Full Year results and outlook - PRESENTATION TO INVESTORS & ANALYSTS - David Banfield - Group CEO Deidre Campbell - Group CFO - NZX
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PRESENTATION TO
INVESTORS & ANALYSTS
Full Year results
and outlook
David Banfield - Group CEO
Deidre Campbell - Group CFO
28 August 2017
For 12 months 1 July 2016 – 30 June 2017
Results emphasise the need for simplification and agility
Summary
for the 12 months ended 30 June 20171
• NPAT (Net Profit After Tax) of $5.8m, down 24.5% reported or 15% on a constant
currency4 basis.
• Sales of $100m, down 5% reported and flat in constant currency.
• EBIT3 of $9.2m, down 17% reported or 7.8% in constant currency.
• Constant currency full year EBIT deviation caused by:
⁻ Heshan supply disruption
⁻ Tapware sales performance in Australia and New Zealand
⁻ NZ market fixed cost investment
• Reported Net Debt2 up $5m due to increased inventory levels.
• UK revenue up 9% and EBIT by 32%, with total sales at the highest in six years and
NPAT the highest in seven years.
• Partially imputed final dividend of 3.0 cents per share payable on 29 September 2017
1. Al results presented references are for the 12 months ended 30 June 2017 (audited) and are compared against the 12 months ended
30 June 2016 (unaudited).
2. Refer to the reconciliation of net debt on slide 29
3. Earnings before interest and tax (EBIT). Refer to the reconciliation of EBIT to the consolidated income statement in note 2.1 of the
financial statements.
4. Constant currency is the previous year’s individual trading entities’ performance in their local currency translated into NZ$ at the
current year’s fx rates. These rates are GBP/NZD 0.5606 (PY 0.4554), AUD/NZD 0.9466 (PY 0.9198) and RMB/NZD 4.8514
(PY4.3174).
–3–
Summary (cont’d)
for the 12 months ended 30 June 20171
• Methven 130 remains the strategic focus for the organisation.
• One-off events of FY17 emphasised the need to transform the existing
business model.
• Fit 4 the Future transformation plan launched:
1. Streamlined market teams
2. Manufacturing consolidation driving margin improvement
3. Simplified processes and integrated systems driving operational
efficiency
–4–
Group financial performance
for the 12 months ended 30 June 20171
• Sales of $100m, down 5% reported and flat in constant currency.
• NPAT finished at $5.8m, down 24.5% reported and down 15% on a constant
currency basis.
• Net Debt increased to $27.1m increase due to inventory build for anticipated sales
that did not materialise in this period.
–5–
Group financial performance
for the 12 months ended 30 June 20171
• Sales of $100m, down 5% reported and flat in constant currency.
• NPAT finished at $5.8m, down 15% on a constant currency basis.
• Net Debt increased to $27.1m increase due to inventory build for anticipated sales
that did not materialise in this period.
–6–
Group financial performance
as at ended 30 June 2017
Net Debt increased to $27.1m.
Net Debt2 increased to $27.1m •
Up $5.0m
• Inventory up $4.5m:
⁻ Build for sales
⁻ Low PCP
• Capex:
⁻ FY17 normalised following
investment in FY16 (NZ
and UK premises, and
manufacturing equipment)
⁻ FY18 Capex to increase
to c. $3.3m to deliver
Fit 4 the Future efficiencies
–7–
Dividend
• Final dividend of 3.0 cps
to be paid on 29
September 2017.
• Full year pay-out ratio
of 89%.
• Partially imputed to
14.4% (maximum of
28%).
