Kingfisher plc

I will then update you on the progress being made against our key strategic objectives, including our plan for France, before we open up for Q&A. So there are four key things I want to highlight about our performance. And first is market share. We see this as a key indicator of our progress beyond the macroeconomic trends. And I'm pleased with our performance here. Kingfisher delivered market share gains in the UK and Ireland, in France and in Poland in the year. That market share growth is being powered by our group's strategic initiatives and strong execution against our plans. Point number two, we have seen strong delivery in two key areas of the group strategy, trade and e-commerce. Our trade sales penetration is up 4.9 points to 17.9%, supported by the development of our trade proposition in all banners. Group e-commerce sales penetration is now 19% compared to 8% in 2019, partly driven by our successful marketplaces, which are now live in all markets. These are two group-led strategic initiatives that we successfully implemented in the UK first. They are the blueprint for Kingfisher's strategy, and we are now actively rolling out this recipe of success to all our other markets. And you will see this demonstrated across today's presentation. At the same time, we are accelerating our restructuring plan at Castorama France. By the end of this financial year, we'll have completed, or been in the process of completing, works on 24 low-performing stores. With our financial performance, we stayed disciplined against the challenging market backdrop. Our adjusted profit before tax and free cash flow was in line with or ahead of the initial guidance we set last year. And we have a strong grip on the operational levels of our business. Gross margin was up 50 basis points. And as guided, we delivered 120 million pounds of structural cost reductions. We also reduced same-store inventory by 107 million. So overall, Kingfisher is in its best operational shape for years, and we remain confident about the growth opportunities in our business. So let me now hand over to Bhavesh. Thank you.

