Kingfisher Plc · LSE:KGF

Kingfisher — H1 2018/19 Earnings Presentation

35 slides from Kingfisher's earnings presentation, Sep 19, 2018

  1. Slide 1: Kingfisher plc half year results

    19 September 2018 Kingfisher plc half year results 6 months to 31 July 2018

  2. Slide 2: Disclaimer

    Disclaimer You are not to construe the content of this presentation as investment, legal or tax advice and you should make you 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 auth

  3. Slide 3: We are halfway through ONE Kingfisher

    We are halfway through ONE Kingfisher. It’s a key stage in our transformation. We have the right plan. We face challenges and we are addressing them. And it is a time of radical change for our industry too. 3

  4. Slide 4: The extent and pace of recent change in retail has been profound

    1 The extent and pace of recent change in retail has been profound 4

  5. Slide 5: The potential of our transformation is huge

    2 The potential of our transformation is huge 5

  6. Slide 6: We have ambitious 5 year transformation targets

    We have ambitious 5(1) year transformation targets Unified & Operational Digital Efficiency £500m EBIT Unique Offer £50m £100m uplift £350m  Over and above what the business would have delivered without the plan  £800m aggregate costs to achieve (1) FY 20/21 6

  7. Slide 7: On track to deliver our FY18/19 strategic milestones

    On track to deliver our FY18/19 strategic milestones for the third year in a row Unified &  Deliver growth in unified & unique sales and gross margin Unique Offer  Unify 40% product (COGS)  Complete final year of unified IT platform roll out to OpCos Digital  Complete ecommerce roll out in Franc

  8. Slide 8: Unified & unique sales growth improving

    Unified & unique sales growth improving % Unified & unique (3.3%) (0.1%) +2.2% sales(1) growth 42% % Unified 23% COGS 16% H1 17/18 FY 17/18 H1 18/19 (1) Constant currency including clearance (excludes Praktiker Romania, Screwfix Germany, Portugal and services) 8

  9. Slide 9: Unified & unique outperforming non-unified

    Unified & unique outperforming non-unified Unified & unique Non-unified +2.2%(1) (1.8)%(1) H1 sales split 41% 59% Unified & unique Unified unique Unified & unique (1) H1sales H1 growth(1) gross profit growth(1) (2) sales growth Category 1 70% 30% +5.9% Category 2 50% 50% +11.6% Category 3 42% 58% (2

  10. Slide 10: We are seeing the benefits and they will come through (1)

    We are seeing the benefits and they will come through as we leverage our scale and drive efficiency (1) ONE Kingfisher benefits Clearance Price  Offer investment  Digital OSC & Digital  Operational organisation Efficiency EBIT uplift Illustrative Year 3 scenario 10

  11. Slide 11: We are seeing the benefits and they will come through (2)

    We are seeing the benefits and they will come through as we leverage our scale and drive efficiency (2) Clearance Price investment OSC & Digital Organisation ONE Kingfisher benefits Clearance Price  Offer ONE Kingfisher investment  Digitalat end benefits of Year 3  Offer Operational OSC & Digita

  12. Slide 12: Transformation on this scale is tough

    3 Transformation on this scale is tough 12

  13. Slide 13: France – three main drivers of underperformance

    France – three main drivers of underperformance Customer  Behind market on overall customer satisfaction (NPS) perception  Bigger perception gap with high spenders  Castorama repositioning but still above market Price  Brico Dépôt maintains strong position  Organisational changes  Unified IT r

  14. Slide 14: France – right plan, taking time to re-energise Castorama

    France – right plan, taking time to re-energise Castorama  Unique & Unified starting to provide a point of differentiation, driving growth in Brico Dépôt Progress to  Castorama pricing gap narrowing (index 101 vs. market) with unified date ranges well positioned  Unified IT platform on track  H2

  15. Slide 15: Making the right decisions for the business long-term

    4 Making the right decisions for the business long-term 15

  16. Slide 16: Making the right decisions for the business long-term

    Making the right decisions for the business long-term  Management changes  Stop the losses within the business  Making the business more efficient 16

  17. Slide 17: Summary

    Summary  We have the right plan  Building the engine we need  Creating scale and momentum  Operating in a challenging environment  Maintaining our ambition 17

  18. Slide 18: H1 18/19 financials

    H1 18/19 financials

  19. Slide 19: H1 18/19 financial summary: income statement

    H1 18/19 financial summary: income statement 2018/19 2017/18 Change YOY Sales (£m) 6,080 6,008 +0.6%(1) Gross margin 36.4% 36.8% (40)bps Retail profit (£m)(2) 404 467 (14.3)%(1) Underlying PBT (£m)(2) 375 440 (14.8)% Adjusted PBT (£m)(3) 323 394 (18.0)% Statutory PBT (£m) 281 402 (30.1)% Adjusted ef

