Kingfisher Plc · LSE:KGF
Kingfisher — H1 2010/11 Earnings Presentation
50 slides from Kingfisher's earnings presentation, 2010
Slide 1: Interim Results 2010
I t i Results Interim R lt 2010 Slides will be available at www.kingfisher.com
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation t ti may lawfully l f ll bbe communicated i t d (“ (“relevant l t persons”). ”) AAny person who h iis nott a relevant person should not act or rely on this presentation or any of i
Slide 3: Ian Cheshire, Group Chief Executive
I Cheshire Ian Ch hi Group Chief Executive
Slide 4: Agenda
Agenda Introduction Ian Cheshire Group CEO Financial Review Kevin O’Byrne G Group CFO Delivering Value Ian Cheshire Group CEO Questions
Slide 5: Summary
Summary • Strong results in challenging markets – Sales S l flflat, t adjusted dj t d PBT + 23% • Self-help initiatives driving our performance – Sales outperformance in France – Group gross margin +130bps – Costs (SG&A) ratio to sales flat • Delivering Value’ programme progressing well
Slide 6: 'Delivering Value' update
‘Delivering Value’ update 1. Driving up B&Q UK & Ireland’s profit ԟ Retail profit + 15% 2. Exploiting the UK Trade opportunity ԟ TradePoint rolled out into 118 large g B&Q stores 3. Expanding our total French business ԟ Profits up +14% ԟ 3 new stores stores, +2% additional space
Slide 7: 'Delivering Value' update
‘Delivering Value’ update 4. Rolling out in Eastern Europe ԟ Sales + 6%, profit +3% ԟ 2 new stores, 10 under development for H2 5. Turning g around B&Q China ԟ Prior year H1 losses almost halved ԟ 80,000m2 space closed, over 95% sublet ԟ New range introduction underway 6. Growing Group sourcing ԟ Sh
Slide 8: Kevin O'Byrne, Group Finance Director
K i O’B Kevin O’Byrne Group Finance Director
Slide 9: Financial highlights
Financial highlights • Constant currency sales flat, LFL down 1.3% • Gross profit up 2.7%* (GM%+130bps*) • Costs (SG&A) to sales ratio held flat • Adjusted Adj t d pre-tax t profit fit £354m, £354 up 23% • Free cashflow £387m (2009/10: £347m) • Reported net cash £19m * constant currencies
Slide 10: Group sales flat
Group sales flat* Retail Sales £5,454m +2.9%* (2.9)%* +0.7%* (0.1)%* Reported Rate (0.9)% 5,502 5,454 2009/10 France UK & Ireland Other 2010/11 International * constant currencies
Slide 11: Group retail profit up 15.8%
Group retail profit up 15.8%* Retail Profit £402m +21.0%* 15.8%* +15 8%* +15.8%* +13.7%* Reported Rate 15.7% 347 402 2009/10 France UK & Ireland Other 2010/11 International * constant currencies
Slide 12: Financial highlights
Financial highlights % Reported 2010/11 2009/10 Change Ch Adjusted PBT* £354m £288m +22.9% Adjusted basic EPS* 10.6p 8.6p +23.3% Exceptional items £(3)m £nil n/a Effective tax rate 30% 30% - Profit for the period £248m £198m +25.3% *Before exceptional items, IAS39, amortisation of acquisition intang
Slide 13: Net finance costs down 50%
Net finance costs down 50% £m 2010/11 2009/10 Cash Interest on net debt ((16)) ((31)) Non Cash Interest charge on defined benefit pension scheme (4) (2) Other 4 1 Statutory net interest (16) (32)
Slide 14: Strong free cashflow
Strong free cashflow £m 2010/11 2009/10 Operating profit pre-exceptionals 374 320 Other non-cash items* 135 146 Change in working capital 25 163 Pensions and provisions pre-exceptionals (30) (32) Operating cashflow 504 597 Interest (12) (36) Tax (51) (79) Free cashflow before capex 441 482 Gross cap
Slide 15: Targeted investment
Targeted investment HI H2 New stores • 9 opened • 17 to open • 17 in development • 23 new stores, 20 new Screwfix counters in development Refresh the • 7 revamps across the UK & • 20 revamps across the UK & offer France France • Range change • Range change merchandising merchandising • TradePoint in
Slide 16: Interim dividend
Interim dividend pence Total dividend 2009/10 5.5 Interim dividend 2010/11: 35% of 2009/10 total dividend 1.925 “It is anticipated that, subject to final approval in March when the Board considers the Groups’ performance, outlook and capital needs, the current year’s full year dividend will rise bro
