Travis Perkins plc The largest supplier of building materials in the UK. Year ended 31 December 2012

Transcription

1 Travis Perkins plc The largest supplier of building materials in the UK Year ended 31 December

2 Robert Walker Chairman 2

3 Geoff Cooper Highlights 3

4 Summary Good financial performance within a market that worsened over the course of the year; 4

5 Summary Good financial performance within a market that worsened over the course of the year; Promising signs for H2 2013, but a bumpy ride until then; 5

6 Summary Good financial performance within a market that worsened over the course of the year; Promising signs for H2 2013, but a bumpy ride until then; Continued tactical actions focusing on operating profits and margin; 6

7 Summary Good financial performance within a market that worsened over the course of the year; Promising signs for H2 2013, but a bumpy ride until then; Continued tactical actions focusing on operating profits and margin; Balance sheet priority on cash flow, dividends and debt reduction, with small but potentially significant strategic developments. 7

8 Paul Hampden Smith Financial Results 8

9 Financial overview (All numbers are adjusted unless stated) 2012 % movement Better / (worse) Revenue 4,845m 1.4% Operating profit 327m 4.3% Operating margin 6.7% 0.1% Profit before tax 300m 1.1% Profit before tax (statutory) 313m 16.2% Earnings per share 95.1p 2.1% Dividend 25.0p 25.0% Free cash flow 242m (17.7)% Net debt 452m 22.5% 9

10 Revenue boosted by acquisitions net of disposals Acquired outstanding 70% of Toolstation acquisition (2012) and ex-focus stores (2011) Disposed of Buck & Hickman and PTS & CPS branches in 2011 General Specialist P&H Consumer* Group* (All figures are % change on prior year) Volume (1.5) (0.2) (1.6) (6.6) (2.4) Price like-for-like sales (1.6) (5.6) (1.4) Trading days Expansion / (disposals) (4.4) total sales movement (6.0) * Excludes Toolstation which is non LFL until Inclusion of Toolstation's own LFL performance would increase the Consumer division's LFL performance to (3.1)% for The Group LFL would improve to (0.8)% 10

11 Specialist Division exploited competitor failure in H2 H1 H2 Full Year (All figures are % change on prior year) General Merchanting 1.2 (1.2) - Specialist Merchanting Plumbing & Heating 0.8 (2.7) (1.6) Consumer (excludes Toolstation) (5.8) (5.3) (5.6) Group like-for-like sales (0.7) (1.9) (1.4) 11

12 Overall group margin up 0.1% (All numbers are % change before exceptional items) General Specialist P&H Consumer Group 2011 operating margin Gross margin (0.9) - (0.6) Overheads (0.2) 0.6 (0.3) Synergies Property profits differential (0.2) operating margin Operating Profit 327m (10) (9) Operating Profit 313m General Specialist Consumer P&H Unallocated 12

13 Continuous action taken to trim costs Like-for-like overheads reduction of 26m 1,110m 20m 35m 6m 5m 72m 19m 1,137m 2011 Inflation Actions to protect profit Unrepeated re-org provison One - off credits Expansion Toolstation, ex-focus and other Disposals

14 Sales per employee ahead in all divisions Generalist Specialist P&H Consumer

15 Free cash flow of 242m 69m 15m (17)m (39)m (54)m (27)m (65)m 33m 327m 301m 242m Operating Depreciation Other Profit before non-cash amortisation / movements exceptional items 14m 5m Gain on Movement in disposal of Working Property, plant capital And equipment 0m 1m Replacement capital expenditure Operating Cash flow Change from last year 1m Net interest paid (4)m Income taxes paid Proceeds from Sale of fixed assets 18m Free cash flow (48)m (27)m (39)m (52)m 15

16 131m of net debt reduction 242m (51)m (28)m (23)m 6m (24)m 9m 452m 583m Net Debt Dec m Free cash flow Dividends Expansion capital expenditure Pension contributions Change from last year Other Acquisitions & Financing Net Debt Sales of Dec 2012 businesses 131m 28m 17m 5m (52)m (12)m (3)m (43)m 16

