Interim Results 2009/10. Slides will be available at

Transcription

1 Interim Results 2009/10 Slides will be available at

2 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ( relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group. For legal reasons, it should be noted that past performance cannot be relied on as a guide to future performance. This presentation contains forward-looking statements with respect to the Group s plans and objectives regarding the Group s financial conditions, results of operations and businesses. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed in the cautionary note regarding forward-looking statements set out in the final slide of this presentation. The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of the Group. For more detailed information, the entire text of the interim announcement for the half year ended 1 August 2009, can be found on the Investor Relations section of the Kingfisher website (

3 Ian Cheshire Group Chief Executive Management, Capital and Returns

4 Agenda Introduction Financial review Delivering Value Ian Cheshire Kevin O Byrne Ian Cheshire Questions and answers Management, Capital and Returns

5 Summary Strong growth by B&Q Resilience in France and Poland On track in China Strong cash generation Cautious outlook, self help and flexibility Management, Capital and Returns

6 Delivering value continued progress 1. Driving up B&Q UK s profit Self help is rebuilding operating margin 2. Exploiting the UK Trade opportunity Screwfix extended, B&Q Trade Point trial 3. Expanding our total French business 2% new space, self help supporting operating margin Management, Capital and Returns

7 Delivering value continued progress 4. Rolling out in Eastern Europe 8% new space, sales and profit growth continued 5. Turning around B&Q China Repositioning plan on track 6. Growing Group sourcing Increases led by UK and France 7. Reducing working capital Good progress Group wide Management, Capital and Returns

8 Kevin O Byrne Group Finance Director Management, Capital and Returns

9 Financial highlights Sales up 1.4% (reported +7.3%), LFL down 2.1% Gross margin +35bps* Retail profit up 23.5%* to 347m Profit after tax up 36.7% Free cashflow 347m (2008/09: 196m) Reported net debt 740m down 26% Interim dividend of 1.925p * constant currencies Management, Capital and Returns

10 Group sales up 1.4%* Retail Sales 5,502m Reported YOY growth of 7.3% 0.1% LFL(3.5)% 1.2% LFL(0.3)% 5.2% LFL(3.5)% Reported Rate 7.3% 1.4% 5,130 5, /09 France UK & Ireland Other International * constant currencies Management, Capital and Returns

11 Group Retail Profit up 23.5%* Retail Profit 347m Reported YOY growth of 25.4% 59.3% 26.5% Reported Rate 25.4% 23.5% Flat /09 France UK & Ireland Other International * constant currencies Management, Capital and Returns

12 Adjusted EPS* up 36.5% 2009/ /09 % Reported Change Adjusted PBT* 288m 214m +34.6% Exceptional items - (11)m n/a Effective tax rate 30% 32% (2)% Profit for the period 198m 146m +35.6% Adjusted EPS* 8.6p 6.3p +36.5% *Before exceptional items, IAS39, amortisation of acquisition intangibles and tax on prior year items Management, Capital and Returns

13 Net finance costs Cash m 2009/ /09 Interest on net debt (31) (43) Non Cash Interest (charge)/return on defined benefit pension scheme (2) 7 Other 1 3 Statutory net interest (32) (33) Management, Capital and Returns

14 Strong free cashflow m 2009/ /09 Operating profit pre-exceptionals Other non-cash items* Change in working capital pre-exceptionals Change in pensions and provisions pre-exceptionals (13) (15) Operating cashflow Interest (36) (37) Tax (79) (53) Gross capex (140) (234) Property and retail disposals 5 33 Net capex (135) (201) Free cashflow * Includes depreciation and amortisation, share based compensation charge, share of post-tax results of JVs and associates, and loss on retail disposals Management, Capital and Returns

15 Continued focus on working capital 163m lower but partly early phasing benefits Average stock days Average debtor days 8 days 2 days 50m working capital reduction target for full year (after impact of LME) remains on track Management, Capital and Returns

16 Focused investment % FY 2007/08** FY 2008/09 ** FY 2009/10 estimate **Restated at H1 2009/10 FX rates Management, Capital and Returns