–8–
Business Review
Our Goals in FY17
Revenue growth in New Zealand Revenue –2.5%
Profitable growth in Australia Revenue no, H2 Profit yes
Double digit sales and profit growth in UK ACHIEVED H2
National distribution in UK ACHIEVED
Market share growth of differentiated shower ACHIEVED
offer (Satinjet® and Aurajet®)
Heshan utilisation increased by 10% Not achieved
Improvement in Group NPAT % to sales Not achieved
–9–
Methven 130
Methven 130
Methven 130 – Our Goals
Revenue $130 Million
NPAT Towards 10% of revenue
Supply & Operations $6 – $8M stock reduction
Technology NPD sales of $10M
Retail New markets and customers delivering $6 – $8M of sales
Insight Improved NPS across key influencers
Digital # 1-2-3 in search
Employees Employees as shareholders
Sustainability Significant reduction in carbon footprint
– 11 –Momentum in FY16
• FY16 good sales momentum
• NZ strong H2 growth
• Australia strong H2 growth
• UK starting to turn around
– 12 –Sales CAGR - 2015-2017
• Group sales CAGR +4.2%
• NZ sales CAGR +4.2%
• Australia sales CAGR +4.2%
• UK sales CAGR +3.1%
– 13 –– 14 –
Fit 4 the Future
• The goals of our Fit 4 the Future transformation plan are targeted to
deliver:
⁻ a 300 basis point improvement in gross margin.
⁻ a 10% reduction in fixed costs that will be reinvested in variable
costs such as brand support.
⁻ and to decrease the sales required to break-even by $1m per
month.
• Expected to take two years to implement.
– 15 –Markets
Market review – NZ
Our Goals in FY17
Increase our Revenue Revenue -2.5%
Grow sales and share of Tapware Not achieved
Launch new services for the Plumber Full service offering being developed
Increased share of Specification market Good progress
Increased brand awareness and preference
Page views +44%
via digital channels
– 17 –Market review – AU
Our Goals in FY17
Profitable revenue growth Revenue no, H2 Profit yes
Grow sales and share of Tapware Not achieved
Category segmentation at point of purchase Test to commence in FY18
Increased share of Specification market Good progress
Increased brand awareness and preference
ACHIEVED
via digital channels
– 18 –Market review – UK
Our Goals in FY17
Double digit sales and profit growth ACHIEVED H2
£ growth from new national distribution ACHIEVED
Launch new international markets France added – no breakthrough
Market share growth of differentiated shower offer Aurajet sales +123%
Increased brand awareness and preference
Page views +21%
via digital channels
– 19 –China Sales
• Focused investment in our China commercial operations continued
in FY17. 20 new distributors have now been appointed.
– 20 –Group Operations segment
(including NZ and China manufacturing)
• 2016 performance positively impacted non-recurring items of $1.0m.
• 2017 performance of factories negatively impacted by the previously
reported management issue that constrained production in Q1 FY17,
and the lower tapware demand from Australia and New Zealand.
• Heshan plant awarded the new Environmental Protection Certificate
for Guangdong Province, which sets us up well for the future.
– 21 –2018 full year earnings outlook
Our Goals in FY18
Our Goals in FY18
Profitable growth in New Zealand and Australia
Double digit growth in UK
Fit 4 the Future – fixed cost savings realised
Fit 4 the Future – Manufacturing insource delivering margin improvement
Tapware innovation launched in Australia and New Zealand
Heshan utilisation and productivity increase
Improvement in Group NPAT % to sales
– 23 –Guidance
12 months ending 30 June 2018
• Guidance for the year ending June 2018:
⁻ Even with Fit 4 the Future investment, we are still expecting
year-on-year NPAT growth of at least 10% in constant
currency.
– 24 –Summary
• FY17 earnings negatively impacted by one-offs in Q1.
• 2015 – 17 CAGR 4.2%.
• UK showing very positive momentum.
• Tapware innovation forecast to deliver improved performance in
FY18.
• Fit 4 the Future designed to deliver 300 basis point
improvement in gross margin over two years.
• Even with Fit 4 the Future investment, we are still expecting
year-on-year NPAT growth of at least 10% in constant currency.
– 25 –Disclaimer
This presentation contains not only a review of operations, but also
some forward-looking statements about Methven Limited and the
environment in which the company operates. Because these
statements are forward looking, Methven Limited’s actual results
could differ materially.
Although management and directors may indicate and believe that
the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realised.
Please read this presentation in the wider context of material
previously published by Methven Limited.
– 26 –Questions?
mETHvEN 2017 Full Year Results and Outlook
Non-GAAP Financial information
Reconciliation of Net Debt to the consolidated balance
sheet
As at 30 June
NZ $000 2017 2016
Bank facility loans 30,048 23,503
Finance leases 702 859
Less: cash and cash equivalents (3,624) (2,240)
Net debt 27,126 22,122
– 29 –You can also read
