Grafton Group PLC · LSE:GFTU
Grafton — FY2012 Earnings Presentation
34 slides from Grafton's earnings presentation, March 2013
Slide 1: Final Results Year Ended 31 December 2012
Final Results Year Ended 31 December 2012
Slide 2: Financial Highlights
Financial Highlights Revenue up 6% to €2.2 billion and by 0.6% in constant currency Underlying operating profit up 32% to €75.2 million from €56.9 million (before exceptional items and amortisation) Group operating profit margin increased by 70 basis points to 3.5% from 2.8% Underlying profit before
Slide 3: Operating Highlights
Operating Highlights Profit increase driven by UK merchanting business which outperformed in a weak market UK merchanting operating margin increased by 75 basis points to 4.85% from 4.10% Lower costs mainly offset impact of revenue decline in merchanting branches in Ireland Second half profit recove
Slide 4: 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% €2.17bn €2.17bn Ireland Retailing 22% Manufacturi 9% Belgium ng 2% 2% 4
Slide 5: UK Merchanting
UK Merchanting % Change 2012 2011 €’000 €’000 Reported Revenue 1,610,462 1,458,826 Constant 10.4% Currency 3.1% Operating profit 78,141 59,883 30.5% 21.9% Operating margin 4.85% 4.1% Market Trading Merchanting volume decline estimated at Economy flat over the past two 2% years Growth in average dail
Slide 6: UK Merchanting Self-help Measures
UK Merchanting Self-help Measures Cost reductions and development of the hire division in Buildbase Sales campaigns in Plumbase to increase market position Turnover growth in more recently opened Selco stores Integration of three specialist businesses engaged in the distribution of drywall and insul
Slide 7: UK Merchanting Acquisitions and Developments
UK Merchanting Acquisitions and Developments Selco opened new branches in Hanworth, South East London in July and Tottenham, North London in October Buildbase acquired Electricbase and added a number of branch implants for electrical products Two branches acquired by Civils & Lintels division Macnau
Slide 8: Irish Merchanting
Irish Merchanting 2012 2011 % Change €’000 €’000 Revenue 280,844 306,849 (8.5%) Operating profit 3,267 4,127 (20.8%) Operating margin 1.2% 1.3% Market Trading Turnover declined by 8.5% Modest export driven growth in 2012 Improved market position – a number of Domestic demand weak as household spendi
Slide 9: Belgium Merchanting
Belgium Merchanting 2012 2011 % Change €’000 €’000 Revenue 37,980 20,926 81.5% Operating profit 875 914 (4.3%) Market Trading Marginal contraction in economic Turnover of JV €59 million in 2012 growth in 2012 Acquisition of Holvoet increased Economy affected by slow down in annualised turnover to €7
Slide 10: Retailing
Retailing 2012 2011 % Change €’000 €’000 Revenue 199,510 219,709 (9.2%) Operating profit 256 2,120 – Market Trading Downward trend in consumer Turnover down by 9.2% spending continued in 2012 Trading affected by decline in consumer spending and adverse weather in second Decline in disposable incomes
Slide 11: Manufacturing
Manufacturing 2012 2011 % Change €’000 €’000 Revenue 42,592 47,523 (10.4%) Operating 2,045 (535) – profit/(loss) Market Trading Volumes lower in UK mortar Division returned to profitability market due to fall in housing starts UK mortar business increased profit on flat turnover Mortgage availabilit
Slide 12: Full-Year Results Pre-Exceptional Items & Amortisation
Full-Year Results Pre - Exceptional Items & Amortisation % Change on 2012 2011 prior period €m €m ReportedConstant Currency Revenue 2,171 2,054 5.7% 0.6% Operating profit* 75.2 56.9 32.1% 22.7% 3.46 Operating margin % 2.77% – (13.3 Finance expense (net) (12.4) 6.8% ) Profit before tax* 61.9 44.5 39.
