Jb Hi-fi Limited · ASX:JBH
Jb Hi-fi — FY2012 Earnings Presentation
33 slides from Jb Hi-fi's earnings presentation, Aug 13, 2012
Slide 1: Full Year Results Presentation 30 June 2012
For personal use only JB Hi-Fi Hi Fi Limited Full Year Results Presentation 30 June 2012 13 August 2012
Slide 2: Agenda
AGENDA For personal use only 1. Performance Summary 2. Profit and Loss Statement 3. Trading Performance 4 4. Looking Forward 5. Competitive Advantages 6. Future Growth Opportunities 7. Ch ll Challenges Ahead Ah d 8. Outlook 9. Cash Flow and Balance Sheet 10. Dividends 11. Store Update 12 Investment
Slide 3: Performance Summary – Highlights
1. PERFORMANCE SUMMARY – HIGHLIGHTS For personal use only JB Hi-Fi branded store sales up 7.0% 2nd half sales showed an improving trend Online sales up 77.3% NZ sales up 17.8% and EBIT up 330.6% Company NPAT in line with guidance 3
Slide 4: Performance Summary
1. PERFORMANCE SUMMARY For personal use only Normalised1 Statutory FY11 FY12 Mvt FY11 FY12 Mvt Sales $2.96b $3.13b +5.7% $2.96b $3.13b +5.7% Gross Margin 22.0% 21.1% -94 bps 22.0% 21.1% -94 bps Cost of Doing Business 14.5% 14.9% +43 bps 15.6% 14.9% -70 bps EBIT $196.0m $161.5m -1
Slide 5: Profit and Loss Statement
2. PROFIT AND LOSS STATEMENT For personal use only 1 AUST NZ (NZD) CONSOLIDATED $m FY11 FY11 FY12 FY11 FY11 FY12 FY11 FY11 FY12 Normalised Statutory Statutory Normalised Statutory Statutory Normalised Statutory Statutory Sales 2,814.6 2,814.6 2,954.6 188.7 188.7 222.2 2,959.3 2,959.3 3,127.8 Gross P
Slide 6: Trading Performance – Sales Growth
3. TRADING PERFORMANCE For personal use only Sales Growth Sales – Total JB Hi-Fi branded store growth of 7.0% FY12 Comps. Total Comps. 1HY12 2HY12 Australia: JB Hi-Fi JB Hi-Fi branded store sales grew by 6.3% to $2.92b. - Australia 6.3% (1.8%) (3.1%) (0.1%) - New Zealand (NZD) 17.8% 11.7% 16.0% 6.
Slide 7: Trading Performance – New Zealand
3. TRADING PERFORMANCE… For personal use only New Zealand – Sales momentum continued Sales Growth FY12 Comps. Sales grew by 17.8% to NZ$222.2m. Total Comps. 1HY12 2HY12 Comparable store sales grew 11.7%. JB Hi-Fi - Australia 6.3% (1.8%) (3.1%) (0.1%) We are getting good traction with the JB Hi
Slide 8: Trading Performance – Gross Margin
3. TRADING PERFORMANCE… For personal use only Gross Margin – Competitive environment Consolidated gross margin was 21.1%, a 94 bps decrease on FY11 1HY12 2HY12 FY12 the prior period. Australia 22.3% 21.5% 21.0% 21.3% New Zealand 17.3% 16.7% 18.9% 17.7% In Australia, the gross margin in FY12 was
Slide 9: Cost of Doing Business
3. TRADING PERFORMANCE… For personal use only Cost of Doing Business (CODB) – Customer service is the key Consolidated CODB was 14.9% (Aust: 14.9%, NZ: 15.0%). FY11 FY12 We have maintained our high levels of service to ensure a continued Normalised Statutory positive customer experience. Austral
Slide 10: Trading Performance – Earnings
3. TRADING PERFORMANCE… For personal use only Earnings – Competitive trading environment. Consolidated EBIT was $161.5m (Aust: $158.7m, NZ: NZ$3.6m). FY11 FY12 Normalised Statutory In Australia, earnings were impacted by gross margin pressures. Australia ($m) 197.2 158.7 In New Zealand, EBIT i
Slide 11: Trading Performance – Out of Store
3. TRADING PERFORMANCE… For personal use only Out of Store Our multi channel strategy continues to develop and has delivered some good results in FY12. Strategy is to give customers a choice on how they wish to shop with JB Hi-Fi and to also make transacting as easy as possible. Online Onlin
Slide 12: Looking Forward
