Kingfisher plc

Good day, ladies and gentlemen, and welcome to Kingfisher PLC's half-year 2024 to 2025 results presentation. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a Q&A session with research analysts. If you wish to ask a question, we ask that you please use the raised hand function at the bottom of your screen. Instructions will also follow at the time of the Q&A. I would like to remind all participants that this call is being recorded. I will now hand over to Thierry Garnier to start the presentation.

Good morning and welcome to our 2024 half-year results presentation. Before we begin, I would like to extend my thanks to all our teams across Kingfisher for their continued hard work and focus on achieving our goals. Although we have seen challenges in our market for the last two years, they continue to work hard to provide an outstanding proposition to our customers. I'm really proud to be part of that team. To slide two and the agenda for this morning, I will begin with an overview of our key messages and financial highlights. I will then pass over to Bernard, who will cover the financial performance in more detail, together with our outlook and guidance. I will then provide an update on our strategy and the progress being made in France before we open up to Q&A. So turning to our key messages on slide three, I've said before our key objectives this year is to focus on what we can control. That means growing market share, managing our gross margin with discipline, controlling our cost and cash, and continuing to deliver at pace on our strategic objectives. I'm pleased to say that in H1, the teams did exactly that. Our overall trading in H1 was in line with our expectations. We were pleased to see continued market share gains in the UK and Poland, while our performance in France was broadly in line with the market. In what remained a soft consumer environment, particularly in France, we managed our gross margin, cost, and inventory very well. We are making solid progress against our strategic objectives. In particular, we are going to draw attention today to our progress in e-commerce and in trade. These two areas have been standard performance in the period, and we are making strong progress in extending the UK success of this proposition to France, Poland and Liberia. In March, we set out our plan to take our performance and margin in France to the next level. The plan includes the restructuring and modernization of the lowest performing stores within the Castorama estate. We are making rapid progress here, and the steps we are taking are starting to take effect. As ever, we are paying very close attention to the short and medium-term outlook for our markets. Here we see some early signs of an improving housing market, particularly in the UK, but remain cautious on the lag between these indicators and home improvement spend, especially on big-ticket categories like kitchen and bathroom. Overall, we believe that market growth in the UK, France and Poland are all tracking within the scenarios we set out in March for 2024. So given this, and together with our H1 results, we have tightened our profit guidance, lifting the lower end of the previous range by £20 million. Finally, we are upgrading our free cash flow guidance for the year. As a result, we have decided to accelerate the pace of our current £300 million share buyback programme. We now expect to complete the programme in March next year. To slide 4, an overview of our financial highlights in H1. Total sales for the group fell by 1.4%, with a like-for-like decline of 2.4%. Our businesses in the UK and Poland showed very good resilience, while our performance in France reflected the soft consumer backdrop. Consumer activity in repairs, maintenance and existing home renovations held up well, and this supported sales in our core categories, which saw a modest decline of 1.1%. As a reminder, core categories are the backbone of our group. They represent two-thirds of our sales and exclude big-ticket and seasonal products. Our gross margin increased by 40 basis points, we maintained competitive price indices in all banners and also stayed disciplined in our promotional activity. Retail price inflation was flat year on year, and volumes were slightly down, given weakness in big ticket, as we expected. We also delivered strong management of our operating costs and inventory. Through structural cost reductions as well as temporary flexing of variable costs, we offset cost inflation entirely in H1. We are fully on track with our commitment to achieve £120 million of cost reduction for the full year and inventory reduced by £134 million, or 4% year-on-year, while achieving a reduction in inventory days and better stock availability. E-commerce was a standout performance, as sales rose by 8.4%. Our group e-commerce penetration of 18.3% is an increase of 1.5 points year-on-year, Within this performance, we saw strong sales from our marketplaces in B&Q and Iberia, with Group GMV of £163 million up 80% year-on-year. We are also making strong progress in driving up trade penetration across our banners. Trade Point in the UK and Ireland now accounts for 22% of B&Q sales, up 2% each point. In Poland, threat penetration has already reached 15% of sales. And at Brico-Depot France, threat penetration more than doubled to 9%. Given our strong control of gross margin and cost, adjusted PBT was down 0.5% to £334 million. This includes a one-off benefit of 25 million of business rate refunds at BNQ. Free cash flow generation was strong at £421 million, supported by the phasing of our inventory purchases and cash tax refunds. And at last, we have announced today an unchanged interim dividend of 3.8 pence. Delivering attractive returns for shareholders continues to be a priority and we have already returned £250 million to shareholders through dividends and buyback in this financial year. By March next year, we'll have returned close to £1.9 billion over four years. Overall, the business is in good financial health and very well positioned to achieve our targets in the second half and beyond. I will now hand over to Bernard to go through the financials in more detail.