Thank you, Thierry. Good morning, everyone, and thank you for joining us today. It's great to meet so many of you in person. I'm now two months into my role as Kingfisher's new CFO, and have spent time meeting colleagues across the business and visiting stores across our banners. I'd like to thank all the teams for the warm welcome I've received. I've been impressed with what I've seen and heard, particularly the enthusiasm and commitment of the teams across our markets to delivering a great customer proposition and our strategic priorities. Kingfisher is a company with a clear strategy driving our market-leading businesses. It's highly cash generative and in excellent operational shape. I'm particularly excited by the opportunity to grow our trade business and drive our e-commerce growth. Two key pillars of the Powered by Kingfisher strategy that you'll hear more on from Thierry shortly. While early days, as I look forward, my priority areas will be first, building on our strong disciplines and cost and cash management. Second, maintaining a strong focus on returns as we invest for growth. And third, delivering attractive cash returns to our shareholders. while maintaining a strong balance sheet. Let me start with the key financial highlights for the year. Total sales for the group in constant currency were 0.8% lower, with like-for-like sales declining 1.7%. I'll speak in more detail on this shortly. We delivered a gross margin of 37.3%, up 50 basis points versus the previous year. Adjusted profit before tax was £528 million, decreasing 7% versus the previous year. Group statutory profit before tax was £307 million, reflecting non-cash impairments in some of our stores in Goodwill. Our free cash flow was strong at £511 million, reflecting good progress in reducing inventory levels. Net debt, which is mainly property leases, was just over £2 billion, with net leverage at 1.6 times EBITDA. We returned £453 million to shareholders via dividends and share buybacks, up 14% on the previous year. We proposed a full-year dividend of 12.4 pence in line with last year, And given our strong free cash flow and confidence in our future cash generation, we're announcing today a new 300 million pound share buyback program. Turning to sales across our core categories. We saw an improving trend through the year, driven by repair, maintenance, and renovation activity. Overall core like-for-like sales were 1.1% lower across the year, with the second half showing an improving performance with like-for-like at minus 0.3%. Like-for-like sales from big ticket categories, which include kitchens and bathrooms, were 4.5% lower for the year, reflecting broader market weakness. In Q4, we saw some encouraging big ticket trends across all our key markets, with like-for-like sales up 1.3%, supported by successful new kitchen and bathroom range reviews and campaigns. In our seasonal categories, which include outdoor furniture, barbecues, and heating and cooling products, Like-for-like sales were 2.6% lower impacted by unfavorable weather in May and June. For the group overall, we saw flat retail price inflation and a negative mixed impact on the average selling price from lower big ticket sales. Overall volumes are lower, but with an improving underlying trend in core category volumes as we move through the year. Let me now walk through performance across our regions, starting with the UK and Ireland. Our UK and Ireland businesses delivered total sales of 6.5 billion pounds, up 1.2%, and like-for-like sales up 0.2%. B&Q, TradePoint, and ScrewFix all delivered market share gains in the year. These gains were driven by our strong performance in trade and e-commerce. At B&Q, TradePoint like-for-like sales were up 6.4%, while ScrewFix grew its like-for-like by 1%. And e-commerce sales across our two businesses were up 8.7%. Gross margin for the UK and Ireland increased by 20 basis points. And UK and Ireland operating costs increased by 2.1%. This includes a one-off benefit of £33 million of business rates refunds at B&Q related to overpayments between 2017 to 2023, of which £8 million was received in H2O. Retail profit for the UK and Ireland was 0.6% higher at £558 million, with a retail operating margin of 8.6%, 10 basis points lower than the prior year. In France, our banners delivered total sales of £3.9 billion, a like-for-like decline of 6.2%, amidst a weak home improvement market which declined by over 7% in the year. Both banners gained market share, driven by strong new range launches and trade customer sales. At Casa Rama, our like-for-like sales were lowered by 6.6% for the year. Sales trends improved in the second half of the year across all categories, with big tickets seeing a notable pickup in Q4. At Brico Depot, like-for-like sales were 5.7% lower. Overall sales trends improved in H2, supported by strong sales growth in the kitchens category at Q4, where like-for-like sales were up 4.9%. BRICO also made strong progress in developing its trade proposition, with trade sales penetration reaching 12.8% in January, up 4.2 percentage points. Gross margin for France increased by 80 basis points, and operating costs were tightly managed, decreasing by 1.6% year-on-year. Overall, France retail profit was £95 million, with margin 80 basis points lower at 2.4%. Thierry will talk shortly about our actions in France to both continue our relative outperformance whilst improving profitability. Poland delivered total sales of £1.8 billion, up 3.2%, supported by the opening of five new stores and market share gains. Like-for-like sales were marginally down by 0.1%. Big ticket categories delivered growth year on year, with underlying core and seasonal category sales both improving in the second half. Like our other markets, Poland has made good progress in driving its trade business. Trade sales penetration reached 24.5% in January, up 19.1 percentage points. The business also successfully launched its e-commerce marketplace in January 2025 with positive early results. Poland gross margin increased by 80 basis points and operating costs were up 5.4%, reflecting higher staff costs and new store openings. Retail profit for the year was 8%, higher at £90 million, with the retail profit margin 20 basis points higher at 5.1%. Looking briefly now at our other international segment. First, Brico Depot Iberia, where like-for-like sales were up 6.1%, with retail profit for the year increasing from £6 million to £8 million. At BricoDepo Romania, the retail loss improved to 11 million pounds versus 18 million pounds in the prior year. In December, we announced the sale of the Romanian business for an enterprise value of 70 million euros, equivalent to around 58 million pounds. The sale is expected to complete in H1. Screwfix France and other, which includes our franchise and wholesale business, recorded an overall loss of 35 million pounds. Majority of this was driven by Screwfix France as the business continued to invest in the opening of new stores. Finally, our Turkish joint venture Kostas contributed an overall loss of £15 million after tax and interest against a highly volatile macroeconomic and trading environment. Kostas swiftly initiated a comprehensive restricting program in response to these challenges. including a reduction in headcount of 900 people and the closure of 106 stores, which is around 30% of its estate. We're monitoring the performance of our Turkish joint venture closely to ensure the business gets back on track. Now, turning to group profit, starting from the left of the slide. Lower like-for-like sales at a constant gross margin rate contributed to £85 billion of profit decline. This was largely offset by a gross margin rate improvement of 50 basis points, which added £60 million to profit. The impact of staff pay rate inflation was £94 million, with an equal weighting across H1 and H2. Technology and other cost increases were £64 million, driven by higher technology investments in H2 and investment in marketplace and advertising spend. We delivered on our guidance of 120 million pounds of structural cost savings, which span across the gross margin improvement, technology cost, and operating cost reduction bars on this chart. As I mentioned earlier, business rates refunds at B&Q were 33 million pounds. And the ineffective foreign exchange hedges in the prior year resulted in a 10 million pound year-on-year benefit. Our central costs and net finance costs were 3 million pounds lower. And finally, our share of the Costash JV was 14 million pounds lower year on year. A key strength of the business is its strong cash generation, as you can see on this slide. Starting on the left, we generated EBITDA of just under 1.3 billion pounds. Good work has been done on inventory management, which reduced by six days. This drove a working capital inflow of 108 million pounds. Net rent paid was 512 million pounds. Tax, interest and other cash outflows were £58 million, including £23 million of tax phasing benefits and refunds. Capital expenditure was £317 million, representing 2.5% of sales. This was circa 12% lower year on year due to the timing of project spend. Overall, free cash flow for the year was £511 million. We paid an ordinary dividend of £228 million and executed a further £225 million of share buybacks. Kingfisher has a strong balance sheet, which we'll maintain through our disciplined capital allocation framework. Our priority is investment in organic growth, where we see a compelling return profile. We target capex of around 3% of sales per year, which may vary slightly year on year, depending on the phasing of projects. We aim to grow our dividend progressively over time, reflecting our firm focus on growing EPS over time. We target dividend cover in the range of 2.25 to 2.75 times. As of last year, we may move outside of this range from time to time. Kingfisher has a strong track record of returning surplus capital to shareholders. with £1.9 billion returned to shareholders since 2021 by dividends and share buybacks. That's over 40% of our current market capitalisation. Our financial resilience is underpinned by our solid investment-grade credit rating, keeping our leverage with a maximum of two times EBITDA and maintaining strong liquidity headroom. Total liquidity as of 31st January was just under £1 billion, including an undrawn RCF of £650 million and cash of £336 million. As we look to the year ahead, we'll maintain our laser focus on cost discipline and cash generation. We have multiple gross margin opportunities. Some examples include work underway on product component costing across the group, to help our banners achieve savings through product design and to negotiate better prices with common vendors. And we're making further reductions in our distribution center space in France and Poland, building on the significant reductions already achieved in 2024. On OPEX and inventory, we have programs already underway to unlock savings in the year ahead. We continue to enhance the productivity of our stores, for example, through more self-checkout terminals. We're also further streamlining our head offices. In Casa Rama, France, the annualized savings from the restructuring will be around £9 million. And we're expanding the use of our in-house developed supply chain visibility tool to further improve our stock forecasting, driving lower inventory, better stock turn, and ultimately more free cash flow. Let me turn now to our FY25-26 outlook and guidance, first with our market growth scenarios. In the UK and Ireland, we observe a relatively resilient consumer, supporting repairs, maintenance, and existing home renovation. However, we remain mindful of the near-term uncertainties facing households. Our outlook for the UK and Ireland home improvement market in 2025 is somewhere between flat and low single digit percent growth year on year. In France, while repairs and maintenance activity is supportive, we remain cautious on consumer sentiment and the housing market in the near term. Our home improvement market outlook is for a low to mid single digit percent decline in a low case and flat year on year in a high case. And in Poland, while consumers expect to see real wage growth in 2025, we're mindful of the uncertainties continuing to face households. In the very near term, we see current geopolitical factors having an adverse impact on the Polish consumer. For the year as a whole, we expect the home improvement market in Poland to be somewhere between a low single-digit percent decline and a low single-digit percent growth year on year. On profit, we expect full-year adjusted PBT of between 480 million to 540 million pounds. The bridge from last year's PBT reflects a number of moving parts. First, the 33 million pound cost rebuild related to B&Q's business rates refunds last year. Second, a 10 million pound year-on-year benefit from the sale on Romania. We then expect to fully offset higher inflation, wages, and taxes totaling around 145 million pounds with gross margin and OPEX mitigations. These include structural cost and productivity initiatives already underway, which I highlighted earlier. And finally, operating leverage or deleverage from our market growth scenarios. Within this, we're assuming some level of sales transference in the UK from the closure of home-based stores. On free cash flow, we expect between 420 million to 480 million pounds, supported by further inventory reductions, but also reflecting the reversal of some capex and creditor timing benefits. The board and the management team remain confident of the cash generation capabilities of the business, which underpins our new 300 million share buyback program. Let me now hand back to Thierry.

