Kingfisher Plc · LSE:KGF
Kingfisher — Debt Investor Presentation (November 2005)
38 slides from Kingfisher's debt investor presentation, November 2005
Slide 1: Eurobond Roadshow Investor Presentation November 2005
Eurobond Roadshow Investor Presentation November 2005
Slide 2: Contents
Contents • Kingfisher Business Overview • Geographical Analysis • Financial Position • Transaction Summary 1
Slide 3: Our business
Kingfisher – Our business • Global home improvement retailer • Leading positions in our core markets • Well positioned to exploit upswings in global DIY market • Targeting growth markets to ensure long-term expansion 2
Slide 4: Market leading brands
Kingfisher – Market leading brands No of stores Market ranking UK and Ireland 339 #1 102 France #1 67 Poland 28 #1 Italy 23 #2 China 38 #1 Taiwan 19 #1 Turkey 5 #2 Spain 6 #5 Plus 21% strategic alliance with Hornbach, 119 stores in 8 European countries 3
Slide 5: Leading European and Global DIY retailers
Kingfisher – # 1 in Europe, # 3 in World Leading European DIY retailers Leading Global DIY retailers 14 12.6 60 56.2 12 Annualised Sales 2004 € bn 50 Annualised Sales 2004 € bn 10 40 8 28.1 5.8 5.7 30 6 3.3 20 4 2.8 12.6 2.3 2.0 2.0 1.7 1.6 1.4 10 2 0 0 I s om er s r Pr l in W e e s r co aus ric h B
Slide 6: Home Improvement – Attractive fundamentals
Home Improvement – Attractive fundamentals • Homes are most people’s biggest asset • Homes have to be repaired • People want to improve their home – Style aspirations as we get richer – Used as a home, an office, entertainment • Global products and suppliers • Low brand awareness allows increased re
Slide 7: Market size and market share
Kingfisher – 628 stores, 10 countries and room for growth Market Size* Market Share UK £28bn 16% France £32bn 8% ROE £27bn 2% Asia £29bn <1% Total £116bn 7% *where Kingfisher is present 6
Slide 8: Strategy: growth and returns
Kingfisher – Strategy: growth and returns Investing for growth Improving returns – New & revitalised – Driving LFL stores – Optimising supply – New markets – Managing costs – Infrastructure Consistent, sustainable growth in economic returns 7
Slide 9: Scale and diversity
Kingfisher – Scale and diversity • Operating scale – buying together, global sourcing – better products, better prices – Strategic Supplier Management £1bn targeted savings in 5 years • Diversity – sharing ideas, accelerating innovation – ranges, formats, brands and infrastructure – people 8
Slide 10: Contents – Geographical Analysis
Contents • Kingfisher Business Overview • Geographical Analysis • Financial Position • Transaction Summary 9
Slide 11: B&Q – Clear UK market leader
B&Q – Clear UK market leader RMI market share 1999-2004 14.4% 14.7% • For customers 15% 12.3% 13.5% 12% 11.2% 10.1% – best value for money 9% – best choice of products 6% – 1st choice store 3% 0% 1999 2000 2001 2002 2003 2004 • Ahead of competitors 5.0 2004 sales – double the size 4.0 4.0 – only big
Slide 12: UK – Tough retail environment
UK – Tough retail environment • Weakening consumer demand • Sharpest fall in housing transactions since 1989 – Affects ‘big ticket’ projects • Competition intensifying – Retail space expansion continuing – Deep price promoting • Full year LFL cost inflation of 4% 11
Slide 13: B&Q – Sales opportunities
B&Q – Sales opportunities Short Term • More aggressive promotion – ‘10% off’ weekend – EDLP to be “spiced up” with events • Marketing refocus – New campaigns: The Real Deal – Direct to home flyers Longer Term • Increase B&Q’s 20% share of customers’ project spend • Reach beyond core DIY customer 12
Slide 14: B&Q – New store format