17 Lease adjusted net debt : EBITDAR ratio improved further (All figures are 'million, unless stated) Tangible fixed assets Other fixed assets 2,232 2,148 Net working capital Taxation creditors and provisions (263) (237) Net debt (452) (583) Net pension deficit (58) (35) Net assets 2,308 2,108 Key ratios (covenant basis) Adjusted interest cover 13.1x 15.4x Adjusted net debt / EBITDA 0.95x 1.30x Adjusted net debt (inc. capitalised leases) / EBITDAR 3.2x 3.4x Gearing (covenantable net debt) 16.2% 23.1% Working capital : sales 5.6% 5.3% 17

18 Guidance Market volume decline and pricing in balance H2 better than H1 Property profits 15m Tight cost base: subject to pension pressure and continued IT investment Toolstation profit growth c. 5m Synergy growth c. 5m Year-end debt target of 325m Pension contributions up to 28m from 23m following actuarial valuation Pension scheme accounting (IAS 19) 12m Dividends 18

19 John Carter Divisional Review 19

20 General Merchanting Delivering industry leading returns 2012 Var Positioning Market leader Revenue 1,457m 0.9% Profit with synergies 167m -1.9% Operating margin 11.5% -33bps People 7,512 Sites 636 Divisional Chairman - Kevin Appleton Performance Successfully balanced margin and volume Further gains in major accounts, managed services and Toolhire Tight cost control in low inflation environment Own brand and direct sourcing growth Self Help Initiatives Selective price reductions and stronger promotions Focus on higher margin categories and mix Invest in assets and capability to drive tool hire growth Centralised administration delivering efficiencies 20

21 Specialist Merchanting Distinctive via specialisation 2012 Var Positioning Targeting No. 1 or 2 position Revenue 604m 3.6% Profit with synergies 32m 20.2% Operating margin 5.2% 70bps People 1,665 Sites 215 Divisional Chairman Arthur Davidson Performance Strong profit growth and market outperformance Deeper specialisation driving sales Keyline now in No.1 market position exploited opportunity from demise of competitor Focus on margin and overheads Self Help Initiatives Keyline focus on growth sectors - Utilities and Rail Sourcing and process benefits in Benchmarx Extended category management in CCF Using technology to enhance delivery service 21

22 P&H Creating foundations to exploit market leading position 2012 Var Positioning Market leader Revenue 1,632m -1.3% Profit with synergies 73m -6.5% Operating margin 4.5% -25bps People 5,364 Sites 587 Divisional Chairman Paul Tallentire Performance A year of repositioning and restructuring Unprecedented zero inflation Good progress on integration with synergies ahead Original View Y/E Current View Category development (eg Toolhire in BSS, New bathroom showrooms, Spares) Self Help Initiatives Systems integration complete by end 2013 Expansion of own brand and direct sourcing Full year effect of 2012 restructuring cost savings Further gains in supply chain and administration 22

23 P&H Solfex Leveraging the energy efficiency opportunity SBS (Sustainable Building Solutions) created as platform to drive energy efficiency market focus Unique position with building fabric and renewable technology Established strong technical base to assist customers Strong relationship with Green Deal provider and UK s largest installer to access ECO and Green Deal Completed acquisition of Solfex Ltd, to extend capability and share in a growth market Specialist distributor of renewables technology Access to proven product range Source of renewable expertise for the wider Group 23

24 Consumer Strong performance in a challenging market 2012 Var Positioning Clear propositions for targeted sectors Revenue 1,152m 13.2% Profit with synergies 65m 40.7% Operating margin 5.6% 109bps People 7,125 Sites 458 Divisional Chairman Jeremy Bird Performance Strong profit growth from Wickes Ex-Focus stores ahead of plan Toolstation expansion delivering strong returns Good sales and profit growth from Tile Giant Self Help Initiatives Drive expansion of Toolstation Maintain strong Trade focus in Wickes Extend collaboration between Wickes and Tile Giant Enhanced Wickes multi-channel offer (Q3 onwards) 24

25 Driving Group performance in a low growth & low inflation environment Focus on looking after our people Stay Safe Investment in multi-channel platform and mobile applications Leverage scale through integrated supply chain Adoption of common and efficient processes Extend Direct Sourcing and Own Brand development... 25

