Howden Joinery Grp Ord

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

Jackie.

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

Thank you, Jacqui. In reviewing our first half performance and plans for this year, I will use our strategic initiatives for the business as a framework. Based around our key features of our business model, such as leading service and convenience, trade value and product leadership, which are delivered by our highly entrepreneurial teams. These are to evolve our DEPO model, improve our range and supply management, develop our digital capabilities and services, expand our international operations. So first, depot evolution. Our updated format enables us to provide the best working and trading environment and to make productivity gains and space utilization gains in a cost-effective way. As a reminder, the format incorporates a trade counter which displays many of our everyday products, providing an initial focus point for interactions with our customers. To provide customers with in-depot inspiration and choice, the kitchen display area showcases many of our kitchen families, including paint to order options and accompanying solid surface choices. The business developer area makes it easy for our trade customers to get support and advice and for our depot teams to build relationships with them. Elsewhere, we display all the styles and colours of our kitchen families, that they come in and we have a separate area for customers to see which is the configuration of products such as worktops, frontals and taps to best suit their kitchen choices. Our presentation rooms are spacious and private with large and high quality screens to show customers their kitchens visualised in 3D. And the restructured warehouses and racking area has enabled us to both free up more front of house space and backed by livestock surety, the ability to serve trade customers more efficiently and reliably. High service levels, including local proximity and immediate availability are all very important to our customers. And we continue to see profitable opportunities to open depots. Overall, we have line of sight to around 1000 depots in the UK versus 869 trading the UK at the end of 2024. This year, we expect to open around 25 more depots, of which three were opened in the first half. The training and working environment the updated format provides is important to our competitive position, and we are converting more depots to the updated format. By the end of 2024, including relocations, we had revamped 350 depots to the updated format. This year, including relocations, we plan to revamp around 60 more depots and we completed 14 of those in the first half. By the end of the year, we expect to have revamped around 61% of our 669 depots, which are trading and were opened in the old format, and to have around 71% of UK depots trading in the updated one. Next, range and supply management. Sales of new product are a significant contributor to performance. We have upgraded our new product program in recent years, and in the first half, sales of product introduced in the last two calendar years represented 23% of UK product sales, with 2023 MPI being the larger contributor. We are committed to providing market-leading and competitively priced product for our customers, and the value for money is a consistent feature of purchasers' buying decisions. Given pressures on household budgets, price featured very prominently in 2024 and is doing 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. Our kitchen MPI, for 2025 makes more colours, styles and finishes available to more budgets, including at entry level and mid-price points. Excluding paint to order, we have launched 22 new kitchens so far this year, and our entire offering of such kitchens is organised into 11 families. We are innovating in our other long-established product categories and have added more colours and styles to our fitted bedroom offering, which we sold from all depots for the first time last year. Across all product categories, we have also introduced clearer and more delineated pricing to demonstrate the value we offer at all price points. This year, we have 13 new kitchens for our established entry and mid-price families. These include, for our entry-level families, Greenwich in gloss reed green and porcelain, and Allendale in pebble. For our versatile mid-price family, Clark & Well, we have eight new colours, including mass-market-leading metallic bronze and titanium options. We have also just launched fruit. a new family whose styling complements that of our long-standing Chelford family. Froome is currently available in four colours, including ash green and porcelain. We also continue to develop our premium kitchen portfolio, which is a large segment of the market and one most associated with the high street independence. For our contemporary styling, Hockley family, we have added five new colours, including reed green and textured dark oak. Elsewhere, the popularity of our paint-to-order service is growing and the new timber kitchens we have this year move our offering up a notch. The number of our Chilcombe and Elmbridge kitchens sold in paint-to-order, which are priced at a premium to Stocks Colours, has significantly increased this year. We have also recently extended the reach of our timber offering with the launch of a new family, Ilfracombe, an in-frame kitchen of classic design. This is positioned above our Chilcombe and Elmbridge families and Ilfracombe is our 12th family and is exclusively available in paint to order in the colour options there. Effectively, these families are now marketed under classic timber kitchens. Solid surface worktops, 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 is underpinned by our in-house manufacturing capacity, which is amongst the largest in the UK. And sales of solid surface worktops have increased again so far this year. Last year, we increased significantly the number of decors we offer in this service, and this year we have improved our range further. We have a total offering of 60 decors to suit all budgets, and they're in place well ahead of peak autumn trading, during which kitchen sales represent an above average portion of the mix. We continue to upgrade our offering in other categories, deploying both third-party branded product and our own in-house brands. So indoors, we are adding more styles and colours at all price points. In appliances, we have further additions to our Limona brand, which is the leading integrated appliance brand in the UK, alongside extensions to our range of third-party branded product. And in sinks and taps, we have more styles and colours and finishes. Our own label flooring brand called Oak & Grey was launched in 2023 and now represents a substantial portion of the category sales. A new flooring product for this year includes innovative water-resistant laminates and refreshed entry-level decors. Customer and depot feedback on our latest own label brand, which we call Fuller & Forge, has been very positive. The brand features our door furniture in a variety of designs, finishes and styles and improves our offering in the ironmongery category where we are underrepresented. Half one fitted bedroom sales were well ahead of last year and bedroom represents a growing source of incremental sales and profit for us. Installing fitted bedrooms suits the skills of our customers who fit kitchens. and they have a high cabinetry content which matches our manufacturing capabilities. Ranges are developed in-house utilizing our existing manufacturing and sourcing infrastructure. Our initial offering was organized into four families using leading designs from our kitchen portfolio matched with internal accessories, including pull-down rails, mirrors, and internal storage solutions. And so far this year, we've extended our offering with more colors, styles, adding a total of 10 more bedrooms. The new product increased