Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — FY2014 Earnings Presentation
33 slides from Kmd Brands's earnings presentation, Sep 23, 2014
Slide 1: FY14 Results Presentation
For personal use only FY14 Results Presentation 1 September 2014
Slide 2: Contents
Contents For personal use only 1 Results Overview 2 Key Line Items 3 Country Results 4 Cash Flow, Balance Sheet, Dividend 5 Growth Strategy Update 6 FY15 Outlook 7 Questions A Appendix 1 2
Slide 3: Results Overview
For personal use only Results Overview
Slide 4: Results Overview: Highlights
1 Results Overview: Highlights Earnings For personal use only • EBITDA $74.5m, up 0.7% • EBIT $64.3m, up 1.4% • NPAT $42.2m, down 4.5% Key Points • Australian growth maintained despite a difficult trading environment • Gross margin improvement • Significant adverse exchange rate impact on $A to $NZ
Slide 5: Results Overview: Year-on-Year
1 Results Overview: Year-on-Year RESULTS NZD $m*1 FY14 FY13 Var $ Var % For personal use only SALES 392.9 384.0 8.9 2.3% GROSS PROFIT 248.1 242.0 6.1 2.5% Gross Margin % 63.1% 63.0% Insurance Claim 1.3 0.3 1.0 OPERATING EXPENSES (175.0) (168.3) (6.7) 4.0% % of Sales 44.5% 43.8% EBITDA 74.5 74.0 0.5
Slide 6: Results Overview: Half-Year split YOY
1 Results Overview: Half-Year split YOY For personal use only RESULTS NZ $m 1H FY14 1H FY13 Var $ Var % 2H FY14 2H FY13 Var $ Var % SALES 167.6 165.9 1.7 1.0% 225.3 218.1 7.2 3.3% GROSS PROFIT 107.1 104.1 3.0 2.9% 141.0 137.9 3.1 2.2% Gross Margin % 63.9% 62.7% 62.6% 63.2% Insurance Claim - - 1.3 0.
Slide 7: Underlying Growth
1 Underlying Growth For personal use only 1. Rounding differences may arise in totals. 7
Slide 8: Key Line Items
For personal use only Key Line Items
Slide 9: Sales
2 Sales For personal use only SALES: +2.3% to $392.9m Group Sales (NZD $m) *1 $384.0 $392.9 • Sales growth year on year:*2 $347.1 $306.1 AU 14.8%, NZ 2.9%, UK -22.6%; $245.8 • At constant exchange rates sales growth $38.2m / 9.9%; • Online sales 5.1% of total sales. FY10 FY11 FY12 FY13 FY14 Australi
Slide 10: Same Store Sales Growth
2 Same Store Sales Growth AU NZ For personal use only 14.4% 12.3% 9.2% • Same store sales: *1 6.5% 6.7% 6.9% -2.7% actual exchange rates +4.2% constant currency: 4.4% • Stores only +3.1% 0.8% 0.6% • Online only +29.2% -0.1% • UK SSS +12.7% FY10 FY11 FY12 FY13 FY14 (total sales 22.6% below FY13 due t
Slide 11: Gross Margin %
2 Gross Margin % AU NZ UK GROUP For personal use only 68.8% 66.9% 66.3% 66.3% 65.5% 65.5% 63.2% 63.2% 63.0% 63.1% 60.3% 60.6% 57.6% 57.7% 58.2% 57.2% 57.4% 53.9% 51.9% 49.6% FY10 FY11 FY12 FY13 FY14 • First half gross margins remained strong FY14 SHARE OF BUSINESS through the Christmas and January t
Slide 12: Cost of Doing Business
2 Cost of Doing Business For personal use only OPERATING EXPENSES: +4.0% to $175.0m NZD $m FY14 FY13 Var $ Var % Rent 44.5 43.8 0.7 1.6% • Operating expenses increased as a % of % of Sales 11.3% 11.4% sales year on year (70 bps); Other operating expenses 130.5 124.5 6.0 4.8% • Sales below expectatio
Slide 13: Earnings Summary
2 Earnings Summary For personal use only EBITDA $74.5m EBIT*1 $64.3m NPAT*2 $42.2m +0.7% +1.4% -4.5% 71.4 74.0 74.5 66.5 64.0 63.4 64.3 57.0 54.4 48.5 44.2 42.2 39.1 34.9 25.2 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 22.1% 23.3% 19.2% 19.3% 19.0% 19.7% 20.9% 16.4% 1
Slide 14: Country Results
For personal use only Country Results
Slide 15: Australia
3 Australia For personal use only SALES: +14.8% to $227.8m AUD $m FY14 FY13 Var % • Same store sales growth above 6% for the fourth Sales 227.8 198.4 14.8% successive year; • Total operating expenses (excl. depreciation): Same store sales growth 6.9% 6.7% • FY14 48.4% of sales; • FY13 48.2% of sales
Slide 16: New Zealand
3 New Zealand For personal use only SALES: +2.9% to $141.0m NZD $m FY14 FY13 Var % • Same store sales growth in all 2H FY14 Sales 141.0 137.0 2.9% months except June; • EBITDA 4yr CAGR 5.9%; Same store sales growth (0.1%) 4.4% • Improved gross margin despite winter EBITDA (trading result)*1 34.8 34.
