Kingfisher Plc · LSE:KGF
Kingfisher — H1 2020/21 Earnings Presentation
35 slides from Kingfisher's earnings presentation, Sep 22, 2020
Slide 1: Kingfisher plc Half year results
Kingfisher plc Half year results 6 months to 31 July 2020 22 September 2020
Slide 2: Disclaimer
Disclaimer You are not to construe the content of this presentation as investment, legal or tax advice and you should make your own evaluation of the Company and the market. If you are in any doubt about the contents of this presentation or the action you should take, you should consult a person aut
Slide 3: Operational & strategic update
Operational & strategic update Thierry Garnier Chief Executive Officer
Slide 4: Welcome & agenda
Welcome & agenda ▪ Thierry Garnier (CEO): Operational & strategic update - Continuing to manage the impact of COVID-19 - ‘Focus and Fix in 2020’ progress update - Recap – ‘Powered by Kingfisher’ ▪ Bernard Bot (CFO): H1 2020/21 results - Performance overview - Cash, debt and liquidity - Outlook and t
Slide 5: Introduction
Introduction ▪ Customers embracing DIY, online shopping and seeking value for money ▪ New strategic direction enabling strong Kingfisher response ▪ Resilient performance in H1 with strong sales recovery in Q2 ▪ Near term outlook uncertain; confident in longer term opportunity ▪ Crisis has reinforced
Slide 6: Continuing to manage the impact of COVID-19
Continuing to manage the impact of COVID-19 Protecting our communities, Accelerating e-commerce with Operating our stores safely customers and colleagues stores at the centre ▪ Successfully established strict social ▪ Home Improvement stores classified ▪ Rapidly implemented changes to distancing and
Slide 7: 'Focus and Fix in 2020' progress update
‘Focus and Fix in 2020’ progress update Progress Progress ✓ Strengthening ranges and reigniting ‘value for COVID-19 See previous slide money’ proposition at Brico Dépôt ✓ People – recruited over 25 critical roles in the ✓ Group Executive team strengthened and French supply chain team now complete Fi
Slide 8: Sales performance so far this year
Sales performance so far this year % Sales Change: 26 weeks(5) to 1 August 2020 Group LFL E-commerce Sales % LFL(1) Change Q3 20/21 Q1 20/21 Q2 20/21 H1 20/21 (to date)(5) UK & Ireland (16.0)% +19.6% +2.4% +18.9% France (41.5)% +27.0% (5.9)% +16.7% Poland (9.6)% +15.0% +3.5% +10.3% Iberia (47.2)% (1
Slide 9: Recap – 'Powered by Kingfisher'
Recap – ‘Powered by Kingfisher’ Group priorities Focus and Fix in 2020 Simplify and Grow – 2020 & onwards Differentiated own exclusive Sourcing & buying brands (OEB) Move to a balanced, simpler Test compact store local-group operating model concepts and adapt our Poweredby by Powered with an agile c
Slide 10: Making progress with our retail banner priorities
Making progress with our retail banner priorities Selected key actions: Focus and Fix in 2020 Simplify and Grow – 2020 & onwards Trialling/relaunching kitchen Trialling smaller store Launched next day delivery UK & Ireland Strengthening of ranges installations, tool hire, and formats (e.g. Merton) &
Slide 11: Establishing a balanced commercial operating model
Establishing a balanced commercial operating model Existing New Int’l Local Int’l Local OEB OEB brands brands brands brands Category plan Group Offer & Sourcing (‘O&S’) Category plan Banners Range O&S Range O&S Banners O&S(1) Supplier relations O&S Supplier relations O&S Banners(1) Banners Price & P
Slide 12: Grow e-commerce sales
