20 2019 Pr Prel eliminary Resu sults 27 th February 2020 1 Howdens 2019 Interim Results Howdens 2019 Interim Results
Andr ndrew ew L Livi ving ngston Chief Executive Officer 2 Howdens 2019 Interim Results Howdens 2019 Interim Results
A A year o of progr gres ess Operating Profit increased at a higher • rate than revenues Sales 4.8% Gross Profit 5.8% Operating Profit 8.3% Price increase in January • More profitable balance between • volume and price Period 11 record sales • Continued to make investments in • the business 3 Howdens 2019 Interim Results Howdens 2019 Interim Results
Ini nitiati tives t s to inc ncrease se volum umes a s and nd pr profits DEPOT EVOLUTION RANGE AND SUPPLY MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 4 Howdens 2019 Interim Results Howdens 2019 Interim Results
Mark R k Rob obson on Deputy CEO and Chief Financial Officer M y CE O a nd Chie f F ina nc ia l Offic e r
Hi Highl hlight hts Revenue, £m Operating profit, £m, and margin, % Gross profit, £m, and margin, % HJ UK Cont Europe 62.3% 1,650 1,000 270 1,583.6 16.4% 1,600 260 950 61.7% 33.3 1,550 1,511.3 986.2 250 260.0 15.9% 1,500 34.0 1,550.3 900 240 1,450 932.2 230 1,477.3 850 240.1 1,400 220 1,350 800 210 1,300 1,250 750 200 2018 2019 2018 2019 2018 2019 HJ UK: +4.9% Profit before tax, £m Uses of ‘cash’, £m Net cash, £m Pension def Cap ex Dividend Share rep 250 270 270 260 260 200 55.2 267.4 260.7 250 250 62.2 125.8 150 240 240 130.5 70.6 230 230 68.3 100 238.5 220 231.3 220 61.1 50 44.3 210 210 27.5 30.0 200 0 200 2018 2019 2018 2019 2018 2019 2019 Preliminary Results 6 Howdens 2019 Interim Results
Reven venue 2019 UK depot revenue £1,550.3m total +4.9% • LFL +2.5% • 2019 Continental Europe depot revenue £33.3m France total (€) +3.8% • LFL +3.1% • 2019 Preliminary Results 7 Howdens 2019 Interim Results
Pr Prof ofit b befor ore t tax Group gross profit margin • 2018: 61.7% • 2019: 62.3% Profit before tax Gross profit Volume & Gross £m £m mix Profit Change (revenue) 54 11 Price £54.0m (revenue) Change 61 £22.2m Volume Currency & mix 986.2 (3) Interest, (COGS) Cost etc. (4) pressure/ 260.7 2 savings, etc. Operating (net) Costs (11) (34) 238.5 932.2 • • 2018 2019 2018 2019 2019 Preliminary Results 8 Howdens 2019 Interim Results
Op Operat ating c g costs £m Change £34.1m GMP equalisation Closure Costs Growth 4 6 726.2 related 8 Older depots 7 New depots 17 692.1 • 2018 2019 2019 Preliminary Results 9 Howdens 2019 Interim Results
Inc ncome s state tement nt £m 201 019 2018 Revenue 1,583.6 1,511.3 Cost of goods sold (597.4) (579.1) Gross profit 986.2 932.2 Operating costs (before GMP equalisation charge) (72 726.2) (688.3) GMP equalisation charge - (3.8) Operating profit 260 60.0 240.1 Net interest 0.7 0. (1.6) Profit before tax 260 60.7 238.5 Tax (51. 1.7) (48.1) Profit for the period 209 09.0 190.4 2019 Preliminary Results 10 Howdens 2019 Interim Results
Earni nings pe s per s sha hare & di dividend nds £m 201 019 2018 • Earnings per share 35. 5.0p 31.3p • Dividend - Final (recommended) 9.1p 9. 7.9p - Full year 13. 3.0p 11.6p 2019 final dividend costing £54.9m 2019 Preliminary Results 11 Howdens 2019 Interim Results
Net cash and cash flow £m 201 019 2018 Opening net cash 231. 23 1.3 241.1 Operating cash flows before movements in working capital 300. 00.8 274.6 Working capital (6 (6.3) 3) (49.7) Capital expenditure (61. 1.1) 1) (44.3) Tax paid (46. 6.2) (45.4) Dividends (70. 0.6) 6) (68.3) Share repurchases (55. 55.2) 2) (62.2) Pension contribution (26. 6.9) 9) (16.3) Other 1. 1.6 1.8 Closing net cash 267. 26 7.4 231.3 2019 Preliminary Results 12 Howdens 2019 Interim Results
Wo Working ng c capi pital • Working capital increased £6.3m – stock up £5m – debtors up £7m – creditors up £6m 2019 Preliminary Results 13 Howdens 2019 Interim Results
Retur urn o n of excess ss c cash h to sha hareho holders • Two year share repurchase programmes: - February 2017: £80m - March 2018: £60m - February 2019: £50m - February 2020: £85m Shareholder Returns 2018 2019 2020 Total Feb 2017 programme 32 - 80 March 2018 programme 30 30 60 Feb 2019 programme - 25 25 50 Feb 2020 programme - - 45 85 Total share repurchases 62 55 70 Dividends 69 71 Total shareholder returns 131 126 2019 Preliminary Results 14 Howdens 2019 Interim Results