Slide 17: United Kingdom
3 United Kingdom GBP £m For personal use only SALES: -22.6% to £2.4m FY14 FY13 Var % Sales 2.4 3.1 (22.6%) • Same store sales growth 12.7% (incl. Online); • Gross margin met expectations; Same store sales growth*1 7.4% (7.0%) • Initial brand building advertising costs £0.24m; Online sales growth*2 5
Slide 18: Cash Flow, Balance Sheet, Dividend
For personal use only Cash Flow Balance Sheet 18 Dividend
Slide 19: Cash Flow
4 Cash Flow For personal use only NZD $m FY14 FY13 Capital expenditure $24.2m (LY $17.4m): NPAT 42.2 44.2 • New stores capex $8.7m (LY $10.5m): Change in working capital (22.6) (6.1) • 15 new stores; • 6 relocations. Change in non-cash items 11.6 7.6 Operating cash flow 31.2 45.7 • Existing stores c
Slide 20: Balance Sheet
4 Balance Sheet For personal use only NZD $m FY14 FY13 • Net debt increase primarily inventory increase (refer following slide); Inventories 103.8 80.0 • Debt facility to be renegotiated 1H 2015; Property, plant and equipment 48.4 43.4 • Interest rate swaps Intangible assets 238.7 234.9 (NZ $22m, AU
Slide 21: Balance Sheet – Inventory
4 Balance Sheet – Inventory For personal use only • Year on year increase in stock per store Stock Per Store *1 18.5%, slightly higher than expectations; • Growth in operating inventory to support new $0.692 stores and online growth; $0.591 $0.584 $0.486 • Online sales now equivalent to eight averag
Slide 22: Dividend
4 Dividend For personal use only • NZ 9.0 cents per share final dividend; full year payout NZ 12.0 cps (2013: NZ 12.0 cps); • Supplementary dividend payable to non-NZ shareholders of 0.15882 NZ cps; • AU dividend will be fully franked; • NZ dividend will be fully imputed; • Record date 10 November 2
Slide 23: Foreign Currency
4 Foreign Currency For personal use only • Effective USD hedge rates FY14: FORWARD HEDGING POSITION FY15 FY16 • AUD/USD 0.961 FY14 vs 1.005 FY13; % covered 90%+ 10%+ • NZD/USD 0.805 FY14 vs 0.791 FY13. AUD/USD Effective Rate 0.897 0.910 • Forward Hedging Position: % covered 90%+ 10%+ • Longest dated
Slide 24: Growth Strategy Update
For personal use only Growth Strategy Update
Slide 25: Growth Strategy - Commentary
5 Growth Strategy - Commentary For personal use only GROWTH STRATEGY COMMENTARY • Expect to open most of these stores by FY17 • 15 new stores in FY15, 8 sites already confirmed and most are planned to • 180 stores targeted for open before Christmas New store Australia and New rollout • New stores in
Slide 26: Growth Strategy – Commentary continued
5 Growth Strategy – Commentary continued For personal use only GROWTH STRATEGY COMMENTARY • Online sales now over 5% of total Group sales • Grow online sales in AU, • International shipping launched, international Summit Club membership Online and NZ and international growing international markets.
Slide 27: Growth Strategy - Australia
5 Growth Strategy – Australia For personal use only Australia remains key growth region for the next 5 years; targeting at least 50% of NZ per capita spend equates to c.A$340m sales. Key Measures FY14 FY09 CAGR % Where this $110m growth will come from: • Store rollout c.30 stores; Sales (AUD $m) 227
Slide 28: Growth Strategy – UK, Europe, International
5 Growth Strategy – UK, Europe, International For personal use only • UK business reorganisation complete, initial results very positive; • Internal performance milestones reached (SSS, brand tracking, Summit Club). This provides confidence to continue investing; • Major brand awareness campaign is
Slide 29: Growth Strategy – Summary
5 Growth Strategy – Summary For personal use only • Australasian business growth strategies clearly identified and will continue to be executed; • Expect to increase sales and earnings in Australasia through next 3 to 5 years at least; • This is the right time for Kathmandu to pursue growth outside
Slide 30: FY15 Outlook
For personal use only FY15 Outlook
Slide 31: FY15 Trading Update and Outlook
6 FY15 Trading Update and Outlook Market / Environment For personal use only • For the foreseeable future, global environment will be uncertain; • Australian economic growth prospects still subdued, New Zealand may slow down in 2015; • Outdoor category competitor mix changing, and very competitive p
Slide 32: Questions
For personal use only 32 Questions
Slide 33: Appendix – Reconciliation of Country Trading Results
Appendix 1 – Reconciliation of Country Trading Results For personal use only Australia (NZ $m) FY14 FY13 New Zealand (NZ $m) FY14 FY13 Segment profit 29.7 20.5 Segment profit 30.7 30.3 Net interest 2.7 2.1 Net interest 1.1 1.7 Facility fees 0.3 0.3 Facility fees 0.2 0.3 Depreciation 6.2 7.0 Deprecia