Wolseley UK and DT Group Webcast to analysts analyst

Transcription

The name the world builds on
Analyst and Investor Site Visit
Leamington Spa, 18 April 2007
1
Introduction
Rob Marchbank - CEO Wolseley Europe
This presentation contains certain forward-looking statements as defined under US legislation (Section 21E of the
Securities Exchange Act of 1934). By their nature, such statements involve uncertainty; as a consequence, actual results
and developments may differ from those expressed in or implied by such statements.
Welcome and introductions
• Introduction – Rob Marchbank (CEO Europe, Wolseley plc)
• DT Group – Steen Weirsoe (CEO), Lars Hansen (Managing Director, Stark) and
Ole Michael Jenson (SVP Group Sourcing)
• Q&A
• Break
• Wolseley UK – Nigel Sibley (Managing Director), Matt Neville (Finance Director),
Angela Rushforth (Marketing Director) and Mark Harrison (Supply Chain Director)
• Q&A
• Lunch
3
Wolseley Europe leadership team
CEO Europe
Rob Marchbank
*MD of UK & Ireland
Nigel Sibley
*Sr VP Supply Chain
Al Byrd
*MD of France
Philippe Gardies
**Director of Sourcing
Mark Kirby
*MD of Central & Eastern Europe
Keith Jones
*Director of Strategy
& Developing Business
Nick Nearchou
**MD of DT Group (Nordic)
Steen Weirsoe
**Director of Human Resources
Bob Morrison
* New since August 06
**New since Jan 07
4
European characteristics
• Each country is at a different stage of economic development
• Each country has different construction codes
• There are common suppliers, but product specifications are different
• Labour structure in Europe is more challenging relative to the US
• Each company is at a different stage of maturity and scale
• Each company is a variation on a common business model
• Small satellites vs large branches
• Centralized vs regional or decentralized
• Specialist vs generalist
5
Activities during H1 in the other clusters
France
Central & Eastern Europe
• New management team in Wolseley France
• Established a CEE management team in
Zurich
• New Management team in Brossette
• SAP pilot in ÖAG
• One offs in the underlying comparators for
2006
• DC implementation in Italy
• Back to basics in Brossette
• Consolidation of the operating and reporting
systems in Eastern Europe
• Investing in CDC’s and branch refits in
Brossette
• Reorganising the credit control operation at
MART in Hungary
• Expansion from products to services in Wood
Solutions
• Consolidation of the operational management
and reporting systems in Benelux
• Developing the branded network for specialist
and generalist
• Acquisitions to expand the product offering in
Belgium and Netherlands
6
Key principles of what should be leveraged
• Supplier spend - direct and indirect
• Knowledge - best practice or expertise
• Resources - which do not need to be duplicated will reduce costs
• Investments and assets - spread the cost across multiple entities and utilize the
capabilities
• Single points of contact where it brings value - some international customers
• Selling on service, not on price
7
Making Wolseley a world class business
EARN
a higher margin through better cost control and achieving more
profitable sales
TURN
our assets in a much more efficient way with particular emphasis
on cash and working capital
GROW
the business at more than 10% from acquisitions and organic
growth
8
Earn, turn, grow - priorities for 07/08
Priority
1
2
3
Earn
Turn
Grow
UK
Earn
Turn
Grow
France
Earn
Grow
Turn
Nordic
Grow
Earn
Turn
Central & Eastern Europe
Grow
Turn
Earn
Group
Europe
9
Financial targets
7% trading margin in 4 years
•
•
•
•
Double digit growth (organic and acquisitive)
Profits to rise faster than sales
Medium term trading margin of 7%, should be achievable in 4 years
ROGCE at least 4% more than WACC
Double the business in 5 to 7 years
CAGR 10% to 15%
10
DT Group
Steen Weirsoe – CEO
Lars Hansen - Managing Director, Stark
Ole Michael Jenson - SVP Group Sourcing
Agenda
1. Who are we
SW
2. Where are we
SW
3. What we do
SW
4. How we do it
SW
5. Stark
LH
6. Group sourcing
OMJ
7. Wolseley DT Group integration
SW
8. Plans for growing the business
SW
9. Q & A
ALL
12
1. Who we are
DT Group
Sales and distribution of building materials
in the Nordic region
14
Primary target groups
Contractors, carpenters, brick layers,
private customers, industry and retailers
15
Revenue split by customers and market
Market
Customers
Private Consumers
34%
New building
21%
Professionals
45%
Industry and retailers
21%
Industry sales
16%
16
Repair and maintenance
63%
Evolution of DT Group
Historical development
Year Market entry Milestone
1
Denmark
Founded in Århus, Denmark
1933
Listing on CSE
1968
Start-up of Silvan
1989
Sweden