Pension Pen on s scheme def eficit Net discount £m rate 197 IAS19 basis Contribution (47) Change Current £20.6m service charge + admin cost + interest 56.6 21 36.0 Asset returns (150) • Dec Dec 2018 2019 2019 Preliminary Results 15 Howdens 2019 Interim Results
Cur urrent nt t trading a and nd out utlook f for 202 020 • UK sales in first two periods up 1.6%, LFL down 0.2% Excluding week 1 +3.5%, LFL +1.6% • Operating expenditure – Cost benefit £6m • Europe – Cost investment £20m • phase 2 Raunds transfer (dual running) • digital development • pension increases • depreciation – Cost pressures • growth & inflation • additional depots inc. France • Capital expenditure c.£80m 2019 Preliminary Results 16 Howdens 2019 Interim Results
Andr ndrew ew L Livi ving ngston Chief Executive Officer 17 Howdens 2019 Interim Results Howdens 2019 Interim Results
Ini nitiati tives t s to inc ncrease se volum umes a s and nd pr profits DEPOT EVOLUTION RANGE AND SUPPLY MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 18 Howdens 2019 Interim Results Howdens 2019 Interim Results
Cus ustomers s s spe pend nding m more w with us h us, more f freque uent ntly 470,000 Credit and Cash Trade • Accounts Sales per customer increased • More transactions per customer • New customer spend up • Profit per new account up • Lower acquisition costs 19 Howdens 2019 Interim Results Howdens 2019 Interim Results
Our Our mod odel el: locally em empow owered d depot t tea eams … … Local Recruitment Local Relationships Local Pricing Local Stock 20 Howdens 2019 Interim Results Howdens 2019 Interim Results
... s ser erved ed by by dedi edica cated s suppl ply y chain Scale Changing requirements 700+ customers Size 2x Peak Trading 21 Howdens 2019 Interim Results Howdens 2019 Interim Results
A key y featur ure o of Ho Howdens ns suc uccess ss is tha hat w we a are trade o onl nly Builder forums held regularly across the country 22 Howdens 2019 Interim Results Howdens 2019 Interim Results
DEPOT EVOLUTION RANGE AND SUPPLY MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 23 Howdens 2019 Interim Results Howdens 2019 Interim Results
DEPOT EVOLUTION RANGE AND SUPPLY MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 24 Howdens 2019 Interim Results Howdens 2019 Interim Results
Ne New de depot f format t to create be best st bus business e ss env nvironm nment nt Vertical racking of product in the • warehouse Space utilisation improvements Potential for productivity gains 25 Howdens 2019 Interim Results Howdens 2019 Interim Results
Ne New de depot f format t to create be best st bus business e ss env nvironm nment nt Open front area connecting depot staff • and customers Visibility and standard of design area • improved Doubling the display space for kitchens • Small items picking area behind the • counter Improved format at no extra cost • Adopted for all UK depots opened in 2019 • Also for those to be opened in 2020 • 26 Howdens 2019 Interim Results Howdens 2019 Interim Results
Impr proved de densi nsities: s: o opt ption t n to ope pen s n smaller de depots Smal Sm aller er depo depots of of c. 6,000 s squ quare e feet eet • 8 smaller f for ormat depo depots open opened i in 2019 • Gives s pot potential for or 850 depo depots in the e UK UK • 27 Howdens 2019 Interim Results Howdens 2019 Interim Results
Num Number o of ne new w de depot o ope peni nings i s inc ncrease sed i in n 201 019 39 ne new U UK d depots inc nclud uding ng 5 i in No n Nort rthe hern rn Irelan and, al all in ne n new f format • 28 Plan to open o open ar arou ound 30 UK UK dep depots this s yea ear • Howdens 2019 Interim Results Howdens 2019 Interim Results
Ro Roll-back op oppor ortunity of of new depot ot f for ormat Initially converted 3 older depots • Park Royal, Swansea & Guilford Trading for 8 months Encouraging performance A further 8 older depots completed prior to • P11 Deployed several capital spends 29 Howdens 2019 Interim Results Howdens 2019 Interim Results
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