Howdens Notes Market Share Gains; Announces £100m Share Buyback

Howdens has published its full-year results for 2024, noting further market share gains in 2024 and announcing a new £100m share buyback.

Results summary

¹ The information presented relates to the 52 weeks 28 December 2024 and the 53 weeks to 30 December 2023 unless otherwise stated.
² Comprises Howdens' depots in France, Belgium and the Republic of Ireland (ROI).

Highlights¹

• Group revenue of £2,322.1m was in line with last year:
  
  o  UK revenue of £2,247.4m was 0.3% ahead of last year reflecting ongoing market share gains, despite a contraction in the UK kitchen market
  
  o  International revenue was 9.7% ahead of last year in local currency with good progress in building out the trade-only business model in France and the Republic of Ireland.
  
  
• Maintained our industry leading gross margin of 61.6%, which included the benefit of purchasing and manufacturing efficiencies.  
  
  
• We have offset the majority of inflationary costs increases through efficiency savings and cost control while investing in our medium-term strategic initiatives.
  
  
• Investment included 29 new depots and 76 depot reformats in the UK, 11 new kitchen ranges, further digital development and upgrades to manufacturing and supply chain.
  
  
• Profit before tax of £328.1m was in line with last year.
  
  
• Strong cash generation and robust balance sheet with year-end cash of £343.6m.
  
  
• Proposed final dividend of 16.3p, bringing the total for the year to 21.2p, up 1.0%.
  
  
• New £100m share buyback announced today.

Commenting on the results Andrew Livingston, Chief Executive said:

"Howdens performed well in a challenging market, gaining further market share. We continued to invest in developing our kitchen and joinery ranges, opening more depots, and in new digital capabilities. We are also investing in our manufacturing operations and supply chain to support our trade customers with high-quality, easy-to-fit products that are reliably in stock.

"Whilst we anticipate the kitchen market is likely to contract further in 2025, we are confident that our differentiated model, combined with our strategic initiatives, mean we are well placed to gain further market share. Reflecting the Group's strong financial position, we have announced today a new £100m share buyback programme while continuing to invest in the business."

Operational developments in 2024

• Network expansion - opened 29 UK depots and added three in the international business. At the end of 2024 Howdens operated with 869 UK depots, 65 in France and Belgium and 13 in the Republic of Ireland.
  
  
• Depot revamps and relocations - completed 76 in 2024 (including relocations) and 8 more in early 2025.
  
  
• New product introductions - 11 new kitchen ranges were introduced in 2024 to suit all budgets.
  
  
• We continued to develop both our higher priced kitchen portfolio including Paint To Order, and improved our solid worksurface offering. We ended the year with 19 bedroom ranges.
  
  
• Manufacturing expansion - we expanded our capabilities and capacity including the first full year of end-panel and kitchen frontal production, which significantly reduced the volume of bought-in products.  
  
  
• Supply chain optimisation - stock availability remains a key differentiator for trade customers. Through our cross docking (XDC) network and 'Daily Traders' initiatives we achieved a 99.98% service level from our primary sites to our depots.   
  
  
• Digital investment - we completed the rollout of a digitised in-depot stock management system to record and pick deliveries and determine depot stock levels. This enabled us to introduce a nationwide "Click and Collect" service for everyday items for customers in the second half.
  
  
• International development - we strengthened the leadership team which has focused on building out our depot teams' capabilities and existing depot sales in France.

Outlook for 2025

• We expect market conditions to remain challenging in 2025, given the prevailing macroeconomic environment, and anticipate that the UK kitchen market is likely to contract again in the year ahead.
  
  
• We are well prepared for this, and our differentiated in-stock, trade-only business model gives us significant competitive advantage. We are well-planned on our strategic initiatives for 2025 leaving us well-placed to strengthen our competitive position and gain market share.
  
  
• We will maintain a profitable balance between price and volume to support our customers with great value to suit all budgets.  
  
  
• We expect a continuation of inflationary pressures, as well as higher contributions to employers' National Insurance and the increase in the National Minimum Wage from April. We will tightly control our cost base, driving efficiency and productivity gains to support near-term profitability.
  
  
• Our strong cash generation and robust balance sheet allows us to invest in the business through the economic cycle, enhancing our competitive edge while returning surplus capital to shareholders.
  
  
• Howdens is in good shape and well-positioned for success in both current markets and when conditions improve.

Summary of the major strategic initiatives for 2025

• We will open around 20 depots in the UK and reformat around 60 existing depots (including relocations).
  
  
• Excluding Paint To Order ranges, we will launch 23 new kitchens aimed at making more styles available at more price points.
  
  
• We will continue to expand our solid work surfaces offer which is now a leading UK supply and fit business. By the end of 2025 we will have a comprehensive range of 63 decors on sale.
  
  
• We will continue to invest in UK manufacturing, including a project to upgrade our cabinet and panel manufacturing capabilities at Runcorn.
  
  
• We will launch new Customer Relationship Management software to make account management more efficient and productive.

Technical guidance for 2025

Income statement

• The expected annualised cost impact of higher contributions to employers' National Insurance and the increase in the National Minimum Wage which come into effect in April 2025 is around £18m.
  
  
• Foreign exchange sensitivity in COGS of Euro: +/- €0.01 = £1.8m; US Dollar: +/- $0.01 = £0.8m.
  
  
• H1 2024 benefited from an additional 2 trading days which is not repeated in H1 2025.

Cashflow

• Capital expenditure is anticipated at around £125m including our ongoing investments to support future growth.

Source : Howden Joinery Group plc

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