CASTORAMA POLAND STORE VISIT 28 SEPTEMBER 2004

Transcription

1 CASTORAMA POLAND STORE VISIT 28 SEPTEMBER 2004

2 Today s agenda Short presentation Kingfisher s international network Poland, an attractive home improvement market Castorama today, the market leader Castorama s future growth potential Q&A Store visit to Targowek,, Warsaw

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4 Kingfisher international network Retail is a national scale game Need countries of some scale Need to be no 1 or 2 in country Beginning to see a network effect for us Global product in key GM categories Best practice/experience shift Belief is in locally adapted warehouse Network brings huge advantage vs local players

5 Three proven formats add flexibility Big-box UK & Ireland (warehouse), France, Poland China (core cities) Medium-box UK & Ireland (mini-warehouse), Italy, Poland China (smaller cities), Taiwan & Korea Small box France, Spain (Brico Depot/Stock)

6 International a growth engine 2004/05 Sales 593m (+29%), profit 62m (+60%) Poland Italy China Taiwan Turkey Spain TOTAL Stores Feb H1 opening Plus Korea and Russia in progress - - H2 planned Feb 2005 Est

7 International - boosting growth in H1 04/05 Sales growth ROW +29% UK and Ireland +33% *Constant currency France + 38%

8 Poland an attractive market Biggest in Central Europe 39 million people 13 million homes 18 cities with 200k+ High growth potential 2004 GDP growth est 6% forecasted at 4-5% 4 on- going Joined EU on 1 May 2004

9 Poland an attractive market RMI market of EUR5bn 70% home ownership A market of natural DIY-ers Strong interest in home improvement Housing stock in need of repair Low income, but high disposable

10 Castorama today No 1 First store stores, 198,000sq.m 4,509 employees ( one expatriate ) Highly recognised brand Last year sales 286m, retail profit 41m H1 sales up 33%, retail profit up 66% Above Group average ROIC and positive cash flow

11 Strong growth in sales and profits m LFL 10.2% 165 Sales LFL 11.1% 227 LFL 13.1% Profit / / / / / /04

12 Castorama No 1 in Poland Stores range in size from 7,000 to 12,000 m 2

13 Castorama today No 1 Highly adapted, localised format targets heavy DIY/trade In-store volumes for projects Clear EDLP policy Good locations High emphasis on in-store standards Group-sourced own-brands Low cost operating model

14 Castorama Warsaw

15 Castorama Warsaw strong price message

16 Own brand prominence - MAC Allister advertising and stand

17 Relative performance 2002 Castorama Leroy Merlin OBI Stores Average m 2 9,700 11,000 8,000 Sales m (e) 220(e) Sales/m (e) 1.2(e)

18 Castorama - growth potential Physical expansion To open around 7 stores a year 26 stores by the year-end end Smaller cities important in Poland Scope for a smaller, mini-warehouse Total stores 60+ in 2009/10 Potential for over 100 in long term

19 Castorama drivers of growth Price margin reinvestment and supply chain development Range SSM, own-label, and direct sourcing People Training and reward initiatives Central costs leveraged scale effect

20 What Poland brings to Kingfisher Significant returns and profit growth Volumes for European buying Sourcing office for Kingfisher Leverage position into Russia Shares similar market characteristics Similar format, common suppliers Transfer of expertise to Russian team

21 Future growth spotlight on Russia.. Positive dynamics for BIY market growth.. Most property needs extensive refurbishment Construction market growing strongly Property prices rising Empty shell apartments BIY culture Fragmented market few Western big-box box retailers The dacha factor

22 Future growth spotlight on Russia.. Medium term growth in Moscow and St Petersburg Longer term development in Western regions Warehouse blueprint based on Castorama Poland 20,000 30,000 sku s Low price; high volume

23 Future growth spotlight on Russia.. 144m people, concentrated west of the Ural mountains 13 cities with population of more than 1 million; 33 cities of more than 500,000 GDP growth > 5% Stabilised currency Consistent improvement in country risk profile Retail expenditure as a % of sales is highest in Europe Estimated $6 billion RMI (Repair, Maintenance and Improvement) market