Howden Joinery Group Plc

and welcome to Haydn's 2025 interim results presentation. I will begin by introducing our performance in the first half and Jacqui Calloway, who joined us in June as our new CFO, will then review our financial results for the period. Welcome, Jacqui. I will then share my perspectives on our 2025 performance to date and our plans for the remainder of the year. And then we'll take your questions. The business has performed well in the first half as we anticipated a challenging marketplace. The results met our expectations for the period and we're on track for 2025. Group sales in the first half increased by 3.2% and were up 4.3% when adjusted for the lower number of trading days this year. In the UK, we believe we gained kitchen market share in the period, which helped us mitigate a small single-digit decline in the overall size of the market. We maintained an industry-leading gross margin with gross profit ahead of last year as we balanced recovery of cost rises with our commitment to providing competitive pricing across the board for our customers. Profit for the period was ahead of last year, increasing at a higher rate than sales. We progressed our strategic plans for the UK which support our trade customers and total sales of our international operations increased significantly. At the half year, we had a total of 948 depots trading, including 871 in the UK. The business delivered strong operating cash flow and we maintained a robust balance sheet. This gives us the flexibility to continue to invest in our growth plans for the business and to provide shareholders with an increased interim dividend for this year. During this year, we also expect to return a total of 100 million to shareholders through our latest share buyback programme, which we announced in February. The interim results demonstrate the strength of our local trade-only in-stock model. A strong product line-up, high stock availability, Industry-leading service levels and a very engaged team have all contributed to our performance, which benefits from the ongoing investments in our strategic initiatives. In the UK, we had a record number of customer accounts as of at the half year, with a similar proportion trading as last year. As well as maintaining an industry-leading gross margin, our total KPI sales volumes were ahead of last year. So far in the second half, our performance has been in line with our expectations. And whilst we have peak trading ahead of us, we are on track with our plans for the business and our outlook for the full year. In 2025, we expected market conditions to remain challenging, and this year has proved to be the case so far. We are well prepared for this, and our customers, mainly self-employed people, are adept at winning business in such times. Delivered by our highly entrepreneurial, well-incentivised teams across the business, I believe that our service-orientated, trade-only, in-stop local model is the right one to deliver sustainable market share gains. Our model is hard to replicate and difficult to compete with, and we have initiatives in place to make it even more so. The addressable value of our principal UK market is some £11 billion, And there are significant long-term growth opportunities for us. We continue to prioritize investments in the business on this basis. So I'll update you on our strategic initiatives, which are key to the long-term development of our business after Jackie has taken you through our financial results for the first half.

Jackie.

So thanks, Andrew, and good morning, everyone. I'm delighted to be here for my first set of results for Howdens, and I look forward to getting to know those of you who I haven't met yet in the coming weeks. Since joining the group in June, I've spent my first few weeks working in the depots, meeting our trade customers and our customer-facing teams, and visiting our main manufacturing and logistics sites. The entrepreneurial culture of the business is very strong, and I've been impressed by both the quality of our people but also the service ethic of the depot teams and their commitment to serving our trade customers. Our strategic direction is well defined and it's very clear that there is significant opportunity to generate shareholder value given the size and attractiveness of the kitchen and joinery markets and the success of the Howden's in-stock trade only model. The business is backed by a very strong balance sheet which supports investment and gives us plenty of options to generate shareholder value. Now turning to the results for the first half of 2025, let me begin by summarising the key highlights of our financial performance. Howden's performed well in the first half as we continued further positive trading momentum and gained market share supported by our ongoing investment in the strategic initiatives. Group sales increased by 3.2% to £998 million, adjusting for the two fewer sales days at the start of 2025 and which were worth around £10 million, the underlying growth rate was a healthy 4.3%. Growth profit was ahead of last year at £620 million and benefited from the price increase implemented at the start of the year, ongoing purchasing benefits and a stronger weighting of the mix of kitchens to joinery than last year. As a result, the growth