17 Full Year 2009/10 balanced investment 16% 60% 24% New stores Revamps Maintenance capex, IT and supply chain

18 Net debt halved year on year m 2009/ /09 Free cashflow Dividends (80) (80) Exceptional items ex property disposals (24) (5) Italy - 27 Other* 4 1 Cash flow movement in net debt Net debt at beginning of period (1,004) (1,559) Transfer to assets and liabilities held for sale - (8) Exchange differences and other non-cash movements 17 (20) Closing net debt at end of period (reported rates) (740) (1,448) Impact of foreign exchange - (96) Closing net debt at end of period (constant currency) (740) (1,544) * Includes dividends received from JVs and associates and dividends paid to minority interests Management, Capital and Returns

19 Debt and facilities, 1.2bn headroom 2.5 billion 275m m billion *As at 17 September 2009 $467m 2013/8 500m m m m 2010 Net debt 1,004m $467m 2013/8 85m m m 2010 Net debt 740m 550m m 2012 FY 08/09 H1 09/10* Committed facilities US Private Placement Term loans ( 75m repaid) Bond issues Management, Capital and Returns

20 Summary Strong sales and gross margin performance Good cost management Net debt materially down Balance sheet strengthened Management, Capital and Returns

21 Summary Strong sales and gross margin performance Good cost management Net debt materially down Balance sheet strengthened Focus for H2 Cash Cost management Capital discipline Management, Capital and Returns

22 Ian Cheshire Group Chief Executive Management, Capital and Returns

23 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital Management, Capital and Returns

24 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital Management, Capital and Returns

25 UK & Ireland Picture of UK businesses

26 UK & Ireland UK 3 priorities 1. Driving the basics at B&Q 2. Unlocking UK synergies 3. Continuing our proposition development

27 UK & Ireland B&Q driving the basics in H1 Improving store standards Over 90% of stores fully comply with new standards level Quarterly sign off process to ensure consistency Self service checkout New monthly store team bonus

28 UK & Ireland B&Q driving the basics in H1 Costs down 1% YOY Gross margins up 100bps Less markdown Better buying Stronger mix of higher margin product Shrinkage and supply chain savings Improved stock position Average stock days 9 days lower than last year Stock availability improved to 99%* *On Top 250 items in-store

29 UK & Ireland Top stock removal programme Before After

30 UK & Ireland UK unlocking the synergies H1 2009/10 B&Q direct sourcing increased from 10% to 13% B&Q/Screwfix common product buying 4m annualised saving on radiators, tube, cable & sanitary ware Group buying 0.5m saving on oil filled radiators, convector and fan heaters Progress with 2010 seasonal ranges

31 UK & Ireland UK Continuing our Proposition Development Low cost revamps delivering strong returns Reserve & Collect rolled out nationwide Trade Point trial encouraging New showroom* only revamps *Kitchens, bathrooms and bedrooms

32 UK & Ireland Showroom only revamps 76 planned for H2

33 UK & Ireland UK Other H2 milestones Trial at least 4 more Trade Points Launch extended installation services trial Up-weighted staff training Reduce overall costs by 1% Further distribution savings

34 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital Management, Capital and Returns

35 France

36 France Weaker sales environment 2,0% Q2 08 Q3 08 Q4 08 Q1 09 Q ,0% 0,0% -1,0% -2,0% 0,0% 0,1% 0,1% 0,2% 0,3% 0,3% -0,5% -0,2% -1,4% -1,3% GDP Private consumption Weak economic recovery Consumer confidence: still weak but improving Real estate Housing transactions down 30% (est -18% FY) Housing starts down 22% Big project planning consents down 19% Source: Insee, FNAIM, notaries of France

37 France DIY H market relatively resilient Electronics (12.7)% Household electrical appliances (4.3)% Furniture (10.8)% DIY (3.7)% Source: Banque de France (comparable store sales)

38 France Continued market outperformance 12% 8% 4% 0% -4% -8% -12% Store development Market Comparable Store 2 new, 1 relocated 4 revamps 57% of stores now in new format

39 France

40 France 12% Brico Dépôt remains more impacted by the market 8% 4% 0% -4% -8% -12% Market Comparable Store Proposition development 2 new stores, 1 relocated

41 France New range development Up weighted arrivage programme

42 France Self help delivers flat profits despite weaker sales Kingfisher France Sales Total + 0.1% Sales LFL (3.5)% Sales Comp. Stores (2.8)% Gross margins Retail Profit Costs saved (CTS) Flat Flat + 1.5pts

43 France Decisive management action on costs Saved 37m in H1, 65m target for full year Costs flexed for slower demand: Store costs 17m Advertising 9m Central cost savings 11m

