Slide 1: 2018 Preliminary Results
2018 Preliminary Results 28 February 2019 Howdens 2018 Preliminary Results
Slide 2: Andrew Livingston, Chief Executive Officer
Andrew Livingston Chief Executive Officer Howdens 2018 Preliminary Results
Slide 3: Sales £1,511m, +7.7%, profit before tax £242.3m
Sales £1,511m, +7.7%, profit before tax £242.3m* Gross margin developed in H2 with sales momentum Period 11 Success • Incentives and focus • Lead generation build • Availability (Raunds' distribution) 33 new depots (2017: 19 depots) New digital platform launched to raise consumer brand awareness New
Slide 4: Depot network, design, in stock
Depot network Design In stock Quality products Trade focussed UK manufacturing base Planning support Range leadership Trade account facility Local prices Rigid cabinets Empowered teams Dedicated supply chain Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 3
Slide 5: Ensure high local stock availability
Ensure high local stock availability – a key part of our service Provide online accessibility Speed up our picking times Improve our display environment for their customers Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 4
Slide 6: Interactive, operational priorities
Interactive Input on new product Operational priorities Sales and margin tracking Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 5
Slide 7: Depot evolution, range management, digital development, international
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 6
Slide 8: Mark Robson, Deputy CEO and CFO
Mark Robson Deputy CEO and Chief Financial Officer 7
Slide 9: Highlights
Highlights Revenue, £m Gross profit, £m, and margin, % Operating profit, £m, and margin, % HJ UK Cont Europe * GMP equalisation charge 15.9% 1550 950 61.7% 250 Operating profit 1,511.3 243.9 1500 34.0 (3.8)* 63.3% 16.7% 900 932.2 1450 1,477.3 240.1 1,403.8 234.4 1400 850 888.4 225 31.8 1350 1,372.0
Slide 10: Revenue
Revenue 2018 UK depot revenue £1,477.3m • total +7.7% • LFL +6.3% 2018 Continental Europe depot revenue £34.0m • France total (€) +4.4% • LFL +4.4% Howdens 2018 Preliminary Results 9
Slide 11: Profit before tax
Profit before tax Group gross profit margin • 2017: 63.3% • 2018: 61.7% Profit before tax Gross profit £m £m Gross Profit Volume 44 & mix (revenue) 117 Cost Change Change pressure/ £10.1m £6.3m savings, Change etc. £43.8m Interest, (net) etc. (10) 1 242.3 238.5 932.2 Volume Currency 232.2 Operating
Slide 12: Operating costs
Operating costs £m Operating costs Change £38.1m GMP equalisation charge Other 4 692.1 Growth 4 688.3 related Older 9 depots 20 New depots 53rd week 654.0 8 9 646.5 • 2017(1) 2017 2018 2018(1) (1) Reported Howdens 2018 Preliminary Results 11
Slide 13: Income statement
Income statement £m 2018 2017 Revenue 1,511.3 1,403.8 Cost of goods sold (579.1) (515.4) Gross profit 932.2 888.4 Operating costs (before GMP equalisation charge) (688.3) (654.0) GMP equalisation charge (3.8) - Operating profit 240.1 234.4 Net interest (1.6) (2.2) Profit before tax 238.5 232.2 Tax (
Slide 14: Earnings per share and dividends
Earnings per share and dividends £m 2018 2017 • Earnings per share 31.3p 29.9p • Dividend - Final (recommended) 7.9p 7.5p - Full year 11.6p 11.1p 2018 final dividend costing £47.6m Howdens 2018 Preliminary Results 13
Slide 15: Net cash and cash flow
Net cash and cash flow £m 2018 2017 Opening net cash 241.1 226.6 Operating cash flows before movements in working capital 274.6 266.6 Working capital (49.7) (26.9) Capital expenditure (44.3) (48.5) Tax paid (45.4) (41.8) Dividends (68.3) (68.4) Share repurchases (62.2) (47.9) Pension contribution (1
Slide 16: Working capital
Working capital • Working capital increased £49.7m – stock up £18m – debtors up £48m – creditors up £16m Howdens 2018 Preliminary Results 15
Slide 17: Return of excess cash to shareholders
Return of excess cash to shareholders • Two year share repurchase programmes: - February 2017: £80m - March 2018: £60m - February 2019: £50m Shareholder Returns 2017 2018 2019 Total Feb 2017 programme 48 32 - 80 March 2018 programme - 30 30 60 Feb 2019 programme - - 50* 50 Total share repurchases 48
Slide 18: Pension scheme deficit
Pension scheme deficit Current service GMP charge + equalisation £m admin cost charge + interest 4 IAS19 basis 24 109.3 Change £(73.3)m Asset returns 46 36.0 Net discount rate (105) Contribution (42) • Dec Dec 2017 2018 Howdens 2018 Preliminary Results 17
Slide 19: Current trading & outlook for 2019
Current trading & outlook for 2019 • UK sales in first two periods up 4.0%, LFL +2.4% ‒ Adjusted for one fewer trading day up 5.1%, LFL +3.5% • Cost pressures ‒ exit of Dutch & German businesses – digital development – depreciation – growth & inflation – additional depots • Capital expenditure: c.£6
Slide 20: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 19
Slide 21: Depot evolution, range management, digital development, international
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 20
Slide 22: Depot format and layout broadly unchanged since 1995
Depot format and layout broadly unchanged since 1995 Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 21
Slide 23: Responding to changing requirements
Responding to changing requirements Space maximisation 18 depot test Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 22
