modernise processes and systems • On track to introduce new ways of working around central forecasting and replenishment and customer relations • Plans well advanced for next major phase of change; focus on core elements - finance, purchasin
Slide 21: Keeping people, communities and values at the heart of our business
Keeping people, communities and values at the heart of our business Awarded 3 stars in the BITC CR Index Special focus on food donation this year 21
Slide 22: Outlook for 2015
Outlook for 2015 GREGGS Always Fresh. Always Tasty*
Slide 23: Outlook for 2015
Outlook for 2015 • Strong first half reflecting LFL growth & restructuring savings • In second half will come up against progressively stronger sales comparatives • Strong pipeline of product initiatives • Market conditions expected to remain favourable • Continued cost benefits and low input inflat
Slide 24: Questions
Questions ss GREGGS Always Fresh. Always Tasty*