4. LOOKING FORWARD For personal use only Market to remain challenging, however we are very well positioned for any rebound in consumer spending Operating in an environment with both cyclical and structural challenges, however quantifying the impact of each is difficult. Not all retailers will be
Slide 13: Competitive Advantages
5. COMPETITIVE ADVANTAGES For personal use only We continue to drive innovation within our model but passionately maintain our fundamental competitive advantages JB Hi-Fi Key Competitive Advantages Market Position – Value / low price focus, we have always been a discount retailer supported by our
Slide 14: Future Growth Opportunities
6. FUTURE GROWTH OPPORTUNITIES For personal use only Growth will continue both in store and out of store! Existing Stores ▪ Continued expansion and enhancement of existing Hardware categories categories. ▪ Ongoing technological innovation will drive new and replacement sales. ▪ Computer category,
Slide 15: Challenges Ahead
7. CHALLENGES AHEAD For personal use only There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying y g degrees g and we believe JB Hi-Fi is best p positioned to face these challenges! g INDUSTRY JB Hi-Fi Positioning / Response CON
Slide 16: Challenges Ahead (continued)
7. CHALLENGES AHEAD… For personal use only There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying y g degrees g and we believe JB Hi-Fi is best p positioned to face these challenges! g INDUSTRY JB Hi-Fi Positioning / Response CO
Slide 17: Challenges Ahead (continued)
7. CHALLENGES AHEAD… For personal use only There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying degrees and we believe JB Hi-Fi is best positioned to face these challenges! 17
Slide 18: Outlook – Trading Outlook
8. OUTLOOK For personal use only Trading Outlook: FY13 sales update: Total consolidated sales growth for the JB Hi-Fi branded stores in July was 4.9%; and Consolidated comparable store sales growth for the JB Hi-Fi branded stores in July was -1.4%. While still early in the year, gross margin
Slide 19: Outlook – Category Outlook
8. OUTLOOK… For personal use only Category Outlook – Continued technology innovation The market is expected to remain very competitive across all categories. Constant technology innovation will drive continued industry growth. Computers / IT ▪ Windows 8 operating platform to be launched in Oct
Slide 20: Cash Flow Statement
9. CASH FLOW AND BALANCE SHEET For personal use only Cash Flow Statement AUDm FY11 FY12 1 EBITDA 223.3 192.2 Change in Working Capital (62.2) 80.3 Net Interest Paid (3 8) (3.8) (12 2) (12.2) Income Tax Paid (52.2) (49.3) Other 4.8 3.9 Net Cash Flow from Operations 109.9 215.0 u c ases o Purchases of
Slide 21: Working Capital
9. CASH FLOW AND BALANCE SHEET… For personal use only Working Capital AUDm FY11 FY12 Inventory Management: (Increase)/decrease in current assets - Inventory levels and mix are in line with internal expectations. Inventory (73.4) (21.0) - Average inventory per store was down 1.6% at $2.55m per stor
Slide 22: Key Ratios
9. CASH FLOW AND BALANCE SHEET… For personal use only Key Ratios Performance Indicators: FY11 FY11 FY12 Our balance sheet remains strong even after the Normalised Statutory Statutory challenging trading environment. Fixed Charge Ratio 4.0x 3.5x 3.1x Our low financial and operating leverage is ev
Slide 23: Balance Sheet
9. CASH FLOW AND BALANCE SHEET… For personal use only Balance Sheet AUDm FY11 FY12 Cash 27.2 39.7 Receivables 58.3 58.4 Inventories 406.9 428.3 Other 8.6 7.7 Total Current Assets 501.1 534.1 Fixed Assets 169.6 182.0 g Intangibles & Goodwill 78.7 78.8 Other 17.8 16.2 Total Non-Current Assets 266.1 27
