Rs Group Plc · LSE:RS1

Rs — Electrocomponents — H1 2012/13 Earnings Presentation

42 slides from Rs's earnings presentation, Nov 8, 2012

  1. Slide 1: Electrocomponents plc Announcement of Interim Results

    Electrocomponents plc ANNOUNCEMENT OF INTERIM RESULTS HALF YEAR ENDED 30 SEPTEMBER 2012 8 NOVEMBER 2012

  2. Slide 2: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 2

  3. Slide 3: Key themes

    Key themes  Difficult market conditions, particularly in electronics  Significant impact on H1 financial performance  Decisive actions taken and expect stronger H2  New organisation structure to accelerate strategy and drive efficiencies  Structural growth opportunity from advantages over small

  4. Slide 4: Financial highlights

    Financial highlights  Flat underlying sales UK +5%, International -2%  Gross margin decline -1.2% pt reduction to 45.5%  Fixed cost leverage 3% constant currency cost growth  Fewer trading days, adverse fx -£5m headline PBT impact  Headline PBT decline -30%, £41.5m  Headline free cash flow gro

  5. Slide 5: Current trading

    Current trading Underlying sales growth (1) FY12 Q1 Q2 H1 October Continental Europe 1% (1)% 0% 1% North America (4)% (6)% (5)% (6)% Asia Pacific (3)% 3% 0% (1)% International (2)% (2)% (2)% (2)% UK 5% 5% 5% 3% Group 0% 0% 0% 0% October Group sales trends consistent with H1 (1) Adjusted for currency

  6. Slide 6: Sales per day

    Sales per day UK sales per day 1,700 1,500 1,300 1,100 Group sales per day 900 5,500 700 5,000 500 4,500 £’000 sales per trading day (constant currency) 4,000 ƒ International sales per day 3,500 4,000 3,000 3,500 3,000 £’000 sales per trading day (constant currency) 2,500 2,000 1,500 £’000 sales per

  7. Slide 7: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 7

  8. Slide 8: Basis of preparation

    Basis of preparation Unless otherwise stated:  Figures have been prepared using International Financial Reporting Standards (IFRS)  Changes in sales are adjusted for currency movements and for the number of trading days (‘underlying sales growth/decline’)  Changes in profit, cash flow, debt and s

  9. Slide 9: Profit and loss account

    Profit and loss account H1 H1 Reported £m 2012/13 2011/12 Change Sales 606.5 626.5 0% (1) Gross margin 45.5% 46.7% (1.2)% points Headline operating costs 231.8 230.3 (3)% (1) Headline operating profit 44.3 62.1 (29)% Interest (2.8) (2.7) (4)% Headline profit before tax 41.5 59.4 (30)% Headline retur

  10. Slide 10: Group headline profit before tax movement

    Group headline profit before tax movement Change (1) (19)% 2% (2)% £(18.0)m £59.4m £0.9m £(0.8)m £41.5m H1 2011/12 International UK Processes H1 2012/13 International driving contribution decline (1) Adjusted for currency 10

  11. Slide 11: International contribution

    International contribution H1 H1 Underlying £m 2012/13 2011/12 Change (1) Sales 420.9 448.2 (2)% Gross margin 44.2% 45.4% (1.2)% points Operating costs (124.8) (124.3) (4)% Contribution 61.0 79.0 (19)% Contribution % 14.5% 17.6% (3.1)% points International contribution margin down by 3% pts (1) Adju

  12. Slide 12: International contribution components

    International contribution components Change (1) (12)% (23)% (43)% £(9.6)m £(4.8)m £(3.6)m £79.0m £61.0m H1 2011/12 Continental Europe North America Asia Pacific H1 2012/13 Contribution decrease broadly based (1) Adjusted for currency 12

  13. Slide 13: UK contribution

    UK contribution H1 H1 Underlying £m 2012/13 2011/12 Change (1) Sales 185.6 178.3 5% Gross margin 48.6% 50.0% (1.4)% points Operating costs (37.8) (37.5) (1)% Contribution 52.5 51.6 2% Contribution % 28.3% 28.9% (0.6)% points Strong UK contribution margin above 28% (1) Sales adjusted for trading days

  14. Slide 14: Reorganisation: impact on profit and cash

    Reorganisation: impact on profit and cash Impacts Benefits One-off costs: Recurring cost savings:  H1 charges of £2.5m  H2 savings c. £3m  H2 charges of c. £4m - £6m  Annualised savings c. £6m - £8m  Net reduction in roles of c. 140 One-off cash outflows:  H1 reorganisation cash outflow of £1.

