Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group sales increased by 47% compared to 2019, demonstrating strong growth post-COVID.
- Howden Joinery Group PLC (HWDJF, Financial) gained market share in the UK, mitigating a decline in the overall kitchen market.
- The company maintained an industry-leading gross margin of 61.6%, showing year-on-year improvement.
- Strong operating cash flow and a robust balance sheet allowed for continued investment in growth and increased dividends.
- A new GBP100 million share buyback program was announced, reflecting confidence in the company's financial health.
Negative Points
- The overall kitchen market is expected to contract in 2025, presenting a challenging environment.
- Operating costs increased by GBP28 million due to ongoing investments, impacting profitability.
- Revenue on a same depot basis was down 1.2% in the UK, indicating challenges in maintaining growth.
- The international division, particularly in France, has yet to reach break-even, with expectations pushed to 2026 or 2027.
- The EBIT margin is at its lowest level in nearly 15 years, highlighting pressure on profitability.
Q & A Highlights
Q: How do you expect the kitchen market and depot sales to perform in 2025 given the current market conditions?
A: Andrew Livingston, CEO, noted that while it's early to predict the year's outcome, the company is well-prepared for market challenges. Despite a contracting market, Howden's has managed profitable growth and maintained strong relationships with builder customers. The company is optimistic about its trading plans and expects to continue outperforming the market.
Q: What is the latest update on the international division, particularly regarding the break-even target for France?
A: Livingston mentioned that the company has strengthened its team in France and is making good progress. While the French market was down, Howden's saw improvement in the latter half of the year. The break-even target for France is projected for 2026 or 2027, depending on depot openings and sales per depot.
Q: Are there any trends in current trading that influence your market outlook for 2025?
A: Livingston highlighted that customers are shopping around more, indicating a demand for value. Howden's is well-positioned with strong margins across all price points and continues to see reliance from builders due to superior service levels and product availability.
Q: How has the refurbishment program for UK depots evolved, and are there plans for further changes?
A: Livingston stated that the depot layout principles remain solid, with displays updated as needed. The refurbishment program has been successful, and the company continues to enhance displays to include new products like solid work surfaces and bedrooms.
Q: What are the plans for CapEx in the coming years, especially with additional capacity building?
A: Paul Hayes, CFO, indicated that CapEx is expected to be around 5% of sales, supporting strategic investments. There may be additional expenditures for land transactions, such as purchasing the Runcorn site, which would be separate from regular CapEx.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
