Rs Group Plc · LSE:RS1
Rs — Electrocomponents — FY2015 Earnings Presentation
31 slides from Rs's earnings presentation, May 21, 2015
Slide 1: Preliminary results for year ended 31 March 2015
Electrocomponents plc Preliminary results for year ended 31 March 2015 21 May 2015 www.electrocomponents.com
Slide 2: Agenda
AGENDA • Overview • Financial performance Simon Boddie • Business performance • Current trading • Introduction & initial observations Lindsley Ruth • Q&A All 2
Slide 3: Overview
OVERVIEW • Overall these are a disappointing set of financial results with headline (1) PBT adjusted for FX and days down 13% • Investment not yet delivering expected step-up in revenues • UK business remains in revenue decline • Gross margin decline of 1.3% • Foreign exchange and trading days adver
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 4
Slide 5: Basis of Preparation
BASIS OF PREPARATION Unless otherwise stated: • Figures have been prepared using International Financial Reporting Standards • Changes in sales are adjusted for currency movements and for the number of trading days (‘underlying sales growth/decline’) • Changes in profit, cash flow, debt and share re
Slide 6: Profit and Loss Account
PROFIT AND LOSS ACCOUNT £m 2015 2014 Change Sales 1,266.2 1,273.1 3.5% (1) Gross margin (%) 44.6% 45.9% (1.3)% pts Headline operating costs (479.5) (477.8) 3.6% (1) Headline operating profit 85.2 106.1 (19.7)% (2) Headline operating margin (%) 6.7% 8.3% (1.6)% pts Headline PBT 80.1 101.1 (20.8)% (2)
Slide 7: Group Headline Profit Before Tax Movement
GROUP HEADLINE PROFIT BEFORE TAX MOVEMENT Change (1) (8%) (2) 6% (8%) (9%) (0%) £101.1m £80.1m 2014 Fx and Days International UK Processes Interest 2015 International contribution growth offset by UK decline and process cost investment (1) Adjusted for currency movements 7 (2) Impact of foreign exch
Slide 8: International Contribution
INTERNATIONAL CONTRIBUTION Change (1) 4% 9% 10% 6% £150.4m £149.5m 2014 Fx Cont Europe North America Asia Pacific 2015 All International regions contributed to growth (1) Adjusted for currency movements 8
Slide 9: Gross Margin
GROSS MARGIN (1) (2) (0.2)% pt (0.3)% pt (0.4)% pt (0.4)% pt 45.9% 44.6% 2014 Geographic mix Product mix Currency Price & discounts 2015 movements Gross margin impacted by mix, currency & price (1) Geographic mix relates to faster growth in lower margin geographies such as North America 9 (2) Produc
Slide 10: Operating Costs
OPERATING COSTS Change (1) 1.4% 2.5% 0.5% (0.8%) 3.6% £478.0m £479.5m 2014 Fx Inflation Strategy inc Variable Reorg 2015 Depn efficiencies Cost growth reflects investment in strategy (1) Adjusted for currency movements 10
Slide 11: Headline Earnings Per Share
HEADLINE EARNINGS PER SHARE £m 2015 2014 Change Headline PBT 80.1 101.1 (20.8)% Pension credit and 16.0 - - Reorganisation costs (1) Reported PBT 96.1 101.1 (5.0)% Effective tax rate (28)% (29)% 1% pt Per share amounts: Headline earnings 13.2p 16.3p (19.0)% Full-year dividend (2) 11.75p 11.75p - (1)
Slide 12: Impact of Foreign Exchange - Translation
IMPACT OF FOREIGN EXCHANGE - TRANSLATION STRENGTHENING OF STERLING REDUCES PROFIT BEFORE TAX • During FY15 the Euro weakened and the US dollar strengthened significantly against sterling • As such adverse FX movements reduced FY15 Headline PBT by £6m Reported May 15 Impact rates rates • Reported pro
Slide 13: Cash Flow
CASH FLOW £m 2015 2014 2016 guidance Profit before tax (1) 96.1 101.1 Depreciation & amortisation 30.5 28.1 c. £33m Working capital 0.4 (14.3) Stock turn 2.5x Pension credit (20.4) - Finance expenses (net) 5.1 5.0 Other non-cash movements 1.5 2.9 Operating cash flow 113.2 122.8 Interest paid (net) (
Slide 14: Net Debt
NET DEBT £52.3m £(51.6)m £(3.3)m £(6.4)m £(152.6)m £(143.6)m 2014 Headline Free Dividends paid Reorganisation Translation/Other 2015 cashflow SUCCESSFUL REFINANCING PENSION DEFICIT • £172m multi-currency facility signed in • Combined deficit £60.4m (2014: £40.9m) Aug 2014, expiring in Aug 2019 • Cha
Slide 15: Business Performance
BUSINESS PERFORMANCE 15
Slide 16: Business Portfolio