Slide 13: Revenue Analysis
Revenue Analysis €m 2,200 2,171 105 2,150 Merchanting 2,100 26 (5) (26)(8.5%) 17 1.7% 81.5% (20)(9.2%) 27 1.7% (7) 2,050 2,054 2,000 1,950 Retailing Currency Ireland Like-For-Like Branch Consl. 2011 Belgium Manufacturing Acq / NewBranches 2012 UK Merchanting 13
Slide 14: Operating Profit Analysis
Operating Profit Analysis €’000 80,000 75,000 Merchanting 4,349 171 75,177 70,000 14,048 (860) (39) (1,864) 2,441 65,000 60,000 55,000 56,931 50,000 2011 UK Ireland BelgiumRetailing Currency 2012 Manufacturing Central / Other 14
Slide 15: Cash Flow
Cash Flow 160 140 23 (26) 120 43 (9) €m 100 (16) 2 106 (18) 80 75 74 60 40 20 Pension Contributions &Replacement Capital Working Capital Cash Adjusted Operating Interest(net) Free& Cash Tax Flow Release Claims Paid Expenditure Profit Depreciation & OtherRestructuring Costs AssetDisposals Non-cash It
Slide 16: Free Cash Flow and Net Debt
Free Cash Flow and Net Debt €m 240 Free Cash Flow Development 220 Capital 226 74 Expenditure Other 200 Acquisitions (12) 2 202 180 (22) Dividend 160 (18) 140 120 100 Net Debt at 31 Net Debt at 31 December 2012 December 2011 16
Slide 17: Net Debt & Shareholders' Equity
Net Debt & Shareholders’ Equity 1,200 1,068 990 983 997 1,000 912 869 800 €m 600 550 436 400 323 255 226 202 200 0 2007 2008 2009 2010 2011 2012 Shareholders’ Equity Net Debt 2007 2008 2009 2010 2011 2012 Gearing 52% 50% 35% 26% 23% 20% 17
Slide 18: Debt Facilities Maturity Profile
Debt Facilities Maturity Profile €m 209 200 180 157 160 140 120 101 100 80 60 40 27 17 5 20 0 Cash 2013 2014 2015 2016 2017+ Total Group debt facilities amount to €457m of which €98m was undrawn at 31 December 2012 Weighted average maturity profile of almost three years 18
Slide 19: Debt Covenants
Debt Covenants 2012 2011 EBITDA - 12 month adjusted €114.7m €97.4m EBITDA interest cover 8.6 times 7.2 times Minimum interest cover 3.5 times 3.0 times Shareholders’ equity (as defined) €1,087m €1,094m Minimum shareholders’ equity €804m €783m Debt to equity ratio 19% 21% Debt to equity ratio limit 8
Slide 20: Summary Balance Sheet
Summary Balance Sheet 31 December 31 December 2012 2011 Change €m €m Change €m Property, plant and 579.3 581.1 €m (1.8) equipment Intangibles 583.5 568.6 14.9 Financial assets 0.2 0.1 0.1 1,163.0 1,149.8 13.2 Working capital 168.4 172.6 (4.2) Income and deferred tax (24.8) (37.8) 13.0 Retirement ben
Slide 21: 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 4.9% 0.7% 3.9% *Includes Belgium from 2011 21
Slide 22: Outlook UK
Outlook UK Slow but sustained recovery forecast for UK economy Near term growth expected to remain weak Declining real incomes likely to put consumer spending under pressure Increase in housing transactions and mortgage approvals supportive of volume growth in RMI market Survey evidence indicates pe
Slide 23: Outlook Ireland
Outlook Ireland Domestic economy starting to stabilise – after contracting for five years Small decline in consumer spending forecast for 2013 House price stabilisation expected to become more broadly based geographically Housing transactions and mortgage approvals increasing from a very low base 23
Slide 24: Strategic Focus
Strategic Focus Major restructuring programmes of recent years now complete Margin growth in UK merchanting branches from current level of 4.85% Development of Selco branch network – new London stores to open in Wimbledon and Old Kent Road Participate selectively in further consolidation in UK merch
Slide 25: Summary and Conclusion
Summary and Conclusion Strong operating profit improvement in difficult markets on flat turnover Portfolio of resilient businesses in UK that improved their market positions Irish brands traded ahead of a weak market High operating cash flow, reduced cost base and spare capacity in branch network Go
Slide 26: Locations
Locations Merchanting Ireland Merchanting UK .co.uk Manufacturing Belgium DIY Ireland 26
Slide 27: Supplementary Information
Supplementary Information
Slide 28: UK Housing Transactions 2006–2012
UK Housing Transactions – 2006 – 2012* ‘000 500 450 400 350 300 250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 28 * Quarterly Seasonally Adjusted
Slide 29: UK Housing Starts & Completions 1998–2012
UK Housing Starts & Completions: 1998 – 2012 ‘000 Starts Completions 250,000 200,000 150,000 100,000 50,000 0 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 99 00 01 02 03 04 05 06 07 08 09 10 11 12 29
Slide 30: UK Mortgage Approvals 2008–2012
UK Mortgage Approvals UK: 2008 – 2012 '000 80 70 60 50 40 30 20 10 0 30
Slide 31: House Completions – Ireland 1990–2012
House Completions – Ireland 1990 - 2012 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Current activity is at an unsustainably low Histo
Slide 32: Mortgages Issued in Ireland 2002–2012
Mortgages Issued in Ireland: 2002 – 2012 Value Volume Volume €’bn ‘000 40,000 120,000 35,000 100,000 30,000 80,000 25,000 20,000 60,000 15,000 40,000 10,000 20,000 5,000 - - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 32
Slide 33: Estimated UK Merchanting League Table
Estimated UK Merchanting League Table Travis Perkins (excluding Circa 2,000 independents Wickes) 23% Independents 29% Wolseley 19% Grafton 11% Jewson 3rd Largest Builders Merchant 18% Sector Turnover £12 billion plus Independents £4.6 billion plus 33
Slide 34: 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