Thank you, Jerry. Good morning, everyone. Starting with slide 6 and the key financials for the half year. Total sales in constant currency were down 1.4% to just under 6.8 billion. Excluding the impact of new stores, like-for-like sales were 2.4% lower. We maintained our gross profit at 2.5 billion with the gross margin rate up 40 basis points. This reflected our strong management of product cost and retail prices, as well as effective supplier negotiations and lower clearance costs and stock provisions. In constant currency, retail profit decreased by 2.7% to 420 million, reflecting lower profits in France and higher losses from Kostas, our joint venture in Turkey. These were partially offset by higher profits in the UK and Ireland than Poland. Profits in the UK were supported by 25 million of one-off business rate refunds at B&Q. The group's retail profit margin was 10 basis points lower at 6.2%. Operating costs in constant currency increased by 0.4%. However, excluding the business rate refunds and the results of Kostas, costs increased by 1.1%, and this largely reflected new store openings and new business, including Scrufix International and NeedHelp. After central costs and our share of joint venture interest and tax, adjusted PBT decreased by 0.5% to $334 million. We generated free cash flow of $421 million, supported by the phasing of inventory purchases over the year and lower cash taxes. And our total liquidity position remained strong at over $1.1 billion. Net debt, mainly comprised of property leases, was just under 2 billion, with net leverage of 1.4 times EBITDA, slightly lower from the year-end position of 1.6 times. Moving to slide 7 and looking at our sales performance by category. The figures you see on this slide have been corrected for leap year and calendar impacts so that we can assess underlying trends. In our core categories, which account for the majority of our group sales and volumes, we saw resilient sales driven by repair, maintenance, and renovation activity on existing homes in the half, with like-for-like sales lower by just 1.7%. Sales trend improved in Q2 with stable volumes and low levels of average selling price inflation. Like-for-like sales from big-ticket categories, which include kitchen and bathroom sales, were 7.4% lower in the half, reflecting broader market weakness, as expected. In the UK and France, Q2 big-ticket sales trends were similar to Q1, and we saw an improvement in Poland. And in our seasonal categories, which include products such as outdoor furniture, barbecues and cooling products, like-for-like sales were 3.7% lower for the half. Seasonal sales underperformed in all of our key markets in Q2, impacted by unfavorable weather for much of May and June. Despite a strong trend since the start of July, we were not able to fully recover lost sales within the quarter. For the group overall, we saw flat retail price inflation in H1, plus a negative mixed impact on the average selling price from lower big ticket sales. Overall, volume was lower year-over-year. Over the next few slides, we'll take a closer look at our performance by region. All year-over-year variances are in constant currency. starting with the UK and Ireland here on slide 8. Like-for-like sales were down just 0.2%. We saw positive performance in core categories, supported by strong e-commerce and trade customer sales. Space and acquisition contributed an additional 1.2%, mainly from store openings at Screwfix. Total sales in UK and Ireland increased by 1%. Looking by banner, like-for-like sales at B&Q decreased by 1%, with strong trade point sales and e-commerce marketplace growth more than offset by weakness in big-ticket categories. Seasonal sales were also slightly lower year-over-year. B&Q's total e-commerce sales increased by 18%, with marketplace participation reaching 40% of B&Q's online sales in H1. TradePoint delivered like-for-like sales growth of 7.1% for the half, with its penetration of B&Q sales increasing by 2 percentage points to 22%. At ScrewFix, like-for-like sales increased by 1.2%, driven by robust demand from trade customers. Space growth and the acquisition of ScrewFix spares contributed 3.3%, for total sales growth of 4.5%. B&Q, TradePoint and ScrewFix all grew their market shares in the half. Gross margin for the UK and Ireland increased by 50 basis points, reflecting our effective management of product costs, retail prices and supplier negotiations, and a favourable sales mix within Screwfix. Operating costs increased by 1%, including the benefit of 25 million of one-off business rate refund received by B&Q. This resulted from a delay in the government's valuation of our larger stores, which led to the overpayment of business rates from 2017 to 2023. The refund was negotiated in Q1 and confirmed in Q2. Excluding these refunds, underlying operating cost increases were driven by staff costs and costs associated with new stores. These were partially offset by structural savings from our cost reduction program. Retail profit for the UK and Ireland was 6.2% higher at 325 million, with retail profit margin moving up by 40 basis points to 9.6%. Moving to slide 9 and our performance in France. Like-for-life sales were 7.2% lower in the half, with the home improvement market continuing to be impacted by a soft consumer environment. Despite this, both our banners performed in line with the market and underlying sales trends in core and big ticket categories were broadly consistent from Q1 to Q2. Looking by banner, Castorama sales trends slowed significantly in Q2 due to the impact of weather on seasonal category sales. However, Castorama's total e-commerce sales increased by 9.8% in the half, benefiting from expanded data and AI capabilities and positive early results from the launch of its new marketplace in March. At Ricodeco, like-for-like sales were 6.8% lower. Sales trends in Q2 slowed from Q1, again due to the significant impact of weather and seasonal sales. This was partially offset by a slightly improved underlying sales trend in core and big-ticket sales. This was in part driven by the development of BRICO's trade proposition, with dedicated service desks, colleagues and a new loyalty program rolled out to all its stores in February. Gross margin for France increased by 20 basis points, reflecting effective supplier negotiations and lower stock provisions. This was partially offset by customer participation in promotional and clearance activity, together with selective price investments at BRICO depot. Costs were tightly managed, decreasing by 3%, building on the actions initiated in H2 last year around staff costs and discretionary spend. Both banners also continued to deliver structural savings from their longer-term cost reduction programs. Overall, retail profit was 32% lower at 69 million, with lower gross profit partially offset by lower operating costs. France's retail profit margin was 120 basis points lower at 3.3%. Turning to slide 10 and the performance of Castorama Poland. Like-for-like sales were 0.2% lower, with sales trends supported by an improved consumer environment and strong progress in the development of Castorama's trade customer initiatives. We were pleased to see the business grow its market share in H1. Sales of core and big-ticket categories were positive in Q2, with the sales trends improving against Q1. This was, however, offset by seasonal category sales, which were significantly impacted by the weather in Q2. Growth margin for Poland increased by 140 basis points, reflecting their effective management of product costs, retail prices and supplier negotiations, together with the lower stock provision movement. The gross margin movement is also somewhat magnified by the higher customer participation in promotions in H1 last year. Operating costs were 3.3% higher in H1, reflecting year-over-year increases in pay rates, higher bonus accruals and higher costs associated with new stores. Cost increases were largely offset by a continuation of the actions taken in H2 to reduce costs, including further flexing of staff levels and discretionary spend, together with structural savings from our cost reduction program. In the prior year, we also absorbed charges related to ineffective foreign exchange hedges, which didn't recur this year. Retail profit for the year was 35.3% higher at 50 million with a retail profit margin of 5.3%, 130 basis points higher year over year. Turning now to slide 11, the performance of the UK and Ireland, France and Poland are shown here in summary. Looking now at some of our other markets. First, in Brico Depot Iberia, where like-for-like sales were 2.3% higher. The business saw positive like-for-like sales in core and big-ticket categories, with strong support from trade customer sales. Seasonal categories saw sequential improvement in Q2, after lapping strong comparatives in Q1. retail profit increased to 6 million. At BricoDepot Romania, like-for-like sales were 1.5% higher, while the resilient overall performance sales trend slowed across all categories in Q2, driven by abnormally hot weather across the quarter and weaker consumer environment. Romania's retail loss decreased to 6 million, reflecting slightly higher gross profit and lower operating costs. Other consists of the consolidated results of Scrufix International, NeedHelp, and franchise and wholesale agreements. These businesses posted a combined retail loss of 80 million, up from 10 million. The majority of this was driven by Scrufix France as the business continued to invest in its stores, operations, and building brand awareness. In July, we sold our equity interest in NeedHelp back to its original founder and current CEO for nil proceeds. This resulted in a loss on disposal of 3 million recorded in exceptional items. NEDEP will continue to offer their services to our customers at B&Q and in France. Our Turkish joint venture, Kostas, contributed a retail loss of 6 million, 11 million lower year-over-year, in a challenging macroeconomic and trading environment that has significantly deteriorated from June. The year-over-year movement largely reflects sales challenges, in addition to higher operating costs related to staff pay rates and costs of credit collection, and the negative impact of accounting under high inflation. Given the significant ongoing challenges associated with trading in Turkey, Kostas has initiated a comprehensive restructuring program, including a large reduction in headcount, store closures and right sizings. We expect the business to broadly break even at a retail profit level in H2. After folding in our share of Kostas' interest and tax, we expect the overall contribution of Kostas to our adjusted PBT to be a net loss of 25 million for the full year versus a net loss of 1 million in the prior year. The