margin percentage grew by 130 basis points to 62.1%, which is sector-leading and ultimately reflects the value that Howdens generates from its vertically integrated business model. Operating costs were £28 million higher at £498 million, and this was predominantly due to the £11 million of investment in our strategic initiatives and higher labour costs arising from the government's changes to employees, national insurance and the minimum wage, which came into effect in April. As a result, we generated EBIT of £121 million and we grew our EBIT margins by 10 basis points as a result of a continued focus on cost control and productivity, which I'll talk about later in the presentation. And after net interest costs, profit before tax was £117 million. And finally on this slide, you can see that the effective tax rate has also edged down slightly from our previous guidance. This was following further analysis of the benefits occurring from the patent box claim on our cabinet leg, which we make in our Howden factory. So now let's look at sales growth in a bit more detail. We outlined in February that our expectation for 2025 was that the UK kitchen market would contract further, although at a slower rate than in 2024. Given these continued market headwinds, we've maintained a disciplined approach to balance price and volume to support our trade customers and alongside further market share gains, we've made a positive start to the year. Overall, UK revenue increased by 3% to £962 million and was 1.7% ahead on the same depot basis. We implemented a price increase at the start of the year, and the impact of this was around 1% in the first half, and we expect that increase to build through the balance of the year. In our international markets, where we operate from 77 sites, We generate revenue of 43 million euros, which was 12% ahead of 2024 and 9.5% ahead on a same depot basis. The new senior leadership in France is focused on strengthening our depot team's capabilities, particularly account management, and on expanding our range of joinery products to drive depot footfall. We will maintain the number of depots in France at the current level and expect further depot expansion in time. Our Irish depots have continued to trade well since we set up there two years ago and we will expand our footprint there later this year with around five additional depots. Andrew will take you through these initiatives in more detail shortly. Now moving on to profit before tax. Bridging from 2024 profit before tax of £112 million on the left, gross profit was £32 million ahead of last year. As I mentioned earlier, we were effective in implementing price increases early in 2025 that benefited the business by £6 million. The positive impact of volumes and mix was £14 million, and we also continued to recover purchasing benefits from both raw materials and finished goods supplies, which totaled around £12 million in the first half. Kitchen sales were encouraging in the first half. While we remained focused on expanding our leadership position and entry in mid-priced kitchens, we did continue to develop our offering at the higher price kitchen segment where we see significant future growth opportunities. And across all of these three kitchen segments, the margin percentage is broadly consistent, so this remains an excellent opportunity for future growth. We also saw a strong mix of kitchens to joinery, which was a benefit to margins in the first half. Our in-house manufacturing and strategic sourcing capabilities are a source of competitive advantage for us, and our recent investments here have strengthened our competitive position by increasing our capacity and by adding broader and new capabilities. In the first half, we delivered £12 million of purchasing savings from both raw materials and finished goods. These benefits annualised in the second half, so we would expect no further benefit through the balance of the year. We otherwise held our manufacturing cost base flat, offsetting ongoing inflation with further efficiencies. Cabinet and panel manufacturing underpins our kitchen offering. Our Runcorn factory with its high volume, low cost cabinet and panel making capability has always been an integral part of our manufacturing and logistics strategy. And in line with our longer term growth ambitions, we are progressing our plans to develop the site, which will increase the capacity by around 15% and will enable us to maintain our low cost manufacturing competitive advantage. Angie will take you through the plans to expand Runcorn later. Once work on the site commences, we expect the project will take around three years to complete, and excluding the freehold purchase of the site, the expected costs of delivering the plant upgrades, site and plant upgrades, I should say, are within our medium-term capex plans. Overall, operating costs increases were held to £28 million as a net result of managing our costs tightly by continuing to fund the investment in our strategic investments. This disciplined approach supported us edging up our EBIT margins and we delivered profit before tax of £117 million in the period. Operating costs were tightly controlled in the first half. The incremental costs of the new UK depots totaled £5 million, which included the cost of the 31 depots opened