Grafton Group PLC · LSE:GFTU
Grafton — H1 2012 Earnings Presentation
29 slides from Grafton's earnings presentation, Jun 30, 2012
Slide 1: Interim Results 6 months to June 30th, 2012
Interim Results 6 months to June 30th, 2012
Slide 2: Highlights
Highlights Group revenues up 5% to €1.05bn Exchange rate benefit Underlying operating profit up 19% to €31.3 million Underlying profit before tax up 18% to €23.8 million UK merchanting revenues up 4% Irish merchanting revenues fall by 9% Self-help measures improve profitability 2
Slide 3: Revenue by Business Segment and Geography
Revenue by Business Segment and Geography Revenue by Business Revenue by Geographic Segment Area Merchant UK ing 76% 89% €1.05bn €1.05bn Ireland Retailing 23% Manufacturi 9% Belgium ng 1% 2% 3
Slide 4: Operating Environment
Operating Environment Merchanting UKin economy Uneven recovery Economy in mild recession Consumer spending weak due to pressure on take-home pay RMI Market reasonably stable despite macro economic weakness Merchanting Ireland Modest economic growth driven by exports Further contraction in merchantin
Slide 5: Self-Help Measures
Self-Help Measures Merchanting UK Merchanting Ireland Cost reductions and Significant cost reductions development of the hire division in Buildbase Branch consolidations Sales initiatives in Plumbase to increase Retailing market share Examinership - Atlantic Developing turnover in Home Care more rec
Slide 6: UK Merchanting
UK Merchanting % Change 2012 2011 €’000 €’000 Reported Revenue 780,547 712,648 Constant 9.5% Currency 3.8% Operating profit 37,532 31,859 17.8% 11.6% Operating margin 4.8% 4.5% Market Trading Economy has slipped back into a Merchanting market declines by an mild recession estimated 4% Lending to hou
Slide 7: Irish Merchanting
Irish Merchanting 2012 2011 €’000 €’000 % Change Revenue 136,369 149,399 (8.7%) Operating profit 897 1,060 (15.4%) Operating 0.7% 0.7% margin Market Trading Economy forecast to show modest Turnover declined by 8.7% growth in 2012 Improved market position – a Domestic demand weak as household number
Slide 8: Retailing
Retailing 2012 2011 % Change €’000 €’000 Revenue 98,223 112,085 (12.4%) Operating loss (3,523) (431) – Market Trading Retail spending continued to decline Turnover down by 12.4% Weak labour market and falling Trading affected by decline in consumer disposable incomes weigh on demand spending and hea
Slide 9: Belgium & Manufacturing
Belgium & Manufacturing Belgium Manufacturing Economy to flat line in 2012 – Division returned to profitability performing ahead of other European economies Volumes lower in UK mortar market due to fall in housing starts and New housing and RMI markets adverse weather conditions in the weaken second
Slide 10: Half-Year Results Pre-Exceptional Items & Amortisation
Half-Year Results Pre - Exceptional Items & Amortisation % Change on 2012 2011 prior period €m €m ReportedConstant Currency Revenue 1,054.5 1,008.1 4.6% 0.6% Operating profit 31.3 26.2 19.3% 11.5% Operating margin 3.0% 2.6% – Finance expense (net) 7.4 6.0 23.3% Profit before tax 23.8 20.2 18.1% Adju
Slide 11: Revenue Analysis
Revenue Analysis €m 1,055 Merchanting 1,008 UK Merchanting 11
Slide 12: Operating Profit Analysis
Operating Profit Analysis €’000 Merchanting 31,262 26,213 * % movements are against H1 2011 12
Slide 13: Cash Flow
€m 70 65 60 55 50 45 40 35 30 25 20 al | Adjusted Operating Profit 21 14 Working Capital Cash Release Depreciation & Other Non-cash Items () Restructuring Costs Grafton Group plc (5) 2 5° (5) (8) 44 Pension Replacement Interest Free Cc ontributions Capital (net) Cash & Claims Paid Expenditure &Tax F
Slide 14: Free Cash Flow and Net Debt
Free Cash Flow and Net Debt 226 201 14
