Jb Hi-fi Limited · ASX:JBH
Jb Hi-fi — FY2010 Earnings Presentation
27 slides from Jb Hi-fi's earnings presentation, Aug 9, 2010
Slide 1: Full Year Results Presentation 30 June 2010
For personal use only JB Hi-Fi Hi Fi Limited Full Year Results Presentation 30 June 2010 9 August 2010
Slide 2: Agenda
Agenda For personal use only 1 Performance 1. 2. Historic Performance 3 Unique JB Model 3. 4. Trading Performance 5 Financial Detail 5. 6. Dividends 7 Store Update 7. 8. Investment Checklist Terry Smart Richard Murray CEO CFO
Slide 3: Performance
1. Performance Strong performance for 12 months to 30 June 2010 For personal use only FY09 FY10 Growth Sales $2.33b $2.73b 17.4% Gross Margin 21 6% 21.6% 21 8% 21.8% +12 bps Cost of Doing Business 14.7% 14.5% -24 bps EBIT $142.0m $175.1m 23.3% EBIT Margin 6.1% 6.4% +31 bps NPAT
Slide 4: Historic performance
2. Historic performance Strong growth in sales & earnings since MBI in July 2000 For personal use only SALES +17% EBIT +23% NPAT +26% 175.1m 118.7m +23% +26% 2.73b +17% + NCE ~ $3.2b 142.0m 2.33b 94.4m +39% +27% +45% LL YEAR GUIDAN 1.83b +43% 102.3m +56% 65.1m +61% FY11 - FUL 1.28b +36% 65.5m +47% 4
Slide 5: Unique JB Model
3. Unique JB Model For personal use only Unique JB Model continues to resonate with customers A huge range and every day low price offering. A unique and engaging retail environment. A sales focused company, while proactively managing our other key performance measures of earnings, working cap
Slide 6: Trading performance: Sales
4. Trading performance For personal use only Sales Consolidated sales grew 17.4%. Consolidated comparable store sales growth for FY10 was 4.8%. This was a strong result, with the company trading well through what was considered a most challenging and competitive period in retail retail. Sale
Slide 7: Trading performance: Gross Margin
4. Trading performance… For personal use only Gross Margin GM was 21.8%, a 12 bps increase for FY10, and a 65 bps increase in the 2nd half. This improved gross margin result was driven by positive outcomes such as : Increasing scale continuing to drive greater levels of supplier support; Mer
Slide 8: Trading performance: Cost of Doing Business
4. Trading performance… For personal use only Cost of Doing Business (CODB) CODB was down 24 bps to 14.5% (pcp: 14.7%), driven by our low cost culture, operating leverage, labour productivity and marketing economies of scale. Our low CODB assists us in managing the impact of product mix on our g
Slide 9: Trading performance: Earnings
4. Trading performance… For personal use only Earnings EBIT increased 23.3% to $175.1m. EBIT margin at 6.4% was a 31 bps increase on the prior year. EBIT growth was driven by the combination of increased gross margin and a lower cost of doing business. Depreciation and amortisation increased
Slide 10: Trading performance: Australia and New Zealand
4. Trading performance… For personal use only Australia Sales grew 17.8% to $2.6b with comparable store sales up 4.5%. Gross margin increased by 17 bps to 22.1%. Cost of doing business was down 18 bps to 14.4%. EBIT increased 23.3% to $178.6m. $ EBIT margin at 6.9% was a 30 bps increase on
Slide 11: Trading Outlook
4. Trading performance… For personal use only Trading Outlook We anticipate opening 18 new JB Hi-Fi stores in FY11 (Aust: 15, NZ: 3). Maintain our target of 210 JB branded stores (160 Tier 1* and 50 Tier 2* format) in Australia and New Zealand. The recently opened Tier 2 stores, while still in
Slide 12: Industry Outlook
4. Trading performance… For personal use only Industry Outlook All categories expected to remain very competitive - specialist players like JB with a unique offering will continue to take market share. Constant technology innovation will drive continued industry growth. Visual: Digital TV sw
Slide 13: Financial detail: Profit and Loss Statement
5. Financial detail Profit and Loss Statement For personal use only AUST NZ CONSOLIDATED AUDm FY09 FY10 Growth FY09 FY10 Growth FY09 FY10 Growth Sales 2,205.0 2,598.0 17.8% 122.3 133.3 9.0% 2,327.3 2,731.3 17.4% Gross Profit 483.0 573.4 18.7% 20.6 20.7 0.6% 503.6 594.2 18.0% G Gross Margin M i 21 90
Slide 14: Financial detail: Balance Sheet
5. Financial detail… Balance Sheet For personal use only AUDm FY09 FY10 Mvt Cash C h 35.8 35 8 51.7 51 7 Receivables 60.3 63.5 Inventories 324.5 334.8 Other 5.7 4.5 Total Current Assets 426.2 454.5 6.6% Fixed Assets 136.1 164.0 Brandname & Goodwill 81.4 83.9 Other 18.0 12.0 Total Non-Current Assets
