Howdens Posts Strong 2022 Growth; Announces Share BuyBack

Howdens Joinery PLC has published full-year results for the 52 weeks to 24 December 2022, advising of strong growth, further market share gains, and sector leading margins.

Results summary

¹ The information presented relates to the 52 weeks to 24 December 2022, the 52 weeks to 25 December 2021 and the 52 weeks to 28 December 2019, unless otherwise stated. The 2022 and 2021 results are presented under IFRS 16, 2019 results have not been restated.

² Same depot basis for any year excludes depots opened in that year and the prior year. See Financial Review on page 4.

³ 2019 results included due to the significant impact of COVID-19 on the 2020 results.

Highlights¹

• Group revenue of £2,319.0m was 10.8% ahead of last year and 46.4% up on 2019 reflecting the strengths of our local, trade only, in-stock business model.
• UK depot revenue was 10.4% ahead of last year and 7.7% ahead on a same depot basis².
• Maintained our sector leading gross margins at 60.9%, with disciplined pricing recovering cost increases.
• Profit before tax of £405.8m, was 4.0% ahead of 2021 and 55.7% ahead of 2019.
• Good cash generation and the balance sheet remains strong with cash at end of period of £308.0m.
• Proposed final dividend of 15.9p, bringing the total for the year to 20.6p, 5.6% ahead of last year.
• £50m share buyback announced today.
• Earnings per share of 65.8p was 23.7% ahead of 2021 benefiting from the previously announced patent box claim, which has been included with the 2022 results.
• Further progress on ESG. Howdens is introducing scienced-based targets in 2023 to reduce our emissions and to achieve net-zero carbon by 2050. 

Andrew Livingston, Chief Executive said:

"Howdens delivered a strong performance in 2022, with good progress on executing our strategic priorities and further market share gains. During the year our teams have been adept at navigating the challenges of high inflation and supply chain disruption, while supporting our customers with a market leading product range, high stock availability and outstanding customer service. 

"Our markets are large and fragmented which gives us a long-term opportunity for growth. In response, we are continuing to expand our depot network, improve our product range, optimise our manufacturing and supply chain, and develop our digital capabilities. We see potential for around 1,000 depots in the UK and we are now selectively expanding our business model internationally in France and the Republic of Ireland. 

"Our robust financial position underpins our strategy, funding investment in our growth initiatives, expanding our manufacturing and supply chain capabilities, and supporting ongoing cash returns for shareholders." 

Operational developments in the year

• Achieved another record sales performance in our peak trading period in the autumn.
• Opened 30 new depots in the UK, bringing the total to 808 at period end. Revamped 82 older UK depots during the year with around 50% of UK depots now trading in the updated format.
• Opened 25 new depots in France (and closed 5) bringing the total to 60 at the period end. Established 5 new depots in the Republic of Ireland.
• Further progress on new product introductions including 21 new kitchen ranges. Sales of new products introduced in 2021 and 2022 represented 22% of UK product sales in 2022. 
• Invested in upgrading our manufacturing capacity and capabilities to support future growth. This included solid work surfaces, architrave and skirting products.
• Largely completed the roll-out of the regional cross-docking network (XDC) serving most of our UK mainland depots, improving product availability.
• Invested in our digital platform which saves our trade customers time and money and supports them in optimising the procurement process for end users.
• Achieved 99.7% of depot waste avoiding landfill at our UK depots and switched substantially all them to renewable energy sources. Our top 27 suppliers comprise around 80% of all of our carbon emissions and we are engaging directly with them to reduce our Scope 3 emissions.

Current trading and outlook for 2023

The following table shows sales in the first two periods of the new financial year to 18 February 2023 in absolute terms, on a same depot (LFL) basis¹.

¹ 5 depots were opened in the Republic of Ireland and 5 French depots were closed in 2022.

We are on track with our plans for 2023 to capitalise on the significant ongoing opportunity to gain further market share. During 2023 we will face strong prior year comparatives and, particularly in the first half, the full year impact of inflationary cost increases and our ongoing investments in our strategic initiatives. This includes 61 new UK depots opened in the past two years, expanding our manufacturing and supply chain capabilities including XDC, ongoing digital development to support our customers and new depot openings in France and the Republic of Ireland. In 2023, capital expenditure will be around £130m, at similar levels to last year. 

While it is still early in the new financial year, sales in the first few weeks have been encouraging in the UK. We continue to seek to maintain a profitable balance between pricing and volume and have implemented a price increase from the start of the year to recover rising input costs. We have a strong product line up and will place considerable emphasis on new product introductions with around 23 new kitchen ranges planned. We are increasing the number of ranges we offer at entry-level and mid-priced kitchen ranges and have refreshed our line-up of higher priced kitchens, a segment of the market where we are under-represented. 

While mindful of ongoing macro economic uncertainty, we are investing in the business for the long term and the fundamentals of our business model remain robust and attractive. Howdens is in good shape and we are well prepared to address the opportunities and challenges ahead in 2023.³ 

³ As previously indicated FY 2023 has an additional 53^rd week in December representing around £17m of additional operating costs with no incremental sales.

Source : Howdens

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