  15. Slide 15: Headline earnings per share

    Headline earnings per share H1 H1 £m 2012/13 2011/12 Change Headline profit before tax 41.5 59.4 (30)% Effective tax rate (30)% (31)% 1% point Per share amounts: Headline earnings 6.6p 9.4p (30)% Interim dividend 5.0p 5.0p - Interim dividend maintained 15

  16. Slide 16: Cash flow

    Cash flow H1 H1 £m 2012/13 2011/12 Comment Profit before tax 39.0 59.4 Profits down 34% Depreciation 11.1 13.0 Employee share options / non-cash mvts 0.9 0.9 Finance expense (net) 2.8 2.7 Working capital (6.8) (21.7) Stock turns 2.6x in H1 2012/13 Cash generated from operations 47.0 54.3 Interest pa

  17. Slide 17: Net debt

    Net debt Movement in net debt Facilities & covenants H1 H1 £m 2012/13 £m 2012/13 Net debt as at 1 April 2012 (154.2) Committed facilities 296.6 Free cash flow 22.8 Used facilities (162.4) Unused facilities 134.2 Dividends paid (29.5) New shares issued 0.4 H1 Own shares acquired (0.2) 2012/13 Covenan

  18. Slide 18: Financial highlights

    Financial highlights  Flat underlying sales UK +5%, International -2%  Gross margin decline -1.2% pt reduction to 45.5%  Fixed cost leverage 3% constant currency cost growth  Fewer trading days, adverse fx -£5m headline PBT impact  Headline PBT decline -30%, £41.5m  Headline free cash flow gro

  19. Slide 19: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 19

  20. Slide 20: Business portfolio

    Business portfolio Underlying H1 FY12/13 sales % of Group Contribution Market £m growth sales margin position Continental Europe 0% 33% 19% No.1 North America (5)% 22% 14% No. 3 Asia Pacific 0% 14% 6% No. 1 International (2)% 69% 14% No. 1 UK 5% 31% 28% No.1 Group 0% 100% 19% No. 1 Attractive margin

  21. Slide 21: Continental Europe

    Continental Europe  Flat sales growth(1) Europe eCommerce share %  France outperforming Germany, Italy, Spain 70%  12% eCommerce sales growth, 65% share 65% 60%  Extended Live Chat into 6 more markets 55% 50%  Catalogue launch after 2 years 45% 40%  Strategic supplier share gains Q1 FY11 Q2 FY

  22. Slide 22: North America

    North America  5% sales decline(1), c. 75% electronics exposure  Adapting to new SAP system  26% eCommerce sales decline, 32% share  17k products introduced  Expanded supplier relationships Investing in improving the offer despite tough H1 (1) Adjusted for currency and trading days 22

  23. Slide 23: Asia Pacific

    Asia Pacific  Flat sales growth(1), Japan significant impact  7% eCommerce sales decline, 48% share  Investment in online marketing initiatives  Extended Live Chat into 6 more markets  20 large customer account wins  Additional supplier agreements signed Strategic progress, growth held back by

  24. Slide 24: UK

    UK  75th Anniversary UK H1 contribution, FY08 – FY13  5% sales growth(1), 3% ex-Raspberry Pi 60 50  c. 75% exposure to maintenance 40 30  £m 12% eCommerce sales growth, 61% share 20  Expanded large customer account portfolio 10 0 FY08 FY09 FY10 FY11 FY12 FY13  Maintained good cost control Cont

  25. Slide 25: H2 profit improvement actions

    H2 profit improvement actions Price differentiation Competitor  Sales growth to benefit from: price index Tail o Easier comparators Drive price Less price perception on our perception in key value items the tail o Increased eCommerce marketing intensity o Sales initiatives and Raspberry Pi Average

  26. Slide 26: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 26

  27. Slide 27: New global organisation structure in place

    New global organisation structure in place  Strong forces driving globalisation Global Operating Model STRATEGY  Reorganised whole of business in 6 months  From country-based to functional-based OFFER MARKETING SALES  Faster implementation of strategy and IT FINANCE HR increased efficiency Signi

