Jb Hi-fi Limited · ASX:JBH
Jb Hi-fi — H1 FY2011 Earnings Presentation
24 slides from Jb Hi-fi's earnings presentation, Feb 7, 2011
Slide 1: Half Year Results Presentation 31 December 2010
For personal use only JB Hi-Fi Hi Fi Limited Half Year Results Presentation 31 December 2010 7 February 2011
Slide 2: Agenda
Agenda For personal use only 1. Performance Summary 2. Historic Performance 3. Trading Performance 4. Financial Detail 5. Dividends 6. Store Update 7. Investment Checklist Terry Smart Richard Murray CEO CFO
Slide 3: Performance Summary
1. PERFORMANCE SUMMARY For personal use only Strong performance for 6 months to 31 December 2010 HY10 HY11 Growth Sales $1.55b $1.68b 8.3% Gross Margin 21.1% 21.5% +44 bps - Cost of Doing Business 13.2% 13.2% 0 bps EBIT $111.4m $127.0m 14.0% EBIT Margin 7.2% 7.5% +38 bps NPAT $76
Slide 4: Historic Performance
2. HISTORIC PERFORMANCE For personal use only Strong growth in sales and earnings since MBI in July 2000 S SALES S +8% 8% EBIT +14% NPAT +16% ~3.0b 175.1m ~134-139m 2.73b +23% FULL YEAR GUIDANCE E +17% + YEAR GUIDANCE 118.7m 2.33b +26% +27% 142.0m +39% FULL Y 127.0m +14% 94.4m 1.83b +45% +43% 87.9m
Slide 5: Trading Performance: Sales
3. TRADING PERFORMANCE For personal use only Sales Consolidated sales were up p by y 8.3%. Consolidated comparable store sales growth was negative 1.5%. A pleasing result given tough trading conditions combined with cycling the strong 9.9% comparable store sales from the first half of last yea
Slide 6: Trading Performance: Gross Margin
3. TRADING PERFORMANCE… For personal use only Gross Margin Gross Margin g was 21.5%, %, a 44 bps p increase on the p prior p period. The strength in gross margin was pleasing given the increased discounting within the market. This improved gross margin result was driven by positive outcomes su
Slide 7: Trading Performance: Cost of Doing Business
3. TRADING PERFORMANCE… For personal use only Cost of Doing Business (CODB) CODB was flat at 13.2%, supported pp by y our low cost culture, operating p g leverage, g labour p productivity y and marketing g economies of scale. In Australia, our CODB was up 1 bps to 13.1%. A pleasing result given
Slide 8: Trading Performance: Earnings
3. TRADING PERFORMANCE… For personal use only Earnings EBIT increased 14.0% to $127.0m. $ EBIT margin at 7.5% was a 38 bps increase on the prior period. EBIT growth was driven by a combination of improved gross profit and a controlled cost of doing business. Depreciation and amortisation inc
Slide 9: Trading Performance: Australia
3. TRADING PERFORMANCE… For personal use only Australia Sales grew 8.8% to $1.6b with comparable store sales down 1.6%. On a comparable store basis, JB Hi-Fi stores were down 0.9% and Clive Anthonys stores were down 13.3%. Gross margin increased by 37 bps to 21.8%. Cost of doing business was
Slide 10: Trading Performance: New Zealand
3. TRADING PERFORMANCE… For personal use only New Zealand J Hi-Fi b JB branded a ded sstore o e sa sales es g grew e 24.7% % too NZ$97.5m. $9 5 O Overall e a sa sales es g growth, o , which c includes c udes the e cclosed osed H&S &S branded stores in the comparative period, was 2.4%. Refer Append
Slide 11: Trading Outlook
3. TRADING PERFORMANCE… For personal use only Trading Outlook We anticipate opening 18 new JB Hi-Fi stores in FY11 (Aust: 15, NZ: 3), with 13 opened in the first half. Maintain our target of 210 JB branded stores (160 Tier 1* and 50 Tier 2* format) in Australia and New Zealand. The recently op
Slide 12: Profit and Loss Statement
4. FINANCIAL DETAIL For personal use only Profit and Loss Statement (iii) AUST NZ CONSOLIDATED AUDm HY10 HY11 Growth HY10 HY11 Growth HY10 HY11 Growth Sales 1,477.2 1,606.5 8.8% 76.6 76.1 -0.6% 1,553.8 1,682.6 8.3% Gross Profit 316.4 350.0 10.6% 11.4 12.4 8.6% 327.8 362.5 10.6% Gross Margin 21.4% 21