B&Q – New store format • Re-configure the larger stores to display room projects 13
Slide 15: B&Q – Reducing costs, improving ROIC
B&Q – Reducing costs, improving ROIC • Head/regional offices reshaped – 400 jobs affected • Closed some underperforming stores • One-off costs of approx. £200m, cash £150m • Focus investment on: – Existing store modernisation – new lower cost, higher return mini warehouses 14
Slide 16: UK – Trade growth opportunity
UK – Trade growth opportunity • A £50 billion market* • An attractive opportunity – Large and growing – Competition is highly fragmented – Low capital intensity compared to retail • Kingfisher have approx.1% share • Two growth vehicles – Screwfix Trade Counters – Trade Depot * AMA research and inter
Slide 17: France – Addressing the full market opportunity with two strong brands
France – Addressing the full market opportunity with two strong brands • Castorama (102 stores) – Targets mainstream consumer – Broad choice, low price and “ideas and inspiration” – Big stores, prime retail locations • Brico Dépôt (67 stores) – Targets the light trade and heavy DIY – Very low price,
Slide 18: France – Outperforming the market
France – Outperforming the market Banque de France comparable stores 12% (adjusted for Brico) Kingfisher France LFL 10% 8% 6% 4% 2% 0% Q Q Q Q Q Q Q Q Q Q Q -2% 1 2 3 4 1 2 3 4 1 2 3 03 03 03 03 04 04 04 04 05 05 05 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 4 4 4 4 5 5 5 5 6 6 6 • Q3 05/06 market data indica
Slide 19: Castorama – Revitalisation on track
Castorama – Revitalisation on track • Product ranges – Entry price products now introduced – Own brand participation at 15% – Major new showroom and decorative ranges rolled out through H1 • Price – from 9th to 3rd lowest price perception in 2 years • Marketing – Stronger marketing plan for H2 ¾ Cat
Slide 20: Brico Dépôt – Accelerating growth across Europe
Brico Dépôt – Accelerating growth across Europe • France – 17.7% LFL sales growth last year – Highest ROIC in the Group – 67 stores now, 3 more in H2 • Roll-out across Europe Spain – <1% market share – 6 stores now, 2 more in H2 Poland – First opening planned for 2006 19
Slide 21: Driving growth – Increasing contribution from Rest of Europe and Asia
Driving growth – Increasing contribution from Rest of Europe and Asia Retail Profit 90 83.0 80 70 61.8 60 £ millions 50 38.0 40 30 20 10 5.6 0 2001/02 2002/03 2003/04 2004/05 Note: excludes discontinued international operations. Includes share of profits of Hornbach (21% stake), Taiwan and Turkey (J
Slide 22: Rest of Europe and Asia
Rest of Europe and Asia Country Stores at July H2 openings Estimated 05 stores at Jan 06 Poland 28 1 29 Italy 23 3 26 Spain 6 2 8 Ireland 4 3 7 Turkey 5 1 6 Russia* - - - Total ROE 66 10 76 China 38 12 50 Taiwan 19 1 20 Korea 1 - 1 Total Asia 58 13 71 Total ROE and Asia 124 23 147 *first store plann
Slide 23: B&Q China – Market leading position after OBI acquisition
B&Q China – Market leading position after OBI acquisition, but still less than 1% share Stores - end 2005 Coverage (estimate) 50 National 25 North & West 24 National (mainly East) 11 North No.9 5 Shanghai Hugely Fragmented Market 22
Slide 24: B&Q China – Acquisition accelerates store roll-out
B&Q China – Acquisition accelerates store roll-out Harbin • Consolidates strong positions in 1 core cities: Shenyang 2 – Beijing, Shanghai, Shenzhen, Beijing Guangzhou 4 1 Dalian 1 1 Tianjin Qingdao 21 Nanjing 1 2 1 1 1 Suzhou • New city entry opportunities Wuxi Shanghai 2 1 Xian Wuhan 5 4 – Chengdu
Slide 25: Contents – Financial Position
Contents • Kingfisher Business Overview • Geographical Analysis • Financial Position • Transaction Summary 24
