Transformation on track Results for the year ended 31 December 2018 8 March 2019 1
Disclaimer: Forward-looking statements This presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to SIG plc’s business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “anticipates”, “targets”, “aims”, “continues”, “expects”, “intends”, “hopes”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other various or comparable terminology. It is believed that the expectations and statements reflected in this document are reasonable but by their nature, they involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, developments in the global economy, changes in the UK and European governments’ policies, spending and procurement methodologies, and failure in SIG’s health, safety or environmental policies and changes in the market position, businesses, financial condition, results of operations or prospects of SIG plc. No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of this presentation and SIG plc and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statement in this presentation, whether as a result of new information, future events or otherwise. No statement in the presentation is intended to be, or intended to be construed as a profit forecast or profit estimate and no statement in the presentation should be interpreted to mean that earnings per SIG plc share for the current or future financial years will necessarily match or exceed the historical earnings per SIG plc share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this presentation does not constitute a recommendation regarding any securities . No representation or warranty, express or implied, is or will be given by, and no duty of care is or will be accepted by SIG plc, its directors or employees as to the fairness, accuracy, completeness or otherwise of this presentation or the information or opinions contained herein. Neither this presentation or any copy of it nor the information contained herein is being issued or may be distributed or redistributed directly or indirectly to or into any jurisdiction where such distribution would be unlawful. This presentation and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. By accepting this presentation, the recipient agrees to be bound by the above provisions. 2
Transformation on track Meinie Oldersma Chief Executive Officer 3
Today’s agenda ➢ 2018 highlights ➢ Financial review of the year ➢ Delivering the transformation ➢ Turnaround at SIG Distribution ➢ Current trading and outlook 4
2018 highlights • Significant operational and financial progress in the second half of the year as the transformation starts to deliver • Underlying revenue down 1.2% due to challenging market conditions and focus on profitability over volume • Underlying gross margin up 50bps and operating costs down • Underlying PBT (excl. property profits) up 25% to £72.7m (2017: £58.1m) in line with expectations • SIG Distribution turnaround well underway, with operating profit up to £20.9m (2017: £3.5m) • Net debt sharply lower at £189.4m (2017: £258.7m) and headline financial leverage down to 1.7x (2017: 2.3x) • Final dividend of 2.5p per share, bringing total for the year to 3.75p (2017: 3.75p) • Group return on sales (excl. property profits) up to 4.0% in the second half, providing good visibility of further significant progress in 2019, despite macro uncertainties • Board reviewing strategic options for Air Handling 5
Significant financial progress in second half Gross margin Operating costs Underlying PBT £(11)m +70 +81% bps £47m £320m 27.1% £309m 26.4% £26m H1 18 H2 18 H1 18 H2 18 H1 18 H2 18 6 Note: Data represents underlying performance excluding property profits
Management actions deliver step change in UK & Ireland Ireland & Other + • LFL sales down 5.6% reflecting challenging 9% market conditions and focus on profitability H2 Revenue over volume £1,180m SIGE SIGD operating 32% 59% (2017: £1,244m) • Gross margin up 110bps in 2018 from pricing profit up 2.4x to initiatives, particularly in SIG Distribution £31m • Changes to operating model delivering cost (H1: £13m; H2: £31m) reductions Ireland & • H2 operating profit up c.2.4x to £31m Other 14% H2 • Return on sales up to 5.4% in H2 Operating Profit SIGD 47% ROS £44m • Momentum from 2018 initiatives provides good 5.4% (2017: £38m) SIGE visibility of further significant progress in 2019 39% (H1: 2.2%) 7 Note: Data represents underlying performance excluding central costs. Analysis includes SK Sales in SIG Distribution
Stable performance across Mainland Europe Benelux 7% • Weaker H2 trading in France and Germany, as Air Handling 10% expected H2 Revenue France Poland • Good top-line growth in Poland, Air Handling 44% 11% £1,503m operating (2017: £1,472m) and Benelux profit up 19% to • LFL sales up 0.8% and gross margin stable at Germany £33m 28% 27.4%, despite pressure on pricing in some (H1: £27m; H2: £33m) markets Benelux 8% • Operating profit up 19% in H2 Air H2 • Return on sales up to 3.9% in H2 Handling Operating Profit France 25% £60m 47% ROS • Pace of transformation accelerating in France (2017: £60m) 3.9% and Germany, building on UK success Germany Poland 15% 5% (H1: 3.7%) 8 Note: Data represents underlying performance excluding central costs. Analysis includes Ouest Isol & Ventil in France
Air Handling combined as pan-European business • Remaining air handling businesses (Ouest Isol & Ventil/SK Sales) transferred into Air Handling New 2018 Existing Ouest Isol & SK Air Handling division pro forma Air Handling Ventil Sales division £310.1m Revenue £148.2m £140.8m £21.1m • Establishes specialist provider of Operating profit/(loss) £14.8m £6.7m £(2.1)m £19.4m air handling solutions operating in 6.3% ROS (excl. property profits) 10.0% 4.8% n/a ten countries across Europe • Provides an integrated platform with potential for continuing growth and significant profit enhancement • The Board is reviewing strategic options for this business Note: Data represents underlying performance. Existing Air Handling represents the business managed from The Netherlands. 9 Ouest Isol & Ventil is reported in 2018 within France and SK Sales within SIG Distribution
Progress towards medium term targets Medium term FY 2017 FY 2018 target Restated Market growth/ (2.1)% LFL sales growth Maintain market +3.5% share 3.3% ROS (excl. property profits) c.5% 2.7% 10.3% ROCE c.15% 9.3% 1.7x Headline financial leverage under 1.0x 2.3x 2018 provides reassurance that transformation is on track 10
Financial review of the year Nick Maddock Chief Financial Officer 11
2018 key financials FY 2017 FY 2018 Change Restated • LFL sales affected by challenging market Revenue £2,683.2m £2,716.4m (1.2)% conditions in UK, weaker H2 trading in LFL sales (2.1)% +3.5% n/a Europe, and focus on profitability over Gross margin 26.7% 26.2% +50bps volume Operating profit £90.6m £85.6m +5.8% • Gross margin improvement and tighter Profit before tax £75.3m £69.4m +8.5% cost discipline, particularly in H2, deliver PBT (excl. property profits) £72.7m £58.1m +25.1% 25% growth in PBT (excl. property profits) Basic earnings per share 9.3p 8.6p +8.1% • Net debt and headline financial leverage ROS (excl. property profits) 3.3% 2.7% +60bps sharply lower ROCE (post-tax) 10.3% 9.3% +100bps • ROCE continues to improve, up Dividend per share 3.75p 3.75p n/c 100bps to 10.3% Net debt (as at 31 Dec) £189.4m £258.7m 26.8% Headline financial leverage 1.7x 2.3x 0.6x 12 Note: Data represents underlying performance
Market backdrop Construction PMI Positive confidence Positive confidence Positive confidence Negative confidence Negative confidence Negative confidence Dec-17 Nov-18 Jan ‘18 Jan ‘19 Jan ‘18 Dec-17 Nov-18 Jan ‘19 Jan ‘18 Dec-17 Nov-18 Jan ‘19 13 Source: https://tradingeconomics.com/
Underlying revenues… £63m +7.4% £2,779m £66m £2,716m £19m £2,683m £14m 2017 2018 portfolio 2017 UK/ Mainland FX 2018 underlying changes underlying Ireland Europe underlying rebased …reflecting market conditions and focus on profitability over volume 14
Recommend
More recommend