Further market share gains and on track for 2023

Results summary

¹ The information presented relates to the 24 weeks to 10 June 2023, and the 24 weeks to 11 June 2022, unless otherwise stated. The 2022 and 2021 results are presented under IFRS 16, 2019 results have not been restated for IFRS 16.

² 2019 included to show pre-COVID-19 financial performance.

Highlights¹

• Revenue growth of 1.5% against very strong prior year comparatives of +16.3%.
  • UK revenue was 0.6% ahead of last year or 1.6% ahead on an underlying basis after excluding £8.3m of third party sales following the acquisition of Sheridans in 2022, not repeated in 2023.
  • International revenue was 33.6% ahead of last year with continued strong growth in France.
• Industry leading gross margin of 61.0%, normalising from an exceptional level a year ago when we benefited from early implementation of price rises ahead of inflationary cost increases.
• Operating costs, before investments in strategic initiatives, were maintained at similar levels to H1 2022 with £23m of efficiency actions offsetting cost inflation. Profit before tax was £111.9m.
• Robust balance sheet enabled us to continue to fund a further £32m investment in our ongoing strategic initiatives, which accounted for predominantly all the increase in H1 operating costs. These include:
  • nine new depots across the Group and 28 reformats in the UK.
  • further investment in manufacturing capabilities and capacity and in digital platforms.
  • optimisation of our recently completed network of 12 cross docking (XDC) hubs.
• Strong cash generation with £137.8m of shareholder returns completed in the period. This comprised of the prior year final dividend of £87.8m and the £50m share buy back completed in H1.
• Interim dividend up 2.1% to 4.8p per share.
• Continued progress on sustainability with new targets submitted to the Science-Based Targets initiative.
• Full year expectations for 2023 unchanged.

Andrew Livingston, Chief Executive said:

“Howdens performed well in the first half in a more challenging marketplace, making progress on the record year we delivered in 2022. Our trade-only, in-stock model is hard to replicate and compete with, and we are continuing to invest in our strategic initiatives to drive growth.

“We are delivering value to our customers at all price-points as we continue to gain market share and we are well set up for further success in the second half, which includes our Autumn peak trading period. The combination of more local depots in convenient locations, an ever-stronger product line-up, first-class service and high stock availability, continues to represent a compelling proposition for our customers. While we are cautious about the short-term macroeconomic outlook for our markets, we remain confident that Howdens will make good progress in 2023 and our full year expectations are unchanged.”

Operational developments

• Expanding our network with 33 new UK depots, and 90 depot reformats planned for 2023. We also plan to open around 10 new International depots this year.
• Launched 23 new kitchen ranges ahead of our Autumn peak trading period with more emphasis on entry and mid-point ranges which account for the majority of our cabinet volumes.
• Invested in expanding our manufacturing capabilities with new kitchen furniture lines and a second architrave and skirting line is fully operational. We are making good progress in upgrading and optimising our solid surface worktop capabilities to support increased demand.
• Introducing a premium ‘paint to order’ service with 15 new colours in H2 for our most popular ‘best’ kitchen ranges, with two new production lines commissioned and installed to support this.
• Optimised the supply chain to support our in-stock model. 12 XDCs are now fully operational to optimise depot inventory and deliver better service.
• Introduced the ‘Daily Traders’ initiative to ensure the highest availability for our best selling SKUs in the UK depots. These everyday items are a large proportion of our total product volumes and promote customer loyalty and footfall.
• Invested in our digital platform which supports our trade customers to run their businesses more efficiently, and optimises the buying process for end-users.
• Good progress in France. New depot performance has been encouraging and is similar to the historical performance achieved by new depots in the UK.

Current trading and outlook for 2023

Despite the continued challenging macroeconomic backdrop, our builder customers remain busy, with activity levels normalising from the exceptional levels of a year ago. Across the Group, we are maintaining our focus on competitive pricing to support our customers, while balancing inflationary pressures to optimise volumes. Our inventory remains healthy underpinning our in-stock model and, in aggregate, is reducing in line with our expectations as we normalise the levels of safety-stock utilised during the pandemic.

In the current environment, we are maintaining a disciplined approach to managing our cost base to optimise operational performance, while leveraging our robust balance sheet to effectively implement our strategic initiatives. Our results are strongly second half weighted, given the Autumn peak trading period and, since the start of H2, overall revenue trends have been similar to the first half. We are on track with our plans for the business and our expectations for 2023 are unchanged. We remain confident of delivering growth ahead of our markets, while generating strong cash flow, and attractive returns for shareholders over the medium-term.

Notes to editors:

1. About Howden Joinery Group Plc

Howdens is the UK’s number one specialist kitchen and joinery supplier. In the UK, the company sells 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. Around 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. Timetable for the interim dividend

The timetable for payment of the proposed interim dividend of 4.8p per ordinary share is as follows:

3. Provisional financial calendar