Rs Group Plc · LSE:RS1

Rs — Electrocomponents — FY2012 Earnings Presentation

47 slides from Rs's earnings presentation, May 24, 2012

  1. Slide 1: Announcement of Preliminary Results, Year Ended 31 March 2012

    Electrocomponents plc ANNOUNCEMENT OF PRELIMINARY RESULTS YEAR ENDED 31 MARCH 2012 24 May 2012

  2. Slide 2: Agenda

    Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 2

  3. Slide 3: Key themes

    Key themes  Record sales, gaining market share internationally  International growth of 9%, International > 70% of Group  Both Electronics and Maintenance grew by 7%, two strong offers  eCommerce at heart of multi-channel marketing approach, growth of 18%  UK performed well, profit now 5% above

  4. Slide 4: Financial highlights

    Financial highlights  Broad based sales growth 7%, c. £1.3bn  Stable gross margin 47%, through year  Further cost leverage 0.3% points improvement  Continued PBT growth £122m, 7% growth  Rising return on capital employed +0.4% points, 24.6%  Increased full year dividend 2%, confidence Broad ba

  5. Slide 5: Current trading

    Current trading Sales FY12 FY13 (2) (1) growth H1 Q3 Q4 Apr&May Continental Europe 15% 5% 2% (1)% North America 14% 6% 1% (3)% Asia Pacific 12% 11% 4% (3)% International 14% 6% 2% (2)% UK 5% 2% 0% 4% Group 11% 5% 1% 0% Group sales at similar level to last year (1) seven weeks to 18 May 2012 (2) unde

  6. Slide 6: Sales per day

    Sales per day UK sales per day 1,700 1,500 1,300 Group sales per day 1,100 900 5,500 700 5,000 500 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 4,500 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 4,000 ƒ £’000 sales per t

  7. Slide 7: Agenda

    Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 7

  8. Slide 8: Basis of preparation

    Basis of preparation Unless otherwise stated:  Figures have been prepared using International Financial Reporting Standards (IFRS)  Changes in revenue are adjusted for exchange rates and for the number of trading days (‘underlying sales growth’)  Changes in profit, cash flow, debt and share relat

  9. Slide 9: Profit and loss account

    Profit and loss account (£m) 2012 2011 Change Revenue 1,267.4 1,182.2 7% (1) Gross margin 46.8% 47.1% (0.3)% points Operating costs as % of sales 36.7% 37.0% 0.3% points Operating profit (2) 128.1 119.8 7% Interest (5.8) (5.8) - Profit before tax 122.3 114.0 7% Return on capital employed 24.6% 24.2%

  10. Slide 10: Group pre tax profit increase

    Group pre tax profit increase Contribution growth (1) 9% 4% £4m £(11)m £15m £122m £114m £m 2011 International UK Processes 2012 Both International and UK delivering contribution growth (1) constant foreign exchange 10

  11. Slide 11: International contribution

    International contribution Underlying (£m) 2012 2011 change (1) Revenue 902.7 825.9 9% Operating costs (249.4) (235.6) (5)% Contribution 160.8 146.3 9% Contribution % 17.8% 17.7% 0.1% points 9% International contribution growth (1) (1) adjusted for currency; revenue also adjusted for trading days 11

  12. Slide 12: International contribution increase

    International contribution increase Contribution 8% 7% (2) 26% growth (1) £1m £5m £161m £9m £146m £m 2011 Continental Europe North America Asia Pacific 2012 All regions contributing, strong performance from Asia Pacific (1) at constant foreign exchange (2) excluding additional IT costs related to SA

  13. Slide 13: UK contribution

    UK contribution Underlying (£m) 2012 2011 change (1) Revenue 364.7 356.3 3% Operating costs (76.5) (72.8) (5)% Contribution 106.0 101.7 4% Contribution % 29.1% 28.5% 0.6% points UK contribution 5% above pre-2008 recession level (1) revenue adjusted for trading days 13

  14. Slide 14: Gross margin

    Gross margin  Group gross margin broadly stable  UK increase (+1.0% pts):  Price differentiation strategy  Increased discount effectiveness  Favourable foreign exchange  International decrease (-0.8% pts):  Principally Continental Europe and Asia Pacific  Large customer account wins  Larger

  15. Slide 15: Operating costs

    Operating costs Costs : % sales Drivers of 2012 operating leverage: 2012 2011 Change  International scale benefits: International 27.6% 28.5% (0.9)% pts. - Particularly in Asia Pacific UK 20.9% 20.5% 0.4% pts.  Cost reductions: - Continuous Improvement Processes 11.0% 10.9% 0.1% pts. - Catalogue c

  16. Slide 16: Earnings per share

    Earnings per share (£m) 2012 2011 Change Profit before tax 122.3 114.0 7% Effective tax rate 31% 31% - Per share amounts Earnings 19.5p 18.0p 8% (1) Full year dividend 11.75p 11.5p 2% Dividend cover 1.7x 1.6x 0.1x 8% increase in headline EPS (1) 2012: includes 6.75p final proposed dividend 16

