Howden Joinery Group Plc

Good morning and welcome to the Howdens 2026 interim results presentation. I'll begin by introducing our performance in the first half and Jackie Callaway, our CFO, will then review our financial results for the period. And I'll then share my perspective on our 2026 performance to date and our plans for the remainder of the year. And then we'll take your questions. In the first half, the business continued to advance on all fronts in what remains a challenging marketplace. The results met our expectations for the period and we're on track for 2026. Group sales in the first half increased by 3.3% and we're up 3.7% on a trading adjusted basis. In the UK, the number of kitchens we sold increased and we are well positioned to take market share again this year. We maintained an industry leading gross margin with gross profit ahead of last year and we balanced recovery of cost rises with our commitment to providing competitive prices across the board for our customers. Underlying profit before tax for the period was also ahead of last year, increasing at a higher rate than reported sales with underlying operating profit increasing more so. We progressed our strategic plans for the UK business which support our trade customers and total sales of our international operations continue to increase. At the half year, we had a total of 975 depots trading, including 893 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 provide shareholders with an increased interim dividend for this year. We will also return a total of 100 million to shareholders through our latest buyback programme announced in February. The interim results demonstrate the strength of our local trade-only in-stock model. A market-leading product line-up, consistently 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 the half year with a similar proportion trading as last year. As well as maintaining an industry-leading gross margin, our total KPI sales volume was ahead of last year. Our performance to date 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 year is unchanged. We have a robust business model and operate in fragmented markets with significant growth opportunities. This year, we planned for the size of the kitchen market to be level on the year and we believe this outcome remains the most likely outcome. We are well prepared for the challenges and opportunities ahead in what remains a challenging marketplace and our customers, namely self-employed people, are highly adept at winning business in all market conditions. Delivered by our highly entrepreneurial and well-incentivised depot teams, our service-orientated, trade-only, in-stock model is hard to replicate and it's difficult to compete with, and we have initiatives in place to make it more so. At present, we believe the value of our principal UK markets, which are relatively unconsolidated, is some £11 billion, and that there are significant long-term growth opportunities for us. We continue to prioritise investment in the business on this basis. So I'll update you on our strategic initiatives, which are key to the longer term development of the business after Jackie has taken you through our financial results for the period. Before handing over to Jackie, I will briefly cover our acquisition of DIY Kitchens business for an enterprise value of 390 million, which completed on the 23rd of June. DIY Kitchens is a vertically integrated kitchen business which sells its products exclusively online, principally to end users, particularly those looking to self-manage the purchase of their kitchen. And as such, its online self-service business model is quite distinct from our own relationship-based, trade-only, fully in-stock model. And one through which we can access directly non-trade kitchen purchasers, thereby expanding the group's addressable UK market base It's a very profitable business, cash generative and a growing enterprise like Howden's. It has well invested manufacturing, scalable capabilities and also an entrepreneurial culture. Whilst DIY Kitchens is much smaller than our trade-only kitchen and joinery business, the two are complementary because of their disciplined focus on serving distinct customer bases, which have very different requirements. We believe that they are each the best at what they do. and that both businesses have plenty of room to grow. Accordingly, DIY will operate on a standalone basis from Howden Trade and will continue to be an online-only business focusing on non-trade customers with a differentiated kitchen product which is made to order and displayed in a small number of destination showrooms. In summary, by size, this is an incremental acquisition which is additive through DIY Kitchen's differentiated online self-service model which extends our direct customer reach and is accretive to revenue EBIT and EPS. So having said that, I'll hand over to Jackie who will take us through our financial results for the first half and our guidance also for the full year. Thanks Jackie.