slide 12 and the movement in adjusted PBT for the group. Lower like-for-like sales at a constant gross margin rate contributed 62 million to the decline. Gross margin rate improvements of 40 basis points added 30 million. The impact of staff pay rate inflation was 46 million, and other cost inflation and cost increases were 27 million, largely driven by non-utility store costs such as cleaning and maintenance, as well as marketplace and advertising spend. Technology costs were broadly flat in H1, with increases this year weighted towards H2. We were able to fully offset these cost increases through flexing of our staffing levels and variable costs, especially in France and Poland, together with savings achieved by our strategic cost reduction program. I will provide a little bit more detail on this in the next slide. The one-off business rates refund at B&Q show us 24 million on this bridge to a 1 million refund in H1 last year. As disclosed in H1 last year, we recognized charges in relation to the ineffective foreign exchange hedges, meaning an 8 million year-over-year benefit in this period. Our central costs were 7 million lower, reflecting one-off insurance deductible related to fire and subsidence last year. The movement in profit contribution from our new stores and new businesses was 2 million. It was mainly driven by screw fix in the UK and Ireland. And finally, the retail contribution of Kostas was 11 million lower, partially offset by a 4 million decrease in our share of interest and tax. This leads us to slide 13 and an overview of ongoing work to structurally lower our cost base and raise productivity levels. As a reminder, in March we told you that we'd taken nearly 360 million of costs out of the business in the last three years, and that we were targeting an additional 120 million this year. I'm pleased to say that we are fully on track to achieve this. One of the most significant highlights in H1 included increasing the productivity of our staff, with our FTEs reducing by 2,400 year-over-year. This was largely through natural attrition, and no exceptional costs were incurred. Other actions included reducing our marketing costs by consolidating our spend with media agencies. In property, we continued to negotiate favorable lease terms as well as focusing on cost efficiencies in store. We completed 18 lease renegotiations across the group, excluding screw fix, realizing an average net rent reduction of 18% in the half. And our energy costs were 25% lower year over year, led by actions to reduce usage as well as lower rates. We also unlocked 4 million in logistics costs through optimizing warehouse space and transport routes across the group. In H2, we have a range of other costs and productivity initiatives in train as we continue to focus on making Kingfisher leaner and more agile. However, our cost reductions are much more weighted to H1 this year based on the prioritization and timing of our projects. To slide 14 and a summary of cash flow movements in the period. We generated EBITDA of 721 million, up by 1.3% year over year. The change in working capital resulted in a net inflow of 128 million. This was driven by an increase in trade payables of 286 million, reflecting normal buying seasonality plus a pull forward of some inventory purchases in light of the ongoing disruption in the red sheet, which should unwind in H2O. Net inventory increased by 82 million over six months, reflecting the seasonality of stock levels at half-year versus year-end. Against July last year, inventory was lowered by 134 million, or 4%, largely driven by lower purchasing and strategic reduction initiatives. Our expectation is for inventory to remain lower year-over-year by 31 January, partially offset by the unwind of trade payables increase. For completeness, receivables increased by $44 million, driven in part by business-rich refunds at B&Q and supplier rebates. Our non-trade payables decreased by $32 million. Net rent paid was $260 million, including $10 million of deferred lease payments from the prior year. Tax, interest, and other cash outflows were $50 million, including the benefit of approximately $30 million of tax-facing benefits and refunds. Capital expenditure for the half was 153 million, representing 2.2% of sales. This was approximately 7% lower year over year due to the timing of our project spend this year. Overall free cash flow for the period was 421 million. We paid ordinary dividends of 159 million and a further 92 million was returned to shareholders via our ongoing 300 million share buyback program. Overall, we saw a net increase in cash of 126 million. Turning to slide 15 and a little bit more detail on inventory management. With our net inventory 134 million lower year over year, we also saw a four-day reduction in inventory days by slightly improving our best-seller product availability. We are continuing to effectively manage the impact from the ongoing disruption in the Red Sea. As a reminder, a relatively low proportion of our purchases are sourced from Asia, and we work closely with our carriers to ensure the optimum amount of shipping capacity is secured. We have protected supply through pulling forward some product orders. And finally, our freight rates are generally locked in in advance. This means that, while we continue to expect an overall tailwind this year, higher costs, including surcharges, start to come through from H2O. Longer term, we see a significant multi-year opportunity for further supply chain optimization and working capital benefits. Our AI-powered supply chain visibility tool, which provides our banner with real-time and end-to-end visibility of products from origin ports to store, is now live in all banners. And we are seeing early evidence of this improving availability and forecasting, driving reduced minimum order quantities and shorter lead times. Moving to slide 16 and our overall liquidity. financial position and returns to shareholders. Given our strong free cash flow generation in H1 and our revolving credit facility, currently $650 million and undrawn, we had over $1.1 billion in total liquidity available as of 31 July. This is well ahead of our minimum $800 billion requirement Our net leverage was 1.5 times EBITDA, slightly lower than year-end and well below our maximum threshold of two times, which allows us to maintain a solid investment-grade credit rating. We have a clear capital allocation policy and a strong tech record of returning surplus capital to shareholders. We announced today that we are holding our interim dividend flat at 3.8 pence. Last September, we announced a 300 million buyback program, with half of this repurchased today. Given our cash position, we will now accelerate the pace of buybacks and expect to complete the remaining 150 million in the next six months. This brings our returns to shareholders to just under 1.9 billion since the full year 21-22, representing nearly 40% of our current market capitalization. Moving on to our outlook and guidance for the year ahead. As you know, we conduct regular and extensive consumer surveys in the UK, France and Poland, allowing us to sense-check our market outlook. In the UK and France, the percentage of consumers who believe their personal finances will get worse in the next year has decreased versus the spring. However, we see a small uptick in Poland, reflecting the uncertainties facing households. Encouragingly, we note there is a declining number of consumers delaying home improvement projects in all of our key markets. And furthermore, the forward intention to undertake a major project is increasing for consumers in the UK and Poland, while slightly down in France. Looking at trade sentiment, our survey of UK tradespeople suggests trade remains busy and that pipelines are strong. 92% of UK tradespeople working, up 2% year-over-year. Moreover, 81% have more work in the pipeline, up 7% year-over-year. 75% of tradespeople have work planned for the next six months, with 17% for more than a year. Moving to slide 19 and our view on the outlook for home improvement in our markets this year. At the start of this year, we assessed various scenarios for the growth of our total addressable home improvement markets in the UK, France and Poland in 2024. These scenarios remain valid and we continue to see differing developments by region. In the UK and Ireland, we observe a relatively resilient consumer with repairs, maintenance and existing home renovation continuing to be supportive. While we are starting to see encouraging housing market indicators, we remain mindful of the lag between housing demand and the realization of home improvement spend. Overall, we believe the UK and Ireland home improvement market in 2024 is currently tracking within the higher end of the scenarios we set out in March. In France, we saw continued subdued consumer confidence and a weak housing market in H1. The supports have viewed that the market is currently tracking at the low end of our scenarios. And finally, in Poland, inflation is down significantly compared to its peak in 2023, and consumer confidence is gradually improving. However, we remain mindful of the continued uncertainties facing households, including higher energy bills and high mortgage rates. Overall, we believe the Polish home improvement market in 2024 is currently tracking within the higher end of our scenarios. Finally, to slide 20, I'm bringing our market outlook together with our guidance for the full year. Further technical guidance can be found in the appendices. Lack for lack sales for the third quarter to date are down 0.3%. We are seeing trading in the UK and France ahead of Q2 with the benefit of softer comparatives in the same period last year. In H2, we will continue to focus on the things we can control. That means growing our market share and effectively managing our product costs and retail prices. We are on track to achieve 120 million in structural cost reductions as we set out at the full year, although as a reminder, these are H1 weighted. We expect this to partially offset higher pay rates, including incentives, as well as technology investments, the latter of which is H2-weighted. Finally, to reflect our performance in H1 and our current view of the trading environments in our market, we are tightening our full-year adjusted PBT guidance to 510 to 550 million versus our previous range of 490 million to 550 million. For free cash flow, we anticipate net inventory to be lower for the full year, partially offset by the unwind of our trade creditor balances. Together, with slightly lower CAPEX for the full year and lower cash taxes, we are upgrading our free cash flow guidance to 410 to 460 million from 350 to 410 million previously. With my review complete, let me now hand back to Thierry.