  17. Slide 17: Dividend

    Dividend  Increase full year dividend by 2%, resulting in cover of 1.7 times  Significant opportunities to invest for growth at attractive returns  Intention to maintain adequate resources to take advantage of opportunities  Over time, as earnings increase, intention to pursue progressive divide

  18. Slide 18: Cash flow

    Cash flow (£m) 2012 2011 Profit before tax 122.3 114.0 Depreciation 27.9 27.0 Employee share options / non-cash mvts 3.0 1.8 Finance expense (net) 5.8 5.8 Working capital (35.8) (41.7) Cash generated from operations 123.2 106.9 Interest paid (net) (5.8) (6.1) Tax paid (26.9) (21.5) Net capital expen

  19. Slide 19: Investment to drive growth

    Investment to drive growth CURRENT STATUS FUTURE  17 warehouses  Strengthen key global warehouses  Recent investments:  Enable range expansion WAREHOUSES • Allied (2007) • Shanghai (2011)  SAP in UK, Europe & Allied  Implement SAP in Asia Pacific,  2011 investments: c. £20m over 2-3 years IT

  20. Slide 20: Net debt

    Net debt (£m ) 2012 Net debt as at 1 April 2011 (160.7) Strong balance sheet metrics: Free cash flow 52.7 2012 2011 Dividends paid (50.1) Net debt:EBITDA 1.0x 1.1x Interest cover 25x 23x New shares / finance loans 1.1 Translation differences 2.8 Successful £210m bank Net debt as at 31 March 2012 (15

  21. Slide 21: Financial highlights

    Financial highlights  Broad based sales growth 7%, c. £1.3bn  Stable gross margin 47%, through year  Further cost leverage 0.3% points improvement  Continued PBT growth £122m, 7% growth  Rising return on capital employed +0.4% points, 24.6%  Increased full year dividend 2%, confidence Broad ba

  22. Slide 22: Agenda

    Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 22

  23. Slide 23: Group strategy

    Group strategy “The world’s distributor of choice” Vision • International growth • Electronics and Maintenance • eCommerce Strategy • Operating leverage • UK profitability • Focus on core strengths Priorities • Global approach, delivered locally Accelerating implementation 23

  24. Slide 24: Benefits of common approach

    Benefits of common approach  Increased marketing intensity Continental Europe regionalisation 15%(1) CAGR FY10 - FY12 500 Regionalisation  begins Larger, consistent product offer 400 4%(1) CAGR FY05 - FY09 Reported sales (£m) 300  Greater supplier engagement 200 100  Focused, local sales approac

  25. Slide 25: Clear trends to globalisation in our business

    Clear trends to globalisation in our business Service accuracy  Customer needs are similar everywhere Ease of doing business  Customers want to access the full range of our Range & offer from anywhere availability  eCommerce enables global marketing approach  Global brands dominate electronics a

  26. Slide 26: Global operating model

    Global operating model OFFER MARKETING SALES  Delivering a global product offer  Global marketing capability  Focused, local sales approach  Reliable service  eCommerce with the human touch  Develop & grow existing customers  Dynamic pricing  Acquire new customers  Enhanced customer experie

  27. Slide 27: Business portfolio

    Business portfolio Underlying FY12 sales % of Group Contribution Market (£m) growth revenue % of revenue position Continental Europe 9% 36% 22% No. 1 North America 9% 22% 16% No. 3 Asia Pacific 9% 13% 10% No. 1 International 9% 71% 18% No. 1 UK 3% 29% 29% No. 1 Group 7% 100% 21% No.1 Cost leverage t

  28. Slide 28: Operating cost leverage

    Operating cost leverage 45% International operating costs as % of sales: >7% point reduction over 10 years 40% Costs as % of sales FY12 China 35% Japan Italy 30% Australia 25% France Germany UK + Austria 20% US 15% 10% 0 50 100 150 200 250 300 350 400 Sales FY12 (£m) Increasing scale is driving cost

  29. Slide 29: Continental Europe

    Continental Europe  9% sales growth, 8% contribution growth (1)  22% eCommerce growth, 61% share  Improved, consistent Maintenance offer  25 corporate account wins  Good progress in Eastern Europe Achieving compliance with corporate accounts Benefitting from regionalisation (1) Revenue and cont

  30. Slide 30: North America

    North America  9% sales growth, 7% contribution growth (1) Track record of growth  13% eCommerce growth, 39% share 300 8% 5-year sales CAGR (1) 250  Strong track record of growth North America Sales (£m) 200  Leveraging strong sales network and 150 100 warehouse footprint 50  SAP IT system succ