Slide 24: Dividends
10. DIVIDENDS For personal use only Dividends The final dividend is 16.0 cents per share fully franked, bringing the total dividends for FY12 to 65.0 cents per share. This represents a payout ratio of 60% of FY12 earnings which is in line with our dividend policy. The Board is confident that the
Slide 25: Store Update – New Stores Opened in FY12
11. STORE UPDATE For personal use only 15 new JB Hi-Fi stores opened in FY12 Australia VIC: Greensborough, Hoppers Crossing, Traralgon, Thomastown, Springvale, Waurn Ponds, Chirnside NSW: Caringbah, Bankstown, Jamisontown, Shellharbour QLD: Mackay, Garden City, Hervey Bay FY12 168 stores WA:
Slide 26: Store Update – New Stores in FY13
11. STORE UPDATE… For personal use only 16 new JB Hi-Fi stores to be opened in FY13 NSW: Port Macquarie#, Coffs Harbour, North Sydney, Tamworth, Broadway VIC: Fountain Gate, The Glen QLD: Bundaberg#, Oxley ACT: Tuggeranong FY13 NT: Darwin (Berrimah) ~181 stores AUST: 4 undisclosed 168 14
Slide 27: Investment Checklist
12. INVESTMENT CHECKLIST For personal use only Strong and unique retail model. Operates mainly in the dynamic home entertainment and technology sector. Low cost of doing business – best of major listed retailers. Many new store opportunities - JB Hi-Fi branded stores circa 214 (164 Tier 1 fo
Slide 28: Appendix I – Store Movements
Appendix I For personal use only Store movements during FY12 Geographic breakdown# FY12 FY11 Opened Closed Total Australia JB - Tier 1 123 12 - 135 JB - Tier 2 16 3 (1) 18 139 15 (1) 153 Clive Anthonys 5 - (3) 2 144 15 (4) 155 New Zealand 1 JB - Tier 1 9 - - 9 JB - Tier 2 4 - - 4 33 13 - - 13 TOTAL
Slide 29: Appendix II – EBIT Reconciliation and NZ P&L
Appendix II For personal use only a) EBIT reconciliation b) NZ Profit and Loss statement (AUD) AUDm FY11 FY11 FY12 NZ (AUD) Normalised Statutory Statutory $m FY11 FY11 FY12 Profit for the year (App 4E) 109.7 109.7 104.6 Normalised Statutory Statutory add back Sales 144.6 144.6 173.2 - income tax exp
Slide 30: Appendix II – CODB Reconciliation
Appendix II… For personal use only d) CODB reconciliation e) CODB as % of sales AUDm FY11 FY11 FY12 35% 32.06% Normalised Statutory Statutory Other income (ex interest received) (0.1) (0.1) (0.05) 30% 28.98% 26.37% Sales and marketing expenses (App 4E) 286.8 286.8 309.5 23.48% 25% Occupancy expenses
Slide 31: Appendix III – Profit and Loss Statement (5 years)
Appendix III For personal use only Profit and Loss Statement (5 years) AUDm FY08 FY09 FY10 FY11 FY11 FY12 Statutory Statutory Statutory Normalised Statutory Statutory Sales 1,828.6 2,327.3 2,731.3 2,959.3 2,959.3 3,127.8 Gross Profit 399.7 503.6 594.2 652.0 652.0 659.8 Gross Margin 21.9% 21.6% 21.8%
Slide 32: Appendix III – Balance Sheet (5 years)
Appendix III… For personal use only Balance Sheet (5 years) AUDm FY08 FY09 FY10 FY11 FY12 Cash (1.5) 35.8 51.7 27.2 39.7 Receivables 53.0 60.3 63.5 58.3 58.4 Inventories 271 9 271.9 324 5 324.5 334 8 334.8 406 9 406.9 428 3 428.3 Other 5.3 5.7 4.5 8.6 7.7 Total Current Assets 328.7 426.2 454.5 501.1
Slide 33: Appendix III – Cash Flow Statement (5 years)
Appendix III… For personal use only Cash Flow Statement (5 years) AUDm FY08 FY09 FY10 FY11 FY12 1 EBITDA 117.0 160.7 198.4 223.3 192.2 Change in Working Capital (44.8) 19.6 1.2 (62.2) 80.3 Net Interest Paid (8 9) (8.9) (6 7) (6.7) (5 0) (5.0) (3 8) (3.8) (12 2) (12.2) Income Tax Paid (28.0) (41.3) (