Thank you, Bernal. Before we go into the progress update, I would like to remind you of our investment case here on slide 22. Our conviction in the medium to longer term outlook for Kingfisher is unchanged. The home improvement market is large, worth over £160 billion across our markets. It is fragmented and importantly shows consistent growth over time. This is being driven by several structural drivers, such as an aging housing stock, the growing demand for energy-efficient and greener homes, and also supportive socio-economic trends, including more working from home and more DIY amongst younger generations. What makes Kingfisher uniquely positioned to win in this market are several distinct competitive advantages. First, we have leadership positions across all our key markets. This is underpinned by the differences of our banners, who each have distinct formats and propositions that resonate with their local customer base. Our own exclusive brands are a key pillar of our strategy, allowing us to offer differentiation through affordable, innovative and sustainable product ranges. Our industry-leading OEBs represent nearly half of our group sales. We have transformed our technology capabilities. We have developed a leading digital proposition that encompasses powerful data and AI-driven tools, customer-centric mobile apps, and a broader range of digital services to complement our store network. And we are proud to be one of the leaders in the retail industry in ESG and responsible business practices. Guided by the group, we keep a strict focus on maximizing our positive impact on the lives of customers, colleagues, communities, and the planet. Overall, these factors combine to create a compelling opportunity for shareholders that benefit from multiple growth drivers, a lean cost base, a healthy balance sheet, strong cash generation, and a consistent track record of shareholder returns. We have a deep conviction in our ability to deliver on this investment case, and the business is well positioned for growth in 2025 and beyond. There are three fundamental reasons why Kingfisher is well positioned. Simply said, we have great people, great products, and we deliver great service. In terms of our people, we have a highly engaged workforce. This is evidence in very high colleague engagement scores, which have even further improved this year. All our banners are now positioned in the top 5% of worldwide retailers. And this in turn delivers the best possible service to our customers. For example, a large part of the success we are having in trade comes down to the expertise and commitment of our people. Our trade sales specialists are developing strong relationships with their local trade people and winning a larger share of their wallets. And secondly, we have great products. Our OEB ranges are a big part of that, allowing us to rapidly innovate in response to evolving customer needs. And also to deliver products that are 15 to 30% cheaper than the branded equivalent. We also have strong relationships with the world's largest home improvement suppliers and offer a wide selection of local and international brands. In addition, with the launches of our e-commerce marketplace in the UK, in France and Liberia, we have been able to supplement this offering with significantly extended choice online. And we are clear on our objective to deliver value for customers by maintaining competitive price indices in all our markets. And finally, we pride ourselves in outstanding customer service. Our customers choose us for the convenient, speedy and personalized service that they know they can rely on. From new compact stores and new digital solutions to greater personalization and more convenience, other examples here are the screw-fix-print one-hour delivery proposition or our new partnerships with Deliveroo. We are working hard to constantly innovate in the way we serve our customers. We are convinced that our commitment to our people, to products and to services will enable us to deliver on our medium-term ambitions. We continue to advance our key strategic priorities at pace. Slide 26 demonstrates our progress so far this year and the financial potential we are aiming for. First, during the period, we continue to strengthen our Screwfix and Castorama Poland store estate. We opened 16 new Screwfix stores in the UK and Ireland and an extra five in France, In the second half, we are ramping up openings with up to 24 new stores in the UK and an additional five in France. At Castorama Poland, we have opened four new stores with one more to follow in H2. Over the medium term, we continue to target over 1,000 screw-fix stores in the UK and Ireland, versus 938 stores today. In France, we currently have 25 screw-fix stores. We see the potential for more than 600 over time. In Poland, we are excited about the market growth opportunity and target up to 75 store openings in the next five years from 106 stores today. These expansion plans should result in a positive impact of 1.5 to 2.5% of group sales in the coming years. Secondly, we continue to make strong progress in e-commerce, including the growth and expansion of our marketplaces. More on this shortly. We are well on the way towards our ambition of achieving 30% of group sales from e-commerce, with one-third of this coming from our marketplaces. Thirdly, our data, AI and retail media capabilities continue to progress rapidly. We are extending our suite of recommendation engines and seeing strong traction with our retail media campaigns in the UK and France. We continue to see the potential for retail media income to reach up to 3% of e-commerce sales. And finally, on trade, we continue to fine-tune and scale our dedicated in-store pro-proposition in France, Poland, and Liberia, alongside our loyalty programs. Over the medium term, we are aiming for over 1 billion pounds of sales at trade point, compared to over 830 million last year, and to double trade sales penetration in France and Poland. To slide 27 and an overview of our progress at Screwfix France, in March, I set out our maturity curve for Screwfix stores in France versus the UK and how this will evolve over time as awareness and consumer adoption grows. The sales maturation of our earliest stores in France is therefore the key metric we watch, and I am pleased to say that these are performing to plan in H1. We are continually improving our convenience offering with more stores and services, and fine-tuning our proposition as we learn new things about our customers. Our five-minute click-and-collect, next-day delivery, and sprint home delivery offerings have all resonated well with customers and enhancing our reputation within the trade community. Our product leadership is supported by our comprehensive ranges and focus on trade. We offer more than 14,000 SKUs across more than 50 brands, which is tailored to our local market. We are also really pleased that our brand awareness continues to grow strongly, up 8 percentage points year on year. Our store colleagues remain highly engaged and have adapted well to the culture of ScrooFix. Staff turnover is very low at 6% and our colleague NPS scores improved to 78%. As a result of their dedication, we have again seen strong customer satisfaction levels with an NPS score of 86%. Finally, our competitive prices deliver value and drive our ability to attract and retain customers. Our prices beat our main competitors by an average of 15%. Overall, we are pleased with the good progress we have seen across the board for Scofix France, and we are on track versus our expectations. On slide 28, we want to highlight how our investment in the last few years are resulting in standard growth in e-commerce. Our e-commerce penetration reached 18.3% in H1, up 1.5 points year on year. Let's remember e-commerce penetration was just 7.3% five years ago, so we have come a long way. On speed and convenience, We have continued to expand one-hour home delivery at Scofix, with our spring proposition now covering 430 stores and over half of all UK postcodes. We have also launched partnerships in the UK with Deliveroo for both Scofix and B&Q, with an initial offer of 500 to 600 products per month. With our new order management system at B&Q, we are driving significant improvements in product availability and lower delivery lead times. In parallel, we have strengthened DIY.com's search and browse capabilities and are seeing an improvement of up to 50% across our speed and performance KPIs, leading to better online NPS calls. We are also working hard on mobile purchasing, We saw in H1 our mobile app sales increased by 58% year-on-year, now accounting for 17% of total e-commerce sales. We continue to strengthen our app offerings, having launched a new look and feel for BAQ. We are also excited about upcoming dedicated apps for the pro. with launches for Treadpoint in the UK and Castopro in Poland. And this is not without forgetting our marketplaces that I will now cover with the next slides. At B&Q, our marketplace has continued to go from strength to strength. We have increased the number of SKUs and approved merchants significantly over the last two years, with customers now able to choose from 1.5 million SKUs across 1,300 merchants. As a result, B&Q generated 157 million pounds of GMV in H1, a growth of 78% year-on-year, and 40% of its total online sales. And we are now rapidly leveraging this success in our other markets with very encouraging progress. As a reminder, the technology was built by Kingfisher alongside Miracle, and first implemented at B&Q. So the incremental cost of extending to new markets is very low. Iberia has seen impressive growth since launch, with 22% of its online sales now coming from marketplace. Castorama France launched earlier this year and by the end of July already had 170 merchants and nearly half a million SKU available, slightly ahead of B&Q at the same stage of development. And we look forward to launching in Poland in the coming months. The success of our marketplaces and the speed of our delivery gives us confidence in our ambition to reach one-third of the group e-commerce sales from marketplace. Turning now to slide 30, we have made further progress on leveraging data and AI to build customer-centric tools. Our suite of AI-driven recommendation engines is now alive in all markets, driving 55 million pounds of sales in each one. Through these technologies, we provide customers with personalized recommendations based on their activities. This is helping to increase bundlings, average order values, and brand loyalty. Bringing this to life, our system can recognize that our customer is buying a tin of paint and then