  31. Slide 31: Asia Pacific

    Asia Pacific  9% sales growth, 26% contribution growth (1)  32% eCommerce growth, 51% share  16% Greater China sales growth  Localising the Group’s eCommerce expertise  Improving the offer, investing in stock  IT system investment over next 2-3 years Regional focus with global leverage (1) Rev

  32. Slide 32: UK

    UK  3% sales growth, 4% contribution growth UK contribution margin  11% eCommerce growth, 58% share 30% 28%  Leveraging the Group initiatives 26%  13 corporate account wins 24% 22%  Successful price differentiation strategies 20% FY08 FY09 FY10 FY11 FY12  Developing new revenue streams Contrib

  33. Slide 33: Electronics

    Electronics  7% sales growth, outperforming the market  32k new products  Over 1.2m DesignSpark visitors since launch  Over 130k DesignSpark PCB downloads  Authorised distributor of Raspberry Pi Market outperformance 33

  34. Slide 34: Electronics and maintenance synergies

    Electronics and maintenance synergies Customers Electronics Maintenance Suppliers 42% 58% Cross-sell Leveraging common infrastructure 34

  35. Slide 35: Maintenance: Overview

    Maintenance: Overview Global presence Maintenance Group Key % of sales by sales by Products Technologies Maintenance region region UK 39% 29% Sensors & switches Process control Continental Europe 39% 36% Automation & Pneumatics, hydraulics & power c. 35% control transmission North America 10% 22% Lo

  36. Slide 36: Maintenance: Offer Development

    Maintenance: Offer Development  Broad range of leading global brands  8k new products introduced in FY12  Added 6k ‘Asia for Asia’ products  Improved, consistent Europe offer Investment in range driving customer satisfaction and loyalty 36

  37. Slide 37: Maintenance: Automation and Control

    Maintenance: Automation and Control 3-year sales CAGR  No.1 position in a large & Automation & Control vs. Total Maintenance fragmented market 15%  Strong market fundamentals 3-year sales CAGR (%) 10%  Fast growing segment  Focus on eCommerce 5%  Strengthening supplier arrangements 0% Automatio

  38. Slide 38: Maintenance: Strategic Supplier Partnerships

    Maintenance: Strategic Supplier Partnerships Maintenance Strategic Suppliers Growth vs. Total Maintenance Growth FY12  Group level relationships with key 15% partners FY12 sales growth (%) 10%  Majority of maintenance new product introductions with these suppliers 5%  FY12 growth of 12% from Main

  39. Slide 39: Maintenance: Pricing

    Maintenance: Pricing Price differentiation  Price differentiation strategies Competitor price index Tail  Web enables dynamic pricing Drive price perception on our Less price perception in key value items the tail  UK trials in lighting have delivered significant sales & profit uplift Parity Aver

  40. Slide 40: eCommerce

    eCommerce Our eCommerce portfolio Revenue Revenue  18% sales growth, 54% share in year growth (1) share (2)  23% increase in online traffic Continental Europe 22% 61% North America 13% 39%  New Search & Browse functionality Asia Pacific 32% 51% International 21% 52%  Improving conversion rates U

  41. Slide 41: Key themes

    Key themes  Uncertain economic environment  Strong business model and proven strategy  Well-positioned versus the numerous, smaller competitors  Our broad product range, high customer service level and eCommerce capabilities are key differentiators  Well-invested global infrastructure  Strong

  42. Slide 42: Agenda

    Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 42

  43. Slide 43: Announcement of Preliminary Results

    Electrocomponents plc ANNOUNCEMENT OF PRELIMINARY RESULTS YEAR ENDED 31 MARCH 2012 24 May 2012 43

  44. Slide 44: Financial appendices

    Financial appendices 44

  45. Slide 45: Impact of foreign exchange

    Impact of foreign exchange Growth Reported Growth Foreign exchange 2012 2011 Reported adjusted £m £m % % International contribution Continental Europe 99.8 90.5 10% 8% North America 43.3 42.5 2% 4% Asia Pacific 17.7 13.3 33% 26% International 160.8 146.3 10% 9% UK contribution 106.0 101.7 4% 4% Grou

  46. Slide 46: Five year performance framework

    Five year performance framework KPIs 5 year target 2012 2011 International sales growth 7-10% p.a. 8.7% 25.3% International share of group sales 70+% 71% 70% UK contribution Stable Increasing Increasing Sales via e-Commerce 70% 54%(1) 49%(1) Underlying gross margin Stable Stable in yr. Stable in yr.

  47. Slide 47: Electrocomponents: what we do

    Electrocomponents: what we do Strong Brands 800K Catalogues 54% e Commerce 2,500 Major Suppliers > 550,000 Products > 1m Customers 17 Distribution Centres 46,000 Parcels Daily 90+% of World GDP The World’s distributor of choice 47

Electrocomponents — FY2012 Earnings Presentation on 6ix