Kingfisher Plc · LSE:KGF
Kingfisher — Investor Presentation (January 2014)
26 slides from Kingfisher's investor presentation, January 2014
Slide 1: Kingfisher plc
Kingfisher plc January 2014
Slide 2: Agenda
Agenda Kingfisher at a Glance Strategic History Our Markets and Brands ‘Creating the Leader’ Strategy 2013/14 YTD(1) Summary and Outlook Questions Up to 2013/14 Q3 ended 2 November 2013 2
Slide 3: Kingfisher at a Glance
Kingfisher at a Glance No 1 in Europe, No 3 worldwide ● 1,090 stores in 9 countries ● 350 ‘Big Box’ stores, 740 medium and smaller outlets ● Retail & light trade offering Sales c£11bn, EBITDA c£1bn(1) ● EBITDA split: France 50%, UK 30%, Developing markets 20% Positive KEP (Kingfisher Economic Profit
Slide 4: Strategic History: Demerging
Strategic History Demerging Conglomerate • Home improvement ‘Delivering Value’ ‘Creating the Leader’ Easier, Common Expand, One Team • General Retail • Electricals 1980 2000 2008 2012 2017 4
Slide 5: Home Improvement is an attractive sector of Retail
Home Improvement is an attractive sector of Retail Scale advantage ● Customer tastes converging across markets ● Few known manufacturer brands Defensible ● Huge range breadth, need for interaction, difficult home delivery economics means – Difficult category for grocers – Low online sales penetratio
Slide 6: Strategic History: Demerging
Strategic History Demerging Conglomerate • Home improvement ‘Delivering Value’ ‘Creating the Leader’ Easier, Common Expand, One Team • General Retail • Electricals 1980 2000 2008 2012 2017 2008 – Ian Cheshire becomes 6 Kingfisher CEO
Slide 7: Delivering Value, 2008-2012 – a success
Delivering Value, 2008-2012 – a success More profitable Higher returns ● Adjusted pre-tax profit more than doubled ● ROC* up c490bps to 10.7% (WACC (from £357m to £807m) 8.1%) ● Retail profit margin up 290bps to 8.1% ● Economic Profit (KEP) of £131m ● Adjusted basic EPS up 137% to 25.1p, (2007/08 Ec
Slide 8: Off to a good start on Common and Direct sourcing
Off to a good start on Common and Direct sourcing (1) Jan Jan As a % of Group Sales Established 11 Group-wide 2008 2012 common own brands ● Replacing the 150+ local own brands Direct sourced 9% 15% ● Enabling investment in innovation and prices Common <1% 2% Common product definition: 1. Same produc
Slide 9: From conglomerate to integrated Group
From conglomerate to integrated Group Past Today Future ‘Conglomerate’ ‘Federation’ ‘Integrated’ 150+ own brands 50% Common Product OpCos working 10+ Group Brands ‘One Team’ separately Kingfisher today 9
Slide 10: Strategic History: Demerging
Strategic History Demerging Conglomerate • Home improvement ‘Delivering Value’ ‘Creating the Leader’ Easier, Common Expand, One Team • General Retail • Electricals 1980 2000 2008 2012 2017 10
Slide 11: Our Markets
Our Markets Russia £100bn+ in 9 countries Mature ROI UK Poland ● France #1 ● UK #1 Emerging France Romania ● Poland #1 1997 ● China #1 1999 Spain ● Turkey #1 2001 Turkey ● Ireland 2002 ● Spain 2003 ● Russia 2006 ● Romania 2013 China 11 China
Slide 12: France
France 27 million households DIY is number one pastime in France helped by ● High level of home ownership and growing ● 35h working week ● High savings ratio Compete on Product and Service more than price ● Two largest Home Improvement retailers make up 50% of the market ● Planning restrictions; dif
Slide 13: France - Our Brands
France - Our Brands Market leader Castorama ● 35,000 SKUs ● Inspiration ● ‘Smart store’: “see, understand, take” Brico Dépôt ● 10,000 SKUs ● Heavy DIY/Trade oriented ● Project quantities ● Everyday low price 212 stores (105 Castorama, 107 Brico Dépôt) ● 65% Freehold 13
Slide 14: UK & Ireland