our total bedroom offering to now 29 bedrooms. Hidens is an in-stock business, and our trade tell us that a high level of stock availability is one of the key reasons that they buy from us. Our XDC network, which enables us to offer next-day delivery service and other recent initiatives, including daily traders, facilitate exceptional levels of service. For the first half of this year, our service levels from primary to depots was 99.99%, a world-class performance by any standard. Our in-house manufacturing capability is a source of competitive advantage for us. And we always keep under review what we believe is best to make or buy, balancing the costs and overall supply chain availability, resilience and flexibility. Recent investments in manufacturing That strengthened our competitive position by increasing our manufacturing capacity and by adding broader and new capabilities. These assets include new kitchen furniture lines, a second architrave and skirting line, both at Haydn and a multi-purpose facility for paid-to-order kitchens. Cabinet and panel manufacturing underpins our kitchen offering, which constitutes the principal source of group sales and a higher portion of gross profit. Our Runcorn factory, with its high-volume, low-cost cabinet-making capability has always been an integral part of our manufacturing and logistics strategy. And our plans for the site development and plans for the development of the site are progressing well. In line with our long-term ambitions for the business, our plans give us at Runcorn about 15% more capacity, more flexibility and broader capabilities and lead to lower COGS than would otherwise have been the case Our plan for this site involves installing a new high volume panel machining line to replace the existing one with an automated work in progress solution to manage storage and dispatch to rigid assembly. Building two extensions to existing building to house new equipment and to increase significantly onsite warehousing capacity. To do this and to increase onsite trailer parking space, we also intend to lease for the long term some council land next to the site. The requisite planning processes are well underway and negotiations with current landlords are progressing well. Following planning being granted, the works would then take some three years to complete. Turning to our digital platform. We use digital to reinforce our model of strong local relationships between depots and their customers by raising brand awareness to support the business model with new services and ways to trade with us and to deliver productivity benefits and more leads for our depot teams and our customers. Usage of our online account facilities, which provides efficiencies and benefits for customers and depots alike, has continued to increase. New registrations totaled some 44,000, and around 58% of customers had an online account for half a year. Total users viewing our trade platform increased by 34%, with around 84% of users regularly logging in to see their individual and confidential pricing. Customers with an online account have on average continued to trade more with us, more frequently and spend more than non-users. We saw high levels of engagement on our web platform with growth in our social media presence, which also stimulates interest in viewing our products and services in howdons.com. Site visits totaled 10.5 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 consistently high levels. Across the leading social media channels, our follower user base at around 687,000 was up 13% with around 6.2 million engagements a month. Usage of our upgraded Click and Collect service, which is available for everyday products, has increased significantly so far this year. Online account customers can check real-time stock availability on a depot-by-depot basis, review their individual and confidential pricing at their selected depot and place orders for collection at the time of their choosing. This year, among other initiatives, we are supporting depots in the management of their customer relationships by making our depot account management tools more efficient and productive. A new account management tool captures information from multiple sources and makes it available via a single dashboard. Initial functionality enables automation of time-consuming manual tasks in depots, provides comprehensive account data for each customer and real-time overviews of accounts, leads and contacts. The system is now operational in all UK depots well ahead of autumn peak trading. And finally, international. Half 1 sales for international operations based in France increased following a significant rise in half 2 of last year. The business is responding positively to the measures taken to improve existing depot sales performance. And we've put in place a new highly experienced senior leadership team with a focus on depot team development, investing in enhanced offerings of footfall driving products, alongside other initiatives. For the present, our focus remains on building out our depot team capabilities, particularly account management. As we look to build on the progress made, we expect to maintain the number of depots trading at around about 65 for the time being. Half one sales in the Republic of Ireland were well ahead of last year's with, and we are opening more depots there in 2025. The Republic of Ireland is a market which suits our differentiated model and one which sets us apart from the incumbents. We commenced trading in the Republic of Ireland in 2022, utilising a similar depot strategy to that in France, with the local teams supported by our UK infrastructure and our digital platform. By the end of 2024, we had opened 13 depots, including eight clustered around Dublin and three serving Cork. We've recently opened a depot in Nice, And in total, we expect to open around five depots in 2025, which would increase the number of trading to 18 by the year end. So for 2025, we are well planned, including on our strategic initiatives. These are aimed at increasing our market share profitably as day by day we deliver value to our customers across all price points and product categories. We have 22 new kitchens in stock well ahead of Autumn Peak Trading, plus very competitively priced paint-to-order kitchen offering. And our lineup of other product categories is the best that we've had in my time at Haydn's. We have a program of rooster promotions in place to keep Haydn's at the front of the minds of the trade, together with other price initiatives. We will continue to improve service and availability, for example, by utilising XTCs efficiently and through our daily traders, livestock and click and collect initiatives. We are increasing the range of services and functionality we offer online to the benefit of the depot teams, the customers and end users alike. During 2025, we plan to open around 25 depots in the UK and refurbish another 60 existing depots to the updated format. We expect to end the year with around 65 depots trading in France and Belgium, and we have 18 or so trading in the Republic of Ireland. Lastly, outlook. Whilst we have peak trading ahead of us, we are on track with our plans for the business and our outlook for the full year. Given the prevailing macroeconomic environment, we expect market conditions to remain challenging and anticipate that the total kitchen market may well contract again this year, but at less so than last year. We are, however, 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 are confident that our business model is the right one to address the opportunities that our markets represent across changing conditions. And in summary, we're well placed to outperform our competitors in 2025. As we both continue to invest in our strategic initiatives and return a further £100 million to shareholders through the SharePyback programme. So thank you for listening and we'll now take your questions, please.