Thanks Andrew and good morning everyone. I'm pleased to present Howden's half year results for 2026 and I'll begin by summarising the key highlights. Howden's first half performance shows the resilience and growth potential of our differentiated, in-stock, trade-only business model. Following our last trading update in April, the business continued to perform well in the final two periods of the half. Group sales increased by 3.7%, adjusted for the one fewer trading day this year. We maintained our industry-leading gross margin, which was 70 basis points ahead of last year, as we balanced price and volume effectively. The margin reflects the benefit of the price increase implemented at the start of the year and our focus on productivity, sourcing and manufacturing efficiencies. Operating expenses were tightly controlled and we delivered an underlying EBIT margin of 12.4% with profit growth ahead of sales while continuing to invest in strategic initiatives that strengthen our competitive position. Underlying profit before tax was up 4.3% to 122 million pounds. The underlying effective tax rate was 23%. Finally, we delivered underlying EPS growth of 5.5%. Let's now look at sales growth in a bit more detail. We maintained a disciplined approach to balancing pricing and volume. While the market remains competitive, our differentiated trade-focused business model Delivered by our highly entrepreneurial local depot teams, supported continued volume growth in a kitchen market we still expect to be about flat this year. Overall UK revenue increased by 3.3% to £991 million and was up 2.3% on a same depot basis. The price increase implemented at the start of this year had an impact on sales of around 1.6%. International depot revenue was 46 million euros. 8.5% ahead of 2025 on an adjusted basis and 7% higher on a same depot basis. In France, sales for the first half continue to increase. Our focus remains on both developing our depot team's capabilities and actively managing the depot estate to optimise performance, including by trialling a more compact depot format that incorporates recent UK format innovations. In the Republic of Ireland, our depots traded well, and we're opening more depots there this year. Angie will take you through our international operations in more detail shortly. Now turning to profit before tax. Starting from profit before tax of £117 million in 2025, gross profit was £28 million ahead of last year. The price increase at the start of the year delivered a £16 million benefit with volumes and mix contributing £12 million. Kitchen volumes increased as we continued to invest in new product introductions and associated kitchen products. Overall, within our cost of goods sold, despite the ongoing uncertainty in the Middle East, we've offset inflationary increases of around $8 million in the first half. Howden's supply chain has remained robust and our predominantly near-sourced, vertically integrated business model is resilient across all macroeconomic conditions. We are maintaining very good ongoing stock availability which supports our trade customers in securing and delivering work and we've hedged fuel and energy expenses through to the end of the year. And we will continue to stay vigilant in the current environment, keeping a sharp focus on productivity, efficiency and disciplined cost control. Looking at operating costs, increases were held to £21 million. balancing tight cost control with a further £9 million investment in our strategic initiatives. This disciplined approach supported an increase in underlying EBIT margin and an underlying profit before tax of £122 million for the half year. Now looking at operating costs in a bit more detail. Ongoing investment in our strategic initiatives was £9 million in the year and this included the incremental costs of the new UK depots which totalled £5 million included the cost of 25 depots opened from the beginning of 2025. We invested a further £3 million in other strategic initiatives predominantly digital. We also invested in our international businesses, for example, by opening depots in the Republic of Ireland. In our existing UK depots, additional costs of £7 million related to a combination of labour costs, property costs and volume increases. We also incurred £3 million of additional labour costs arising from the government's changes to the employer's national insurance and the minimum wage which came into effect last April. I would also highlight that we've offset around £11 million of inflationary cost increases with productivity and efficiency actions. In 2026 we now expect inflationary headwinds of around £40 million in the total cost base, so that's across both cost of goods sold and operating costs. These headwinds are in areas such as commodity, labour and additional property costs. This is 10 million pounds higher than our previous guidance and reflects the additional cost pressures as a result of the uncertainty in the Middle East. As in previous years, we will take a disciplined approach on costs with ongoing actions to offset these inflationary headwinds where practicable. In the first half our actions delivered combined cost savings of around £19 million across operating costs and cost of goods sold. We will also continue to invest in our strategic initiatives to fund future growth and Andrew will take you through our plans for 2026 shortly. Next let's look at the cash flow. Cash generation was strong and we ended the first half with £333 million of cash. In total we invested around £12 million in working capital to support our growth. Capital expenditure was £41 million as planned. Our normalised CapEx spend will continue to be around £125 million a year. And aside from maintenance CapEx, which is around £30 million a year, within this there are three major investment categories that we are prioritising to support profitable growth and strengthen our competitive position. Firstly, manufacturing. We continue to make investments in our UK manufacturing base to enhance productivity, increase capacity and broaden our capabilities. And this includes our plans to develop the Runcorn site which will increase capacity there by around 1 million rigid cabinets. In 2025 we acquired the lease for some additional land and this enabled development work to begin on a new trailer park which frees up space for the expansion of the factory. and in the first half, following clearing and development of this land, the first trailer has now been parked there enabling work to start on the site extensions which is progressing to plan. Secondly, we'll invest in depot reformats and openings. Our updated format provides the best environment to do business with our trade customers and we continue to see attractive investment returns when we convert a depot. And finally, we will invest in digital. We will continue to support our trade customers by upgrade to our digital capabilities to make them more productive and to raise brand awareness. We're also using technology to support new services and ways to trade while delivering productivity benefits to the depots. Moving now on to cash tax. In previous years we've benefited from the prior year tax credits arising from our patent box claim. This is normalising now and looking forward we expect cash tax to be around £60 million A year with an effective tax rate of around 23-24%. Finally our 100 million share buyback is underway with £7 million completed in the first half and a total of £39 million completed by the close of business on Tuesday 21st July. We remain on track to complete the full buyback by the end of this year as planned. Moving on to capital allocation. Howdens is a highly cash-generative business and we continue to take a disciplined approach to capital allocation. Our priority is to invest in and develop a differentiated business model to deliver sustainable profit growth. At the same time, we aim to maintain a progressive and sustainable ordinary dividend, providing shareholders with an attractive ongoing income stream. Following completion of the acquisition of DIY Kitchens, the group retains a robust balance sheet and expects to remain in a net cash position. and going forward we will continue to prioritise organic growth, maintain our progressive dividend and look to return surplus capital to shareholders while maintaining a net cash position. And importantly, following the acquisition, our existing dividend policy and the previously announced 100 million share buyback programme for 2026 are unchanged. The Board has declared an interim dividend for 2026 of 5.1 pence per an ordinary share An increase of 2% which will be paid on 20th November to shareholders on the register on the 16th of October. We continue to expect to remain in net cash position to support future investment and growth and ongoing shareholder value creation. So to summarise, we have performed well in the first half. Our differentiated in-stock trade-only model continues to demonstrate its resilience and growth potential and our strategy is well defined and being executed well. Our robust balance sheet and strong cash generation support continued investment in our strategic initiatives and in the future growth of the business. We are firmly focused on growing our profits faster than sales and it was pleasing to achieve this in the first half. Looking ahead, we are well prepared for our peak trading period in the autumn, supported by our strongest ever product line-up across kitchens and joinery and the strength of our local depot teams, first rate product quality, market leading stock availability and the skill of our trade customers and winning work. We remain well positioned to continue to grow profitably and meet current market expectations for 2026. Thank you and I'll now hand you back to Andrew.