26 Extend Direct Sourcing and Own Brand development Creating powerful product brands Trade quality standards Fully integrated procurement and central distribution Strong and unique customer propositions Competitively priced Margin enhancing 26

27 Driving Group performance in a low growth & low inflation environment Focus on looking after our people Stay Safe Investment in multi-channel platform and mobile applications Leverage scale through integrated supply chain Adoption of common and efficient processes Extend Direct Sourcing and Own Brand development Enhanced pricing platform and control within Trade businesses Pilot Toolstation in other Group businesses Drive further value from the property portfolio Exploit unique position to take advantage of ECO and Green Deal 27

28 In summary Divisions well placed to navigate markets Strong market positions Self help initiatives offset low growth of low inflation Strengthened management teams and managed succession 28

29 Geoff Cooper Update 29

30 100bn Construction market output deteriorated through the year 30

31 OUTPUT M (Constant prices 2005) and the public sector squeeze still holds activity back in ,000 6,000 4,000 2, ,000-4,000-6,000-8,000-10,000 YEAR Private Housing (New build and R&M) Public Infrastructure Commercial & Industrial Private Non Housing R&M Source: Travis Perkins analysis of CPA Winter Forecasts 31

32 Lead indicators for H are turning slightly positive Housing activity (mortgage pricing and levels, housing transactions) starting to pick up; 32

33 Lead indicators for H are turning slightly positive Housing activity (mortgage pricing and levels, housing transactions) starting to pick up; Reduced pressure on disposable incomes yet to show in consumer confidence; 33

34 Lead indicators for H are turning slightly positive Housing activity (mortgage pricing and levels, housing transactions) starting to pick up; Reduced pressure on disposable incomes yet to show in consumer confidence; Employment holding up; 34

35 but, if anything, short term conditions are worse... Overall housing starts down nationals taking share; 35

36 but, if anything, short term conditions are worse... Overall housing starts down nationals taking share; Construction orders sharply down in Q4 2012; 36

37 but, if anything, short term conditions are worse... Overall housing starts down nationals taking share; Construction orders sharply down in Q4 2012; Uneven comparators. 37

38 and this is reflected in current trading Figures are a % change of sales for the first 7 weeks: LFL General Merchanting (4.5) Specialist Merchanting 2.0 Plumbing & Heating (5.4) Consumer (7.6) Group (5.1) 38

39 Tactics focussing on operating profit and operating margin Each business balancing gross margin and volume; Pricing environment stable, slightly better in P&H; Currently our volume trend in line with market; Targeting volume outperformance as market strengthens through

40 Tactics focussing on operating profit and operating margin Each business balancing gross margin and volume; LFL costs managed to gain leverage and sustain operating margin; Constant trimming of variable costs; Potential to take out fixed costs; Inflation and pensions add c. 30m costs. 40

41 Tactics focussing on operating profit and operating margin Each business balancing gross margin and volume; LFL costs managed to gain leverage and sustain operating margin; Overall aim is to balance volume, margin and costs to sustain operating margins and maximise cash profit. 41

42 Strategic developments Tidying up our estate, limited new branches; Low value but strategically significant developments (renewables, strategic partnerships); Step-up multi-channel investment, building on success of ToolStation; Continued trial in the Netherlands... 42

43 Summary A recovery has been signalled, but won t set in for a while; We have sufficient levers to sustain expected performance in 2013; Strategy update for analysts in Q4....having created the leader in building materials distribution in the UK, we ll set out plans for exploiting that position. 43

44 Appendix Travis Perkins plc further analysis 44

45 m Facilities at 20 February reflect changes in syndicated loan in April 2013 Interest Facility 18% 33% 67% 82% Fixed Floating Bank Loans Unsecured Senior Notes Facility maturity profile < 1 year 1-2 years 2-5 years > 5 years Bank Loans Unsecured Senior Notes 45

46 No significant change to interest in m 25m - 30m 2012 Net debt movement Committment fee Swap amortisation IFRS Pension scheme accounting changes

