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Half-year Report

23 July 2020

Download the 2020 Half Year Results

 

Download the 2020 Half Year Results Presentation

 

2020 Half Year Results Audiocast Presentation

 

 

SUMMARY OF GROUP RESULTS 1

£m (unless stated)

2020

2019

% change

Revenue

- Group

 

465.0

 

652.6

 

(28.7)

- Howden Joinery UK depots

453.4

638.1

(29.0)

Gross profit

276.1

404.2

(31.8)

Gross profit margin, %

59.4

61.9

(250)bp

Operating (loss)/profit

(9.8)

77.7

(112.6)

(Loss)/profit before tax

(14.2)

78.1

(118.2)

Basic (loss)/earnings per share

(1.8)p

10.3p

(117.5)

Dividend per share

0.0p

3.9p

(100.0)

Net cash at end of period

253.4

217.1

16.7

The information presented relates to the 24 weeks to 13 June 2020 and the 24 weeks to 15 June 2019, unless otherwise stated. The H1 2020 results are presented under IFRS 16 for the first time, 2019 results have not been restated.
2 Same depot basis for any year excludes depots opened in that year and the prior year.

Financial highlights1:

  • Howden Group results were significantly impacted by the COVID-19 pandemic, with Group revenue in the first half of £465.0m (2019: £652.6m). Howden Joinery UK depot revenue reduced by 29.0% to £453.4m (2019: £638.1m), and by 30.3% on a same depot basis2. Split by quarter, Howden Joinery UK revenue was 1.1% higher in the first quarter and 55.9% lower in the second quarter;
  • Gross profit margin of 59.4% (2019: 61.9%), reflected mix changes and the impact of carrying fixed costs during reduced levels of production;
  • Loss before tax of £14.2m (2019: profit before tax of £78.1m), included government furlough income of £21.5m;
  • Net cash of £253.4m at 13 June 2020 (28 December 2019: £267.4m net cash; 15 June 2019: £217.1m net cash), assisted by £76m support from Government schemes, including tax deferrals, and actions taken by the Group to conserve cash.

Chief Executive, Andrew Livingston, said:

"Howdens performance in the first half of 2020 was materially impacted by COVID-19, with sales for the period being significantly lower than last year. The shortfall in sales all occurred in the second quarter, which coincided with the start of lockdown in the UK, and led to us making an overall loss of £14m in the first half. Our performance improved period on period in the second quarter as we found ways to re-open for business safely and with full stock availability. UK Depot Sales in the first four week period of the second half were up 2% year on year.

“During the period our first priority has been the health and wellbeing of our staff and our customers, whose ability to work was curtailed by lockdown. We introduced new ways of operating, provided new services to support our customers during this difficult time and reduced cash expenditure, whilst protecting essential areas.

“Given the COVID related and other economic uncertainties, we remain cautious about underlying market conditions, however we believe a more challenging and demanding marketplace can play to the advantage of our in-stock, local model."

Operational developments:

  • On 24 March 2020, in response to the COVID-19 pandemic, Howdens announced the temporary closure of all its UK depots, along with its manufacturing and distribution sites. From late April, in line with the latest Government guidance and with additional safe working processes in place, Howdens began a phased reopening of depots, manufacturing and distribution. By period 6, all sites were open and operating safely.
  • 13 new kitchen ranges introduced in H1 2020, 11 of which were in stock for the start of the year and synchronised with a promotional offer;
  • Other new product introductions include extending the range of Lamona new technology appliances and 11 new worktops;
  • Further progress on developing the new digital offering, with the new Howdens.com web platform improving brand awareness and leading to increased web visits, online brochure requests and resulting depot contacts, and the online trade customer area seeing a significant increase in adoption and usage;
  • Capital expenditure of £22.3m (2019: £24.1m) included the next phase of our Raunds distribution centre and digital investments.

CURRENT TRADING AND OUTLOOK FOR 2020

In the first four-week period of H2 (Period 7, to 11 July 2020), total sales at Howdens Joinery UK depots rose by 2.2% on the same period in 2019, and by 0.3% on a same depot basis2.

During the course of 2020, we now plan to open around 20 depots in the UK and France. We also intend to extend our mature depot test by refurbishing around 30 older depots to the new format during the year, 18 of which were completed in the first half, and introduce vertically racked product to a further 25 depots without further modifications, five of which have been completed. 

In 2020, we expect additional operating costs of £20m to be incurred in respect of: the one-year impact of running the old National Distribution Centre whilst also incurring the costs of the second phase of our new Raunds distribution facility; increased pension charges; and additional depreciation. These are in addition to the impact of on-going growth in the business, inflationary pressures, new depots and COVID-19. Compared to 2019, we will benefit from not bearing the £5.8m costs of closing our operations in the Netherlands and Germany. Capital expenditure of around £60m (2019: £61.1m) is expected, including the final phase of the Raunds distribution centre, together with further investment in digital, new depots and depot refurbishments.

We continue to be cautious given the economic uncertainties that we face, with our key Period 11 trading ahead of us and with consumer and regulatory reactions to COVID-19 making predictions of future levels of demand difficult. However, despite this, we remain confident in our business model for the future.

2 Same depot basis for any year excludes depots opened in that year and the prior year.

Enquiries

Investors/analysts: 
Guy Stainer
Head of Investor Relations + 44 (0) 20 7535 1164/+44 (0) 7739 778187

Media:
Citigate Dewe Rogerson
Simon Rigby + 44 (0) 20 3926 8522, Kevin Smith +44 (0) 20 3926 8509
Nick Hayns + 44 (0) 20 3926 8503

 

Note to editors:

Howden Joinery Group Plc is the parent company of Howden Joinery (Howdens). In the UK, Howdens is engaged in the sale of kitchens and joinery products to trade customers, primarily small local builders, through more than 730 depots. Around one-third of the products it sells are manufactured in the company’s own factories in Runcorn, Cheshire, and Howden, East Yorkshire. The business also operates a total of 27 depots in France and Belgium.

There will be an audio webcast for analysts and investors at 09.30 UK time today, 23 July 2020. For details and more information, please see: www.howdenjoinerygroupplc.com. The presentation can also be heard via a phone link, where there will be the opportunity to ask questions, details below:

Confirmation code: 1332261

Location

Phone Number

United Kingdom, Local

+44 (0)330 336 9411

United States, Local

+1 929-477-0324

 

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