Thank you, Jackie. We believe our markets give us significant longer term growth opportunities. and our strategic initiatives are key to capitalising on these. And I'm going to use them as a framework to review our first half performance and our plans for the rest of the year. So based around our key features of our business model, the initiatives are to evolve our depot network, to improve our range and supply management and to develop our digital capabilities and service and to grow our international operations. So firstly, we will look at depot evolution. High service levels, including local proximity and immediate availability, are very important to our trade customers. We continue to see profitable opportunities to open depots. For the medium term, we continue to see scope for around 1,000 depots in the UK versus the 891 trading at the end of 2025. This year, we expect to open around 25 more depots as compared to 23 in 2025, of which two were opened in the first half Last time I took you through the latest iteration of the updated format and the format enables us to provide the best working and trading environments and to make productivity and space utilization gains in a cost effective way. The format innovations have strengthened our competitive position and our program to revamp depots opened in the old format is now well advanced. By the end of 2025, including relocations, we had revamped 410 depots to an updated format. These principally comprised of conversions of our larger and longest established depots. This year, including relocations, we plan to update the format of around 30 more depots and computed 10 of these in the first half. So by the year end, We expect to have revamped around 66% of the depots which opened in the old format and to have around 75% of all UK depots trading in the updated one. We're also modifying the layers of some of the depots converted earlier in the programme so that these incorporate more of the latest format innovations. The next point is range and supply management. Sales of new product are a significant contributor to our performance. The first half sales of product introduced this year and over the preceding 18 months represented over 15% of the UK product sales. A higher proportion of sales than for the comparable 24 months in H1 last year. And value for money always features in purchasers buying decisions and we're committed to providing our customers with market leading, easy to fit and fairly priced product. Given the pressures in the household budget, price featured predominantly in 2025, we expected to do so again this year. With an emphasis on value for money and choice at all price points, our offering is well positioned to take advantage of this. This year's new kitchen programme makes more colour styles and finishes available to more budgets, principally at entry and mid-level price points. Excluding Paint to Order, we have 23 new kitchens so far this year and we entered the second half of our entire offering with such kitchens organised around 11 families with a similar kitchen count to last year. Elsewhere we're innovating other long established product categories and adding more colours and styles to our fitted bedroom offering launched two years ago. This year we have A total of 13 new kitchens for our established entry and mid price families, most of which have been in depot since the start of the year and all of which are now in stock well ahead of our peak trading period. For our entry level families, we have introduced five new colours which are popular elsewhere in our offering, including Greenwich, Innatural Walnut, which we launched at the start of the second half. At the mid-level, we've launched nine new kitchens for our established families, including five more colours for our more modern shaker kitchens. So Froome, which going forward replaces Chelford in our line-up, and recent additions to these families include Froome in reed green and Halesworth in mist, both shown For the second half, we also have our new mid-level contemporary family, Winterton, for the first time. Winterton's available in five colours, including gloss sandstone and gloss white. Our higher price kitchen portfolio comprises four families, including three shaker-style families, which are collectively marketed as classic timber kitchens. In the first half, the proportion of our classic timber kitchens sold paint to order continued to increase. For the second half, we've refreshed our paint to order palette with four new colors. And for our top end in frame shaker family Ilfa Coombe, which is exclusively available in paint to order, we've added a new beaded style door frame option as shown in the picture. This year, we have also migrate in two of the leading paint water colours over to the in-stock offering of our Chilcombe and Elmbridge families. And for the second half, we have also just launched our new natural walnut effect cabinet, which replaces our croft grey cabinet and is our first cabinet refresh in several years. The natural walnut cabinet complements a wide colour palette can be specified for all of our kitchen families and offering it from stock for immediate delivery is a first for the UK mass market. Solid surface work tops which are often but not exclusively associated with the sale of higher priced kitchens continue to represent significant opportunities for the group. Our offering in this category where we trade as Heidens Work Surfaces or HWS is underpinned by our in-house manufacturing capability, which is among the largest of the UK, helping us offer rapid templates to fit times. In recent years, we've increased the number of decors we offer in this service. And for this year, we've introduced clearer, simpler ranging and more delineated pricing to demonstrate the value that we offer at all price points. Ahead of peak trading, Our total offering will comprise a similar number of options to last year. In 2026, we've continued to upgrade our offering in other categories, including our own label brands, which complement the third-party brands and products that we sell. In appliances, we've put in place a major refresh to our Lamona brand, which is one of the leading integrated appliance brands in the UK. And we've modified the design, lowered the prices of a suite of high-volume products without compromising these products functionality and updated the design and specification of several higher priced products including washing machines, fridge freezers and cookers. Elsewhere in flooring and ironmongery, we've extended the offering of our own label brands, Oak and Gray, Fuller and Forge and added new product finishes, designs and subcategories. As well as being substantial businesses, doors in Joinery remain a key footfall driver of building product for us. For our door lineup, new product includes a new premium range of Haydn's branded solid engineered doors and in Joinery we've developed the subcategory extensions into wall panelling, stair parts and loft spaces which we initiated in 2025. As one fitted bedroom sales continue to increase, as well as representing a source of incremental sales and profit, they help us foster customer relationships. Installing fitted bedrooms suits the skills of our customers who fit kitchens and a significant portion of total bedroom sales compromise purchases either by new customers or by customers who had bought from us relatively infrequently. We develop our bedroom ranges in-house utilizing our existing designs and supply infrastructure and they have a high cabinet content which matches our manufacturing capabilities. Our 2025 offering comprised bedrooms in five leading family designs drawn from our kitchen portfolio including a new family Clark & Well launched during the year and this year our focus is on entry and mid-level bedrooms which have a total of five new ones including and including for the second half, a new mid-level family, Winterton, which was just launched in three gloss colours. Howden's is an in-stock business and the trade tell us that a high level of stock availability is one of the key reasons that they buy from us. The investment in our XDC network, which enabled us to offer a next-day delivery service and other initiatives, including daily traders, facilitate exceptional levels of service. In the first half, deliveries totaled some 30 million pieces, and our service level from primary to depots was a world-class 99.98%. Our in-house manufacturing capability, which is a source of competitive advantage for us, and we keep under review of what we believe is best to make or buy, balancing cost and overall supply chain availability, resilience and flexibility. and investments in manufacturing in recent years have strengthened our competitive position by increasing our manufacturing capacity and by adding broader and newer capabilities. Our Runcorn factory with its high volume, low cost cabinet making capability has always been an integral part of our manufacturing and logistics strategy. Our three year development programme for Runcorn site is now underway and is proceeding as planned. In line with our long-term ambitions for the business, the program will give us at Runcorn more capacity, more flexibility, broader capability and lead to lower COGS than would otherwise have been the case. Turning to our digital platform, we use digital to reinforce our model of strong local relationships between depots and their customers. We use it to raise brand awareness to support the business model with new ways to trade with us and to deliver productivity benefits and more leads to our depot teams and our customers. In the first half, new registrations for our online account facilities which provide efficiencies and benefits for customers and depot staff alike increased. New registrations totaled some 56,000. Around 62% of customers had an online account at the year end with 80% of trade users regularly looking at their individual and confidential prices. Customers with an online account have on average continued to trade with us more frequently and spent more than non-users. We saw high levels of engagement with our web platform and growth in our social media presence which also stimulates interest in viewing our products and services online. and site visits totaled 11.3 million in the period. Among kitchen specialists, we continue to have the highest number of fitted kitchen site visits in the UK. And the time spent viewing pages and the number of pages viewed per visit were at a consistently high levels. Across the leading social media channels, our follower base is at over 800,000, that's up 17%. with about 4.6 million engagements a month. We are seeing increased usage of our upgraded Click and Collect service for everyday products and new account management tools introduced last year is helping depots manage their relationships more efficiently and productively. This year, our new depot pricing and margin tool, PAM, is operating in all UK depots. and it was designed in-house and PAM makes depot pricing management easier and more effective. It provides comprehensive data for depot teams to make more informed pricing decisions with a higher degree of confidence and enables depots to access quickly the impact on margin of those price changes. Depot feedback has been very positive and we see both more bespoke local pricing and improvements in depot margin on the product incorporated in the system. And finally, international. Total half one sales of our operations based in France increased following a significant year-on-year increase in half one last year. We now have in place an experienced leadership team adept at depot management in tough market conditions. The business has continued to respond positively to measures taken to improve existing depot sales performance. In 2026, we continue to focus on both developing our depot teams capabilities, particularly account management, and actively managing our depot estate, including by closures and relocations where necessary. As we look to optimize the existing depot performance, as we guided last time, we anticipate closing up to six depots in suboptimal locations later this year. having closed two such depots last year. Alongside this, we're trialing a more compact version of our format. It is under half the average size of the current depots in France, has lower rental costs, and the layout incorporates recent UK format innovations. In the first half, we opened one of these depots in France to the west of Paris, and in the second half, we're intending on opening another one serving the city of Tours in the Loire Valley. Overall, we expect to end the year with around 60 depots trading. Half-won sales in the Republic of Ireland were well ahead of last year and we are opening more depots there in 2026. The Irish market suits our differentiated model and one which sets us apart from the incumbents. We commenced trading in the Republic of Ireland in 2022 using a similar format location strategy to down in France with the local team supported by our UK infrastructure and our digital platform. By the end of 2025 we had 16 depots trading including nine clustered around Dublin and three serving Cork. In the first half of this year we opened two more depots which respectively serve the areas around Wexford and Athlone and in the second half we expect to open at least three more which would increase the number of trading to 21 depots by the year end. So for 2026 we are well planned including on our strategic initiatives as day to day we deliver value to customers across all price points and product categories. We already have 23 kitchens in stock well ahead of peak autumn trading plus a very competitively priced paint to order kitchen offering and our lineup in other product categories is the best that we've had in my time at Howdens. We have a program of rooster promotions in place to keep Howdens at the front of the trades mind together with other price initiatives and we continue to improve service and availability and increase functionality We offer online to the benefit of our depot customers and end users alike. During 2026 we plan to open around 25 depots in the UK and reformat around another 30 existing depots. We expect to end the year with around 80 depots trading in France, Belgium and the Republic of Ireland. And finally in the second half, BRY Kitchens will contribute to the group's results for the first time and we're looking forward to working with the team there. Lastly, outlook. Whilst we have peak trading ahead of us, we're on track with our plans for the business and our outlooks for the full year is unchanged in what remains a challenging marketplace. We plan for the size of the UK kitchen market in 2026 to be level year and year, which in our view remains the most likely outcome. and we are well prepared for the challenges and opportunities ahead. We aim to retain a profitable balance between price and volume as we continue to maintain competitive pricing whilst aligning operating costs and work with suppliers to keep product and input costs controlled. We're confident that our business model enables us to address the opportunities in the market across changing conditions and in summary we're well placed to outperform our competitors in 2026 as we both continue to invest in our strategic initiatives and return a further £100 million to shareholders through our latest buyback programme. So thank you very much for listening and Jackie and I will now take your questions.