suggest a paint roller, tray, and masking tape. Our award-winning HelloCasto AI virtual assistant now has an expanded set of capabilities covering customer queries across all product categories. Following its launch late last year, the uptake of HelloCasto has been very strong, with around 100,000 conversations now being had every month. We see up to 10% of online sales at Castorama France coming via HelloCasto. Another innovative solution we developed recently is our visual search technology. The solution allows customers to find the right product for their job with just a picture of the product or component, even a broken part of a product. This is now rolled out in 11 ScrewFix stores with the ambition of integrating the technology into the app, and we also plan to start testing in our other banners. We are also leveraging the use of data and AI to improve our profitability and cash flow, and this is on slide 31. Our in-house, developed and AI-driven markdown clearance and promotional solutions were deployed at B&Q last year. As a result, we are seeing significant improvements in B&Q clearance product margins in H1. Over 300 promotional events have also been planned using the solution, resulting in improved sales, gross margin rate, and sales through upstock. We are starting deployment of these solutions in Castorama France in H2, with other banners to follow next year. We are also leveraging data to streamline operations, as Bernard mentioned earlier, Our end-to-end supply chain visibility tool is now in use across all our banners, helping to optimize the time between product being ordered and then arriving at our stores and distribution centers. And finally, our retail media proposition continues to grow as a new and high potential income stream for the business. Over 70 of our first-party vendors in the UK and France are currently engaged in over 1,500 live campaigns for sponsored product ads. We also run 200 campaigns with select marketplace sellers at B&Q in H1. As a strong indication of the potential here, These campaigns delivered a return on ad spend of over 600%, which is far ahead of industry averages. Our focus in H2 is on further expanding retail media across the group, launching in new markets, including Poland and Liberia, and building on the strong early results from our campaigns with marketplace sellers. And finally, on slide 32, to cover the rapid progress across our trade-focused initiatives. As a reminder, trade customers tend to visit more frequently and spend more than retail customers, and so this is a key driver of our priorities around top-line growth, market share and profitability. In the UK, TradePoint is continuing to outperform, with like-for-like sales up 7.1% in H1, now accounting for 22% of BNQ sales, which is 2 percentage points higher year-on-year. TradePoint has recruited 44 trade sales partners to date, rising to 80 by year-end, as we build more direct and personalized relationships with our trade customers. We are pleased to see that investment is paying off with a 5% uplift in trade sales in those stores with SalesPartner. And we are also attracting new customers with loyalty sign-ups increasing by 22%. TradePoint's upcoming mobile app launch will give our members a tailored experience and enable them to place orders, track loyalty progress, and receive personalized offers. TradePoint's continued outperformance and market share gains give us confidence in our ambition of generating over £1 billion of sales at this business over the medium term. And we are leveraging our success in the UK across our other banners. In Brico Depot France, we have launched dedicated trade service desks and colleagues in all stores in H1 after strong results from our tests last year. Brico Depot rolled out its nationwide loyalty scheme in February, and it has been well received with 70,000 members signed up to date. We are pleased to see our actions have already increased trade penetration to 9% at Brico Depot, up 5 percentage points. In Poland, we have expanded our Casto Pro zones, which is a Polish version of TradePoint, to a further 4 stores in H1, with a total of nine now in operation. The nationwide loyalty scheme has performed exceptionally well since it was expanded to all stores with more than 1,000 sign-ups per day since its launch in February. And we have also rolled out the Castor Rent Tool Hire proposition in all our stores, which allows customers to rent OEB tools for a low price. As a consequence, trade sales penetration across Castorama Poland increased to 15% in H1, up 5 percentage points. And finally, in Liberia, we saw a trade penetration of 35% in H1, up 5 points from last year, which is outstanding. We are continuing to fine-tune the in-store proposition with our team of dedicated trade colleagues. As an example of our trade strategy in action, we wanted to share a case study of our popular now store in Warsaw, Poland, here on slide 33. Those we attended our recent visit to Poland, we know the store has been on a journey of improvement over the last six months as we reorganized and optimized store space without increasing its footprint. We added a dedicated pro zone holding 300 trade-specific SKUs, dedicated tills, and an indoor drive-through builder layout. We now have three dedicated sales partners working directly with trade customers, and the store now runs on extended opening hours. The project required minimal capex investment. We are seeing strong customer feedback and a 12% point increase in trade sales penetration from February to July. We have already seen that trade average basket size are twice the rest of the store, with frequency of shop around three times per month. Overall, we expect this initiative to drive a significant increase in sales densities going forward. This is a good example of how we can leverage the success of Treadpoint to increase the like-for-like of our existing stores at minimal cost. Turning now to an update on the progress of our plan for France on slides 35 and 36. In March, we announced our plan to take Castorama and Bricolepo to the next level of performance and profitability. A medium-term profit margin target is 5% to 7%, and execution is now well underway. We have completed our simplification of the French organizational structure. We have shifted strategic and operational decision-making to the two banners and confirmed new leadership teams. Brico Depot CEO Laurent Vitoz has now joined Pascal Gilles, Castorama CEOs, on the Kingfisher Group Executive Team, with both reporting to me. Secondly, to grow sales densities at both banners, we are continuing to optimize our product ranges. We have also extended our offering through the launch of Marketplace at Castorama, and our initiatives to capture trade demand are progressing well. Brico is also continuing to test compact stores. Thirdly, we are focused on increasing our productivity and operating efficiency. We have strengthened our cost reduction plan and are starting to put in place the AI and data-driven solutions I discussed earlier, which have produced strong results at B&Q. Finally, on restructuring and modernizing the Castorama store network, as we said in March, a total of 13 stores will be restructured or modernized this year alone to address the one-third of Castorama stores that are the lowest performing. More on this in a moment. Importantly, there are no significant restructuring costs attached to this plan. So as you can see, we have made significant progress in a short space of time. Regarding the margin bridge on this slide, the progression to our target is not in chronological order, and the increments are not to scale. But it shows you how we think about the opportunity. The financial outcome from our actions and self-help initiatives will take time to come through, but we have confidence in what we are doing. While we remain focused on what we can control with our self-help initiatives, we also believe the upper hand of the margin range is achievable. through an improvement in the economic environment and therefore operating leverage. Finally, on slide 36, let me provide an update on the restructuring and modernizing of our lowest performing Castorama stores. Our two completed right sizings are generating encouraging early results and we have work underway on an additional two stores. All right-sized stores also benefit from comprehensive refits, similar to the Anglo store that we profiled in March and on our store visit in July. In the half, we also completed four lighter-touch store modernization, with one more to follow in H2. We have been able to carry out these works with minimal impact on trading. We have also started work on a comprehensive refit of our store in Toulon. We are making preparations to close one Castorama store next month ahead of its conversion to the BricoDepot banner, which should complete in Q1 next year. And finally, we are making good progress with the development of our franchising model and plan to test it in two stores within the next nine months. We see franchise as having attractive potential for both Castorama and Rico Depot over time, but it is important to first test and learn. In summary, we are fully on track with the plan, and with several stores already being actioned, we expect to see tangible benefits from these initiatives over the medium term. Turning now to a summary of the key messages from today's presentation. We are doing what we said we would do, which is to focus on the things we can control. Our overall trading is in line with our expectations and we are gaining market share in the UK and Poland. We are managing our gross margin, cost and inventory very well against what has remained a soft consumer environment. Our strategic priorities are progressing well and in particular we are pleased with the standard growth in e-commerce and trade. Our plan for France is advancing at pace and our broader self-help initiatives for both Castorama and BricoDepot are firmly on track. Overall, we believe that market growth in 2024 in the UK, France and Poland are all tracking within the scenarios we set out in March. So given this and our performance in H1, we are tightening our expectations for adjusted PBT to a range of 510 to 550 million pounds, raising the lower end of the previous range by 20 million pounds. And our free cash flow performance means we have raised guidance to between 410 and 460 million pounds. As a result, we'll accelerate the pace of our current share buyback program. With that, I would like to close by thanking you for your time today. We will now open up the line for any questions. So, operator, over to you to start the Q&A. And thank you, everyone.