Slide 24: Responding to different requirements
Responding to different requirements Space maximisation 18 depot test Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 23
Slide 25: Creating the best environment
Creating the best environment Space maximisation 18 depot test Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 24
Slide 26: Two model formats
Two model formats Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 25
Slide 27: Improved display environment
Improved display environment Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 26
Slide 28: Open, accessible offices for improved conversations
Open, accessible offices for improved conversations Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 27
Slide 29: Testing a broader hardware offer
Testing a broader hardware offer Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 28
Slide 30: Service visibility
Service visibility Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 29
Slide 31: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 30
Slide 32: Improved design and presentation facilities
Improved design and presentation facilities Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 31
Slide 33: Warehouse – restructured the space, improved picking times
Warehouse – restructured the space, improved picking times Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 32
Slide 34: Conversion of older depots
Conversion of 3 older depots 6 more depots converted by August Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 33
Slide 35: New 10,000 sq.ft. and 6,000 sq.ft. formats
New 10,000 sq.ft. and 6,000 sq.ft. formats Both can support full Howdens offer Opens up access to new locations to create opportunity for around c. 850 depots Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 34
Slide 36: Depot evolution, range management, digital development, international
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 35
Slide 37: Howdens design centre
Howdens design centre Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 36
Slide 38: Industrial influences
Industrial influences Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 37
Slide 39: Emerging linear trend
Emerging linear trend Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 38
Slide 40: Grey and Navy remain popular
Grey and Navy remain popular Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 39
Slide 41: New charcoal
New charcoal Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 40
Slide 42: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 41
Slide 43: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 42
Slide 44: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 43
Slide 45: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 44
Slide 46: Howdens Howdens 2018 2018 Preliminary
Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 45
Slide 47: Increased new product sales on fewer new kitchen ranges
Increased new product sales on fewer new kitchen ranges Rebalancing our stocking points over time Timely discontinuation of under performing ranges Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 46
Slide 48: Depot evolution, range management, digital development, international
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 47
Slide 49: Building digital capability
Building digital capability • Improve interface for customers • Increase awareness • Streamlined operating processes New platform • Mobile friendly • Traffic growth • Improved lead quality Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 48
Slide 50: Increasing consumer awareness
Increasing consumer awareness • Greater visibility in search • Easier access to products, styles and colours • Stronger social media presence Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 49
Slide 51: Better connectivity and operating processes
Better connectivity and operating processes • Mobile first • Depot in pocket • Trade login area • Account management • Information access Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 50
Slide 52: Depot evolution, range management, digital development, international
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 51
Slide 53: International
INTERNATIONAL 2018: 24 depots in 4 countries Freestanding market estimate FR €1.6bn v UK €2.1bn DIY kitchen sales - FR 91% v UK 50% Mature French depots sales - €2.1m (similar to comparable UK depots) Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 52
Slide 54: Local cluster benefits
Target Areas Local cluster benefits City based : • Reach local scale • Establish accounts • Build Howdens ‘ know-how and culture Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 53
Slide 55: Rebranding to gain advantages
Rebranding to gain advantages from : • UK brand equity • Online search reputation • Business efficiencies Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 54
Slide 56: 2019: price increase, new UK depots, Brexit planning
2019 Price increase in January Open 40 UK depots Brexit planning 5.1% Sales growth on a same day basis – P1 & P2 Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 55
Slide 57: Expo Visit – 4th April 2019
Expo Visit – 4th April 2019 Howdens Howdens 2018 2018 Preliminary Preliminary Results Results 56
Slide 58: 2018 Preliminary Results
2018 Preliminary Results 28 February 2019 Howdens 2018 Preliminary Results