Thank you.

Yeah. Trade Fest is the all-important period, of course, and you can't have a good year in Haydn's without delivering Trade Fest. We put a serious level of work into making sure the depots are in the right place. First thing is having the right product lineup for the period, and I think we are as well set as I can possibly think that we would be. We've got a brand new cabinet, we've got 23 kitchen ranges, we've got a lot of day-to-day products. I think the team has done really an exceptional job of lining up the product offering for the peak. The second thing is making sure the teams are as incentivized as well as possible and understand the trading rhythm we need to hit as we go into it. So we've done this year a similar thing that we did last year. We did 10 regional boards. We completed them just at the back end of the first half. We went around the country. They, probably to imagine, 100 PEPA managers in a room per region. And I would say, you know, the feedback is just as strong and the fighting spirit is as strong as ever. So I walked away from all of those sessions very encouraged by the second half plans for Tradefest. It's also the second year that we're doing this event and we'd have taken some lessons out of last year to make it even better so we brand it Tradefest but it's better than a sale and It struck the chord with our depot managers very well. We've actually branded it. We've registered the Name Trade Fest and we're doing it again this year. And it's really focused on helping the builders to sell our products. It's absolutely into the core of the model of the builders. you know really being successful through the event and it celebrates sort of their work and then bringing the work which is the most efficient thing that we can do so you'll see our builders doing a lot on social media even more than last year from a stock availability point of view we're in terrific place on it I mean it's just the advantages of being so focused on vertical integration and all the work we've done on our vertical integration capabilities have meant that you know when we sit around as an exec and talk about what's missing we talk about what's missing and there's very little missing in our entire product offering for Peak so we expect to run service levels through Peak at 99.98% all the way through and that's a key thing for delivering this Peak that can't be replicated by the competition because we're the only people with stock on the ground able to get kitchens out before before Christmas. So I feel we're as well set up as we possibly can when I look at the lead indicators on it and momentum in the business. There's enough there to do what we want to do for Peak and deliver the guidance that we've got. Having said that, the market's tough, but our teams are so able to to fight, you wouldn't want to be up competing against them. So, yeah, they're well-incentives. The incentives look fantastic for the teams this year.