  28. Slide 28: Single, global product offer

    Single, global product offer  Integration of electronics, maintenance Five product categories and supply chain Electronics Famous Electronics (semiconductors, (semiconductors, passives & electromechanical) passives & Automation & Control for electromechanical) Automation & Control  Industry-leadin

  29. Slide 29: Focused on growing target customers

    Focused on growing target customers Targeting 4 contact groups  Focused, local sales approach Electronic Design Machine & Maintenance Engineers Panel Builders Engineers Electronics (semiconductors, passives & electromechanical)  Develop and grow existing customers Automation & Control Test & Measu

  30. Slide 30: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 30

  31. Slide 31: New Global Marketing approach

    New Global Marketing approach Single global effort across contact lifecycle Awareness Acquisition Nursery Development Brand awareness First purchase First 4 months Beyond 4 months • Contacts know who • Acquire contacts in • Drive average • Drive breadth of we are both new and existing purchases high

  32. Slide 32: Transforming the customer experience will drive eCommerce growth

    Transforming the customer experience will drive eCommerce growth Search Conversion Curve Persuasion (b/a) = ability to extract orders from visitors / sessions a 100% Conversion (d/a) = ability to turn visitors / sessions into sales Traffic b c d Execute Order Add to cart Checkout search Confirmation

  33. Slide 33: New Search and Browse - one year on

    New Search and Browse - one year on Conversion from New Search – Monthly Trend RS Conversion Index (Jan 11 = 100%) 120% 110% 100% 90% 80% Jan - 11 Mar- 11 May- 11 Jul - 11 Sep - 11 Nov - 11 Jan -12 Mar-12 May-12 Jul -12 Sep -12 Staggered New Search & Browse roll-out Step-change in conversion deliver

  34. Slide 34: New initiative - improved web checkout

    New initiative - improved web checkout Opportunity: WENT LIVE SEPTEMBER 2012  4m shopping carts abandoned/year  210k registrations abandoned/year Objectives:  Reduce abandoned carts/year by >100k  Reduce abandoned registrations/year by c.50%  Clear and complete pricing in the basket  Simplify

  35. Slide 35: New Global Marketing approach

    New Global Marketing approach Single global effort across contact lifecycle Awareness Acquisition Nursery Development Brand awareness First purchase First 4 months Beyond 4 months • Contacts know who • Acquire contacts in • Drive average • Drive breadth of we are both new and existing purchases high

  36. Slide 36: Key themes

    Key themes  Difficult market conditions, particularly in electronics  Significant impact on H1 financial performance  Decisive actions taken and expect stronger H2  New organisation structure to accelerate strategy and drive efficiencies  Structural growth opportunity from advantages over small

  37. Slide 37: Agenda

    Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business performance Ian Mason Strategy Ian Mason Global Marketing Keith Reville Q&A All 37

  38. Slide 38: Electrocomponents plc Announcement of Interim Results

    Electrocomponents plc ANNOUNCEMENT OF INTERIM RESULTS HALF YEAR ENDED 30 SEPTEMBER 2012 8 NOVEMBER 2012

  39. Slide 39: Financial appendices

    Financial appendices 39

  40. Slide 40: Impact of foreign exchange

    Impact of foreign exchange Reported H1 2012/13 H1 2011/12 Growth Growth reported Foreign exchange adjusted £m £m % % Headline International contribution Continental Europe 37.7 47.3 (20)% (12)% North America 18.5 23.3 (21)% (23)% Asia Pacific 4.8 8.4 (43)% (43)% International 61.0 79.0 (23)% (19)% H

  41. Slide 41: Five year performance framework

    Five year performance framework KPIs 5 year target H1 2012/13 FY12 International sales growth 7-10% p.a. (1.7)% 8.7% UK contribution Stable Increasing Increasing Sales via eCommerce 70% 54%(1) 54%(1) Underlying gross margin Stable Declining Stable in year Cost as % of sales(2) Reducing Increasing Re

  42. Slide 42: Electrocomponents: what we do

    Electrocomponents: what we do Strong Brands 800K Catalogues 54% e Commerce 2,500 Major Suppliers > 550,000 Products > 1m Customers 17 Distribution Centres 44,000 Parcels Daily 90+% of World GDP The World’s distributor of choice 42

Electrocomponents — H1 2012/13 Earnings Presentation on 6ix