Thank you, Babesh. And I would now like to start by taking a moment to remind you of the fundamentals of Kingfisher's investment case. And this underpins our conviction in the medium to longer-term outlook. We have number one and number two leading positions in our markets, and those markets worth £160 billion have attractive and structural growth drivers. Secondly, our Powered by Kingfisher model gives us distinctive competitive advantages. We have diverse banners with formats and propositions that address different customer needs. Within our banners, we have a balanced exposure to trade and retail customers. Our own exclusive brands are industry-leading and a powerful competitive advantage. We have leading-edge technology and e-commerce, bringing our customers speed and choice, including fast fulfillment in our online marketplaces. And as a group, we have scale. This means providing buying and sourcing synergies to our banners and leveraging the group to invest in technology. And then we drive market share gains through our strategy growth initiatives. We are building out our exposure to trade customers, which is now very much a proven strategy with clear runway to keep growing. On e-commerce, we have an ambition to reach 30% sales penetration, and we are well on track to achieve that. With retail media, we are targeting additional revenues of 3% of total e-commerce sales, and we are opening new stores, primarily through the continued expansion of Screwfix and the growth opportunities we see in Poland. So our medium-term target is for new stores to contribute 1.5 to 2.5% to sales growth. So bringing all these elements together, we are committed to our financial priorities, which you can see along the bottom of these slides. Turning to slide 18, I want to come back to how we have grown our market share in all key regions last year. First, we continue to strengthen our core proposition. We maintain strong price indices supported by effective management of our product cost. We have also maintained high stock availability driven by smarter inventory and logistic management. We have leveraged the power of our own brands to strengthen product ranges. Our banners delivered many successful range reviews during the year, like bathroom and kitchen at B&Q, and eating and kitchens at Brico Depot in France. And we have made significant improvements to the omnichannel customer journey reflected in strong and improved customer net promoter scores in all regions. In parallel, we are leveraging our group strategic growth drivers. Over the next few slides, I will cover the success we have seen with these initiatives in the UK and how we are accelerating the rollout in all our markets. And starting here on slide 19. And our trade point has benefited from the group strategy for trade. We know that trade customers visit our stores more frequently and spend more on average than retail customers. Our group plan, therefore, centers around six key pillars to develop a compelling proposition for tradespeople. Trade-specific ranges, dedicated new loyalty programs, people, value-add services, digital and stores. Importantly, this plan leverages our assets, pushes up store sales densities, which is limited to no capex. TradePoint achieved strong market share gains last year, and its sales now represent 23.4% of BNQ, nearly 5 points more than 2019. TradePoint now has 1.4 million active trade customers, strongly up year on year. The business has a presence in 70% of B&Q stores, and we are now finding ways to expand TradePoint into smaller footprints, leveraging click and collect. In October, TradePoint launched its first ever mobile app. The customer response has been strong, with app sales already accounting for 16% of TradePoint's online sales. Arguably, the most important differentiator is our TradePoint colleagues. We have recruited 44 trade sales partners in our stores, a sales force who build close relationships with local trades and have a degree of freedom to strike deals on the shop floor. Stores operating with trade partners are strongly overperforming stores without. We are therefore accelerating new sales partners' roles this year and expecting further positive impact on our sales. Over the medium term, we confirm our ambition to reach over 1 billion pounds of sales at TradePoint. To slide 20, and we have applied this group framework in France and Poland with strong results. In France, trade penetration at Brico Depot is now 12.8%, up 4.2 percentage points since early last year. Brico rolled out dedicated trade service desks and colleagues across all stores, complemented by a popular new loyalty program and mobile app. At Castorama, we have been testing our trade customer proposition, Casto Pro in eight stores, seeing a very strong uplift in trade sales as a result. Following this successful trial, we have decided to accelerate rollout to the entire Castorama front store network. In Poland, we have seen impressive growth in trade sales, growing by 19 percentage points to 24.5% in the last year. This was supported by Castorama's new trade loyalty program, which saw an average of around 900 membership signups per day in 2024. The business has also introduced dedicated CastoPro trade zones at 12 stores, following a concept similar to TradePoint, with a further 15 stores to come this year. The group has provided support to all countries, for example, through the introduction of new trade-specific OEB ranges and the technology to support new digital capabilities. So you can see we are really excited about the trade opportunity in France and Poland, which is supporting market share gains in both countries. Over the medium term, our ambition is to double trade penetration in France and achieve a trade sales penetration of at least 30% in Poland. As with trade, the group has provided the blueprint for profitable e-commerce growth in the first instance with our UK banners. In five years, B&Q's e-commerce sales penetration has tripled to 15%, while at Screwfix, penetration has gone from 33% to 58%. This growth has driven consistent market share gains at both banners. Our group e-commerce strategy is defined by speed and choice. With speed, our national coverage enables us to fulfill orders quickly we have decided to largely rely on stock picking, facilitating 93% of our first-party e-commerce orders. We have set up 53 B&Q digital hubs. These are larger stores with extended ranges, which service over 90% of UK home deliveries. Our click and collect offering is also market-leading, as under one hour for B&Q and just one minute for Squofix. And secondly, choice. We know the vast majority of customer home improvement journeys start online, and so having a strong online experience is crucial for conversion, either online or in stores. At B&Q, 309 million pounds of sales are from Marketplace, representing 41% of its total e-commerce sales, with over 2 million SKUs. And at Screwfix, the overall assortment has increased to 72,000 products with the extended ranges available next day. So to slide 22, and we are applying the group's proven e-commerce framework across France and Poland, driving further market share gains. Castorama France has grown from an e-commerce sales penetration of 2% in 2019 to 7% last year. As with B&Q three years ago, we expect Castorama's online sales to move up quickly following the launch of its marketplace platform in Q1 2024, which is already up to 14% penetration. An additional 700,000 SKUs are now available for customers. This marketplace leverages the technology built by Kingfisher and applied first to B&Q, and so the rollout incurred minimal cost. In addition, 10% of Castorama's online sales now originate through its AI virtual assistant, HelloCasto, which was developed by Kingfisher and launched at Castorama in 2023. At BricoDepot France, e-commerce penetration is now up to 5%, and we look forward to seeing the results of its new website set to launch in Q2. And at Castorama Poland, we launched our e-commerce marketplace in January 2025 with positive early results. App sales also progressing well with participation up to 12% from 7% in the prior year. So with marketplaces live in all our markets, we focus this year. Our focus this year is to scale up the number of SKUs to accelerate the onboarding of cross-border merchants and start offering click and collect for marketplace orders. Our target for group e-commerce sales is to reach 30% of total sales with one-third of this coming from marketplace. And we are well on track. So on to slide 23 and the very real opportunity for Kingfisher in data and retail media is which are now scaling up across all markets. These initiatives started three years ago and are having a tangible impact on sales, margin, and cash. I would like to highlight our AI-led markdown and promotion solutions, which were built by the group and first deployed at B&Q last year. The solutions created more than 1,500 bespoke campaigns last year. They resulted in significant improvement to B&Q clearance product margins, as well as a more efficient sell-through of its stock. Our next priority is to quickly expand these solutions in France and Poland with implementation already