BUSINESS PORTFOLIO 2015 (1) % of Group Contribution Sales growth sales margin Continental Europe 4% 35% 21% North America 10% 24% 14% Asia Pacific 4% 12% 8% International 6% 71% 17% UK (2)% 29% 27% Group 3% 100% 20% (1) Underlying sales growth, adjusted for currency and trading days International ov
Slide 17: Continental Europe
CONTINENTAL EUROPE (35% Group sales) (1) • All markets in growth 2015 2014 Growth • France back in growth following management action Sales £447.3m £460.6m 4.4% plan Contribution £95.7m £99.4m 4.0% • 8% eCommerce growth 71% eCommerce share (+2% Contribution pts) 21.4% 21.6% (0.2)% pts margin • eProc
Slide 18: North America
NORTH AMERICA (24% Group sales) • Strong revenue growth driven (1) 2015 2014 Growth by growth in automation & control Sales £302.7m £281.3m 10.0% • Significant new product introductions Contribution £41.9m £39.1m 8.8% • 16% eCommerce growth 41% eCommerce share (+2% Contribution pts) 13.8% 13.9% (0.1
Slide 19: Asia Pacific
ASIA PACIFIC (12% Group sales) • Growth in China & SEA (1) 2015 2014 Growth • Japan recovering post SAP rollout Sales £152.4m £156.9m 3.6% • Australasia difficult • SAP rollout completed Contribution £11.9m £11.9m 10.2% • eCommerce grew 4%, represents Contribution 50% of revenues 7.8% 7.6% 0.2% pts
Slide 20: UK
UK (29% Group sales) • UK market remains difficult (1) 2015 2014 Growth • eCommerce revenues flat, represents 63% of revenues Sales £363.8m £374.3m (2.4)% • 8% contribution decline • UK Action Plan Contribution £98.8m £107.5m (8.1)% • Tools and consumables • Corporate accounts Contribution • Online
Slide 21: Current Trading
CURRENT TRADING Sales Growth (1) Apr/May H1 2015 H2 2015 Q4 2015 2016 (2) Continental 2% 7% 8% 11% Europe North America 10% 10% 6% 4% Asia Pacific 5% 3% 4% (1)% International 5% 7% 7% 6% UK (2)% (3)% (3)% (2)% UK ex-Rasp. Pi (1)% (2)% (2)% (2)% Group 3% 4% 4% 4% (1) Underlying sales growth, adjusted
Slide 22: Lindsley Ruth - Introduction & Initial Observations
LINDSLEY RUTH – INTRODUCTION & INITIAL OBSERVATIONS • Career history • 2002 – 2015 Future Electronics Inc. Executive Vice President • 1999 – 2002 Solectron Corporation Vice President, Materials • 1994 – 1999 TTI Inc. Director • 1992 – 1994 Texas A&M University Assistant Lecturer, College of Engineer
Slide 23: Initial Observations - Strengths
INITIAL OBSERVATIONS – STRENGTHS • Strong brands • Global footprint • RS branded products • eCommerce expertise • Commitment of the people • Innovative solutions e.g. DesignSpark Strong brands and market position 23
Slide 24: Initial Observations - Opportunities
INITIAL OBSERVATIONS – OPPORTUNITIES • Increase customer focus • Improve service levels • Streamline decision making • Simplify operating model • Drive operating efficiencies • Asia Pacific and Emerging Markets Execution needs to improve 24
Slide 25: Summary
SUMMARY SIGNIFICANT OPPORTUNITY TO IMPROVE PERFORMANCE • Overall, 2015 financial results not satisfactory • Significant opportunity to improve performance • Will present my detailed plans at our interim results in November • Meanwhile actions to address underperformance are being intensified Focusin
Slide 26: Q&A
Q&A 26
Slide 27: Appendix
APPENDIX 27
Slide 28: Impact of Foreign Exchange
IMPACT OF FOREIGN EXCHANGE 2015 2014 Growth Growth FX £m £m Reported adjusted Continental Europe 95.7 99.4 (3.7)% 4.0% North America 41.9 39.1 7.2% 8.8% Asia Pacific 11.9 11.9 - 10.2% International 149.5 150.4 (0.6)% 5.9% contribution UK contribution 98.8 107.5 (8.1)% (8.1)% Process costs (163.1) (1
Slide 29: Financial KPIs
FINANCIAL KPIs Medium-term Performance Framework 2014 2015 Medium-term (Year 1 of plan) (Year 2 of plan) target range Group sales growth (1) 2.1% 3.5% 5% - 8% Group return on sales 8.3% 6.7% 9% - 11% Return on capital 20.9% 16.4% 20% - 30% employed Free cash flow as a 4.6% 4.1% 4% - 6% percentage of
Slide 30: Restated FY15 Half-Year Results
RESTATED FY15 HALF-YEAR RESULTS £m Group UK Int’l Europe APAC Allied As originally reported Sales 616.4 180.1 436.3 213.3 76.5 146.5 Gross profit 275.6 89.3 186.3 Gross margin 44.7% 49.5% 42.7% Contribution 120.0 49.3 70.7 46.4 4.7 19.6 Contribution margin 19.5% 27.4% 16.2% 21.8% 6.1% 13.4% Restated
Slide 31: Preliminary results for year ended 31 March 2015
Electrocomponents plc Preliminary results for year ended 31 March 2015 21 May 2015 www.electrocomponents.com