Now begin the Q&A session. If you wish to ask a question, please use the raise hand function at the bottom of your screen. I would like to remind all participants that this call is being recorded. We will take our first question from Amigala of City. Please go ahead.

Hi. Sorry for a couple of minutes of technical issues. Thanks. I have a few questions, please. The first one was on the marketplace. Could you give us some color as to what is the contribution of the group level at the bottom line from the penetration that you've seen in marketplace today? That would be quite helpful. The second one was on current trading. You know, is there any signs of pickup in big ticket categories in the sort of trends that you've seen in the recent weeks? Again, if you could give us some color in terms of UK, you know, what's the sort of incremental changes that you've seen on the big ticket spectrum? And the last one really was on Screwfix UK. I think the trends to date look quite encouraging. Again, in terms of the sort of underlying strength in Screwfix in the UK, you know, would you kind of give us some color in terms of the categories where you're seeing incremental demand ticking up? Is there more sort of trade-focused penetration that is helping the Screwfix business as well?

Thank you, Amy, for the different questions.

So let's start with the marketplace. You see, you have seen the GMV and the growth on the margin and the tech rates we have previously guided. between 10 and 15%, and we are right there. So happy with that. In the future, we as well believe there are more monetization to come, you know, with retail media, with additional services you could sell to vendors, with data selling. So we have a plan for the future to continue to grow our tech rates. Then on the cost side, it's mainly tech costs. You know, we have built our tech platform for marketplace all together with Miracle. Investment is done. So now we can roll out this technology to more banners. So I would say they are overall minimal cost. Then it's all due to where you want to go for advertising, how much spend you want to spend in your marketing. Overall, we already said, in the UK. So in fact, that's a balance of how much advertising you want to spend. And then depending on that, how much profit you want to make for the marketplace. Current trading, you have seen the Q3, UK and France ahead of Q2. In short, I would say that UK and France big ticket are still weaker than the other categories. Obviously, you will see overall a slightly movement of all categories, but with big ticket weaker than the other categories in the UK and France. And we have seen better big ticket categories in Poland since Q2. That's encouraging to see this trend in Poland. Screwfix UK You probably know about 75% of the sales is trade. In our latest survey, we continue to see very strong trade demand. You had that in the presentation. A lot of the 82% of the trade working with more to come, which is historical standard, very strong. And I would say all the, you know, I the typical categories that are working well during H1, including power tools, tools. But we were as well happy with outdoors at Screwfix because we had a better season for Screwfix than last year in this field. So overall, really trade-related categories, a bit more outdoor in H1.

Thank you.

All right. You're welcome.

We will take our next question from Warwick Okines of BNP Paraglass Exane. Please go ahead.

Good morning. Thanks very much. Good morning. Thanks for the presentation to two topics for me, please. The first is on the competitive landscape in in France. Perhaps you could just give an overall view, but particularly I'd just be interested. I appreciate you've got your margin ambitions, but are you not inclined to invest some of the gross margin gains to win back some of the market share? You know, it isn't. Isn't driving the top line the most important thing there? And then the second topic is around trade penetration at Brico Depot, France. It's a long way behind Iberia, of course. What can you learn from Iberia for Brico Depot, France? And perhaps do you have a target of a way you think you can get penetration to it in France? Thank you.

You're right. So. Competition in France, first of all, we have an excellent competitor with Leroy Merlin. In the past, we have seen in France fairly rational markets on prices and on promo, and we continue to see that in H1 and in the current trading. So price-wise, promotion-wise, you know, everyone is doing his plan. You know, we need promotion, but there is nothing to mention. especially in H1. We have kept our good price index positioning. I will discuss Castor versus Brico in a minute and a fairly normalized promo plan in H1. Then when you say first top line versus margin, we have different targets by banner. Castor, we believe, is the right thing to do because we want to win market share and cash tours through offers, through our services, through online, through trade, and through a good trading plan. While for Brico, indeed, we want to take shares through price, through price, through value. Clearly, the price positioning of Brico is below 100, and we invested in some categories in H1 and Brico Depot. So that continues to improve our price positioning and to take shares. So the two banners have a slightly different strategy here. Obviously, OEB is very critical. You remember that it's around 50% for Castor, above 50% for Brico, and OEB is a key asset for us in this value proposition. Remind you as well on margin that we I've seen overall flat retail prices, but our COGS are slightly down. So we've been able to support our margin as well through slightly better purchasing prices, while overall we're happy with pricing this season and retail price are flat. Trade penetration for BRICO in France, we have high expectation. You point out to Iberia. Probably, you know, when we do store visits in Home Depot in the U.S., or even when you have Home Depot people visiting a store in France, the Brico Depot French stores are probably the closest model to Home Depot in the U.S., so we have high expectations. It's just the beginning. We have now a proper, I would say, pro-loyalty program for Brico, so we have more accurate data, and from this base, I expect in the future. You have seen, you know, the recipe is dedicated space, dedicated team, a loyalty program. We have as well high expectation of what we call the trade partners, what we have implemented for TradePoint in the UK. That's very, very important value in the future, dedicated trade partner to a small number of trades. And that's something we'll apply to Brico France in the future.

Thanks very much, Gerry.

We will take our next question from Adam Katrain of Deutsche Bank. Please go ahead.

Good morning, Adam.

Can you hear me? Yes. Good morning, Adam. My computer told me I was muted. A couple of questions. First of all, on Turkey, can you just dig into a little bit about what's happening there and whether there's any restructuring costs within the loss you're expecting for this year, and what's giving you the confidence of the plan to move back towards profitability next year in that market. It's not one we've really spent a lot of time, I think, focusing on in the past. And then secondly, if we get to a 5% margin in France, does this give an acceptable return on invested capital from that market? Can you sort of give us an indication of what return on invested capital, a 5% margin would give in France? Thanks.

Thank you, Adam.

I'll start with Turkey. I think, first of all, you know, when you look at the big picture of 85 million population country with a very large home improvement market. I think we have the best possible partner with the Koch Group, you know, it's the largest private companies in Turkey, very successful. We have been together as a joint venture since 2000, so over 20, 24, 25 years. Always has been a pretty good joint venture and we are 50-50. And even when you look at the dividends, we received about 50 million pounds of dividends since 2000. So rather a good story. What we are seeing at the moment is really a macro drama. You know, we have very high interest rates in the country. Let's say around 60% with the central bank increased. its interest rates. But in parallel, the government is rather managing a hard landing. In June, the Turkish government has decided not to increase the minimum wage. And in fact, we have seen a kind of collapse of the demands, I think, across the country since June. So you have very poor demands. Your cost base is rising. And at the same time, you are facing I think the team is taking extremely radical and fast action and what they should do in the current environment, which is really trying to control the purchase, managing the working capital, right-sizing some stores, closing some of our smaller format fixed stores. as well as getting the account in the head office, et cetera, et cetera. So they are really a comprehensive plan. We are supporting them with this plan. And therefore, in H2, while we are very cautious about the demand at this point, we believe the cost control and the cash control they will do in H2 will help. Broadly macro in 2025, when you read the economic report, inflation to move from, let's say, broadly 50%, 60% to around 20% next year, and with a stronger GDP. So we should have some hope in the macro. Again, we have a very strong partner. We have been there for 25 years, and we believe that the plan the team are delivering is the right one. So that's the short summary for Turkey. Obviously, we'll continue to monitor the situation. I mean, what's in the future?