Okay.

Thanks very much.

Hi, it's Rob Chansey at Barenberg. Thanks for the presentation, guys. So three questions for me. So firstly, just on, I guess, the market share story, I know historically you've not really talked about precise numbers, but clearly an immensely tough market is contracting. You continue to kind of grow the business. I need to talk about some of the nuances there, specifically on the kind of higher valued kitchen area. I know that's a different route to market, different competitive environment, but an area you've really made progress in, so some more colour on that part of the competitive journey. Secondly, international, I guess, obviously, given how those are pausing, I guess a depot rollout in France. Just interested, strategically, is there a better way to do it in France? It's clearly a €4 billion market for kitchens, ex-appliances, you guys are 2%, someone does it well, How do they do it? What do they do? And then thirdly, I know in the past few years, obviously, balance sheet's been great. But on the kind of acquisition side, to what extent do acquisitions play a role when you're thinking about these different areas? You've clearly got a very wide in-house manufacturing capability now. You can do a lot of these things better, quicker than others. But do acquisitions still play a part of your thought process or are they just off the table? Thank you.

Sure. Look, as I said, I'm pretty confident that we have grown market share over the last number of years. We've done that through a consistent approach to investing in the business right through the cycle, be it COVID or post-COVID. And we've been very intent in focusing on developing out the business and focusing on our customers rather than our competitors. The output is that we seem to be gaining market share, and I would say considerably across all pieces. It's not well surveyed. We don't really know, but... quarter of the market and a third of the volume as a guide. But I think we've been increasing that each year. Yeah, we talk often to the better end of the kitchen market being very important. Haydn's is based on, you know, volume going through our factories and we adore getting high volume going through the factories. The better end of the kitchen market that sort of We call the kitchen market around about 6 billion currently in the round. The best end of the kitchen market, we would consider that sort of 8 grand plus plus. That's an area where we would think, have we gotten to double digits? Possibly. But we're growing fast in that space and we're very intent on developing it out. So adding in solid work surfacing, for example, is not just exclusive to the best end of the kitchen market, but it can go into the medium part of the kitchen market. You can go into opening price if landlords or student accommodation, that sort of thing, want that type of product because it performs so well. But in the better end of the kitchen market, our launch of paint-to-order solutions, in a smart way, the team have done it, not offering too much, but just a great range of choices. And in the introduction of a new family, an in-frame family called Ilfracombe, I think will play very well for us this year and really does challenge the independence properly. You know, the Ilfracombe offering really does tackle the independence, but it does it at a very good value offering. So, you know, there's plenty of money in it for the sitter. There's money in it for us. There's a huge benefit for the end consumers as they get passed on. And we've wrapped this up. You'll see outside that we've launched a new brochure. And I'm pretty sure the independents will look at this and they'll take a gulp when it comes out in the coming weeks. And we will trade this new format as we go through the rest of the year and include things like wooden draw boxes, which is often a feature of what people want at that top end. So that's interesting. But I think the thing that we're pleased about this year is how – The kitchen has developed at opening, mid and top end. So it's not just we're winning at the best end and growing. We've been growing at all levels. And that's what I find particularly encouraging in the first half. So plenty, plenty more to go at. You know, if we've got a quarter of the market, you know, we want an awful lot more than that. We will not rest until we achieve it. On international, I'm feeling good about what's happening. You can't go into a country if you don't have a competitive differentiator. We turn up in France with something that is really unique in that our model sits on lower cost properties. We are deeply in stock of product and there is literally nobody else doing it in the way that we do it in the market. That is being picked up by our trade customers as they shop with us. So we are confident that the model is right and we can see that in many of the depots that we are performing in the right way. Where we've strengthened our proposition, we've brought more range and we've brought more day-to-day type product. And it's very important that customers shop with us frequently. And we've been doing that in Ireland and we've been doing it in France. And the team over there has just done an exceptional job. on making sure there are day-to-day products. So we are seeing our largest account base in France ever, same in Ireland, and we're seeing them more frequently. And when we see them more frequently, we can talk to them about kitchen sales, so our lead bank grows off the back of that. So, yes, while we're small relatively in France for the business, we're making good progress. And I would also point out the investments that we've made in the senior leadership team there on Sebastian Kryczak's leadership. Zarin Zalek, who's come from the UK, over in France, and the other members that have been brought to the team there are as strong