Kingfisher Plc · LSE:KGF
Kingfisher — H1 2015/16 Earnings Presentation
39 slides from Kingfisher's earnings presentation, September 2015
Slide 1: Kingfisher plc Interim Results
Kingfisher plc Interim Results Half year ended 1 August 2015
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
Slide 3: Véronique Laury, Chief Executive Officer
Véronique Laury Chief Executive Officer
Slide 4: Slide 4
Slide 5: Karen Witts, Chief Financial Officer
Karen Witts Chief Financial Officer
Slide 6: Financial summary
Financial summary 2015/16 2014/15 % YOY Adjusted sales (£m) (1) 5,382 5,605 +3.5%(2) Retail profit (1) (4) 410 419 +5.0%(2) Adjusted PBT (£m) (1) (3) (4) 384 393 (2.3)% Effective tax rate (5) 26% 27% +1.0% Adjusted basic EPS (p) (1) (3) (4) 12.3 12.3 Flat Statutory post-tax profit (£m) (4) 318 290 +
Slide 7: Exceptional items
Exceptional items £m gain / (charge) 2015/16 2014/15 UK & Ireland and Europe restructuring (151) (6) Profit on disposal of B&Q China 143 - Disposal of properties 17 21 Transaction costs - (5) Exceptional items before tax 9 10 Exceptional tax items 29 1 Net exceptional items 38 11
Slide 8: Retail profit by geography
Retail profit by geography Other UK & International Ireland £49m £194m +3.0%(1) +16.8%(1) France £167m (5.7)%(1)(2) (1) In constant currencies (2) Comparatives restated for IFRIC 21 'Levies'
Slide 9: France – profits impacted by ongoing price investment
France – profits impacted by ongoing price investment Castorama performing in-line with market Brico Dépôt impacted by ongoing slow house Sales +0.1% building market LFL +0.2% Sales +2.4% LFL (0.9)% GM% +1% Sales +1.1% LFL (0.3)% Total France Gross margin ‘Click, Pay & Collect’ New space GM (60)bps
Slide 10: UK & Ireland – sales and profit growth; strong contribution from Screwfix
UK & Ireland – sales and profit growth; strong contribution from Screwfix B&Q Sales drivers Sales +0.2% Productivity initiatives Indoor core LFL +0.7% continuing to deliver product ranges benefits e.g. store offset by weaker seasonal and friendly deliveries and Sales +27.9% roller checkouts outdoor
Slide 11: Other International – sales and profit growth driven by Poland
Other International – sales and profit growth driven by Poland Poland Retail profit Sales LFL £m % YOY Benefiting from new ranges and good seasonal sales (+6%) % % 2015/16 2014/15 Russia Poland +2.3 +3.4 53 +8.7% Profit growth benefiting from higher sales despite FX hit on Russia +21.6 +15.3 3 +
Slide 12: Retail profit drivers across H1
Retail profit drivers across H1 UK & Other New France Costs Ireland OpCos countries £m +19 (13) +11 (1) +4 47 419 (29) (7) 20 (1) (11) (36) 410 7 (1) (2) 4 390 H1 2014/15 FX Impact H1 2014/15 Market & Margin Market & Margin Market & Margin New Cost control Cost IT H1 2015/16 Underlying volume driver
Slide 13: Capital discipline – maintaining a strong balance sheet and uses of cash
Capital discipline – maintaining a strong balance sheet and uses of cash Financial flexibility CAPEX H1 2014/15 £119M Retain a solid investment grade credit rating; now at BBB flat 29% 34% 37% Target 2.0-2.5x lease adjusted net debt/EBITDAR (1); currently at 2.1x Ongoing optimisation of lease ad
Slide 14: Use of free cash flow
Use of free cash flow 329 (31) £m 435 308 (299) 137 (9) 137 H1 2015/16 Returns to B&Q China Other Net cash flow Opening FX & Other Closing net cash Free cash flow shareholders disposal net cash
Slide 15: Financial summary
Financial summary Group retail profit up 5.0% in constant currencies Driven by UK & Ireland and Poland partly offset by France Continued strong focus on costs Adjusted PBT impacted by £29m adverse foreign exchange translation Balance sheet remains strong Optimising our lease adjusted debt posi
Slide 16: Véronique Laury, Karen Witts, Steve Willett
Véronique Laury Karen Witts Steve Willett
Slide 17: A reminder of our clear set of guiding principles
A reminder of our clear set of guiding principles 1 2 Create a unique Customer needs and leading offer come first 3 Same products 4 Limited across Europe number of formats presented in the & omnichannel same way everywhere 5 6 Low ONE cost always company culture
Slide 18: And of our refined first 'sharp' decisions
And of our refined first ‘sharp’ decisions Develop unique garden and bathroom businesses CUSTOMER & Develop core essential offer OFFER Develop plan to cut existing product tail Space rationalisation: Close c.15% surplus space at B&Q RETAIL Close our few loss making stores in Europe OPERA
Slide 19: Our offer – a reminder of the reality
Our offer – a reminder of the reality at last CUSTOMER & OFFER year end 393k* SKUs sold FY 14/15 Ranged vs 7,000 non-ranged SKUs CUT THE TAIL 193,000 386,000 200,000 UNIFIED Common** OpCo Non-ranged Ranged *Top 5 OpCos only **Sold in at least 2 OpCos
Slide 20: Defining our offer on the journey to 'ONE'
Defining our offer on the journey to ‘ONE’ CUSTOMER & OFFER Kingfisher Today Future Common (same products in at least 2 OpCos) Unique (leading home improvement products and solutions, 1st choice in customers’ minds) Unified (same products everywhere presented in the same way) Core essentials (home i
Slide 21: Developing unified core essential offer