Then in terms of inflation, we are guiding an additional $10 million of inflation this year. It's primarily as a result of the Middle East war, so we've seen cost price increases primarily around commodities, particularly raw materials, timber. So anything that's got a sort of energy fuel impact. So that's going to hit our cost of goods sold, primarily. It's in our stock now, so it's already happening. It unwinds into the P&L in the second half of the year. We will look to offset all of that. So we've guided in line with expectations today. So there's a little bit more price coming through in the second half, but also productivity is a big part of how we offset inflation. To your question on go forward, this is something we've been good at doing in the past. If you think about productivity, it's three areas. It's better buying and cost of goods sold. The buying team over the last few years have done a fantastic job and they'll continue to do that going forward. The manufacturing teams are very good with cost efficiencies in the plant, so areas like reducing waste, better productivity on headcount, so that'll continue. and the third area that we're very focused on is in our operating costs. So that could be logistics where every year we see our logistics teams doing a good job on cost savings, better procurement, again people savings. So something we've done well in the past and will continue to do well in the future. We'll always look to offset our cost increases with productivity efficiencies.

Brilliant, thank you so much.

I didn't realise it was me, thanks. Emily Biddles from Barclays. I've got three, please. The first two are on DIY kitchens. I just wondered if you could give us a sense of what you think the addressable market is for that business, sort of how big do you think it could potentially be? Secondly, how does DIY kitchens acquire customers? Obviously, the core business has a trade to sort of promote Howden's, but is there a sort of advertising expense we should bear in mind here, or something that might change in the group because of the existence of DIY? and then thirdly, you obviously delivered 5.5% profit growth in what looks to be a flat market in H1. If we wanted to be really ambitious and sort of imagine that the UK market grows at some point, is there a list of sort of strategic initiatives that you have in the back pocket that you would like to be doing in a stronger market or

are you doing things that the pace should like to be and actually if we think about incremental volume we should look at that sort of flopping through to the bottom yeah well I'd go with the third one first because I think that's exactly right I think one of the things that we've been quite distinctive on here is pressing ahead with our strategic initiatives and investing well into the business to do all of the right things whether it's manufacturing revamping the depots investing in digital the stuff I've covered and you know if the market got into that place we don't see it this year but if the market got into that positive place I think it looks extremely attractive actually for both businesses so I think we're extremely well placed when it comes back and you know others who may have backed away from space we've not we've opened up more space those who may not have invested in manufacturing but we've done the opposite and we've invested extremely well in our manufacturing and in one of the big plays we've made and why we're you know incredibly confident in the Howden's business model it is making the investment into the Runcorn plant that gives us capacity to manufacture more cabinets for the future that's a long-term play that we're very proud we're making So I think all the metrics look incredibly attractive when the market turns a wee bit in our favour and I don't think we need to do anything differently. We've always spoken about the kitchen market being split in two but we talk about how it's sort of addressing the whole market but you know DIY clearly addresses a different type of customer to the items customer and as I've got into the business and understood it you know more than you do through due diligence process I think I'm absolutely bang on in what I thought which was this is a sort of canny customer if you like who is not having bought their first kitchen probably their second or third They're confident about doing it, they want to do it themselves, they may have a builder there and they're very sharp on price. We know that DIY doesn't affect the housing business. If you take the two DIY showrooms, Whitney and one in Yorkshire, and you track what's happened to the depot performance around those, showrooms there's absolutely no impact if anything it's slightly positive because you know customers come to the area so you know a third showroom will open up for DIY in Livingston which is in between Edinburgh and Glasgow that was due to be opened up in January next year we bring a bit more capability to it all and it'll be pulled forward until the end of October this year sort of a third one of the Beautiful things I love about this profitable model is you know a lot of it is also being done through social media and some lower cost forms of communicating with customers and DIY also it's word of mouth and a lot of it is on social media it runs a very strong reputation with its customer base most of their work is done they do pay a little bit on pay-per-click but it's very efficient. Most of it's around natural search and I do not propose that we start spending more on that. So it's more of the same. The showrooms help but I don't want a big network of loads of showrooms. I want a number of large destination showrooms that people are happy to drive a couple of hours to. So I would say no sort of change in the metrics there.

Thank you.

Where did we go? Thank you. Grab the mic.

Thank you. It's just two questions from me. You've obviously talked about the market backdrop being challenging. So just in that context, I wondered if you're seeing any signs of down trading to lower priced kitchens and if there's some sort of mixed effect we need to factor in over the next couple of months. And then the second question, I do appreciate it's early days, but in terms of trends that you've seen against this sort of challenging backdrop, is there any discernible difference in terms of the levels of demand or the lead indicators between DIY kitchens and your incumbent business?

