KGFHF - Kingfisher plc (KGFHF) Q4 2023 Earnings Call Transcript

2024-03-25 14:14:08 ET

Kingfisher plc (KGFHF)

Q4 2023 Results Conference Call

March 25, 2024 05:00 AM ET

Company Participants

Majid Nazir - Investor Relations

Thierry Garnier - Chief Executive Officer & Executive Director

Bernard Bot - Chief Financial Officer & Director

Conference Call Participants

Warwick Okines - BNP Paribas

Ami Galla - Citi

Izabel Dobreva - Morgan Stanley

Kate Calvert - Investec

Grace Gilberg - Jefferies

Richard Chamberlain - RBC Capital Markets

Adam Cochrane - Deutsche Bank

Presentation

Thierry Garnier

Thank you, Maj, and good morning. Welcome to everyone here at the London Stock Exchange and also to those joining online. And I would like to begin by warmly thanking our colleagues across the group for their continued hard work and commitment. I am immensely proud of all our teams for their focus and contributions against a challenging backdrop, helping us to deliver for customers and drive our long-term strategy.

So now turning to our agenda for today on Slide 2, and I will start the presentation with the key messages and financial highlights for the year. And Bernard will then run through our performance in more detail and cover our outlook and guidance for the year ahead. I will then provide an update on our strategy, including details on our new plan for France. And as usual, we'll be happy to take your questions after the presentation.

So now to Slide 3 and our key messages today. Our financial performance for the year was in line with our guidance, which we revised at our Q3 results. Against the backdrop of high inflation and elevated cost of living, we saw contrasting results in our banners. We delivered a positive sales performance in the U.K. and Ireland with our three banners, B&Q, Screwfix and TradePoint consistently gaining market share. And in France and Poland, as we have reported, sales were impacted by the more challenging consumer environment in those markets.

We have stayed focused and continued to execute against our strategic priorities at pace. And in particular, we are making significant progress in the areas of Screwfix, e-commerce marketplace, data, retail media and trade. These are all key drivers of sustained market share gains and our medium-term growth ambitions. We're also today announcing a clear plan to take France to the next level, simplifying the organization and significantly improving the performance and profitability of Castorama France.

Turning to the short term and the year-end, we expect repairs and renovation on existing homes, which are typically around 80% to 85% of our sales to continue to support resilient demand. So, while we start to see early positive momentum for housing demand across our markets, we are cautious on the overall market look for 2024 due to the lag between housing demand and home improvement demand. Against this backdrop, we are focusing 2024 on what we can control. This is delivering our strategy to deliver market share growth, driving productivity gains and continuing to manage our cost and cash effectively.

Overall, our consistent execution over the last four years means we are now strongly positioned for growth in 2025 and beyond. We have made significant structural changes in how we operate. We are more agile, more lean, and we have a high conviction in the multiple growth drivers we are already investing in.

So, turning now to Slide 4 and the financial highlights for the year. Overall sales of minus 1.8% were resilient despite the conditions in France and Poland. This was supported by our positive performance in the U.K. and Ireland. We analyze our business by three broad categories: seasonal, big-ticket and our core categories. Core represents 77% of group volumes and 2/3 of group sales last year. Through the year, we saw a sequential improvement quarter after quarter in the volume trend of these core categories as price inflation tapered. And this is still the case when we look at current trading versus the fourth quarter. This is an important and encouraging trend in the context of 2024.

So, e-commerce growth has been very encouraging, supported by the strong progress of our marketplace at B&Q, which has reached £200 million in GMV in less than two years of operations. Our overall e-commerce sales now represents 17.4% of the group. This is more than twice the level of 2019, which shows how far we have come. We delivered adjusted profit before tax of £568 million and a strong free cash flow of £514 million. And finally, we continue to build on our track record of attractive shareholder returns with around £400 million return through dividends and buyback in the year....

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