47 Number of shares for 2013 EPS calculation Number of shares 239,559, ,388,160 47

48 Analysis of turnover Heavyside - 48% (2011: 48%) Lightside - 26% (2011: 25%) Timber & FP-23% (2011: 24%) 3%(20113%) Credit - 79% (2011: 79%) Cash -21% (2011: 21%) Generalist Yard - 85% (2011: 85%) Direct - 15% (2011: 15%) Delivered - 51% (2011: 51%) Collected - 49% (2011: 49%) Specialist North - 20% (2011: 20%) South East - 33% (2011: 33%) South West -24% (2011: 24%) Midlands -23% (2011: 23%) Consumer Heavyside - 80% (2011: 81%) Lightside - 14% (2011: 12%)Timber & FP - 6% (2011: 7%) Credit - 84% (2011: 85%) Cash -16% (2011: 15%) P&H Yard - 70% (2011: 72%) Direct - 30% (2011: 28%) Delivered - 77% (2011: 76%) Collected - 23% (2011: 24%) North - 39% (2011: 40%) South East - 35% (2011: 35%) South West - 12% (2011: 12%) Midlands - 14% (2011: 13%) Lightside - 64% (2011: 62%) Timber & FP - 21% (2011: 22%) Heavyside - 15% (2011: 16%) Collected - 66% (2011: 66%) Delivered - 34% (2011: 34%) South East - 41% (2011: 42%) North -19% (2011: 19%) Midlands -23% (2011: 23%) South West -17% (2011: 16%) RMI - 100% (2011: 100%) P&H - 97% (2011: 99%) Lightside - 3% (2011: 1%) Credit - 89% (2011: 89%) Cash - 11% (2011: 11%) South East - 21% (2011: 22%) North - 33% (2011: 33%) Midlands - 24% (2011: 23%) South West - 22% (2011: 22%) 48

49 Analysis of turnover New - Public Sector 6% New - Infrastructure 3% New - Industrial 1% RMI - Retail 24% New - Commercial 6% New - Private Sector 16% RMI - Merchanting - Private Sector 34% RMI - Merchanting - Public Sector 10% 49

50 Net exceptional credit mainly from revaluation of initial 30% stake in Toolstation m BSS integration 14.7 Wickes onerous leases (6.0) Toolstation acquisition (39.5) Total exceptional items (30.8) 50

51 Pension deficit increased due to declining gilt yields (All figures are 'million) scheme schemes Group TP BSS Gross asset / (deficit) at 1 January (65) (46) Service costs charged to P&L (7) (3) (10) Contributions Other finance income Tricom transfer (1) 1 - Actuarial (loss) / gain (46) - (46) Gross assets / (deficit) at 31 December (60) (58) Deferred tax Net assets / (deficit) at 31 December (47) (45) 51

52 Summary of branch and store numbers 31-Dec-2011 Acquisition Brownfield Consolidation 31-Dec-2012 Travis Perkins (General) (4) 636 Keyline CCF Rinus Roofing Supplies Benchmarx Specialist Plumbing Trade Supplies (7) 314 BSS Industrial City Plumbing (2) 189 Direct Heating Spares F&P Wholesale (1) 10 Connections Other BSS businesses (3) 10 Plumbing & Heating (13) 587 Wickes * (1) 224 Tile Giant (2) 106 Toolstation ** Consumer (3) 458 Group 1, (20) 1,896 * includes 11 (2011: 10) stand-alone K&B showrooms and 1 franchise store in Ireland (2011: 1) ** includes 5 (2011: 5) stores in The Netherlands 52

53 Divisional breakdown Revenue Profit with synergies Operating margin Generalist 1,457m 1,443m 167m 170m 11.5% 11.8% Specialist 604m 582m 32m 26m 5.2% 4.5% P&H Underlying 1,632m 1,653m 73m 78m 4.5% 4.7% Divested business - 83m - 2m 0.0% 2.3% Total 1,632m 1,736m 73m 80m 4.5% 4.6% Consumer 1,153m 1,018m 65m 46m 5.6% 4.5% Unalloc - - ( 10m) ( 9m) 0.0% 0.0% Total 4,845m 4,779m 327m 313m 6.7% 6.6% 53

54 Travis Perkins plc The largest supplier of building materials in the UK Year ended 31 December