underway at Castorama France. We are also continuing to scale up our retail media proposition, making big strides over the last year. So far, the return on advertising spend that we are generating for over 500 vendors and marketplace merchants is above 600%, significantly ahead of industry averages. We look forward to launching RetailMedia at Screwfix and further tests of in-store RetailMedia campaigns. Our ambition for RetailMedia Income is to reach up to 3% of the group's total e-commerce sales. We believe this is a very reasonable target given the success we are witnessing in US non-food retail, where RetailMedia is one step more advanced than the UK and Europe. Turning now to slide 24, and before we discuss the Scrufix rollout in France, I wanted to remind you of the proposition we have built in the UK and its runway for growth. Scrufix has a proven model that delivers industry-leading returns on capital employed. With 952 stores and 58% e-commerce sales penetration, Scrufix possesses arguably the strongest omnichannel proposition in UK general retail. Over the last five years, sales at Scufix have grown from 1.8 to 2.6 billion pounds, with a CAGR of 7.6%. Over 80% of these sales come from tradespeople. Our store estate has grown by 40% since 2019, and store sales densities are two times our closest competitor. Since then, we have added 2 percentage points of market share, and our customer net promoter score has increased by 8 percentage points to 88. This success is driven by unbeatable ranges, prices, and convenience. On price, we index about 2% cheaper than our competitors. On convenience, we have truly innovative capabilities, enabling one-minute click-and-collect and one-hour home delivery to site, which now covers 60% of the UK population. I hear anecdotally that tradespeople have started to use screwfix as a verb on sites. When a pro needs something quickly, they just screwfix it. And we are not standing still. With further growth top of mind, our share of wallet with customers is only 15%. We are developing plans to therefore increase loyalty and share of spend with us. We are also building on Scufix's assortment of 72,000 SKUs, for example, through ranges fulfilled directly by vendors. And we are exploring a number of enhancements to our fast delivery propositions. With our stores, we have validated the blueprint for a new format, Scufix City, which is performing ahead of our expectations. We are aiming to open up to 100 of these stores in the coming years. So with Kingfisher's backing, Scofix has made significant investment in the last five years to support its current position, and the business is primed for strong and profitable growth. So now to slide 25, and we are exporting this successful model to France. So in short, we are pleased to see the rollout progressing in line with our expectations, despite the challenging consumer backdrop in France. We believe the key to its long-term success is leveraging all the things that make ScrooFix great in the UK, the best prices, fast fulfillment, and a wide selection of products. We are seeing clear momentum across all KPIs with stronger customer retention, growing national brand awareness, and over 11,000 sign-ups to the new trade loyalty program. Screwfix in France currently generates 54% of its sales from trade customers. The business opened 10 new stores last year, taking us to a total of 30 with up to five more this year. And most significantly, the sales trends of all store opening cohorts are progressing in line already for expectations. We have a clear roadmap to profitability with a measured approach to the pace of store openings in the coming years. So to reiterate, we see the potential for more than 600 screw fixtures in France over time. So turning now to an update on our plan for France and starting here on slide 27 with the retail profit bridge year on year. By far, the biggest factor has been the home improvement market decline in France, down by over 7% according to JFK, due to a weak French consumer against a very uncertain political and economic environment. Against this backdrop, we have stayed focused on delivering against our strategic plans and managing effectively our gross margin and cost. Through a combination of market share gains, the gross margin improvements that Bhavesh discussed earlier, and cost reductions, both structural and short-term flex, we managed to fully offset the profit impact of the market decline. Finally, higher pay rates, order inflation, and investment we made in technology to support our growth ambitions were a total of 42 million pounds. why we are pleased with the self-help done in 2024. There is still much to be done. On slide 28, I want to reiterate our clear path to achieving our medium-term margin target of 5% to 7%. And you can see here our four self-help initiatives. One. to simplify the organization and structure in France, where we have already made significant progress. Two, grow sales entities at both banners, including through the rollout of our group trade and e-commerce initiatives. Three, create productivity and operating efficiencies. And four, restructure approximately one-third of Castorama's stores network, which is well underway. We appreciate the gap to 5% to 7% is larger than it was one year ago, but you can be confident that our self-help initiatives are starting to bear results, as you can see in this presentation. We also firmly believe the severe market decline seen in 2023 and 2024 will at least reverse over the medium term. Now, to give you a little more detail on how we are building on our momentum and accelerating our French growth and self-help initiatives. First, we completed the simplification of the French organizational structure in April last year. We shifted the responsibility for centralized decision to the individual banners. We also strengthened the leadership teams with six strong new appointments at Castorama, including in commercial, digital marketing, and technology. In November, we started the restructuring of Castorama's head office, which will yield £9 million of annualized cost savings in 2025 and 2026. Second, we continue to drive higher sales densities at both banners. Key range reviews in kitchen, bathroom, storage, and heating were completed in the year. For example, our new Pragma kitchen range offers a unique solution to customers looking for a simple kitchen. It was launched at Brico Depot France last year, driving strong sales outperformance compared to other ranges. So given these successes, the new team at Castorama will accelerate strategy and range reviews in the year ahead. And as you have heard in detail, we continue to drive our trade and e-commerce propositions. Castorama Pro program will be quickly rolled out to all stores this year, and we have high expectations for its e-commerce marketplace as well as for the progress of ProSales at BricoDepot. Our third focus area is improving our productivity and operating efficiency. We achieved significant structural cost reduction last year, with the total operating cost down 1.6% in France. 75% of Kingfisher's inventory reduction last year was in France. And Brico Depot achieved a 9% reduction in its logistics space, with a further 1.5% at Castorama, which will support lower logistics costs going forward. So looking to the year ahead, Bhavesh has already discussed the group-wide programs in place to further reduce our structural cost base. On top of this, both banners will be scaling up Kingfisher's markdown and promo AI solution, as well as retail media. These are all accretive to gross margin. And finally, we are making rapid progress in restructuring and modernizing Castorama's store network. By the end of this year, we will have completed or have works in motion on 24 of its lowest performing stores. As a reminder, we said last year that we are targeting one third of Castorama's estate. We expect these actions to gradually achieve structural increases in profitability. So I want to be clear that the performance in France is not where we want it to be, but this plan demonstrates that we are taking comprehensive action to drive top line and market share, create efficiencies, and quickly address the store network as we return France to profitable growth. So to summarize here on slide 31, Kingfisher gained market share in all key regions against a challenging backdrop. We achieved this by strong execution against our key group's strategic initiatives of trade and e-commerce, with the success at our UK businesses now being replicated in France and Poland. In France, we are growing market share and delivering on our self-help actions against what was a very weak market for the second year in a row. We deliver profit and cash in line or ahead of our expectations, thanks to a strong financial discipline And following over 900 million pounds of share buyback, we have today announced a new 300 million pound program. And finally, we remain confident about the medium to longer-term outlook for the sector and the growth opportunities in our business. Home improvement is an exciting and attractive market, and we are uniquely positioned to win. With that homage, over to you. Thank you.