Yeah. I mean the lovely thing about how we set up our kitchen model is we we love cabinet volume and it's from a margin point of view our margins are pretty level whether you're at opening mid or high price points in Hyden so you know for us it's important that we drive you know significant cabinet volume growth. I would sort of expect but not really to you know any kind of Overall numbers to affect the business. I would expect us to remain particularly strong in the mid-end and opening price has always been very robust for us through all of this cycle. And the better end has always been sort of brand new business territory for the business. So we progressed on all three in the first half. We had noticed a good pickup in the mid-range and I'd expect that continues as we go into the second half. I think you see customers doing things like, you know, they want the solid surface, so they might trade down on the door, but the overall kitchen value is essentially just putting the emphasis in different places. I think it's too early for me to comment on the IY thing. I mean, I think from a demand point of view, we're very comfortable with, you know, what we have seen post the acquisition and the momentum of the business. But, you know, we got the keys four weeks ago. Julian Lee is in there doing a great job settling down the team and organising how he wants to organise to get more volume out of the business and I think it's been sort of a textbook handover from Alf and Claire to Julian but also in our manufacturing operations Julian's handed over to his number two and that has been as smooth as it possibly could have been.

Thanks, it's Charlie Campbell of Stiefel. I've got a couple of questions, please, if I can. You referenced the best range ever. I just wondered if you could sort of show us your workings a bit behind that, because that's an intriguing statement. And then secondly, just wondered what the impact of PAM has been already, and how should we think about going forward? Is that a tool that helps depot managers secure sales by Reverse Engineering to the Right Price or is it about giving less away and discounting?

All of that actually. Look, I commented on our best range ever. I think what the team have done superbly this year is we've continued to move the Howdens offering of being a sort of slow follower maybe eight years ago to being really on the front foot around product and how we test product in Regions and then know for certain when we launch something how well it's going to sell. So our accuracy on forecasting of new ranges coming through is very good. So we say it in the maths, we know how much new innovation we've got. We measure our new product introductions as a percentage of sales. We love innovation because it keeps the margin strong as we've seen in the first half. and we've got gear that our depot teams can sell that nobody else has got in the market and a good example of that would be the oak cabinet that we've launched and James McKenzie when he joined the business you know had been working with the team and doing the rounds and we'd seen so much of it in the upstream in the shows and with suppliers and with some competitors in Europe we decided just to go for the for the cabinet new colour and that's really a year ahead of when we plan to do it. So that's a big feature of something new that the depots will get a creative margin for because it's so fresh to the market. And then the range is just a constant refinement and we've advanced ourselves so much further than the rest of the market with the product range that's right for us using the lessons of colours that we put in paint to order that we know where they're safe options to go and put into the core range. There's two ways we fuel our thinking into the core range and one of them is find the gap, but the other is understanding what colours are working in paint to order where you're not investing any stock, you're just investing in effectively paint colours and learning what to do there. I made that statement this year, I probably could have made it last year because I think we're constantly improving every year. The PAM tool primarily affects non-kitchen product and where we've grown quite a lot our most actively traded product areas the stuff behind the counter you know everything to help the builder get his job done and there are others who are very transparent in price around those areas and quite a lot of product categories for the teams to get around so we put PAM, which is a price and margin tool built on the lessons from our stock management tool, which we call TED. So PAM primarily does pricing on everything outside of kitchens, but does some elements of basic kitchens like sinks and taps. But the teams can quite easily see where the pricing is of that product with competitors, but also see it with immediate depots. And they can see that sort of price volume mix So they go in and actively use it. It's important for a couple of reasons because customers can go online now in their confidential area and they can see their housing's pricing so it has to be right. It has to be right with the local depot. And they can also jump on somebody else's website and find out what the price is. Very difficult to do it in the kitchen but on long kitchen stuff it is so but it's been a very very helpful tool for the depot managers and I think it increases over the long term real confidence in our pricing on long kitchen product and the results will show that it's working. Thanks. Geoff, do you want to go next?

Sorry, shock. Two questions really. First, clearly DIY kitchens is a bit of a departure for Howden and its DNA of not really acquiring things over the years. Has it raised any eyebrows within your existing workforce in terms of changes of direction or not? And the second question, the thousand UK depots, how is availability of the sites from here to there looking for you? And how much of this is about sort of you know genuinely fresh territory enabled by XDC versus infill just trying to get a sense because the incremental returns from the depots appear very high despite you sort of getting towards the thousands.