Grow e-commerce sales Medium-term focus: 1 Shift to store picking and fulfilment Redesign store operating model Test use of ‘Dark stores’ +164% E-commerce sales growth 19% Digital penetration(1) up in H1 20/21 12 ppts in H1 20/21 2 Develop innovative last-mile delivery from stores Click & Collect (C
Slide 13: Differentiate and grow OEB
Differentiate and grow OEB Medium-term focus: 1 Shift priority to OEB development vs. unification Drive innovation and differentiation Support sales and profit growth New kitchens range trading well – orders +23.0% and ‘takeaway’ +7.7% LFL (excluding showroom closures) 2 Deliver value-for-money to c
Slide 14: H1 20/21 results
H1 20/21 results Bernard Bot Chief Financial Officer
Slide 15: Key point summary
Key point summary ▪ Strong Q2 sales recovery; encouraging start to Q3 ▪ Resilient Group financial performance in H1 20/21 - H1 total sales down 1.1%(1); LFL down 1.6% - Retail profit up 17.7%(1) from cost savings (in large part temporary) and strong B&Q performance - Free cash flow significantly hig
Slide 16: H1 20/21 key financials
H1 20/21 key financials Sales Gross profit / Retail profit / Adjusted profit(2) margin % margin % pre-tax post-tax £5,921m (1.6)% £2,186m 36.9% £533m 9.0% £415m £317m (1.1)%(1) LFL (1.5)%(1) (10)bps(1) +17.7%(1) +140bps(1) +23.1% +27.8% Statutory profit Net debt Net leverage Free cash flow pre-tax p
Slide 17: Group retail profit bridge
Group retail profit bridge Includes: Includes, in large part, Shift of employee profit - £100m benefit from business temporary cost savings £m share into H1, with rates & furlough in H1 (e.g. advertising offsetting benefit in H2 - £28m incremental COVID costs(1) and marketing) 92 (23) (20) 7 533 8 (
Slide 18: H1 20/21 exceptional items
H1 20/21 exceptional items H1 20/21 H1 19/20 Comments £m (unless otherwise stated) Adjusted PBT 415 337 ▪ Prior year charge mainly relates to redundancy provisions for planned Store closures - (68) store closures in France and Germany ▪ Additional asset impairments in H1 20/21 reflecting performance
Slide 19: H1 20/21 geographic summary
H1 20/21 geographic summary H1 20/21 sales Retail profit/(loss) Retail profit margin £m % chg(1) % LFL £m % chg(1) % bps chg(1) UK & Ireland 2,753 +3.7% +2.4% 411 +47.1% 14.9% +440bps - B&Q 1,839 +3.7% +4.1% - Screwfix 914 +3.7% (1.1)% France 2,028 (7.0)% (5.9)% 63 (44.1)% 3.1% (210)bps - Castorama
Slide 20: H1 20/21 summary cash flows and net debt
H1 20/21 summary cash flows and net debt ▪ Decrease in stock: £208m £m H1 20/21 FY 19/20 - Reflects lower stock purchases due to COVID and strong Q2 sales IFRS 16 lease liabilities(1) (2,526) (2,563) ▪ Net increase in creditors/debtors: £448m, largely driven by: Financial debt(2) (615) (158) - £282m
Slide 21: Significant liquidity headroom and solid financial position
Significant liquidity headroom and solid financial position ▪ Over £3.7bn of total liquidity as at 18 September 2020 including: - c.£2.1bn Cash & cash equivalents (including c.£540m from Term facility, guaranteed at 80% by the French State) (1) - £600m(2) Eligibility to access Bank of England’s Covi
Slide 22: FY 20/21 outlook & technical guidance
FY 20/21 outlook & technical guidance ▪ Q3 trends to date remain encouraging, but continued uncertainty and concerns over COVID and wider economic Sales outlook environment limit visibility ▪ COVID-related costs – incremental costs(1) expected to be c.£40m ▪ Central costs – expected to be c.£58-60m