Slide 15: Net Debt & Shareholders' Equity
Net Debt & Shareholders’ Equity 2007 2008 2009 2010 2011 2012 Gearing 52% 50% 35% 26% 23% 20% 15
Slide 16: Debt Facilities Maturity Profile
Debt Facilities Maturity Profile Total Group debt facilities amount to €452m of which €112m was undrawn at 30 June 2012 Weighted average maturity profile of 3.4 years Offer to roll €85m to 2015* 16
Slide 17: Debt Covenants
Debt Covenants First Half First Half FY 2012 2011 2011 EBITDA - 12 month rolling €101.2m €101.5m €97.4m adjusted EBITDA interest cover 7.1 times 7.7 times 7.2 times Minimum interest cover 3.0 times 1.0 times 3.0 times Shareholders’ equity (as defined) €1,071m €1,131m €1,094m Minimum shareholders’ eq
Slide 18: Summary Balance Sheet
Summary Balance Sheet 30 June 31 Dec 2012 2011 Change €m €m Change €m Property, plant and 583.2 581.1 €m 2.1 equipment Intangibles 578.4 568.6 9.8 Financial assets 0.1 0.1 – 1,161.7 1,149.8 11.9 Working capital 166.4 172.6 (6.2) Income and deferred tax (38.3) (37.8) (0.5) Retirement benefit (57.7) (
Slide 19: Acquisitions and Developments
Acquisitions and Developments Macnaughton Blair acquired Brooks two branch merchanting business in Northern Ireland The Belgian JV benefitted from two single branch acquisitions completed in second half of 2011 Two merchanting branches were opened under the Jacksons and Plumbase brands Selco opened
Slide 20: Strategic Focus
Strategic Focus Continued margin growth in UK merchanting branches Development of Selco branch network Selectively participate in further consolidation in UK merchanting market Responding to challenging market conditions in Ireland Development of merchanting business in third geography Maintaining s
Slide 21: Second Half Outlook
Second Half Outlook Outlook for the UK economy is uncertain Consumers to benefit from low inflation and interest rates UK RMI market conditions to remain challenging Demand is expected to remain weak in Irish merchanting and DIY markets Emphasis on self-help measures to increase operating profit 21
Slide 22: Summary and Conclusion
Summary and Conclusion Continued operating profit improvement in difficult markets Portfolio of resilient businesses with improving market positions High operating cash flow, reduced cost base and spare capacity in branch network Good platform to benefit from any recovery in market conditions from c
Slide 23: Locations
Locations Merchanting Ireland Merchanting UK .co.uk Manufacturing Belgium DIY Ireland 23
Slide 24: Supplementary Information
Supplementary Information
Slide 25: Housing Starts & Completions – GB 2002-2011
Housing Starts & Completions – GB 2002 - 2011 220,810 182,390 211,9 10 168,1 20 134,980 129,350 129,260 106,660 Significant pent-up demand Historic Lows 25
Slide 26: House Completions – Ireland 1990-2012
House Completions – Ireland 1990 - 2012 Current activity is at an unsustainably low Historic Lows level 26
Slide 27: Estimated UK Merchanting League Table
Estimated UK Merchanting League Table Circa 2,000 independents 3rd Largest Builders Merchant Sector Turnover £12 billion plus Independents £4.6 billion plus 27
Slide 28: Operating Margin History (Core – Before Central Costs)
Operating Margin History (Core – Before Central Costs) Year UK ROI Group* 2007 7.3% 10.8% 8.7% 2008 4.5% 5.5% 4.9% 2009 3.2% -1.7% 1.6% 2010 4.1% 0.4% 3.0% 2011 4.1% 0.7% 3.2% 2012 (H1) 4.8% -1.3% 3.4% 2011 (H1) 4.5% -0.4% 3.2% *Includes Belgium from 2011 28
Slide 29: For Further Information
For Further Information Gavin Slark Chief Executive Officer Colm Ó Nualláin Finance Director Charles Rinn Group Financial Controller / Secretary Address: Grafton Group plc, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Telephone: +353 1 216 0600 Fax: +353 1 295 4470 Email: email@g