as they possibly could be. So that team will develop out that business very well, and we're confident that the model will land. On acquisitions, look, we've not been acquisitive historically. We've bought a couple of things that are relevant to strengthening our business model. And when we see something like that, of course, we're well-placed to go and do something like that. You know, we bought Rotherham's, which is our first entry and our first purchase ever, you know, that was work surfaces and it was sort of experimental. And then we bought Sheridan's and the two together. We would say, you know, it's been a fantastic investment and really supported not just those businesses on its own, but has grown out our business. cabinetry business, which is primarily what we want to do. And it's easier for customers when they're making a purchase with us to buy the whole kitchen solution with us, appliances and flooring and worktops, lighting, all that sort of stuff. So we really do consider the size of the basket. But yeah, Jackie and I will be alert to anything that comes across our desk. And by the way, loads of stuff comes across our desk every day. but you sift through it. But, you know, anything that was there that would strengthen manufacturing capability and, you know, be interesting from that point of view, yeah, of course, we'd be open to having a look. Thanks for your questions.

Thanks very much. Morning. Ainsley Lemon from Investor. Just two questions. On the gross margins, I think you said the price impact was 1% in H1. You said that would grow in H2. Just interested, is that you expect to push more price through? Is it phasing versus last year? What's driving that? And I think also you usually deliver a higher gross margin in H2 versus H1. Would that be your expectation for this year? And second question, just on the overall kitchen market, could you give us a kind of sense or feel for where you think volumes are relative either to the recent peak or what you would consider to be a normal market? And kind of what catalyst do you think would turn that? Is it lower interest rates? I'm interested in your views on that. Thanks.

Yeah, just taking the price one first. So the pricing is already in place, but it's just the way it came in. It was coming in around about March this year. So you get an impact of about 1% in the first half That'll grow in the second half. It'll be about 2% for the full year. So that was the first one. The second one was just on the gross margin. So we're holding gross margin at this point, H1, H2. So you get a little bit of a different impact coming through in the second half. So a bit more price, but we won't have those sourcing efficiencies coming through in the second half. So that's why we're holding at this point.

I think we've done well on landing prices this year. It points to the amount of innovation that's coming through in the business. The teams can get more price from innovative product coming through, but also just holding the value of the proposition. The things that we can do in Huygens versus our competitors that are quite incredible. You can have a kitchen tomorrow. You can adjust it in flight. You can... know if something gets broken and we've never met a builder who's broken anything on site but we can replace it and we can you know fix it straight away um you know and it is a power it's you cannot replicate it in the rest of the market be it here ireland or or france um regarding your second question um look it's it's it's not well uh position you know it's not well placed but you know we are in sort of a lower cycle from a volume point of view. And we think it's down a wee bit this year. You know, next year, will it be slightly, will it be slightly down again? I just don't know. I think we'll call that when we get through the peak trading period. By value, I think the market's, you know, in an okay place versus last year, maybe call it level, but versus sort of 2014, 15 and 16, the market's, you know, quite considerably down actually versus then. So if you think of our, through top line uh sales performance and holding on to our volumes i think we've done incredibly well versus the market um i mean what happens going forward is uh you know within anybody's sort of uh guess but i i think the thing that we do is we just continue on delivering what we do open up depots invest in manufacturing and push out the business and We will continue to gain market share. Others have been retreating and going to asset-like models. And when the market comes back, they're not going to be placed to come back and chase after us because we've gained a stronghold. And we continue to grow our account base and make sure that they are trusted to work with us regularly and become complete trusted partners with us. and ensure our teams are very well incentivized. And particularly in the second half, I want the teams to be very, very well incentivized to drive our peak trading performance. And I want them to do very, very well. So just to be quite clear on that. Things that could change? I don't know. I don't think we're expecting any market help, if you like. And I don't know what's going to happen in autumn budgets and so on. But I would say... We like people moving, we like new house built, we like reduced housing rates, interest rates. But having said all of that, there's a lot of people, if they choose not to move or can't move for whatever constraints there are in that, stamp duty or whatever, people there's still a huge market for us for staying and improving and there's still an awful lot of kitchens need to be put in and walls taken down between kitchens and living spaces and open days and you know making making homes i think we're in quite a sweet spot because the home is just consistently and continue to become more and more important over over time christian