this year and in the prior year. We are planning to open around 25 depots in 2025, so the incremental costs will be a bit higher for the balance of the year. We invested a further £4 million in other strategic initiatives to drive growth, and we're also continuing to invest in our international business to drive same-depot growth in France and adding new depots in Ireland. The existing UK depot increases of £6 million related to higher inflationary costs principally in property and labour. We also incurred £4 million of higher labour costs arising from the government's changes to employer national insurance and the minimum wage, which came into effect in April. We will therefore get a full period of these costs in the second half, the annualised impact of which is around £18 million. Other cost increases were tightly controlled, and I'd also highlight the inflationary cost increases of around £10 million have been offset by productivity and efficiency actions taken in the first half. And now moving on to our cash flow. From an opening cash position of 344 million, we ended the period with 321 million pounds of cash, a net outflow of 23 million pounds. You can see from the slide that this was after paying dividends of 90 million pounds and 31 million pounds relating to the share buyback. As we highlighted last year, there was a large movement in working capital in the first half of 2024, and this was due to the timing of both the 2023 peak trading and the 53rd week at the end of 2023. In total in the period we invested around 14 million in working capital for the first half, inventory increased by 26 million pounds and payables increased by 20 million pounds since the year end, which was in line with the normal seasonal phasing of the stock build ahead of our peak trading period. Receivables were 7 million pounds higher as a result of the higher sales at the end of the period. Capital expenditure totalled £43 million as we continue to focus on the execution of our strategic initiatives. The major investments continue to be in depot expansion and reformat programs. Other initiatives included investments in our supply chain and manufacturing sites, as well as expanding our digital capabilities. On cash tax, we were once again able to offset tax benefits arising from the patent box, and you can see that this reflected on the payment of £16 million in the period. Over 2024 and 2025, we will have benefited circa 45 million to cash tax because of the patent box. And in 2026, we expect the cash tax rate to move more in line with the profit and loss rate. Now turning to earnings per share and dividends. EPS in the first half was 16.4 pence, which was 6.5% ahead of the prior year, and benefited from the lower number of shares in issue as we continued to execute the share buyback. We are strongly cash generative and we have a robust balance sheet which gives us the opportunity to both invest for the future as well as rewarding shareholder with attractive returns over a long period of time. Our progressive dividend policy remains unchanged and I'm pleased to announce that the board has declared an interim dividend of 5 pence, an increase of 2%. You can see on the slide around 32 million of share buybacks were completed in the first half. Since the period end was pushed on, and as of last Friday, we've now completed around £48 million of share buybacks. Turning now to our technical guidance for the rest of 2025. First, profit and loss guidance. The higher contributions to employers' national insurance and the increase in the national minimum wage, which came into effect in April, is around £18 million a year. Foreign exchange sensitivity and our cost of goods purchases in euros and US dollars is set out on the slide. The tax rate for the full year will be around 24%, which is a little bit lower than previous guidance, as we've benefited from the higher than expected patent box benefits in 2025. And just to remind you that there were two fewer trading days in the first half compared to last year. We get one of these back in the second half, so there is one less trading day by the end of the 2025 financial year. Looking now at cash flow items, capital expenditure is anticipated at around £125 million, including investments to support future growth. In addition to this, the purchase of the freehold of Runcorn site is expected to be completed in the second half. We expect to complete the share buyback in the second half. So in summary... We've performed well in the first half in a challenging marketplace. We continue to be proactive in delivering productivity and efficiency savings to protect profits, and this discipline, along with the price increase at the start of the year, has benefited margins. Our balance sheet and cash flow remains very strong and support our continued investment in the business, and we expect to maintain this at the current pace in the second half. And since the start of the second half, our performance has been in line with our expectations. We are on track with the outlook for 2025 and we feel well set up for the second half in our peak trading period. We remain confident of delivering growth ahead of our markets while generating strong cash flows and attractive returns for shareholders. Thank you and now I'll hand back to Andrew.