Yeah great questions. Look the DIY kitchen I'll just be absolutely clear on this it is not a change of direction for the Hyden's business model and when I went on the calls with all the depot teams and this is So the genuine feedback was they just felt pride amongst the teams that we've been able to buy this business and grow it out. Our teams see it as an entirely different business model. You know, they know that what they do in Howdens is about, you know, we plan for the builder. We work in a triumvirate between the builder, the end consumer and our depot teams. We're there all the way through the project. It's relationship type business. and DIY is a transactional business. Haydn's is trade only and DIY is online only and never the two will meet and I've given the teams the commitment that it will not be the same year sold across both businesses but it's an incremental opportunity. So we settled the teams down. There was no issue. A couple of questions came back and I said I want you to forget about it and that's what they've done. So when we did the full day regional boards there was not one question from any one of the teams in any of the regional boards Thank you for joining us today. No eyebrows. Amongst the supply base, you'd imagine a lot of eyebrows went up. You know, one of them described it to me as a clever chess move and you hadn't expected it. And it sort of seen us maybe buying, you know, other types of businesses. But, you know, we've not bought anything. I mean, you could argue that the worked up business, that sort of a make versus buy type decision, it is. The first time we bought something, and I was very, very thoughtful about doing it for quite a long period of time, and I got to know Alf and Claire for about five years before we made the move, so I was just very conscious of what we were doing. I love Hidens as a business, and my absolute focus is on growing the Hidens business. There's loads of runway for us to do that, and DIY I think is just so interesting because who knows what's going on down the road around AI, who knows about there will always be customers who want to be empowered to buy their own kitchen and there's customers there that no matter how good we are in Huygens there will be kitchens sold there otherwise we'd have the whole market so I think there's a long way to grow out DIY and I'm conscious I didn't answer your question but I can see the DIY business being ten times the size it is at the minute or maybe that's an exaggeration it won't be in my lifetime but it's got that feeling when I go in there of a very, very exciting opportunity and a fresh, innovative way of selling kitchens in the future that's both incremental and decretive and I'm glad we've got it. Your second question, Jeff, is on the thousand depots. Look, it does get harder. It does get harder as time goes on. We've got a really strong property team and, you know, A lot of the agents know that we're out looking for stuff. We're flexible in the type of space that we can take. And it's better that we're in the area, even if it's slightly suboptimal. We opened up our first one in Waterloo underneath the arches and we've managed to fit in there very well. And I think it's a combination of driving the convenience measure for the builder, because time is money and drive time is money. We can get the stock there with XDC and what we hold in balance between XDC and what's in stock. But quite a portion of the number is within London actually, where we've got around about 100 depots inside the M25 and it should be quite a lot more than that, but we're just going to be very thoughtful how we get there. So it's really sort of inside the M25, driving convenience, some smaller depots, and the infills outside in Royal Catchments. I mean, we're very clear that 1,000 is about the number. And, you know, you probably will see our rate of opening slow over coming years because we don't have a compromise in quality. But last year I called out that we might move from 30 down to 20 and then we ended up sort of doing 23 and this year we're going to do 25. I think we've got a good line up for next year, actually. You know, we're very confident we do a similar sort of number next year too.

Yeah.

Hi, Rob Chantreau at Barenberg. Three questions for me. So firstly, could you just talk about the changing shape of UK trading locations and how it impacts you? So if you're doing well, others are struggling, does that impact football in the areas? Does it create opportunities to give a one-stop-shop type approach? But how does the dynamics of trading estates work when everyone else is struggling? Secondly, depot maturity, just interested to how your thinking about it has changed in recent years. Is there a correlation with the larger depots continuing to grow, the mid-sized ones with three, four years old showing stronger growth. So once they're all in that same depot-like mix, how do they mature? How do you think about that? And then thirdly, I think historically you've mentioned flooring. I think the fourth biggest in the UK. Just give us a quick update on strategy, manufacturing, distribution, Sondola integrated, exactly what the economics of flooring look like for Howden.

Yeah, I think the first one, you know, UK trading locations... They're busy. They're busy at the minute. Parking is often an issue. And I think trading estates in general have become busier with businesses like Screwfix and Toolstation pulling customers online. It may not necessarily be always trade customers, but a right mix of customers end up going on to trading estates. And trading estates sometimes get hot and cold over a period of time. We'll tend to move around six to eight depots a year to make sure that they're in the right sort of place. We're always optimizing this. but they remain busy and we tend, because we started our journey quite earlier than others, we tend to be in more featured spots than others. On depot maturity, I think the point I would probably raise is that we've always thought about a seven-year maturity in depots but our biggest depot, which I always quote as being Davie, our manager at Glasgow Depot, he tells me he will clear the £10 million mark this year and Davey has consistently done that, led the way every single time, he's an unbelievable manager and that's a figure that we probably never would have thought we would have hit on a per-depot basis but it leads the way for the others to get there and we've got a number of depots that are not too far behind that So I think that challenges how, you know, is seven years the right maturity because that depot in Glasgow has been open over 25 years and it's still growing because the strategic initiatives support it. Great leadership supports it, great incentives, the relationship he's built with his trade customers all support it and I don't think there's much more to say sort of on our maturity profile except to sort of push it out over time. Flooring I don't know where we rank at the minute in sort of flooring but it's grown particularly well this year and we've done a combination of own brand which is our oak and grey flooring brand that has done superbly well and we've launched some new more premium brands into the range supported by XDC and we've refreshed all the displays across the estate and flooring so We're growing very well and I don't think the competitors are. This is our story.

Thank you, Clive Lewis at Peel Hunt. I think I've got three for me, Andrew. You talk about a flat market for the kitchens in the UK this year. Is that on a volume or a value basis? Second one, probably following on from Rob's question a little bit about flooring, but talking about the non-kitchen revenue within the UK. Was that better or worse than that 3% figure that you've reported for the first half? And the third one was probably around Runcorn and the investment there and thinking, A, have the metrics and the numbers changed at all in terms of the spend and the returns? But also, I know you're pretty keen on keeping a clear demarcation between DIY Kitchens and Houghtons, but the bit where it may overlap, certainly when I look at it, is on the manufacturing side. and I'm wondering whether, certainly if you're doing cabinets out of Runcorn, whether those cabinets can easily be directed into DIY kitchens and speed up that whole return process.

Yeah, look, it's great to have capacity, isn't it, when you've built it out ahead of time. I don't know is the answer to all of that, but the cabinet's different and I will always keep the cabinet different. The panels are panels and they can be made anywhere, but I've no plans for that. DIY has had a very strong investment program it makes to order rather than to stock which is slightly different but you know we are certainly we will have optionality if you like you know for that and we'll work that out as we go forward and how well it grows you know we're also having interesting conversations with the suppliers as well because a lot of the products are similar across the piece so James is well placed to shake all that down but we will have capacity and there will be opportunities to optimise supply across the two. This is what you're getting at. Kitchens versus not kitchens, there's not a lot in it to be honest in the first half it's nicely balanced. I am absolutely obsessed with customers coming in on a routine basis and they might come in and buy joinery or flooring or whatever and that gives us the opportunity to sell them kitchens. decent balance between the two and you know most of the other categories in good growth actually in the first half of the year and I'd be worried if they weren't because you don't see the sort of frequency of customers. Do you want to do the one on the market?