Thank you very much. Three from me, please. Maybe just following up on the gross margin piece, but maybe taking a more medium term view. There are quite a few puts and takes and there's more manufacturing, range expansion, price tools. Is 62% the right level? Is there more to go for? Just as the first one. The second one, On pricing, but probably more industry pricing, what are you seeing in terms of competitive reactions to higher national insurance contributions? Are those being passed on? Are they sort of taking a hit on margins and a mix of both? And then just finally, you pointed to some mixed benefits. I sold more kitchens relative in the first half. Just anything to read into that, the driver of that. Thank you.

Yeah. Look, we're constantly focused on cash, but I don't think anybody's going to be happy if we drop our gross margins too low. Do you remember when I took over the business back in 2018, some eight years ago, And, you know, my first job was to get the margin back in the right place because we dropped prices and, you know, we were going for significant volume and there was volume uplift. But finding this right balance between price and volume is the job of what we do, you know, day in, day out and selling the value of our operation. I think we just got good at it. We've got even better at it in the first half of this year. the team have been incredibly thoughtful about how we place prices into what we put into the depots. And we're very good at targeting the depots and making sure that they hit the right value for the product that they sell. And, you know, our depot managers are paid 5% of the depot profits and, you know, the teams are paid on the gross profit of the depots. So, you know, we are all lined, for me, Jackie, and the rest of the team, we're all lined up to make sure that we all do the right thing on on growth margin. We've been introducing a new tool this year, which we're calling PAM. And PAM stands for price and margin. And it's a tool that helps the depots see what other depots are pricing in terms of particularly everyday products, but also what's going on in the marketplace. And we've been putting that in and trialing it. It's gaining a tremendous response from the teams. And it's a very capable tool to help them make sure that they are at absolutely the right price. And sometimes that leads to improved gross margins as well. So I look for now 62, a bit above 62 feels about right, but just always bearing in mind that we're leaving enough money for the builders to make money and everybody is being successful off the back of it. I think on the sort of industry pricing, I would imagine a lot of people have priced away half of it and tried to save costs on half of it as a guide. would be my sense. And in the first half, in terms of sort of mixed benefits, look, I think innovation drives sales. I think confidence of the teams and their ability to earn money. Very important and I think both of those things were a feature in the first half. Now remember we've been opening up consistently between 25 and 30 depots and we're still working through the refit program. I was having dinner with eight of our depot managers Wednesday night just talking about incentives and making sure that they're well placed for the second half. Three of the eight were going through refits and they were the eight of our biggest depots. Very exciting. places those depots particularly well for the second half. So look, we sold more kitchens in the first half. We'll try and do again the same in the second half, but we are interested in day-to-day footfall driving businesses because a healthy door, joinery, flooring, skirting, architrave type business is good. It's good for footfall. It's good that we see the customers regularly and then we can sell them more kitchens.

Charlie Campbell at T4 here. I've got a couple of questions, please. Just to understand, I suppose, on Roncorn, the risks to disruption of production and how you manage that. And then secondly, you touched on it in the answer to the last question, but just thinking about payback from new depots and refurbs. Just wondering, have you seen that diminish sort of materially considerably over the last few years as you move from lowest hanging fruit first perhaps? Just wondering what the process was on that.

I mean, just taking the second one first, not really. Not really. I think everything that we've done in the business that has improved the proposition, you know, click and collect, double the amount of displays. We've moved our format from about 450 square feet up to about 850 square feet. And I know that's an awful lot less than a number of our competitors offer in terms of display. We don't think that's the right way to do it. We find it very costly to replace displays with new competitors. And you don't need huge, big kitchen displays to sell all the kitchens. We think the interaction and the planning and the design and so on and the availability will do that. So we're very happy with paybacks on new depots. We get excited about the new ones that are still on the blocks both here. And whilst we've paused in France, we're only pausing for a moment. We've still got our eyes on new depots, new territories to open up. We're just stabilizing it first. In fact, we have signed off one extra one that will come out the start of next year in France. So, you know, we will continue and some of the sites that we're finding in Ireland are just fantastic, absolutely fantastic sites in the Republic. So, yeah, no, nothing really to point to that sort of concern there and paybacks. In terms of Runcorn, I mean, One of the things I don't think that's well enough appreciated about Haydn's is the capability that we've got in our vertical integration. We're vertically integrated, but we are massively capable under Julian's very strong leadership there. Julian has built out a very, very strong team. A chap called Nick Fisher will be developing out Runcorn for us. Nick has done huge projects for Amazon. He's done huge projects for Jaguar Land Rover where he was there most recently, very capable. So it's planned. We will take our time. We will do it correctly. The unlock has been taking the extra land. That is, we call it land under the bridge. It's adjacent to the factory and we've been able to move off vehicles at the back of that factory and place them elsewhere. We'll get that land pretty soon we'll probably use that land to support us during peak this year. And that gives us space just to develop out the back and, you know, we'll move around. We are excellent at managing new factory developments and I would have no concerns in our ability to do this and, you know, more in the future.