Slide 15: Financial detail: Cash Flow Statement
5. Financial detail… Cash Flow Statement For personal use only AUDm FY09 FY10 Mvt EBITDA 160.7 160 7 198.4 198 4 23 4% 23.4% Change in Working Capital 19.6 1.2 Net Interest Paid (6.7) (5.0) Income Tax Paid (41.3) (53.5) Other 13.3 11.0 Net Cash Flow from Operations 145.6 152.1 4.5% Purchases of P&E
Slide 16: Working capital and key ratios
5. Financial detail… Working capital and key ratios For personal use only AUDm FY09 FY10 (Increase)/decrease (I )/d in i currentt assets t Inventory (52.5) (10.0) Inventory Management: Receivables (7.0) (3.4) Inventory management remains a constant focus; Other current assets (0.5) 1.1 We inve
Slide 17: Dividends
6. Dividends For personal use only Dividends The final dividend is 33.0 cents per share fully franked. Total dividends of 66.0 cents per share represents a 50.0% increase over the prior year. The payout ratio of 60% reflects the Company’s continuing strong cashflows from existing stores and ov
Slide 18: Store update: stores opened in FY10
7. Store update 23 stores opened in FY10 For personal use only 23 JB Hi-Fi stores opened in FY10 23 JB Hi-Fi stores: NSW: Albury, Artarmon, Belrose, Eastgardens, Moore Park, Top Ryde, Wagga Wagga, Wollongong Central, World Square QLD: Brisbane CBD ((x2), ), Browns Plains,, Mt Ommaney, y, Roc
Slide 19: Store update: new stores to open in FY11
7. Store update… 18 new stores to open in FY11 For personal use only 18 JB Hi-Fi stores expected to be opened during FY11 18 JB Hi-Fi stores: VIC: Sunshine, Forrest Hill, Chadstone – Warrigal Rd, Greensborough, Mildura, Airport West, Bayside Frankston NSW: North Sydney, Sydney Charlestown, C
Slide 20: Store ramp up profile and maturity mix
7. Store update… Store ramp up profile and maturity mix For personal use only Store Ramp Up Profile - a JB Hi-Fi store takes on average 2.5/3 years to mature, sales mature faster than earnings. Close to half of our stores are still in their maturity ramp up and with 18 new stores expected to ope
Slide 21: Investment checklist
8. Investment checklist For personal use only Strong and unique retail model. Operates mainly in high growth home entertainment and technology sector. Low cost of doing business – best of listed retailers. Many new store opportunities - JB Hi-Fi circa 210 (160 Tier 1 format and 50 Tier 2 for
Slide 22: Appendix I: Store movements during FY10
Appendix I For personal use only Store movements during FY10 Geographic breakdown# FY10 FY09 Opened Rebranded Closed Total Australia JB - Tier 1 90 17 - - 107 JB - Tier 2 8 5 - - 13 98 22 - - 120 Clive Anthonys 11 - - - 11 109 22 - - 131 1 New Zealand JB - Tier Ti 1 7 - 1 (i) - 8 31 JB - Tier 2 1 1
Slide 23: Appendix II: EBIT and CODB reconciliation
Appendix II For personal use only a)) EBIT reconciliation AUDm FY09 FY10 Profit for the year (App 4E) 94.4 118.7 add back - income tax expense p ((App pp 4E)) 41.1 50.9 Profit before Tax 135.5 169.6 add back - interest received (1.6) (1.4) - interest expense (App 4E) 8.0 7.0 - nett interest i t t ex
Slide 24: Appendix II: Store types and H&S closure
Appendix II… For personal use only c) Store types JB Hi-Fi is currently targeting 210 stores in Australia and New Zealand. This target is split between Tier 1 (160 stores) and Tier 2 (50 stores). While each store is different, broadly the stores can be defined as follows: Tier 1: approximately 1,100
Slide 25: Appendix III: Profit and Loss (5 years)
Appendix III Profit and Loss (5 years) For personal use only AUDm FY06 FY07 FY08 FY09 FY10 S l Sales 945 8 945.8 1 281 8 1,281.8 1 828 6 1,828.6 2 327 3 2,327.3 2 731 3 2,731.3 Gross Profit 212.4 283.4 399.7 503.6 594.2 Gross Margin 22.5% 22.1% 21.9% 21.6% 21.8% EBITDA 52.0 76.4 117.0 160.7 198.4 De
Slide 26: Appendix III: Balance Sheet (5 years)
Appendix III… Balance Sheet (5 years) For personal use only AUDm FY06 FY07 FY08 FY09 FY10 C h Cash 45 4.5 23.7 23 7 (1 5) (1.5) 35.8 35 8 51.7 51 7 Receivables 28.3 45.2 53.0 60.3 63.5 Inventories 161.1 211.3 271.9 324.5 334.8 Other 2.8 3.5 5.3 5.7 4.5 Total Current Assets 196.8 283.7 328.7 426.2 45
Slide 27: Appendix III: Cash Flow Statement (5 years)
Appendix III… Cash Flow Statement (5 years) For personal use only AUDm FY06 FY07 FY08 FY09 FY10 EBITDA 52.0 52 0 76.4 76 4 117.0 117 0 160.7 160 7 198.4 198 4 Change in Working Capital (17.9) 5.6 (44.8) 19.6 1.2 Net Interest Paid (5.7) (7.1) (8.9) (6.7) (5.0) Income Tax Paid (11.3) (15.2) (28.0) (41