REG - Howden Joinery Grp - Trading Update

Howden JoineryAnnouncement

02/11/2023 07:00

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RNS Number : 1060S  Howden Joinery Group PLC  02 November 2023

Robust performance with continued market share gains

Howden Joinery Group Plc, the UK's largest specialist trade kitchen supplier,
today announces a trading update for the period ended 28 October 2023.

 

Current trading

 Revenue growth(1)            Growth vs 2022      Growth vs 2019
                              Total %   LFL %      Total %   LFL %
 UK revenue                             (3.3%)    +42.5%     +30.5%

   - Periods 7 to 11          (2.0%)    (1.8%)    +41.5%     +29.9%

   - Year-to-date             (0.8%)    +0.0%     +40.2%     +29.2%

   - H1 (Periods 1 to 6)      +0.6%
  International revenue(2)

    - Periods 6 to 11         +5.7%     (16.8%)   +101.4%    +14.8%

    - Year-to-date            +9.9%     (12.3%)   +101.0%    +21.7%

+120.7%

    - H1 (Periods 1 to 6)     +28.4%    +2.7%                +40.8%

(1) 2019 is shown being the last pre-COVID year. Same depot basis (LFL) for
any year excludes depots opened in that year and the prior year.

(2) International is shown in local currency. Five French depots were closed
in H1 2022.

(3) 2023 Full Year Profit Before Tax (PBT) consensus published on the
Company's website is an average of £346m with a range of £330m to £365m.

 

The Group delivered a robust performance in Periods 7 to 11, in the face of
continuing macro-economic headwinds. Reported sales were 2.0% lower than 2022
and 42.5% ahead of 2019, with the underlying performance consistent with
Howdens' record sales in the prior year. Reported sales are stated before:

 

 §   Strong sales in the final few days of the period which included a higher
     proportion of 'made-to-order' products (e.g. Howdens work surfaces,
     paint-to-order) where lead times are longer. These will be recognised in
     subsequent periods.
 §   Third party trade sales associated with the Sheridans business, which the
     Group acquired last year which are non-recurring.

 

Sales in the international depots (c.3% of Group revenue) during Periods 6 to
11 were 5.7% ahead of the prior year despite challenging market conditions. We
have disclosed Periods 6 to 11 as it is a more meaningful representation of
our performance due to the previously announced de-risking of our French peak
trading period over two trading periods this year (Periods 6 and 7) rather
than Period 7 only. This approach to peak trading is now consistent with the
UK.

 

Andrew Livingston, Chief Executive said:

"Howdens has continued to trade well since the half year and has gained market
share. UK depot sales during our peak trading period remained consistent with
last year's record performance. This was a significant achievement by our
teams given the macro-economic headwinds and demonstrates the value of our
culture and a differentiated business model. Our balance sheet and cash
generation remain strong and we continue to invest in our strategic
initiatives to develop the operating model, which strengthens our competitive
advantage."

Outlook

Given the Group's continued resilient trading, the Board maintains its full
year expectations for 2023, but recognising a more uncertain macro-economic
outlook this is expected to be towards the lower end of the range of analysts'
consensus forecasts.(3)

( )

Operations

As previously announced, Andy Witts, UK Chief Operating Officer (COO) has
moved to a new leadership role to develop Howdens' existing international
operations. Following a successful handover period, Stuart Livingstone is now
in post as UK Trade Director responsible for UK trade operations.

 

Our differentiated business model and well-established strategy continues to
serve us well through the macro-economic cycle. We continue to invest for
future growth with the opening of up to 33 new UK depots, revamping around 90
older UK depots and around 10 new international depots by the end of the year.
New product introductions for 2023 included 25 new kitchen ranges. Benefits
have been realised from continued supply chain enhancements including the full
availability of our XDC cross-docking facility. Investments have also been
made to expand our manufacturing capabilities.

 

Patent box

The Group previously announced during 2023, its claim under the Patent Box Tax
Relief Scheme which allows companies to benefit from investments made in
intellectual property including new product innovations, with the success of
the claim subject to review by HMRC. Following consultation with HMRC, the
Group is confident that the patent box claim will proceed. As previously
indicated, it expects to deliver an ongoing reduction of c.3% to Howdens
effective tax rate, assuming current marginal tax rates.

 

 For further information please contact
 Howden Joinery Group Plc                        Media Enquiries
 Paul Hayes, CFO                                 Nina Coad, David Litterick (Brunswick)

 Tel: +44 (0) 207 535 1110                       Tel: +44 (0) 207 404 5959
 Mark Fearon, Director of IR and Communications

 Mob: +44 (0)7711 875070

 

Note to editors:

1.   About Howden Joinery Group Plc

Howdens is the UK's number one specialist kitchen and joinery supplier. In the
UK, we sell kitchens and joinery products to trade customers, primarily local
builders, through 808 depots at the end of 2022. In 2022, the business
generated revenues of around £2.3 billion and profit before tax of £405.8
million. Over one-third of Howdens' cost of goods sold are products
manufactured in house at its two principal factories in Runcorn, Cheshire, and
Howden, East Yorkshire both of which have achieved carbon neutral status. At
the end of 2022, Howdens operated 60 depots in France and Belgium and five
depots in the Republic of Ireland.

 

2.   Financial calendar
 Reporting period            Scheduled date    Financial Disclosure (Revenue)

 End of Financial Year 2023  30 December 2023  -
 Full Year results           29 February 2024  Trading Periods 1-13 (2023)
 Trading update              30 April 2024     Trading Periods 1-4 (2024)
 Half Year Results           25 July 2024      Trading Periods 1-6 (2024)

3.   Cautionary statement

Certain statements in this announcement are forward-looking. Although the
Company believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements contain risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. We undertake no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise.

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