Slide 17: Capital structure
Capital structure Leasehold E it Equity debt • Headline gearing 0% • Underlying gearing c50% • Solid capital structure – Now rated stable BBB- – Metrics improving – Operational flexibility • £3bn* of freehold property Reported net cash * As at 30 January 2010
Slide 18: Summary
Summary • Strong results in challenging markets – Sales flat, adjusted PBT + 23% • Self-help initiatives driving our performance – Sales S l outperformance f iin F France – Group gross margin +130bps – Costs (SG&A) ratio to sales flat • Strong balance sheet • Investing g for future g growth where re
Slide 19: Ian Cheshire, Group Chief Executive
I Cheshire Ian Ch hi Group Chief Executive
Slide 20: Delivering Value
Delivering Value 1. Driving up B&Q UK & Ireland’s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5 Turning around B&Q China 5. 6. Growing Group sourcing 7. Reducing working capital
Slide 21: UK & Ireland
UK & Ireland Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 22: UK & Ireland
UK & Ireland Our “self-help” p jjourney y back to 7% % continues to progress well Retail Proposition Engineering Development Mostly done Well underway Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 23: Update on 2010/11 key priorities
Update on 2010/11 key priorities Store Standards Clean Inventory £230m less y Remaining g 95%+ Store Clean LLow19Cost C t stock in 2 showroom Showroom large store Stores Standards Inventory Revamps years revamps revamps C t Control Cost C t l More direct I Intensify if Cost Costs down Trial new Roll
Slide 24: Direct sourcing ahead of plan
Direct sourcing ahead of plan H1 H2 Xmas Kitchen Outdoor Lighting JCB power appliances leisure tools Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 25: Shrinkage reduced
Shrinkage reduced • New Store Standards driving a ‘cultural’ shift • GM benefit +50bps Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 26: Future efficiencies
Future efficiencies 5% routed direct to store RCC RCC Worksop RCC RCC RCC RCC RCC Doncaster 95% via RCC* Preston Brook * Regional Consolidation Centre Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 27: Future efficiencies
Future efficiencies 75% routed direct to store RCC Worksop RCC RCC RCC 25% via RCC • Enables more direct sourcing Doncaster • Quicker to store • Lower stocks, better availability • Lower distribution costs • Less CO2 Swindon Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 28: More innovation and eco
More innovation and eco Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 29: TradePoint now nationwide
TradePoint now nationwide • Now in all 118 large stores • 250,000 registered trade customers • National advertising recently launched Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 30: Good early results
Good early results • Average only 11 weeks trading • Maturing well, advertising helping • In 4 original trial stores: ԟ Annualised trade sales now 13% of total store sales (vs 9% previously) ԟ ATV c£50 ԟ 50% new customers, t 50% existing i ti customers ԟ Higher frequency of spend Driving up B&Q UK &
Slide 31: Trade growth in H2
Trade growth in H2 Trial TradePoint ‘order order & collect collect’ counter in medium stores 7 further Screwfix outlets Launch new trade credit offer (valid in B&Q TradePoint and Screwfix) B&Q, Driving up B&Q UK & Ireland’s profit Exploiting our UK Trade opportunity
Slide 32: Kingfisher France
Kingfisher France Expanding our total French business
Slide 33: Kingfisher France
Kingfisher France Outperforming the market, particularly Castorama Sales (comparable store) 5.6 % Feb 10 July 10 3.6 1.6 ‐0.4 ‐2.4 ‐4.4 Kingfisher France Market* *Source: Banque de France Expanding our total French business
Slide 34: Kingfisher France
Kingfisher France Retail profit up 13.7%, boosted by self help Good sales • Store modernisation and new marketing growth • Product innovation • More direct sourcing Margin • Buying i optimisation i i i b benefits fi Initiatives • Fewer promotions Expanding our total French business