Slide 13: Balance Sheet
4. FINANCIAL DETAIL… For personal use only Balance Sheet AUDm HY10 HY11 FY10 Cash 127.4 180.0 51.7 Receivables 113.4 130.3 63.5 Inventories 373.3 388.1 334.8 Other 6.4 5.1 4.5 Total Current Assets 620.4 703.4 454.5 Fixed Assets 155.1 176.8 164.0 Brandname & Goodwill 82.8 83.0 83.9 Other 16.1 14.0 12
Slide 14: Cash Flow Statement
4. FINANCIAL DETAIL… For personal use only Cash Flow Statement AUDm HY10 HY11 Mvt EBITDA 122.6 140.3 14.4% Change in Working Capital 73.6 97.7 Net Interest Paid (2 7) (2.7) (2 1) (2.1) Income Tax Paid (29.4) (22.4) Other 4.4 5.1 Net Cash Flow from Operations 168.4 218.5 29.8% Purchases of P&E (30.3)
Slide 15: Working Capital and Key Ratios
4. FINANCIAL DETAIL… For personal use only Working Capital and Key Ratios AUDm HY10 HY11 Inventory Management: (Increase)/decrease in current assets Invested $34.2m in new store inventory; Inventory (48.6) (55.1) Receivables (53 2) (53.2) (67 2) (67.2) Inventory y turnover improved p to 7.2 ti
Slide 16: Dividends
5. DIVIDENDS For personal use only Dividends The interim dividend is 48.0 48 0 cents per share fully franked franked. This represents a payout ratio of 60% of HY11 earnings and reflects the Company’s continuing strong cashflows from existing stores and overall company growth. The Board is confid
Slide 17: Store Update
6. STORE UPDATE For personal use only 18 new JB Hi-Fi stores to be opened in FY11 13 JB Hi-Fi stores opened during HY11 18 JB Hi-Fi stores to be opened in FY11 including: VIC: Airport West, West Bayside Frankston, Frankston Chadstone – Warrigal Rd* Rd , Forrest Hill Hill*, Mildura, Sunshine* F
Slide 18: Investment Checklist
7. 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 19: Appendix I: Store movements during HY11
Appendix I For personal use only Store movements during HY11 Geographic breakdown# HY11 FY10 Opened Closed Total Australia JB - Tier 1 107 8 - 115 JB - Tier 2 13 2 - 15 120 10 - 130 Clive Anthonys 11 - (1) 10 131 10 (1) 140 New Zealand 1 JB - Tier 1 8 1 - 9 32 JB - Tier 2 2 2 - 4 10 3 - 13 17 TOTAL
Slide 20: Appendix II: Store types
Appendix II For personal use only Store types Currently targeting 210 JB Hi-Fi branded 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 1,10
Slide 21: Appendix III: Reconciliations and NZ P&L
Appendix III For personal use only a) EBIT reconciliation c) NZ Profit and Loss statement (NZD) AUDm HY10 HY11 New Zealand Profit for the year (App 4D) 76.0 87.9 NZDm HY10 HY11 Growth add back Sales 95.2 97.5 2.4% - income tax expense (App 4D) 32.7 37.7 Profit before Tax 108.7 Gross Profit 14 2 14.2
Slide 22: Appendix IV: Profit and Loss Statement (5 years)
Appendix IV For personal use only Profit and Loss Statement (5 years) AUDm HY07 HY08 HY09 HY10 HY11 Sales 658.9 988.5 1,261.6 1,553.8 1,682.6 Gross Profit 145.9 213.3 269.5 327.8 362.5 Gross Margin 22.1% 21.6% 21.4% 21.1% 21.5% EBITDA 46.8 71.6 97.9 122.6 140.3 Depreciation & Amortisation 5.1 6.8 8.
Slide 23: Appendix IV: Balance Sheet (5 years)
Appendix IV… For personal use only Balance Sheet (5 years) AUDm HY07 HY08 HY09 HY10 HY11 Cash 83.4 46.4 90.8 127.4 180.0 Receivables 55.4 82.2 97.3 113.4 130.3 Inventories 188 7 188.7 272 5 272.5 300 3 300.3 373 3 373.3 388 1 388.1 Other 3.2 4.4 4.6 6.4 5.1 Total Current Assets 330.7 405.5 493.0 620
Slide 24: Appendix IV: Cash Flow Statement (5 years)
Appendix IV… For personal use only Cash Flow Statement (5 years) AUDm HY07 HY08 HY09 HY10 HY11 EBITDA 46.8 71.6 97.9 122.6 140.3 Change in Working Capital 65.5 26.4 108.5 73.6 97.7 N t Interest Net I t t Paid P id (3 3) (3.3) (3 7) (3.7) (4 4) (4.4) (2 7) (2.7) (2 1) (2.1) Income Tax Paid (8.5) (14.