Slide 23: Summary
Summary Thierry Garnier Chief Executive Officer
Slide 24: Summary
Summary ▪ Resilient performance in H1 with strong sales recovery in Q2 ▪ Stronger demand for home improvement across our markets ▪ Early benefits from the new strategy; crisis reinforces our approach and pushes us to be bolder ▪ Encouraging progress with our strategic priorities ▪ Committed to retur
Slide 25: Q&A
Q&A
Slide 26: Cautionary note regarding forward looking statements
Cautionary note regarding forward looking statements Certain information contained in this presentation may constitute “forward-looking statements” (including within the meaning of the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995), which can be identi
Slide 27: ADR programme
ADR programme Kingfisher ADRs trade on OTCQX – the premier tier of the Benefits of ADRs to U.S. investors: U.S. over-the-counter market under the following information: Symbol KGFHY ▪ Clear and settle according to normal U.S. standards CUSIP 495724403 ▪ Offer the convenience of stock quotes and divi
Slide 28: Contacts
Contacts Investor Relations Media Relations Tel: +44 (0)20 7644 1082 Tel: +44 (0)20 7644 1030 Email: [email protected] Email: [email protected] Teneo Tel: +44 (0)20 7420 3184 Email: [email protected] 28
Slide 29: Appendices
\ tw eh, Appendices
Slide 30: H1 19/20 – restated comparatives for reallocation of costs
H1 19/20 – restated comparatives for reallocation of costs Reallocation of costs H1 19/20 Central Transformation H1 19/20 (as previously (restated) £m (unless otherwise stated) support costs P&L costs reported) UK & Ireland 277 7 (5) 279 Reallocations: France 114 1 (3) 112 Poland 88 (6) (1) 81 ▪ Cen
Slide 31: UK & Ireland – strong B&Q Q2, and lower operating costs
UK & Ireland – strong B&Q Q2, and lower operating costs UK & Ireland H1 20/21 H1 19/20 % chg(1) B&Q Sales (£m) 2,753 2,655 +3.7% ▪ LFL sales +4.1% LFL (%) +2.4% (0.7)% ▪ Q1 (21.8)%; Q2 +28.0% Gross margin (%) +100bps ▪ E-commerce sales +135%(1); c.11% of sales Operating costs (8.8)% ▪ TradePoint LFL
Slide 32: France – recovering, but significantly impacted by COVID
France – recovering, but significantly impacted by COVID France H1 20/21 H1 19/20 % chg(1) Castorama France Sales (£m) 2,028 2,158 (7.0)% ▪ LFL sales (7.4)% LFL (%) (5.9)% (4.4)% ▪ Q1 (43.6)%; Q2 +25.3% Gross margin (%) (130)bps ▪ E-commerce sales +202%(1); c.6% of sales Operating costs (4.9)% Brico
Slide 33: Poland – strong rebound in Q2; continuing to invest
Poland – strong rebound in Q2; continuing to invest Poland H1 20/21 H1 19/20 % chg(1) Castorama Poland Sales (£m) 783 753 +6.8% ▪ LFL sales +3.5% LFL (%) +3.5% +3.3% ▪ Q1 (9.6)%; Q2 +15.0% Gross margin (%) (120)bps ▪ E-commerce sales +230%(1); c.5% of total sales Operating costs +7.6% ▪ Gross margin
Slide 34: Romania – in transition; Iberia – impacted by lockdown
Romania – in transition; Iberia – impacted by lockdown Romania H1 20/21 H1 19/20 % chg(1) Iberia H1 20/21 H1 19/20 % chg(1) Sales (£m) 107 96 +11.7% Sales (£m) 138 176 (22.3)% LFL (%) +9.2% +10.5% LFL (%) (22.3)% (3.6)% RL (£m) (11) (12) n/a RP (£m) 1 2 n/a Brico Dépôt Romania Brico Dépôt Iberia ▪ G
Slide 35: Net debt to EBITDA
Net debt to EBITDA Moving annual total FY 19/20 £m (unless otherwise stated) 20/21 Retail profit 865 786 ▪ Leverage of 1.0x well below target Central costs (61) (62) range of 2.0-2.5x net debt to EBITDA Depreciation and amortisation 539 545 EBITDA 1,343 1,269 ▪ Overall net cash position excluding le