Gerry Murphy. Chief Executive Officer

Transcription

1 Gerry Murphy Chief Executive Officer

2 Kingfisher today Strong Q1 performance Retail sales million up 8.5%, LFL up 3.9% Retail profit million, up 36.5% KESA demerger on track for Q2 New name : KESA Electricals plc David Newlands,, Chairman Jean-Noël Labroue,, Chief Executive Martin Reavley,, Finance Director

3 Kingfisher Home Improvement Uniquely positioned in attractive markets Scale 3 rd largest Home Improvement retailer International - European No. 1 and leadership in Asia Market leading retail brands, built on value for money Experienced and focused management Strong financials, renewed focus on returns

4 Strength of brands drives strong sales growth bn CAGR 11.8% Figures without Reno Depot, Casto Germany, Casto Belgium, Casto Brazil, Nomi

5 .. and double digit growth in operating profit bn CAGR 12.9% Figures without Reno Depot, Casto Germany, Casto Belgium, Casto Brazil, Nomi

6 Kingfisher Home improvement operating companies Wholly owned Operating companies B&Q (incl. B&Q Direct) Castorama France Brico Dépôt Castorama Poland Castorama Italy B&Q China Number of stores Sales growth (CAGR ) 16.5% 3.5% 35.2% 36.2% 23.2% 129.2%

7 Our objective driving growth and efficiency Driving business growth Leveraging existing space Aggressive roll-out out of new space Driving operating efficiency Supply chain Sharing skills superior returns

8 Our markets

9 Growing and attractive home improvement market Large, global market Strong growth over last five years Growth forecast to continue Common products Fragmented supplier base

10 Europe & Asia represent 40% of the world Home Improvement market 40bn 130bn 230bn Europe North America Asia Rest of World

11 DIY market growth expected to outperform retail sector.. Sales growth % UK France 4.9% CAGR = 4.5% CAGR = 4.1% 4.5% 4.2% 3.8% 3.8% 3.4% 3.2% 2.8% Source: Mintel DIY All retail

12 Market growth driven by a combination of.. Personal wealth Cyclical factors Housing transactions Socio-economic factors Rising number of households Increased female participation Increased interest in style Affordability

13 Clear link between DIY spend and disposable income Disposable Income per Capita ( ) Greece Italy Spain UK France DIY Expenditure per Capita ( k) Denmark Germany Source: Verdict 2002

14 UK DIY market only marginally affected by housing transactions YOY Change Source ONS, Verdict Property transaction (volume) DIY spend

15 French DIY market only marginally affected by housing transactions YOY Change Property transaction (volume) DIY spend Source Unibal, INSEE

16 Number of households increasing ahead of population growth UK population (m) UK households (m) % % e e Source : EIU

17 Number of households increasing ahead of population growth French population (m) French households (m) % % e e Source : EIU

18 Women are now the decision makers for major purchases in the UK % Conservatory Wooden Floors Fitted Kitchen Bathroom Suite Men Women Source TGI : Had major or equal say in purchase of

19 and are the catalyst for home improvement projects Agreement with attitudinal statements I m always looking for ideas to improve my home Magazines give me ideas for how to improve my home I change decoration at home as often as I can afford to Men Women Source : TGI annual survey

20 UK Media coverage encourages the DIY amateur enthusiast.. Then those with specialist knowledge Gardeners World Gardeners Question time Now the amateur enthusiast Changing Rooms Home Front Charlie s Garden Army Ground Force

21 Kingfisher driving business growth

22 Kingfisher well positioned in key markets UK Market Market size ( bn) 17 Market position 1 Relative market share versus next competitor 2.1 France Italy Poland Taiwan 1 1 na China

23 ..but strategy is to drive business growth Driving business growth Leveraging existing space Product innovation Services Pricing Aggressive roll-out out of new space

24 Scope for significant sales density improvements Sales per square metre index (B&Q = 100) Index (B&Q = 100) Brico Depot Home Depot Leroy Merlin B&Q UK Castorama France Homebase

25 Driving growth product innovation B&Q decking sales ( m) +400% e Market share in %

26 Driving growth product innovation B&Q laminate flooring sales ( m) +300% e Market share in % %

27 Driving growth own brands Performance Power own label range of power tools market leader in the UK with 38% market share Colours Own label range of decorative paint 19% market share

28 Driving growth new services Installation Products Kitchens Bathrooms Fireplaces Windows/doors Sales CAGR 21.8% 13.5% 24.4% 11.1% DIY market CAGR %

29 Driving growth new services Financial services You Can Do It more than 100,000 cards since Nov 02 Homeplan more than 20,000 cards since Nov 02 L Atout ¾ million cards since 1997

30 Bringing down the price of DIY for our customers.. Warehouse price reduction profile (index) /99 99/00 00/01 '01/02 '02/03

31 has driven total sales growth B&Q sales growth vs. pricing index Price index Sales m 88 98/99 99/00 00/01 '01/02 '02/03 0

32 without impacting operating margins B&Q operating margin vs. price index Price index % 10.0% 8.0% 6.0% 4.0% 2.0% Operating margin % 88 98/99 99/00 00/01 '01/02 '02/03 0.0%