Slide 26: Financial position
Kingfisher – Financial position • Strong sales and profit history Home Improvement Sales Home Improvement Operating Profit 8,000 7,650 800 7,038 706.5 6,130 638.2 6,000 5,193 600 519.9 £ millions £ millions 4,530 424.1 385.9 4,000 400 2,000 200 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2
Slide 27: FYE 2004 and 2005 Highlights
Kingfisher – FYE 2004 and 2005 Highlights £m FYE 05 FYE 04 Retail Sales 7,650 7,038 Retail Profit 707 638 Free Cashflow 303 415 EBITDA 830 839 FFO 689 355 Net Debt 794 844 FFO/ Net Debt 86.8% 42.1% Net Debt/ EBITDA 1.0x 1.0x Interest Cover 33.2x 19.1x 26
Slide 28: Interim results
Kingfisher – Interim results £m, Continuing Group HY ended HY ended 30 Jul 05 31 Jul 04 Retail sales 4,079 3,948 Gross profit 1,444 1,447 Retail profit 289 367 Adjusted pre-tax profit* 254 329 * excluding IFRS retranslation of intercompany balances 27
Slide 29: Cashflow
Kingfisher – Cashflow £m, Continuing Group HY ended HY ended 30 Jul 05 31 Jul 04 Operating Profit 270 342 Depreciation/other 85 73 Change in working capital 86 128 Retail capex (160) (116) Underlying free cashflow 281 427 Acquisitions/ freehold purchases (235) (81) Free Cashflow 46 346 28
Slide 30: Net debt
Kingfisher – Net debt £m, Continuing Group HY ended HY ended 30 Jul 05 31 Jul 04 Free cashflow 46 346 Interest 2 25 Corporation Tax (100) (68) Dividends (158) (136) Other 7 29 Movement in net debt (203) 196 Opening net debt (841) (891) Translation on debt (4) 25 Closing net debt (1,048) (670) 29
Slide 31: Capital investment and property
Kingfisher – Capital investment and property Significant proportion of Unencumbered property investment in property Capex 2004/5 £2.4bn Portfolio 25% £0.5bn 39% £1.1bn 13% £0.8bn 23% Ne w Store s - Fre e hold UK Ne w Store s - Re tail France Re vam ps and othe r Store Inve s tm e nt Inte rnational I
Slide 32: Liquidity overview
Kingfisher – Liquidity overview • £ 300m 364-day Bridge Facility – fully drawn • £ 500m 2010 Revolving Credit Facility – undrawn • £ 150m MTN 6.875% 2010 • € 500m MTN 4.500% 2010 • £ 250m MTN 5.625% 2014 £ MTN 1,200 € MTN Revolving Credit Facility 1,000 364-day Bridge Facility 150 £ equivalent milli
Slide 33: Credit ratings
Kingfisher – Credit ratings • “The ratings continue to reflect the group’s leading position in S&P 15/09/05 the U.K. and French retail markets and its focus on the home- home- improvement business, which has long- long-term fundamentals” • “The negative outlook reflects that the ratings would come B
Slide 34: Pension funding
Kingfisher – Pension funding • UK Defined Benefit Pension Scheme deficit of £298m at 29 Jan 05 • £250m additional contribution over 3 years • Invested in matching assets • Balance sheet neutral under IFRS 33
Slide 35: Summary
Kingfisher – Summary • Leading positions in attractive home improvement market • Leveraging the Group’s scale and diversity • Investing for growth and improving returns • Financials consistent with strong BBB credit 34
Slide 36: Contents – Transaction Summary
Contents • Kingfisher Business Overview • Geographical Analysis • Financial Position • Transaction Summary 35
Slide 37: Transaction Summary
Transaction Summary • Issuer: Kingfisher plc • Currency: Euro • Size: Benchmark • Maturity: 7-10 years • Listing: London • Credit Ratings: Baa1/BBB+/BBB+ • Change of Control: Included • Use of Proceeds: General Corporate Purposes • Timing: Investor Meetings 8-11th Nov • Documentation: € 2.5bn EMTN P
Slide 38: Eurobond Roadshow Investor Presentation November 2005
Eurobond Roadshow Investor Presentation November 2005
Kingfisher — Debt Investor Presentation (November 2005) on 6ix