Shane Carvery, good buddy. Just two from me if I can. Just to go back onto that kind of France rollout point, with the new management team in place now, do you have a kind of better view on how far away we are from kind of stabilization and then a resumption of growth? And then the second one was just regarding H1. You kind of mentioned that towards the latter part of H1 performed really well in the increase in promotional activity. Was there anything done differently there, anything unusual versus prior year that we should be aware of?

I would say we only just played a slightly better game year on year. There was really nothing that different. I think we gave our teams the opportunity to earn more and they drove more sales and earned more as a result of that. We put a focus on one particular category. We did the same thing in the previous year. I think the thing that we were pleased about was if you look across the first half with this point about opening mid and the best end, it wasn't driven just by one particular grouping of kitchen families, it was across the piece, so I think fairly healthy stuff. In France, yeah, as I said before, the job is to stabilize and make sure that we work through all of any underperforming depot. We're very pleased with a significant number of the depots in France. You get that in any estate where you get really strong ones, medium ones, and underperforming ones. I want the underperforming ones fixed, and the team were very clear on that. Resumption of growth. I had dinner with a number of the depot managers in London. It's one of the incentives that Zarin Zalek had put on. And the number of towns they talked about where a Houdens was needed was, you know, really quite exciting. So we have signed a site in Reims, in France, in the Champagne district. And we found a site that's at the right size for us. and we'll be able to just pack a punch in that proposition and Sebastian wants to land it incredibly well. He'll take his time on that. And whilst we're not adjusting any part of the model, we will just make sure the size and the rental affordability is right. The business runs at great margins already, so... that feels like the right way forward. And I'm not putting any sort of numbers on it, but we will build out the capability of the teams very, very well before we roll out further. But I'm very pleased with the management team in France.

Thanks for taking my questions. Just to come back on the vertical integration point, can you remind us where you are and where you see that going in the future and the potential that can have on margins? And then secondly, on the new product sales, I think you said 23% in H1. What sort of run rate would you like to see for the foreseeable future? Thank you.

Yeah, on the vertical integration point, we make about a third of the volume that we sell. And we do consider what we're capable of manufacturing, what we're not. We're very clear on what our competencies are. And just remember, you know, we would be extremely close to our European supply base. And there are things that our supply base are, frankly, better at doing than we would be doing. But we have been challenging it. So, you know, we are outstanding at building cabinetry. Some doors, you know, Julian pushes to do more and more doors. In fact, we have taken volumes of product from Europe and brought them back to the U.K., So, you know, with 40%, a bit more than 40%, 40, 45% in the long run be about right, probably indicatively, but we will always be balanced up, you know, what we do, what we make and what we buy. We built some capability to bring some doors back from Italy to Europe and the supplier fought incredibly hard to keep the business and we repurposed the production lines to make sure we were building end panels instead. So we won, the supplier won. Yeah, but we keep a very close relation. In fact, we're so close to some of our vertically integrated suppliers that come and help us. The relationship is that tight. So we're keen on doing it. Of course, there's a benefit to gross margin, but it's not just that. It's the flexibility, the ability to spin stuff up, and what Julian and the team can do when we get into peak trading period is quite incredible. We will deliver... 19 million pieces into our depots in our peak trading period this year. That's what we plan to do. And just to give you a sense, we will drop 3,600 pieces of the 19 million pieces. And all those 3,600 pieces will be fixed within two days. for the depots. That's the reassurance that our depots have in terms of selling product. It's really unbelievable what goes on in this business around peak. 70,000 deliveries will happen during our peak trading period. One delivery into depot every 22 seconds. For a kitchen business, not bad. So we are very, very supported from a vertical integration point of view. And I think the teams are, Dead excited about Pete in the second half this year. We love a scrap. Apologies, I didn't answer your question, innovation. We seem to be running around a quarter of ourselves coming through from innovation. I think we've got a particularly high this year versus last. And we pointed out 2023 being another particularly strong year. So we were strong in 2023, a little bit lighter last year, very strong this year.