No, on France, I had never heard of that. Let me answer that.

Hi, Adam. So just to give you a couple of numbers. Last year, the ROKI in France was 5.9%. That was with a retail profit of 3.3%, actually, for the full year. It's pretty much the same as we had in H1. So you can do the math. If we go from 3.3% to 5%, that's about a 50% uplift.

there from the margin.

So you could basically assume that the capital base will be the same. I guess we've noted there's some investment needed in the various plans, but it's within the 3% and it all has relatively quick payback periods.

So with that, we should be above the cost of capital in France.

That's great. Thank you.

You're welcome.

We will take our next question from Richard Chamberlain of RBC. Please go ahead.

Good morning, Richard. Good morning, Thierry. Can you hear me okay?

Yes, very good.

Excellent. Excellent morning. Yeah, a couple from me, please. So just back to the marketplace. What have you guys learned so far from the UK marketplace that you're applying to France in terms of sort of speed of roll out and ramp up and so on. And are the best-selling items, or the sort of items that you're selling, are the best-selling ones the same for both countries? And then just a quick one on Screwfix France. How are you seeing the sales densities trending for that format in recent months? That's my questions. Thank you.

Thank you, Richard.

I think on Marketplace, the first thing we learned It's really the number of SKUs is driving the sales choice, you know, the traffic on Google. So clearly, you know, we have made very, very fast progress on the number of SKUs. You see about 1.5 million SKUs now from EAQ. We are looking at the best sellers in competitors' marketplace, looking at aggregators. Very often you have very large aggregators that are extremely good partners, and when you integrate them, clearly you benefit from their knowledge and professionalism. So a number of SKUs using aggregators. I think we have, as we have seen, interesting trend recently on retail media in B&Q for marketplace vendors. So it is not only large brand, but your own marketplace vendor, they are very, very interested in advertising on your site. And we are really surprised by the traction. So we'll start in France as well very, very quickly with the with the written media benefit. Again, we believe in the future we have more space for for the margin through retail media, selling new services to vendors, selling data. For example, we are doing a test in the U.K. whereby we fulfill for the vendors. It's a kind of test with a few vendors. But, again, in the future, you understand we have very strong supply chain capabilities in the U.K. and in France, and you can fulfill for vendors and, therefore, improve your margin. So that would be a few of my suggestions. of my comment. ScrewFix France, Celles d'Antiquity, you are absolutely right. This is number one focus. And I think in short, you remember in March we saw on the slide our expectations for Celles d'Antiquity in France versus the UK earlier. In summary, we are right in track with the curve we showed in March. Not better, not below, right in track. So more updates in the coming months. But so far, all the underlying KPI that are prices versus Amazon or Leroy, availability, our customer NPS, the number of customers we are recruiting, the trade penetration, all that is moving really according to plan. So in short, big focus on self-density. And so far, exactly on track with the curve, with the chart we show in March, back in March.

Got it. Great. Thank you very much. You're welcome.

We will take our next question from Isabel de Breva of Morgan Stanley. Please go ahead.

Good morning, Isabel.

I hope you can hear me okay. I had a couple of questions. The first one was on the gross margin, which was very strong across all of your regions. I was hoping maybe you can give some color on the cyclical versus the structural within that. So, for example, how much of it was driven by input cost moderation and where are we on that in terms of the cycle, but then also the structural component and whether you think we can continue to see that gross margin uplift for the next 12 months as you continue to put through renegotiations and supply chain improvements? That's the first question. And maybe I'll pause here and then I'll do them one by one.

Yeah, thank you, Isabelle. Maybe just a few words, then I will hand over to Bernard. I think that the key component, we see deflation on raw material, and overall we have seen deflation on our purchasing price, strongly driven by good negotiation with our OED partners, so that's point one. And freight, as expected, has been a tailwind in H1. Then for the dynamic H1-H2, I hand over to Bernard.

Yes, Isabel. If we look at H1, obviously, gross margin up 50 basis points in the UK, 20 basis points in France, 140 basis points in Poland. I think some of the things that Thierry mentioned played out in each of the values. I would say that in Poland, we had a very high participation in promotion in H1, and you'll see in H2 that that will flip, basically, with H2. much lower promo in H2. So just be aware of that in the dynamic. Equally, in the UK, we had a very strong gross margin increase in H2, so we'll also be annualizing that. And in terms of structural components, I think in terms of the logistics efficiencies and lower stock losses in France, those should roll into H2.

into h2 and sorry i may have misspoken the on poland as the high customer participation in promo was in h1 last year good oh that's good thank you um and then my second question was on cost savings in france um i was wondering given the very strong progress on cost savings so far is there scope to increase that figure further and also do this level of run rate or increase it into next year considering the market backdrop in france because i appreciate all of the self-help levers that you're putting through but with the like for like it's difficult to navigate that level of volume sales the leverage um or alternatively could you maybe give us an indication of when you expect that french like for like to break above zero

Thank you for the question, Isabelle. I think there is more to do, you know, things like supply chain. We have reduced our space by about 30% the past five years, but there are more. We believe there are more to do. and therefore you can still improve the efficiency of your supply chain. We still continue to implement more self-checkout in France. We continue to work on store productivity. For example, Brico is implementing a new way of working. They are starting to roll out this new way of working in store and therefore continuing to improve their store sales efficiency. There is a size of our still a lot of things ongoing. Obviously, we wish the top line back to positive. I think it's really early to give a prediction. We are encouraged by the Q3. You know, the Q3 today in France is better than Q2. But I think it's too early to try to predict at what point in the future the like-for-like will be positive.

Okay. Thank you very much.

You're welcome. We will take our next question from Georgina Johannon of JP Morgan. Please go ahead.

Good morning, Georgina.

Can you hear me okay?

Yes.

Great. Thank you. No problem. Great. I've got three quick questions, please. The first one was just following on from Isabel's question on the like-for-like growth and inflecting back into positive territory. Would you have more confidence on a positive like-for-like in the UK, in B&Q in particular? into next year given the trends that you're seeing that that was my first question my second one was just sticking with the UK I think it was Wix that was talking about some benefits from consolidation in in the UK market from sort of the demise of some of the smaller players um so so you TG tiles and so on. And would you say that's something that you have also benefited from? And then just finally, I think the pricing in the first half was probably slightly lower than you had maybe hoped for at the start of the year. How do you see the outlook on that sort of over the next six months and into next year on retail price, please? Thank you.

Thank you, Georgina. I think Obviously, we don't want to guide for 2025 at the moment. So when you look at the different categories, what I would say is core, very resilient, gradual improvement in volumes. So I would expect, you know, and that's really the health and the resilience of the U.K. consumer. We continue to see that. You know, sometimes I question, do we see worse consumer outcomes? In the current trading, no. We see a better UK in Q3 versus Q2 so far. So resilient core categories. Season, on average up to now, the seasons are being not great, you know. Much better July, but overall, when you look season for each one, it was down. So you could expect better season in 2025. Then big ticket, the only guide I would say is We take housing transactions plus 9 to 12 months. So when housing transactions start to be positive, then I hope to have a positive impact in 9 to 12 months. That would be my view for the U.K. Consolidation, we have not mentioned it explicitly in our prepared remark. We are the leader in the U.K. with BAQ and SCOFIX. we are benefiting from it. If you have less DIY stores in the UK, then your existing stores are benefiting from it. But I would say it's bitterly to call out any meaningful data. Retail price flat, I would say my expectation for H2 would be about the same. We have seen very rational behaviors in all our markets, including in the UK. It was the case in H1, it's the case in Q3 today. So if you're rational, it should be the same expectation for H2. So while we continue to have good negotiation, I said we have our cogs are down year on year, especially driven by OEB. So I would expect the same for H2 and rather around flat retail prices.