Thank you very much, Thierry and Bhavesh. So we'll now start the Q&A. So maybe just if you can wait for the microphone to get to you, state your name and institution. John, can we start with Warwick, please, in the third row?

Feels like COVID days. Morning. Warwick O'Kinds, BNP Parabikes. And just one question, actually, on Screwfix France. Could you talk about the cash generation issue? or the cash consumption of Screwfix France. Why are you only opening five stores in the year ahead? Thank you.

Yeah, thank you, Raj. I think, first of all, We are very pleased with what we are seeing today. As you saw in the presentation, there are many what I would call industrial KPIs, starting from price index, customer NPS. But probably the most important one is the repeat purchase. We are very pleased with the repeat purchase. So where we could trade, they are coming back. And today the number one focus of the team is the store sells like for like growth. So to make sure every cohort in year two, year three, year four, the like for like is in line with the maturation curve. You maybe remember one year ago we showed maturation curve. So that's the number one KPI for us. We are seeing improvement of awareness and all those underlying KPI are strong. So therefore, in fact, expansion is not the number one topic. We could open more stores. We continue to open stores. This in 24. We have five stores in the plan for 25. That's overall limited capex. You know, the scufix in the UK and France, it's not really a capex issue. It's really to make sure the maturation of the store, like for like sales, is exactly in line with our expectation.

Can we go to Ann first and then Kate?

Thank you. It's Ann Critchlow from Berenberg. First, a question on the Screwfix 100 city stores. Is that in addition to the existing target for Screwfix store openings, please? And could you also comment on compact stores generally, what you're doing there in other banners and what you're thinking is about compact stores looking forward? Thank you.