I've got two, please. Firstly, I think, could you talk a bit about the promotional activity at the end of the first half? Do you think there was any pull forward in that period from the second half? And secondly, in the Runcorn expansion plan, just interested in the rough magnitude of the site freehold cost there? Thank you. I missed your second question. Apologies. The freehold cost.

Oh, the freehold cost, yeah.

Okay. Do you want to talk about freehold?

Yeah, so take the freehold cost. It's circa 30 million pounds. That's in addition to our BAU CapEx.

You know, we feel very comfortable about owning strategic sites like that, you know, where we're spending. You know, the kit that we're putting into Runcorn will last 25 years. You know, we buy best in breed. Make sure we do it well. Promotion active in H1, there's a few people asking questions about that. I'd be relaxed about, you know, what we did in H1. You know, it feels like, you know, a run rate rather than anything that we've pulled forward from H2 into H1. It just doesn't feel like that. So nothing particularly different that I would point to. You know, Hyden's is a very, very steady company. delivering business and if you if you look back and you stand back over the last three or four years and you say well when we hit a run rate in individual periods for the year they tend to be you know similar and then you'll have a good or a bad period 21 um so you know tend to have good ones um so i wouldn't particularly point to anything in the first half We incentivised our teams well. If there was one thing that we did well in the first half, we incentivised the teams well. And I intend, saying it for the third time, to do it in the second half of this year. I want our people to earn well. Any more questions?

Thanks. Clyde Lewis at Peel Hunt 3, if I may. First one was on, I suppose, on joinery as opposed to kitchens. It sounds very much like you're gaining share in kitchens. Are you also doing the same in joinery? I haven't said too much about that today. The second one was on the sort of push to grow that market share in the upper market part of the kitchen side of the business. Do you think the the way you sell at the moment through the branches, again, with a very limited display area. Obviously, you've got the design room at the back to sort of take customers through, but is that enough of a draw for the highest vendors to sort of come and buy the kitchen from Howden? So it'll be interesting to hear what you're doing or thinking about on that front. And the third one was around bedrooms. Are you pulling in a different type of customer and tradesmen? to do that or are you seeing very much a sort of shift across from the kitchen installers who are obviously sort of joinery specialists anyway?

Yeah, they're all good questions. Thank you very much. Yeah, look, the joinery versus kitchens thing, most of our money is made out of kitchens. Joinery is important because it drives footfall. I suppose if we look back and reflect on ourselves, we have definitely spent more time innovating in kitchens and appliances and so on and in joinery yeah we've probably since Matt Norris has been with us as commercial director we really upped our game there but it does take time for some of this product to come through could we have done more on doors for example I believe we could have and bringing more innovation into doors is happening right now and we'll take time to come through but we We're back into good, sensible growth. Skirting and architrave, we've got a couple of big production lines at the factory that we love feeding. We love just belting the stuff out. It's like us selling milk, you know, a quid a meter on door on skirting and architrave. You know, we just belt through that product like you've never seen. So it's a very big focus for us. And, you know, we've done very well with own labels like Oak and Gray and Flooring and brought in new colors and styles I'm very excited about what happens to our new top end handles range, Fuller and Forge, that we've brought in. And we've reinvigorated things like stair parts and stairs, things like that. We've started playing around with things, you know, people moving into the attic. it's the joinery type product that is right for us and anything that's related to that that helps our customers fit that type of product so you know stuff for the van stuff for the job even stuff for the builder themselves are all things that fit in that type of joinery category i think our pricing tool that's launching will make sure that we're even keener and more on the money every every time but It represents a significant growth opportunity for us. But in the overall profitability figures for the year, you're not going to notice it. We just worry about how often, how frequently we're seeing customers coming through our doors. We're in good nick. At the upper end of the market, selling kitchens in this modern way has been really facilitated by the extraordinary work that the team has done on XDC. XDC. A big cost for us doing it, but it was a complete unlock to us being able to service what are often complicated, more skews involved in a kitchen like that because of all the details that people want. And there's often a case where we would not want the stock to be in a depot because it ends up being trapped in a depot. We get excited about this colour. It goes off and then the stock is trapped. So XDC has given us the availability, the ability to focus on fast sellers in depots. So we call those daily traders and there's about changes, there's around about 1500 SKUs, 70% of the volume, you've got to be in stock of all of those and the system support that. XDC enables stock to turn up for our customers. That's the most important part of this thing. If we're selling what you might buy on a high street, a 50, 60,000 pound kitchen, and you come to Howden's and you get it for 25, 28, and you can hardly tell the difference between the two. I've just done it in my house in London. And it is breathtaking. When you see the result of particularly this new in-framed kitchen, you wouldn't go to an independent. Now, customers are smart. very, very smart not to be underestimated. And I think when customers go in and see big displays and big environments and somebody attacks you and won't let you get out before you've let the lead be there and you get follow-up telephone calls, that can be uncomfortable for folk. And we're not like that in Haydn's. We're there to support the builder in his sale. And I think customers, when they see value and they see the quality of the product we offer, and then the builder is there saying, This is the right way to go on this. These jobs are complicated and stuff goes wrong. Every time on the kitchen, stuff goes wrong. Our ability to fix it and rectify it is breathtaking. You know, if you're doing it with somebody who's, you know, you've bought a kitchen and you get a promise that it's five, six weeks delivery and then you've forgotten some items or indeed you haven't forgotten some items but you decide to do the laundry room, you decide to clean more cabinets and you can't get them because some people don't even offer the ability to buy four units or less. You know, it's not an order for them, so you can't get it. Or if you over-deliver on an item and you end up with a lardine that you don't need, good luck. You're selling it in the Facebook marketplace. You know, the model is so set up for this. So going into one of our new formats of depots, I think we've hit exactly the right balance between it's feeling like a trade environment, there for the trade, a tool for the trade, where you walk in and you see nice displays, a good representation of all the families. But you don't need to see every family in every colour. You want to go and see a nice display of an Elmbridge kitchen and then you can show the colours and you can show how people match it up. And then our designers do this most incredible job of taking a builder's customer and bringing them into one of our design rooms and showing them the designs. And our conversion rate is unbelievable. When we get a customer in one of our design rooms, we convert almost at a perfect level. So I am very, very comfortable with where we're at from a design point of view, not just about pretty displays, but also about a very strong back end supporting. If I was telling any of you to buy a kitchen, and I wouldn't say it just because I run Haydn's, I'd be saying it is the perfect place to buy a kitchen because we can support you all the way through the process properly. I forgot about that one. Yeah, I don't think it's a different customer. I think it's exactly the same customer. I think this time in peak trading is going to be interesting as well because the depots, you know, we say peak trading is best done by a kitchen. And then some of the depots can be saying, you know, can we say best done by a kitchen and a bedroom? You know, we do not want to lose focus on kitchens as the primary driver of profitability. But there's a lot of builders who, you know, will add on bedrooms to the sale when they're in the customer's home. And I think that is a significant opportunity. The business is clicking along very nicely. And the additional range expansion that we've done, it's not for every one of our builders. Some builders are just happy being in the kitchen and don't want to go into bedrooms and do bedrooms, but there's a number of them really do. And it's very interesting because our builders have worked with us for so long, it takes time for them to learn. Even some of them will still not realize, even though we've told them several times that we do do bedrooms, But, you know, we're comfortable with where we're at. We like the margins on it. So we will continue to press forward if that is good.