44 France France Summary Weaker market, Kingfisher outperforming Self help initiatives supporting profit Full year cost savings target of 65m remains on track

45 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital Management, Capital and Returns

46 Other International Eastern Europe roll out on track, trading well H1 New stores LFL % Total sales* % H2 new stores Poland Turkey Russia *constant currencies

47 Other International France Poland 2 priorities Keep growing market share Protect operating margins

48 Other International France Poland grow market share Opened 2 stores with a further 4 planned for H2 H2 store openings

49 Other International France Poland new ranges Decorative/ style Maintaining core DIY strengths

50 Other International France Poland protecting operating margins Gross margins up 70bps due to sales mix and buying scale Cost efficiencies eg power, IT, security (total costs down 20bps)

51 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital

52 Other International China - turnaround on track Rationalise store portfolio 63 stores down to 48 2 stores downsized 2 freeholds under offer nil net cash cost still anticipated

53 Other International China - turnaround on track Revamp store format Good learning from first store revamp Next phase underway 5 more currently trading 7 more planned for H2 Good interest in space for sublet

54 Other International China - turnaround on track Some early improvement, but range development always takes time

55 Other International China a significant value opportunity Long-term, cash generative growth market Good brand and footprint On track to fix the losses Progressing with the future format Extending the trial More focus on range and supplier development

56 Delivering value 7 steps 1. Driving up B&Q UK s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital Management, Capital and Returns

57 Group sourcing and working capital Group sourcing Direct sourcing up 28% B&Q UK and Castorama France (25%) common sourced leisure buy for 2010, 50% common suppliers Good progress on working capital improvements MAT* stock levels down by 8 days (over 80m) Annual reduction target of 50m on track * MAT moving average total

58 Outlook widespread economic uncertainty Consumer fears Unemployment Higher taxes UK higher mortgage costs Positive stimulus House prices stabilised House transactions pickup Management, Capital and Returns

59 Outlook cautious Self help initiatives to continue margins, costs and cash Retain flexibility replen vs fixed buy special order vs stocked options to accelerate initiatives Management, Capital and Returns

60 Summary Strong growth by B&Q Resilience in France and Poland On track in China Strong cash generation Cautious outlook, retaining flexibility Management, Capital and Returns

61 Cautionary note regarding forward-looking statements This document contains forward-looking statements and is therefore subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied because they relate to future events. These forward looking statements include, but are not limited to, statements relating to the Company s expectations around its three key priorities of Management, Capital and Returns and the associated seven steps to Delivering Value objectives. Forward-looking statements can be identified by the use of relevant terminology including the words: believes, estimates, anticipates, expects, intends, plans, goal, target, aim, may, will, would, could or should or, in each case, their negative or other variations or comparable terminology and include all matters that are not historical facts. Other factors that could cause actual results to differ materially from those estimated by the forward-looking statements include, but are not limited to, global economic business conditions, monetary and interest rate policies, foreign currency exchange rates, equity and property prices, the impact of competition, inflation and deflation, changes to regulations, taxes and legislation, changes to consumer saving and spending habits; and our success in managing these factors. Consequently, our actual future financial condition, performance and results could differ materially from the plans, goals and expectations set out in our forward-looking statements. The Company undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise.

62 Q&A Management, Capital and Returns

63 Interim Results 2009/10 Slides will be available at

64 Appendices Management, Capital and Returns

65 Property 3.2 billion as at 31 January 2009 Market Value Yields 2008/ /08 UK 774m 7.8% 6.3% France 1,328m 8.2% 6.5% Poland 529m 7.3% 6.9% China 379m 6.6% 7.7% Rest of Other International 191m - - Total 3,201m - - Note: Book value of properties 2.7bn. Balance sheet values were frozen at 1 February 2004 on transition to IFRS Management, Capital and Returns

66 Financial timetable 2009/10 Q1 H1 preclose Interim results Q3 Q4 Prelims Period 13 weeks to 2 May 23 weeks to 11 July 26 weeks to 1 August 13 weeks to 31 October 13 weeks to 30 January 52 weeks to 30 January Reporting date Detail 02 June Sales and retail profit 23 July Pre-close guidance 17 September Full interim results 3 December Sales and retail profit Communication Conference call Press release Presentation Conference call 18 February Sales Conference call 25 March Full year results Presentation