On the market on a value basis it's flat year on year on a value basis probably slightly down on a volume basis.

Where are we now? Morning, Alan from Bank of America. Just three questions from me. So first of all, do you feel any pressure from your competitors, maybe like Wix, which we know they're probably having a small comeback story. Do you feel anything from their side? No. Number two, I guess that's probably the answer. On the DIY kitchen, because obviously we feel very good about this deal, but did you see any potential issues And lastly, do you have a number of targets for the showrooms for DIY kitchens at all? Thank you.

I'll answer the first question. Every competitor bothers us every day. I think we're so well ahead on product development, service, incentives with the teams. I don't worry about that. Challenges from DIY, one of the things I think we've done really well over all of the years of Hightness has been focused. We're focused on kitchen categories. When I go and spend time with the DIY team, we talk kitchens and we're obsessed about panels and hinges and supply chain and matching the front and the back end. it's not complicated to pick up given you know what we know from Hidens so you know if I had been worried about defocus I'm not because it's separate it's going to have its own leadership team and I will never defocus myself out of Hidens but I see more way more opportunity than Any challenge, but the obvious one is, does it defocus you from your core business? And I'm absolutely certain it does not. If anything, it'll strengthen us because you look at similar problems from a different angle. And, you know, it's pretty safety on costs at DIY and you take those challenges back to the core business and, you know, there'll be opportunities there. You know, each of the supplier will get a challenge around it. We're buying similar machinery in Europe for DIY as we are for the UK. So I think the opportunity is really significant and is incremental and additive to the business. From Sharon's point of view, I think we'll feel our way forward. But what DIY has cleverly done is they've got this model where the customer does quite a lot of the work themselves. They place the order, they take responsibility for the design. and they get in the car and they drive a good distance to go and see good displays. And what they offer is fantastic. If you ever get an opportunity to go up to Whitney or York, you'll see the two largest showrooms in the UK. But I don't see us building a whole lot of showrooms across the UK. I would see us doing six or eight or 10 sort of territory. There's only Oxford down south at the minute and then Scotland's been a very good market for DLI, so one up there is totally appropriate.

Thanks, Ben Varro, RBC. I'll do two, please, just in terms of the mid-term margin, just your thinking there, obviously putting into new capacity DIY, Kitchenton as well, so just your thinking around operating leverage within the business in the mid-term. and the second one is just in terms of France. Can you give a sense of the mix of depots of perhaps reach break-even level and the change of travel there and what you're looking to see to accelerate the growth?

Yeah, yeah. Look, Jackie and I are very focused on getting core heightens back to the sort of 17% territory of where we've Thank you for joining us today. Profits Ahead of Sales in the first half, we're going to do the same in the second half and we'll be very challenging ourselves as we go into next year. France, checking, I did a full review of the French business yesterday and they are making good progress and our depot managers are incentivised in getting to break even. We have a number of depots, which we don't disclose, but we have a number of depots increasing their hurdle rate in getting over the break-even point last year and we expect a whole load more this year. we've tidied up the we will by the back end of this year tidied up the depots that we weren't confident would get to that place but there's a lot to play for in the second half for France this year and they're very well set up to do it so we'll update more at the full year on that one more here sorry thank you we'll come to you after two more

Just a couple of questions on the wardrobes business. Can you remind us of the opportunities that are present? And I think you said you're focusing on the entry to mid. What would drive you to focus more on maybe a premium wardrobe range and what would that do to the opportunity in that business?

Yeah, we like our bedroom business. We make the vast majority of it. We've backed it into our kitchen range. and it's grown very nicely and we've done it in a way that doesn't make the depots focus off kitchens and onto bedrooms because we're absolutely focused on selling kitchens so it's been a very good incremental opportunity. Hayden started off as a kitchen business at opening price and then moved into the middle and we've done that. People don't tend to spend the same amount of money in the bedroom as they do in part of the home that they are happy to show off to people coming in. So we have pitched it as opening and mid-priced. I think that premium opportunity would be much longer term for us. I think we've hit at exactly the right sort of addressable markets around about a fifth of what the kitchen market is. So it represents that sort of opportunity for us. We've got a quarter of the kitchen market and could we ever get there in bedrooms? I don't know, but it's growing very well. You asked a second question, I can't remember. No, you did just one. Thanks. And then the final question.

I'll keep to two. Thank you for allowing the question. Regarding the Magnet CBA, REN hasn't been shy chasing after customers there. Is there any sort of guidance since you can give us any benefit to first half numbers in terms of either picking up Magnet customers or anything of that nature that you can point to.

I don't know if I can really, I mean we've got a very long history with Magnet obviously because Matthew came out of Magnet, a lot of earlier managers in Magnet, there's still a lot of Magnet managers around so we've got a very strong sense of what's going on in that business and we've taken a number of the sites already and we may take some more. but when I sit in front of the depot managers which we do seven times a year in front of every depot manager I never ever ever hear Magnus as a concern I don't even hear we've won business against Magnus it's just sort of gone sort of thing so there's nothing really I'd point to there at all.

And just as a lead indicator in the international business can you give us a bit of a The Flavor or a sense of how the number of accounts is developing. How are you going about doing that?

Yeah, we do it similar to the UK actually. That's our most successful way is developers out in the road building accounts and building relationships with customers and it's growing very well. So it takes time to either show a customer how they can make money out of a housing offering and our best depots in France do that incredibly well. So, yeah, we are growing the account price well. We had one of our UK regional managing directors in France for two years. He's just returned, having handed over to a local who's reporting into Sebastian Krycek. and Zarin would have been very, very strong on growing the account base and the conversion rates that are brought from that. So I think those processes are properly installed in the French business now.

Okay, great. I was going to ask about the DIY kitchens balance sheet, but I'll take that offline. Thanks.

Okay, great. I think that summarises it. We're done. Thank you very much.