Yeah, I think it's fair to say that initially we had a target of 1,000 stores. So this Scrooge City are on top of the 1,000 stores. There are smaller stores, so there are a bit less sales than the initial Scrooge, but again, very happy sales profit ahead of expectations. Second part of the question, we still very much believe in compact stores. It's a bit tricky in DIY because, for example, how you said, you know, kitchen, bathroom in a small space. But we are very much convinced that over time that would be a very critical format for DIY. So there are two formats. We have tested many different formats the past four years. There are two formats we have validated, the Scufix CT. And as well, the B&Q 2,000 square meter retail park format. So this is as well a compact store format that is a tick. And now we will see more of this 2,000 square meter B&Q in retail park in the future. There are two or three formats we are still looking at. B&Q locals, I would say 70%, 80% happy, so not far. Brico Depot, 1,000 square meters in France. We have three stores. As well, we are looking at continuing to fine-tune the model. And we have as well a smaller store in Poland. While in Poland, to be fair, the biggest opportunity for us today is more medium box, around 4,000 square meters. So those three formats, Brico Depot 1,000, B&Q Local, and Poland, I would say happy 70%, 80% on a good pass. But before we're happy 100%, not happy 100%, we'll not start a very fast expansion. You're welcome.

Paul, can we go to Kate, who's third row, hand up?

Thanks. Kate Calvert from Vestec. Two for me, which are slightly connected. First of all, could you give more detail on the logistics reduction you've been going through and what's the potential to do more? And the second question is on stock. How should we think about the potential to reduce stock going forward from here? Thanks so much.

Thank you, Kate. So logistic, the start is in 2019. We were not in a great place. If you remember the past one, Kingfisher, it was all around a lot of fast increase of private label, Fari sourcing. We had a lot of issue with tech. We had two legacy systems in France for three years, et cetera. And a lot of disruption across the business. So therefore, we started with high inventory and much too many spaces in our EDC. So the first thing is we are correcting those mistakes. Two, we are really implementing new tools for forecasting, and you remember we discussed AI and our supply chain visibility tool to give us real-time view on every DC, every ship across the world, et cetera, that today is providing a lot of food. I think we are as well moving a bit from stock DCs to flow-through DCs. So the combination of all of that, and I checked the figures this morning, we said in the past that we reduce, for example, the square meter in France by 27%. That's probably what we said one year ago. In 2024, we reduce the square meter at Brico by 9% and Casto 1.5%. And this year, we are planning to reduce the space in France by about 13% in addition. In Poland, we believe we have as well too many space, too much space now, and we have a plan to reduce space in Poland, and we have as well some plan in the UK to continue to modernize the BNQ network. So that's structural actions on inventory. Thank you.

I think from an inventory perspective, the team's done a good job this year, 100 million out six days. And I think there's more potential if we benchmark Kingfisher against other retailers. I recognize not all retail is the same, but we still benchmark on the bottom quartile of our days of inventory that we carry. So continue to focus on our slow movers, using some of the tools and technology so the markdown and promo tool helps us get better visibility and where and how we should push stock through the system um we're trialing things at screw fix so shipping direct from vendor to the store so bypassing um any sort of central distribution center so there's lots of initiatives underway but i think there's more we can do paul can you get adam please on the end of the row

Hi, good morning. It's Adam Cochrane from Deutsche Bank. Three questions, if I can. Firstly, on the cash position, you've guided to the 420 to 480, but you've got a 228 million dividend, a 300 million share buyback. You've talked rather cautiously about Poland and France. Why is it now the right time to be gearing up the balance sheet, given the cautious outlook that you've presented? Secondly, within the £145 million of costs and then mitigation, what degree of operational leverage or deleverage have you assumed within that £145 million? Or is that the difference between the other bit of the guidance range? What's in that £145 million? And then finally... To cut a third of the stores in Turkey is already quite impressive. How do we think about the Turkish profitability for next year? There's quite a lot going on in that country right now, so I imagine it might be hard. But can we annualize the sort of the 1H, 2H profit movements to get to what we might look like next year? Thanks.

Maybe you want to start. Start in cash flow and then we'll combine on the other questions.

Yeah, so look, we're not gearing up the balance sheet, Adam. We're at 1.6 times net debt, but below our target of 2, so a very, very strong balance sheet. I think the business has done great this year in terms of what it's delivered from a cash perspective. That depends a bit on what we're guiding next year. The driver's strong inventory performance, and we expect more from inventory and working capital to help. staying disciplined on our CapEx. There's a little bit of timing between sort of credit payments this year to next year. So we've had a great year from a cash perspective and expect to continue to deliver next year. But we're not doing that at the expense of driving up our leverage.

I think maybe to start on the 145 and we can comment together. I think 145 is a combination of cost and gross margin. You remember back in November we said we'd partially mitigate. I think since then we have looked at all our cost plans. So, in fact, we are probably more in the pipeline. So we have accelerated some of those cost actions. And part of it is... mitigated through gross margin. Gross margin is, you know, retail media, marketplace, logistic, typically logistic square meter reduction as mentioned. We have accelerated that since November. Another relatively good news is we have probably better negotiation with our Far East suppliers than expected six months ago. You know, we have been able to negotiate down Raw material, you know, raw material during COVID were very high. So since then, they are down. We've been able to negotiate down some of these cogs. And that contributes to this 145 million. Then maybe on Turkey.

I'll just add to what Thierry said. One of the things I've observed going around the business, seeing the stores, is a real strong muscle in managing costs. Coming from Tesco, a much lower margin business, I know what good looks like, what good rigor on managing costs looks like. I definitely see that across all the banners. I gave you some examples in my script of some of the initiatives that we're doing that are intelligent cost savings to really get into structural reductions over time.