Developing unified core essential offer CUSTOMER & OFFER Defined as home improvement basics and consumables; products that our customers see as universal e.g. batteries, light bulbs, paint brushes Represent c.1/3 of total company buying scale We believe number of SKUs and suppliers can be sign
Slide 22: Unified core essential offer progressing well
Unified core essential offer progressing well CUSTOMER & OFFER First wave covers all OpCos and will land in stores FY 2016/17 Covers 20 categories Represents £0.6bn of company buying scale c.90% of product will be unified and c.10% OpCo Progressing well e.g. Currently 338 battery SKUs on up
Slide 23: Space update
Space update RETAILRETAIL OPERATIONS OPERATIONS B&Q On track to close c.15% B&Q surplus space by end of FY 2016/17 (c.60 stores) 2 right-sizes in H1; 30 closures on track by the end of the year Lease exits secured on 26 of the stores through combination of transfers to national retailers and l
Slide 24: Programme to unify GNFR underway
Programme to unify GNFR underway INFRASTRUCTURE RETAIL OPERATIONS & PROCESSES Scoping exercise completed of the total £1.2bn spend c.90% can be unified Wave 1: To be implemented across 3 waves over the next 3 £350m years Including e.g. Wave 1 progressing well Wave 2: Wave 3: • Media buying £400m
Slide 25: Unified 'Easier' IT platform creates a step change
Unified ‘Easier’ IT platform creates a step INFRASTRUCTURE RETAIL OPERATIONS & PROCESSES change Customers Colleagues Enabling customers to shop, order and Providing new handsets and pay using any device, anywhere, applications that are as simple as a anytime mobile app Enabling improved custom
Slide 26: Ireland pilot on track and working well
Ireland pilot on track and working well INFRASTRUCTURE RETAIL OPERATIONS & PROCESSES Web Technologies Full systems platform built and tested Layer Pilot Services & Integration Layer Started on time and now live in 7 stores Core Systems Layer Testing over 75% of all functionality and technologies
Slide 27: So we are accelerating the roll out
So we are accelerating the roll out INFRASTRUCTURE RETAIL OPERATIONS & PROCESSES B&Q and Castorama France to complete in 2016, whole company by end of FY 2018/19 Will be a key enabler for ‘ONE’ Kingfisher Strong risk management in place Will not sacrifice quality for speed Already running a full
Slide 28: We have now finalised our leadership team
We have now finalised our leadership team RETAILPEOPLE OPERATIONS Chief Executive Officer Chief Financial Officer Véronique Laury Karen Witts Chief Offer & Supply Chain Officer Chief Digital & IT Officer Chief People Officer Arja Taaveniku Steve Willett Emily Lawson 3 Operations Directors by format
Slide 29: … and made several other key appointments and internal changes
… and made several other key RETAILPEOPLE OPERATIONS appointments and internal changes We are establishing international and diverse teams with stricter criteria e.g. retail & home improvement experience, language Reviewed all CEOs and other key roles 5 external appointments; 15 internal moves ‘ON
Slide 30: New, more unified ways of working: 5 year plan workstreams
New, more unified ways of working as we start to organise ourselves very differently e.g. 5 year plan 5 Year Plan 5 Year Plan Customer Offer & Supply Chain workstreams workstreams Strategic Strategic Retail expansion Digital Infrastructure & processes OpCo base OpCo base Plans Plans
Slide 31: Summary & roadmap
Summary & roadmap March ’16 - Preliminary results Early 2016 - Capital Markets Event: Detail of our long term strategy November ’15 - Q3 Trading update November ’15 - Ireland IT Pilot: Investor / Analyst Visit September ’15 - Interim results: Solid H1 Solid progress on first ‘sharp’ decisions March
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
Slide 33: Questions
Questions KingfSsher
Slide 34: Appendices
Appendices KingfSsher
Slide 35: 2015/16 Technical guidance
2015/16 Technical guidance Income statement: Retail losses from new country development activity – expected to be around £17m for FY 2015/16 Group interest charge - around £10m Central costs are expected to be around £45m Corporation tax rate is expected to be c.26% subject to profit mix cha
Slide 36: Statutory financial reconciliation
Statutory financial reconciliation 2015/16 2014/15 £m £m Adjusted sales 5,382 5,605 B&Q China sales 110 163 Statutory sales 5,492 5,768 Adjusted pre-tax profit 384 393 B&Q China operating loss (4) (11) Financing fair value remeasurements (FFVR) (3) 1 Exceptional items before tax 9 10 Statutory pre-t
Slide 37: Net debt/EBITDAR reconciliation
Net debt/EBITDAR reconciliation 2015/16 2014/15 (2) Moving annual total Year end £m £m EBITDA(1) 938 953 Property operating lease rentals 410 415 EBITDAR 1,348 1,368 Financial net cash (435) (329) Pension deficit - - Property operating lease rentals (8x)(3) 3,280 3,320 Lease adjusted net debt 2,845
Slide 38: ADR programme
ADR programme Kingfisher ADRs trade on OTCQX – the premier tier of the U.S. over- Benefits of ADRs to U.S. investors: the-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
Slide 39: Contacts
Contacts Sarah Levy, Group Investor Relations Director +44 (0)20 7644 1032 Christian Cowley, Head of Investor Relations +44 (0)20 7644 1126 Giles Hartley, Investor Relations Manager +44 (0)20 7644 1082 Nigel Cope, Head of Media Relations +44 (0)20 7644 1030 Brunswick +44 (0)20 7404 5959 Further copi