And maybe, Eugene, you said that we saw it slightly weaker than you expected, I think. the comment would be is that, again, shelf price inflation flat, the negative mixed impact on ASB from big ticket, that's what's flowing through.

That's great. Thank you very much.

Okay.

We will take our next question from Matthew Clements of Barclays. Please unmute yourself and go ahead.

Yes, good morning, both. Good morning, Matthew. Can you hear me? Yes, we can hear you, Matthew. Brilliant. Sorry about that. Three quick questions, if that's okay. The first one on Poland. You talk in the press release about an improved consumer environment, but then there are some cautious comments around consumer demand and health. Any colour on how you see the Polish consumer developing in the second half? I suppose you're talking about Your outlook for the market being closer to the top end, that assumes some acceleration in like-for-like in the second half, I suppose. Just any color there would be helpful. And maybe I'll come back to the other two questions.

Yeah, I would say if you look at the H1, we have clearly seen improvements. And this is the only banner where the big ticket is more or less in line with the core categories. And we have seen a better big ticket trend in Q2 than in Q1. And the Q3 is broadly flat versus H1. The current trading is broadly flat. So I would say we have seen strong improvement in price. driven as well by new government policies, housing transaction up. Rather plateau in Q2 versus Q1. So the consumer sentiment has plateaued since Q2, a bit driven by the perception of inflation. So my expectation would be a gradual improvement in the future and probably a bit of support from housing transaction into big ticket.

That's very helpful. Thank you. And then two more questions. I appreciate it's a pretty small part of the group, but Romania looks like it decelerated quite sharply in the second quarter. Apologies if you've already touched on this, but any colour on what's going on in Romania and view into the second half? And then I'll throw in the third question as well here, which is screw fix. I think you previously talked about up to 15 stores in France this year. Now you've settled on 10. Just trying to understand why that's the right pace of rollout for this year. I appreciate you probably don't want to comment on the years ahead, but how we should think maybe about to roll out going forward. Thank you.

Thank you, Matthew. So quickly, Romania, Q1 into Q2, we had – there's a bit of calendar impact in Romania because of the Easter timing, so it helped Q1. It doesn't help Q2. And secondly, we were – obviously, we're not very pleased with the Q2 results, but we had an extraordinary heat wave in Romania for several – So hot that, you know, you're always happy with the weather when it's hot. When it's too hot, then people really start to do external work. So all the building material categories were collapsing. Nobody wanted to work outside. And except air conditioning, we did not sell much in Q2. So a bit of weather impact. So obviously we keep monitoring Romania very, very closely because that's a country where we lose money. ScrewFix, I would not read too much into the 15 versus 10. We said up to 15, we'll open 10. Really, it's not a big deal to open more stores in France. Our processes are very smooth. We can find good locations. But our focus is really today on sales density, you know, the question we discussed before, and awareness, and NPSO. You shouldn't read too much of the small adjustment on number of stores because all our focus is around the like-for-like sales and the sales density.

Very good. Thank you very much.

You're welcome. We will take our next question from Kate Calvert of Investec. Please unmute yourself and go ahead.

Good morning, Kate.

Morning, everyone. I hope you can hear me. Two questions for me. The first one's just back on French margins. How much of the self-help improvements of the margin up to 5% do you think is sales driven and how much of it will be cost driven? And my second question is a further question on Romania. Do you think you can move Romania back into profit next year? And if not, what do you need to do to get it back into profit? Thank you very much.

Thank you, Kate. Let me start, and I think Bernard will pose questions. I think we have not guided explicitly on the CASTO plan or how much it sells, how much it networks and costs. I think it's a balanced plan. We need the three. And we don't, again, the 5% does not assume a strong recovery of the French market. So it's all due to, you know, for sales is all due to our marketplace, is our offering, is our trade penetration. Cost is really under our control. And the network is as well fully under our control. So I think it's a well-balanced plan between those three levels, sales, cost, and network restructuring. But I can't guide further at this point. Romania, we are really watching closely Romania We have a very clear and strong plan with the team to focus in the short term and recover profitability. So far, we are doing a better year. I would not commit today that we'll achieve a break-even in 2025, but we are on the right trajectory at this point.

Thanks so much.

A reminder that if you want to ask a question, please use the raise hand function at the bottom of your screen. We will take our next question from Grace Gilbert of Jefferies. Please unmute yourself and go ahead.

Good morning, Grace.

Can you guys hear me now?

Yes, very well.

Perfect, perfect. Thank you. Just a few questions from me. The first one is in regards to 2Q, on the 2Q like for like. How much was weather in the summer an impact on that figure, and can we get an indication of the underlying versus maybe the weather-impacted figure for 2Q? And then the second question is around France and then current trading. I mean, as we go into Q3, obviously the comps get a little bit easier for that region. How should we think about more of the macro trends going into Q3 for France versus maybe some of the underlying trends that you're seeing, at least from August and through September? Thank you.

Thank you.

Maybe I start with France and then we move back to who is there now. I think... Different data point I have. We are looking at INSEE. You know, INSEE is a good French government entity that gives you a consumer indicator. So the recent INSEE KPI indicator is 92. Really, the long-term average is 100, and we reached 50 years low point 12 months ago at 80. So recovering from 80 to 92, but still at a low point. Absolutely. The French mood, it's always difficult to explain it, even when you're French. I think it's a combination of political uncertainty, so I don't need to comment further with election and a lot of reforms in 23. And as well, the perception of inflation in France has somehow been delayed by one year versus the UK because of the French government cap on energy that arrived very, very early in 2022. So somehow, inflation and cost of living crisis is still very a hot topic in France this year. Now we have softer comparatives from Q3. Clearly, our Q3 is ahead of Q2 trends. We saw last year from mid-August a very big shift in the sales in France, and we are happy to see from mid-August this year significant improvement. If you like the comps for the second part of Q3, They are as well very soft. In fact, they are softer in the second part of Q3 than the first part of Q3. So that's where we are. It's too early, I think, to call a trend after six weeks of trading. But overall, that's what we see. Core, when you look Q1 to Q2 in France, in fact, the core and big ticket categories were exactly on the same trend. It's purely the Q1 to Q2 trend in France was entirely due to seasonal product.

Now, for Q2, like, for like, I don't know. Yes, Grace, I'm doing some quick math.

But just to give you a couple of numbers. First, underlying, so that's excluding the calendar and EPR impact. In Q1, we were minus 2.8%. You can find that in the R&S. And in Q2, we were minus 3.3%. If you then look at the categories, core Q1 was minus 2.2, and it nudged up to minus 1.5%. So that's positive. Big ticket went from minus 8.2 to minus 6.9. But seasonal was zero in Q1 and went to minus 5.8. So you can see that. If we only had core and big ticket and seasonal had stayed flat, we'd be not underlying. And it's really the seasonal driving it down must be something around a percentage point negative or Q2.

Perfect. Thank you both.

You're welcome, Grace.

There are no further questions. I will now hand over to Thierry for closing remarks.

Thank you, everyone, for being with us this morning and for all your questions. We are really happy to interact and to interact with all of you. And we wish you a very good day and talk to you very soon. Thank you.