Maybe just a word on Turkey. I think, you know, we have been in Turkey for over 25 years. We are JV with Koch. Koch is the largest private company in Turkey, very strong partner. And we have been very pleased with Turkey. for 24 years with dividends, et cetera. So, yes, for the past 18 months, you know, I will not comment too much on the Turkish macroeconomy because probably they're more experienced than me today, but, you know, the government has decided somehow for hard lending with increasing strongly interest rates, trying to cool down the minimum wages, and that's totally collapsed the demand from summer 2024. So on top of that, very high interest rates. So, you know, all the costs related to credit cards, consumer credit cards, went to the roof. I think the team did a good job, you know, really aggressive in the restructuring plan. I'm very impressed and happy with the action. We have strong support. We are working well together with COSH to manage the situation. I think you have seen a loss around minus 15 million in 2024. I think we assume about the same level for 2025.

I'm going to go to Rich next. John, thank you.

Thanks, Sean. Richard Chamberlain, RBC. Three from me, please, as well, but that's okay. First is on the home base impacts. I wonder what you guys are expecting there in terms of this year and next year, sort of contribution to sales for B&Q. The second one's on capex, sort of split by region. How much are you now intending to spend on the France sort of existing estate or remaining estate? Sort of thinking about how you're keeping that kind of consistent with the trade and digital offer. And then finally, on the UK gross margin, it sounds like the marketplace had a favourable, impact as you'd expect through the year. But what about product mix impacts? I think they were adverse. Is that to do with seasonal and what is the potential for that to sort of reverse in the coming year? Thanks.

Thank you, Richard. I'll start with home base. When we look at the B&Q estate, today about half of the B&Q stores have home base in their catchment area. So we'll be impacted by the change of banner from home base. I must say very early days, we are early in 2025, but so far we see a positive impact to the B&Q sales. It's very early, you know, depend of categories. I would say even for the spring, you know, home base was very strong in garden. So we really see during the spring the magnitude of the transference. But so far we are seeing positive impact of UCF. I don't want to guide on the specific number for now.

Just on CapEx in France, Thierry talked about right-sizing transfers to BRICO. They're relatively CapEx light, so there's no big bang of CapEx with what we're doing in France. It's within our 3% envelope. Did 13 stores last year. We got another 11, so that's a quarter of the estate, and again, it's well within our CapEx envelope.

And I think on gross margin, I think in short, while we have been relatively cautious on market scenario, you have seen that, I would say more opportunities in gross margin. And that's true of structural actions. Relatively happy to see the purchasing impact, the COGS, the raw material down. So that's a positive. I remind you that in our policy, we want to keep very strong price indexes. So it's not, you know, the topic is not to increase price per se. We want to keep strong price indices. But we have seen very rational market behaviors in all our markets, and we continue to see that this year. So I think we should keep the benefit of those purchasing gains. All the structural action, marketplace, retail media, you're right to say that the mix in 24 was not towards big tickets, so we could have some expectation here. A lot of jobs going on on the supply chain. And at last, we are overall having a pretty healthy inventory. Therefore, all the accruals for delisting items are as well contributing to the margin.

Paul, we'll go to Grace, please. Thank you.

Hi, Grace Gilbert. I'm from Jefferies. Just two questions for me, if I may. First, could I get a little bit more color around any changes in consumer behavior in Poland and just the overall macro backdrop there would be really helpful? And second, and I recognize you may not be able to answer this, but I'm going to try anyway, is there any color you can give around the last few months within trading? I know you typically provide a current trading number. That wasn't provided today, but any type of commentary around that would be really helpful. Thank you.

Maybe let's cover generally the consumer across the three markets, give you a bit of a flavor where we are. So I start with Poland. It was your question. I think you have seen we had pretty good Q4 in Poland. So we were seeing... an improvement of the consumer confidence in Poland, driven by real wage growth, as well inflation gradually coming down. I think recently we have had better news on inflation than expected. And therefore, you know, if we think, I will not say medium term, maybe H2 2025, We are fairly positive about the consumer in Poland. In the very short term, we see a lot of volatility and, to be fair, a lot of worries about the consumer. It's a mix of geopolitical situation. Poland was very close to Ukraine and very close to the U.S., so they are in a difficult position. You have presidential election in May. And for different reasons, the mortgage rate is still very high. So short term, I would say a lot of volatility and uncertainty, but overall positive in the medium term. If you want to say a word around the current trading, why we don't discuss current trading.

You're right. We aren't disclosing current trading today. Today is about our results, our strategy. the long-term direction where we want to take this business. I appreciate in the previous periods post-COVID, we've given a little bit more disclosure. We've chosen not to do that so we can focus on where we want to drive our business. We've discussed it with the board, with Thierry, with our advisors, and we feel that's really to focus on promoting our long-term story. I will give you training update at Q1, which is just in a couple of weeks' time.

Then maybe to give it a color on UK and France. I think UK, I would say, fairly resilient customer, at least for DIY. We are seeing the real wage growth. We are seeing support from 75%, 80% of our business is repair, maintenance, renovation. Probably our customer demographic is a bit skewed toward middle income, so probably protecting us a bit. We were pleased to see the big ticket in Q4, so I can tell you. That in Q4, kitchen and bathroom at B&Q were positive like for like. We have a positive order well in kitchen. So it's a bit early days to say, you know, after one quarter, yes, a big ticket is back. You remember we discussed a lot our view that between the mortgage approval and the restart of DIY spend on big ticket, we need nine to 12 months. We have started to see a better housing market in the UK for the few months. early days, but Q4 was good for big ticket. And we are seeing some home-based transference. So in the short term, if you want put and takes, I think question would be employment and mortgage, you know, probably higher for a long year. But overall, I would say relatively positive. And you know, our worst case scenario for the UK is flat. So France, more difficult. Clearly, we feel the market stay very weak. When you look consumer confidence, gradually improving. So really the low point was somewhere around early 23 for INSEE. So we are gradually seeing an improvement of the consumer confidence. But H2, you follow the French situation, a lot of political uncertainty around budget. That did not help all H2. Nevertheless, we saw Q4 with some good news on big ticket. For example, Brico Depot, a positive big ticket in Q4. Casto still negative with an improvement. So my view is, again, we have been cautious in our market scenario. You have seen that. But there is a time when the French DIY market will recover. You have households with a lot of savings. The long-term average is about 14% in France. They have 18% of savings. The mortgages versus 2019. New mortgage, minus 44 versus 2019. Housing transaction, minus 28 versus 2019. It's difficult to see there is a point it should reverse. That's the only touch of optimism I would put on France.