Slide 35: Product innovation at Castorama
Product innovation at Castorama 8% of total tile sales 10% of total toilet sales Expanding our total French business
Slide 36: Direct sourcing ahead of plan
Direct sourcing ahead of plan Expanding our total French business
Slide 37: Expansion potential
Expansion potential Before After La Rochelle La Rochelle • 8,700 , sqm q • 15,000 , sqm q • 17% market share (Casto 11,000 sqm; Brico Dépôt 4,000sqm) • 30 % market share Expanding our total French business
Slide 38: Castorama: 60% modern format
Castorama: 60% modern format Expanding our total French business
Slide 39: Other International
KING/)SHER Other International BRICO castorama [/BRICO
Slide 40: Good growth continues
Good growth continues H1 H2 • Gross margins +70bps • 5 new stores Poland • Profit decline £4m • Central DC opens • 1 new store Turkey • 4 new stores • Profits +22% • 1 new store (2 in progress) • 1 new store R Russia i • Develop D l ‘city ‘ it store’ t ’ format f t • Sales +38% Moscow Rolling out in
Slide 41: Castorama Poland
Castorama Poland • Very tough H1 conditions, some one-off events • First Distribution Centre opens September 2010 – Immediate opportunity is Direct Sourcing now only 2%* – Longer L tterm opportunity t it isi full f ll national ti l central t l distribution • Now targeting g g 100 stores in Poland *
Slide 42: B&Q China
B&Q China Fix i it i G Grow it i • Store rationalisation • New format now in 16 complete stores • Stock clearance complete • Strong management team • Costs reduced • Range re‐engineering 20% • Sub let income secured complete • Losses halved halved, on track for • Introducingg ggroup p own breakeven
Slide 43: 'Fix it' Longyang store
‘Fix it’ Longyang store H1 2009/10 H1 2010/11 Sales £9m £8m Space 13,600 sqm 6,950 sqm (-48%) Sales/sqm £ 628 £ 1,115 (+77%) Profit £ 0.5m £ 0.8 m* *Excludes annual sublease income of c£1.2m - Starts in H2 2010. Turning around B&Q China
Slide 44: Leveraging sourcing scale
Leveraging sourcing scale H1 H2 • Direct sourced • On track to increase shipments running direct sourced ahead of plan shipments to at least • Payment terms USD1 billion improved by 5 days • 10 ‘Superbrands’ created to enable development off common ranges Growing Group sourcing
Slide 45: 10 Group 'Superbrands'
10 Group ‘Superbrands’ H d Hardware Decoration Outdoors leisure Power tools Kitchens, Bath & Horticulture Bed Heating & Opening Price Storage cooling Point Growing Group sourcing
Slide 46: Group 'Superbrands'
10 Group ‘Superbrands’ Growing Group sourcing
Slide 47: Summary & Outlook
Summary & Outlook H1 • Strong performance in challenging markets • Self help driving our performance • ‘Delivering Delivering Value’ Value programme progressing well Short term outlook • Still not expecting any help from our markets • The business is in robust shape • Investing for future growth
Slide 48: Long term growth
Long term growth Good long term growth prospects • Leading in 5 markets, developing fast in another 3 • Good store development pipeline • Now have a more profitable, higher returning model • Financial Fi i l flexibility fl ibilit tto accelerate l t growth th • Initiatives today will drive tomorrow’s
Slide 49: Financial timetable 2010/11
Financial timetable 2010/11 Period Reporting Detail Communication date Q3 13 weeks to 2 December Sales and Conference call at 30 October 2010 retail profit 1300hrs GMT 2010 Q4 13 weeks to 17 February 2011 Sales Press release 29 January 2011 Prelims Year ended 24 March 2011 Full year Presentation/web
Slide 50: Sponsored ADR
Sponsored ADR Kingfisher’s ADRs trade in the US over‐the‐ ADR Benefits to US Investors: counter market on the ‘OTCQX’ p platform under the following information: ADRs give access to cross‐border market liquidity • Symbol KGFHY ADRs are cost‐effective • CUSIP 495724403 ADRs are convenient to ow