  20. Slide 20: H1 18/19 group operational summary

    H1 18/19 group operational summary UK & Ireland  B&Q LFL -2.5% with good sales recovery in Q2 after exceptionally harsh weather in Q1 LFL (0.5)%  Screwfix LFL +4.5% RP +1.2%  Gross margin -30bps Poland  LFL +1.5% reflecting good performance despite new Sunday trading LFL +1.5% laws; good perform

  21. Slide 21: Actions in place to support H2 performance in France

    Actions in place to support H2 performance in France • Castorama LFL -5.8% reflecting weaker footfall and impact of France transformation-related activity • Brico Dépôt LFL +1.7% benefiting from new unified ranges LFL (2.4)% • Higher costs including phasing of marketing investment at Brico RP (31.1)

  22. Slide 22: H1 unified & unique margin benefits offset by inefficiencies

    H1 Unified & unique margin benefits offset by inefficiencies which we are addressing After cost price inflation, price investment & clearance +30bps(1) (10)bps (40)bps 36.8% (20)bps 36.4% H1 17/18 Group Unified & unique Non-unified Logistics & stock Group operating Group H1 18/19 gross margin ineffi

  23. Slide 23: Expecting improvement in H2 margin

    Expecting improvement in H2 margin Expecting to grow the full year Group gross margin after clearance costs Logistics & stock inefficiencies CPR phasing being weighted addressed towards H2 36.4% Price optimisation of ranges H1 18/19 FY 18/19 23

  24. Slide 24: Operational efficiency - GNFR continuing to deliver

    Operational efficiency - GNFR(1) continuing to deliver  Target of £100m by FY 20/21, driven by GNFR £m  £72m of cumulative benefits delivered to date 14 72 28  H1 18/19: - £8m GNFR and £6m of further operational efficiency benefits 30  On track to deliver £30m of operational efficiencies in FY 1

  25. Slide 25: H1 18/19 financial summary: cash and returns

    H1 18/19 financial summary: cash and returns 2018/19 2017/18 Free cash flow (£m) 285 327 Net cash (£m) 99 650 Half year ordinary dividend (p) 3.33 3.33 Share buyback (£m) 90 149 25

  26. Slide 26: H1 18/19 uses of operating cash flow

    H1 18/19 uses of operating cash flow £m Lease adjusted 77 (81) net debt to EBITDAR 460 (165) 2.5x (10) (250) 99 68 Opening net EBITDA Change in Tax & net Gross capex Exceptionals Returns to Closing net cash WC interest paid & other shareholders cash 26

  27. Slide 27: Working capital - mitigation stock reducing

    Working capital - mitigation stock reducing GROWTH UNIFIED RANGES NON-UNIFIED £m RANGES 74 77 90 (27) (35) (25) Growth Changes in New unified Mitigation Change in H1 18/19 change operating ranges stock payables & in working model (non-unified) receivables capital 27

  28. Slide 28: Disciplined approach to capex

    Disciplined approach to capex FY 18/19: up to £350m (previously up to £425m) Transformation Other 5% Existing stores Screwfix expansion 5% up to £350m Other 13% 3% Transformation 15% 5% 5% 32% 15% New stores (ex-Screwfix) 20% H1 18/19: 31% £165m 15% IT IT 25% 3% 30% Screwfix 18% expansion Existing s

  29. Slide 29: £800m total transformation cost guidance unchanged

    £800m(1) total transformation cost guidance unchanged £m 240 511 55 75 135 194 Exceptional Costs 50 293 15 P&L Costs 114 Capex 77 65 5 143 44 28 Y1 Actual Y2 Actual Y3 Guidance Y1-3 Cumulative (1) Transformation costs include P&L, exceptional & capex 29

  30. Slide 30: Financial summary

    Financial summary 1 2 Unified & Unique sales and Actions underway to support margin growth H2 performance in France 3 4 Expect to grow Group gross H1 transformation costs as margin after clearance in FY expected; reaffirming total 18/19 transformation costs 5 6  Working capital -  Outlook for our

  31. Slide 31: Together we will make home improvement accessible. For everyone.

    Together we will make home improvement accessible. For everyone. 31

  32. Slide 32: 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

  33. Slide 33: Appendix

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  34. Slide 34: ADR programme

    ADR programme Kingfisher ADRs trade on OTCQX – the premier tier of the U.S. over-the- Benefits of ADRs to U.S. investors: counter market under the following information:  Clear and settle according to normal U.S. standards Symbol KGFHY CUSIP 495724403  Offer the convenience of stock quotes and div

  35. Slide 35: 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 Blue Rubicon Tel: +44 (0)20 7260 2700 Email: [email protected] 35

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