UK & Ireland 26 million households High level of home ownership Nation of gardeners Government initiatives supporting housing market Fragmented market, lots of smaller players 662 stores (359 B&Q, 303 Screwfix) ● 95% leasehold 14
Slide 15: UK & Ireland – Our Brands
UK & Ireland – Our Brands B&Q ● 40,000+ SKUs ● One stop shop for projects, modern stores ● ‘Trade-point’ trade offer ● Upgrading Omni channel offer ● Market leader Screwfix ● 20,000 SKUs ● Services small tradesmen ‘White Van Man’ ● ‘Trade-counter’ model ● Best in class Omni channel offer 15
Slide 16: Poland
Poland 14 million households Skilled population, big project DIY Increasing aspiration, tastes changing Lots of Soviet era housing and high occupancy ratio Lots of small local players but underserved by big retailers Store revamp program 72 stores ● 80% freehold 16
Slide 17: Our Markets – Other International
Our Markets – Other International Stores Sales Retail profit FY2012/13 FY 2012/13 (£m) (£m) Russia 19 426 16 Spain 24 234 1 Turkey (1) 39 n/a(1) 9 China 39 374 (9) Romania 15 n/a(3) n/a(3) Hornbach (2) n/a n/a 26 (1) Joint Venture sales are not consolidated (2) Associate sales are neither consolidat
Slide 18: ‘Creating the Leader’
— wa ‘Creating the Leader’ BETTER HOMES, BETTER LIVES
Slide 19: ‘Creating the Leader’
‘Creating the Leader’ 1. Making it easier for customers to improve their home Easier 2. Giving our customers more ways to shop Sales 3. Building innovative common brands Common 4. Driving efficiency and effectiveness everywhere Gross margin 5. Growing our presence in existing markets Expand 6. Expan
Slide 20: ‘Creating the Leader’ in action
‘Creating the Leader’ in action 1. Product innovation Easier 2. Omni channel/click & collect 3. 10+ group brands replacing OpCo own brands Common 4. One Team Product Show 5. Adding c.3% space per year excl. Romania(1) Expand 6. Screwfix Germany trial, 4 stores summer 2014 (1) Romania acquisition com
Slide 21: Off to a good start…and there is more to come
Off to a good start…and there is more to come As a % of Group Jan 2008 Jan 2012 Jan 2013 Target Sales Direct sourced 9% 15% 19% 35% Common <1% 2% 8% 50% Common product definition: 1. Same product or; 2. Same supplier where common product not possible due to market / legal reasons 21 (e.g. Electrical
Slide 22: Expansion where returns attractive, Rightsizing in UK
Expand Expansion where returns attractive, Rightsizing in UK FY 2013/14 % Space Rightsizing program in UK c.£400m (including Romania) growth 2013/14 ● 1 store completed with positive 5% UK & Ireland +1.0% results France +3%(2) 18 store package underway 24% Poland +3% ● 5% less space China (1)% Looki
Slide 23: Annualised benefits targeted for year 5: £300m additional Retail Profit
Annualised benefits targeted for year 5 2% LFL outperformance* £300m 1% higher Gross Margin percentage additional (after some reinvestment in affordability) Retail Profit 1% reduction in the cost to sales ratio in year 5 * Adding profit at the gross margin rate Note: Based on the size of the busines
Slide 24: 2013/14 YTD Summary and Outlook
2013/14 YTD Summary and Outlook H1 challenging and volatile, Q3 overall growth in both sales and profits Markets remain challenging, particularly France £145m provision release from resolution of French tax case Balance sheet remains strong, not in capital ‘surplus’ Housing transactions vs. 5 year a
Slide 25: Questions
Questions
Slide 26: Contacts
Contacts Ian Harding, Group Communications Director +44 (0)20 7644 1029 Sarah Levy, Director of Investor Relations +44 (0)20 7644 1032 Matt Duffy, Investor Relations Manager +44 (0)20 7644 1082 Further copies of this presentation will be available for download from www.kingfisher.com or viewed on th