Can we go to Geoff, please, and sit in the middle?

Thank you. Geoff Lowry, Redburn. I was very struck by your chart about gross margin opportunities and I think you used the word multiple opportunities. I appreciate the slide was with regard to 2025. But if we looked out over, say, three years, many of those drivers feel longer term in nature. Do they add up to tens of basis points or hundreds of basis points of opportunity?

Why don't I give you a bit of color? A lot of initiatives are already underway. We're not starting from zero. To give you a concrete example, we have an initiative we're calling Buying for Growth, which is taking what we know about our private label business and disaggregating the components of a particular product, commodities, energy, what it costs to actually build that product. And that's giving us really good insight to go back to the branded products in terms of how we're negotiating. because there has been inflation over the last couple of years on some of our cogs. So we're really getting bottom-up signs, so looking at product cost components to then push back and really get good negotiation with suppliers. Marketplace has been growing rapidly. That's accretive. As you've seen, we rolled it out now to Poland, to France. It continues to grow really quickly at B&Q. Retail media, we talked about trialing it at Screwfix. These are all things that are underway that are additive and will push our margin forward next year and the year beyond.

We are a bit cautious on sales trend, but we believe cost and margin is really in our control, and there are clear opportunities. We are more bullish on this.

Charles, please. Thank you.

Thanks. Charles Allen of Bloomberg Intelligence. With the focus on increasing sales densities, when you look at your peers around the world, do you see any product categories that you're missing out on where you see peers have got a strong presence and where you think you could maybe generate more sales from bringing some new items in?

I will give you a good example and a bad example. The good example is trade. If we had spotted the big categories, we should have gone already. I can give you cleaning products. You go to Home Depot and you enter the store on cleaning products. We are learning from that. We could do more. It's a good product. It's relatively easy to manage. It's a good margin. But overall, it's trade. Trade is the biggest set of opportunities where we can learn from others. I can give you a Another example, in the U.S., Home Depot and Louvre, they sell a lot of appliances because they are the leader in this category. In Europe, you have other places where you will buy your kitchen appliances. We are doing some of this. It's a market, but not the size of the U.S. So to answer, it's really around trade, the biggest sales-sensitive opportunities we are learning from others.

And Isabel, please.

Thank you. It's from Morgan Stanley. I had a couple of questions. Firstly, on the competitive environment in France, could you talk a little bit of what you're seeing in terms of competitive behavior, given the volume outlook is weak and there have been a lot of cost pressures thrust upon the industry? And then a similar question on the UK, but my question is more around pricing. Would you say that there is perhaps a better opportunity to pass on pricing in the UK today versus, say, three months ago, given, again, competition is not particularly strong? Or on the flip side, are you quite cautious from passing on that pricing given the sort of the start of the recovery? And perhaps you don't want to disrupt that. And then my final question is just going back to the point on inventories. So you have talked a lot about trade. And I'm curious, is there any need to expand the range or maybe improve availability, given that's very important for trade? Or is that something that you think can be more than offset by your other initiatives leading to further inflows?

Thank you. I think let's have general point of prices. competitive positioning versus other, and especially France and the UK. Our key principle is strong price indices. That's our core. We are putting that every week, and we are in a good place today, and we want to stay in a good place. And you need to always start from there when you're a mass market retailer, and that's strong for us. Private label, 15 to 30% cheaper than national brands, and we are, it's half of ourselves, so we leverage our private label as well to drive more volume. Second point, we have seen rational behavior in every market, including Leroy Merlin France, Leroy Merlin Poland, you know, When you talk to the team, they will tell you, oh, they did a promo this week, but they did a promo last year the same week. So, yes, they are competitors. They are doing their job and their promo. But it's nothing outstanding, abnormal in France, in Poland. I think I will not comment on Laura Merlin in France, but everyone in France suffered in 23-24. And I would expect the market to stay rational in 25 in France and in Poland. Just a word, when we say, we usually say UK is not a competitive market, but we just lost one major competitor, and I think some other building merchants are not all in a great shape. So we are gaining shares, you know, we are working hard on prices, on trade, on e-commerce, and that as well, you know, driving our market share in the UK. I think quickly on inventory and trade, yes, when you move to more trade sales, you need a little bit more inventory. It's not necessarily the range, but you need more what I would call the project quantity. When a trade comes to your store and you want $50, you need to have the $50. If you have $5, you don't do the deal. But as I can give you more examples, we have so much in the tank on inventory reduction in the coming years. And as you say, we are... We are not the best in class. We are starting from a high level. Lots going on. Therefore, we'd compensate that.

I just thought that inventory turns a lot faster with the trade. And so it's a different dynamic than what you'd see with a DIY consumer and stock.

You're welcome.

Thanks. That's a wrap. So Thierry, over to you for any closing remarks.

Again, thank you. Thank you for being with us this morning. Thank you for all your questions. And again, happy to keep in touch ourselves with Baresh and with all the team. Thank you, everyone.