Hi, Ben Barra, RBC. I'll just take one. Just in terms of sales leads and how that perhaps developed throughout the half, did you see an improvement there or was the strong result mainly sort of an uptick in conversion rates?

Yeah it's a good question and the lead bank we would say is in a sensible place and surveys in a very good place so conversion would have been better in the first half but the lead bank is ticking on at the right sort of rate that we'd want it to so a bit of a mixed answer on that but You know, if our lead bank, we are, I mentioned an account management system that we're putting in at the minute. And, you know, it gives us an incredibly accurate view of where we're at going forward. But, of course, it'll give you a view going back. But when we look relatively to how we measured it last year, all sensible stuff. One more, I'd say. Yeah.

Thank you. Brielle from Jefferies. I've just got two left. The first was just on the... guidance for around 2% price inflation this year. Will that be particularly skewed to certain sort of price points in the kitchen market or is it fairly consistent across all three? And then the second question was just on depot openings in the UK. I think you made the point back in February that actually if you get close to that 1,000 target, it will be more difficult to find the right number of sites per annum. But I think for this year, that number of new openings has sort of cracked up from about 20 to 25. What was behind that and also is 25 the right sort of number to assume going forward? Thanks for that.

Yeah, on the pricing thing, I commented earlier that Matt, when he's led the price increase, has been very thoughtful about where our competitiveness is on pricing. So there's some parts of our range, you know, wouldn't have had a price increase on them. And other areas would have taken a little bit more. So we constantly think that through across the piece. But by and large, we've moved, you know, the pricing on, you know, across all the price points, but in particular about some. And probably best, I don't talk any more detail on that because it's competitive. On depot openings, yeah, I look. I don't want to put the team under the wrong level of pressure when we're trying to find dep openings, particularly as you're moving closer to the 1,000. So it's easy for me to sit there and say, let's do 30, let's do 35. And I do never want to take a property that's not right for us. And often there's a bigger mix of new build, which tend to be slower, or you're trying to get into an estate, but it's just not there. So at the start of the year, I said 20 feels about right for this year. But as the team has looked through it, it feels easier to get more than that. So we've set about 25. But that sort of range does not feel wrong for us in this cycle as we see profitable opportunities to open up depots. I think we're done. Is there any calls online that want to be...

We have no questions from the convent school.

Thank you very much, everybody, for coming. Appreciate it. We'll be around for a bit longer if you want to chat further.