33 Driving business growth-new Castorama Management Philippe Tible,, Castorama Chief Executive since February 2003 Entire career in the French retail industry 10 years at Leroy Merlin Patrick Chorein,, new Commercial Director since last week Commercial director at Conforama (PPR Group) for 10 years

34 Driving business growth revitalising Castorama France Short term initiatives Standardised in-store display End caps, cash ends, clip strips and power aisles Pricing of top 500+ products Improved in-store availability Best sellers in all stores Own label offer In-store navigation

35 Driving business growth revitalising Castorama France Store revitalisation Project Wheel type rejuvenation Development of test store (Lille( Lille- Hellemmes) Range, merchandising, in-store layout and navigation, prices Develop during 2003/4 Longer term store blue-print

36 Longer term new store format 3 test stores to re-open in 2003 (La Hénin, Toulon-La Seyne, Chalon s/saône) Range reviews Changes in surface allocation Change price perceptions Standardisation of merchandising (Planogram)

37 Driving business growth- Logistics improvements at Castorama Type Before Direct 82% 62% 35% Distribution centres 18% 18% 30% Cross- Dockings 20% 35%

38 Driving business growth Driving business growth Leveraging existing space Product innovation Services Pricing Aggressive roll-out out of new space

39 Driving growth - new selling space Home Improvement 000m 2 Space growth - CAGR 15% 2,477 3,021 3,383 3,

40 Kingfisher store formats the big box warehouse B&Q UK Warehouse Castorama France Castorama Poland Castorama Italy B&Q China Stores Another snap 10,000 sqm internal 5,000 sqm garden centre 40-50,000 SKU s

41 Kingfisher store formats the medium box warehouse B&Q UK mini- Warehouse B&Q UK Supercentre B&Q Taiwan Stores Another snap 4,000-5,000 sqm 25,000 SKU s

42 Store formats Castorama France 6,300 sqm internal 2,700 sqm garden centre 45,000 SKU s Catchment area = 144,000 households

43 Store formats Brico DépôtD 3,700 sqm internal 1,300 sqm garden centre 15,000 SKU s Catchment area = 150,000 households

44 Our markets are relatively underdeveloped Specialist selling space per capita (square feet) US 3.0 * Germany 1.6 France 1.1 UK 1.0 Italy 0.9 Spain 0.6 Source : Verdict *Estimate

45 Kingfisher improving operating efficiency

46 Improving operating efficiency Driving superior business growth Leveraging existing space Aggressive roll-out out of new space Improving operating efficiency Supply chain Asset leverage Store operations superior returns

47 Improving operating efficiency - exploiting scale Cost Price Reduction programme Established far Eastern buying operation Product range Common product sourcing Own label development Sharing skills and innovation Product development format development In store practices

48 CPR is mutually beneficial, driving volume through lowering price Higher volumes for key suppliers Higher volumes enable lower costs Lower selling prices drive volume Lower costs enable lower selling prices

49 Driving volume through lowering price Product X (B&Q) Cost Price / Unit Quantity Retail Price Net Margin k

50 .. and generating sustainable savings Cumulative net CPR m

51 The opportunity for CPR in France is significant SKU s in store SKU s referenced Suppliers B&Q 40,000 80, Castorama 50,000 >150,000 1,200

52 Improving operating efficiency - exploiting the benefits of scale Cost Price Reduction programme Established far Eastern buying operation Product range Common product sourcing Own label development Sharing skills and innovation Product development format development In store practices

53 Buying offices located near key suppliers Shanghai Hong Kong Jaipur Shenzhen

54 Rapid increase in volumes sourced directly from the Far East Kingfisher DIY shipments m /96 96/97 97/98 98/99 99/00 00/01 '01/02 '02/03

55 .. but still further potential B&Q Castorama 2002/3 10% 4% Group Potential % Estimated savings from direct sourcing 30%

56 Improving operating efficiency - exploiting the benefits of scale Cost Price Reduction programme Established far Eastern buying operation Product range Common product sourcing Own label development Sharing skills and innovation Product development format development In store practices

57 Common product sourcing Current B&Q UK 700 suppliers Castorama France 1,200 suppliers B&Q China 1,800 suppliers Future Core 1000 key suppliers accounting for 80% of purchases global supply > one company

58 Improving operating efficiency - exploiting the benefits of scale Cost Price Reduction programme Established far Eastern buying operation Product range Common product sourcing Own label development Sharing skills and innovation Product development format development In store practices

59 Own label development 2003 Xmas decorations UK, Ireland, France, Italy, Germany, Turkey, China, Taiwan

60 Improving operating efficiency - exploiting the benefits of scale Cost Price Reduction programme Established far Eastern buying operation Product range Common product sourcing Own label development Sharing skills and innovation Product development format development In store practices

61 Driving value Kingfisher World s most international home improvement business: leading brands in attractive markets multiple formats and channels great people Leveraging scale and diversity Substantial organic growth potential Focused on value and returns

62 Gerry Murphy Chief Executive Officer