Focus
Strong
expansion
Operations
Expansion
Operations
Profitable
growth
Sales
CAGR
34%
(1)%
13%
4%
>10%
25
2.000
Acquisition of Beijer
2
International hardwood activities
discontinued
4
5
Norway
1997
2000
Acquisition of Neumann
Start-up of Silvan in Sweden
Finland
Acquisition of Starkki
2002
Closure of I&D Wholesale
2003
Delisted from the CSE
2004
Stark uniform branding
2006
Name is changed to DT Group A/S
2006
DT Group A/S acquired by Wolseley
3
15
1.200
2
10
800
1
5
400
0
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
Jan-04
Jan-05
Jan-06
1997
1.600
4
Revenue
2007 Greenland Acquisition of Superbyg
17
EBITDA
0
(EBITDA DKK million)
3
5
20
(Revenue DKK billion)
1993
Jan-07
1896
Revenue and EBITDA, 1985 – 2007
Divisions in DT Group
BUILDERS’ MERCHANTS
DIY STORES
DT Group is a solutions provider
18
TRADE
Divisional revenue and operating profit
Operating profit
Revenue
Stark
42%
DT Trade
7%
Starkki
17%
Silvan
12%
Starkki
13%
Stark
50%
Beijer
17%
DT Trade
4%
Neumann
5%
12 months to 31 January 2007
19
Silvan
13%
Neumann
5%
Beijer
15%
Organisation
DT GROUP A/S
EXECUTIVE BOARD
Group functions
Steen Weirsøe (CEO) * Jørgen Clausen (CFO)
Steen Weirsøe
Executive Board Assistant 1
Mohammad Asim
GROUP MANAGEMENT COMMITTEE
Business development
Jørgen Wenshøj
1
HR and Communications
Jakob Larsen
3
Group Sourcing
Ole Mikael Jensen
32
Steen Weirsøe * Jørgen Clausen
Lars Hansen * Anders Wassberg * Markku Willström
Per-Erik Pedersen * Michael Christiansen * Jørgen Wenshøj * Ole Mikael Jensen
Jørgen Clausen
Builders' merchants
IT
Hans Henrik Junge
70
Finance
Karsten Wingsted
10
Treasury
Jens Grøn
3
Properties
Karin Hovmand Eriksen
2
DIY stores
Stark
Starkki
Beijer
Neumann
Silvan
Cheapy
Lars
Hansen
Markku
Willström
Anders
Wassberg
Per-Erik
Pedersen
Michael
Christiansen
Karsten
Kehler
No. of FTE employees
Total number of full time employees
7,183 (31/01/2007)
20
DT Trade
Jørgen
Wenshøj
Group management committee
Jørgen Clausen
Steen Weirsøe
AGE
Years with DT
Lars Hansen
Michael Christiansen
59
50
7
4
Anders Wassberg
Markku Willström
Per-Erik Pedersen
Jørgen Wenshøj
Ole Mikael Jensen
Sourcing
49
42
41
56
51
50
37
9
16
5
7
9
8
7
21
2. Where we are
The Nordic region and Greenland
1
2
3
4
5
6
7
8
9
10
11
28
UK
Ireland
France
Belgium
Netherlands
Luxembourg
Switzerland
Italy
San Marino
Croatia
Romania
12 Hungary
19
20
21
18
22
2
17
1
5
4
3
23
16
6
15
14
7
12
8
27
9
26
24
25
23
13
10
11
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Slovakia
Austria
Czech Republic
Poland
Denmark
Norway
Sweden
Finland
Canada
USA
Mexico
Panama
Trinidad & Tobago
Barbados
Puerto Rico
Greenland
Attractive future growth
Market growth
% sales split
5,0%
56%
4,0%
Attractive growth
rates, particularly
within the RMI
segment
5,0%
21%
4,0%
3,0%
18%
3,0%
4,0%
5%
3,0%
0
2
4
5 year CAGR
Professional
DIY
Source: Management estimates
24
6
Building materials – market share analysis
The Nordic building materials market is estimated at DKK183bn
Denmark
Finland
Rautia
(Rautakesko)
DT Group
21%
18%
DT Group
Others
11%
Bygma
67%
8%
Other
62%
DLH
4%
Market Size:
9%
DKK 49 billion
Market Size:
Sweden
DT Group
10%
Norgros (BM)
Optimera
4%
(Kesko)
8%
DT Group
2%
Optimera
5%
Other
79%
Other
Lovenskjold
6%
85%
Market Size:
DKK 33 billion
Norway
Bygma
1%
___________________________
Puukeskus
Market Size:
DKK 43 billion
Source: Prognosenteret (Market size)
25
DKK 58 billion
Market leader - Nordic region and Greenland
Store network
No 1
Denmark
No 1
No 2
Sweden
Middle
position
No 1
Start-up
Local
leader
No 1-3
Stark
Starkki
Neumann Bygg
Beijer
Cheapy
Silvan
Largest pan-Nordic store network…
26
The Nordic market is fragmented
MARKET HIGHLIGHTS
• A number of both voluntary and capital
chains operate in the Nordic building
materials market
• Voluntary chains (purchasing groups)
are not considered to be direct
competitors on an aggregated basis
• The total professional and DIY market
in the Nordic region is estimated at
approx. DKK183bn (£17bn) (2006)
• The Nordic market is very fragmented
and the ongoing consolidation is
expected to continue
27
Stark - market positioning
Market share and positioning
Professional
25%
Bygma
Semi-prof.
DIY
9%
12%
Stark competitive strength
4%
DLH
XL-Byg
7%
XL Byg
Local
19%
Silvan
8%
Bauhaus
6%
jem & fix
6%
Largest store network in Denmark
(Capital Chains)
National coverage
Nationwide brand since 2004
Flexible concept adapted to different
customer groups
Strong local customer relationships
High customer loyalty
‘One-stop-shopping’ opportunity
Wide product range complemented
by additional services
Committed customer service and indepth product knowledge
Stark ranks as the largest builders’ merchant in Denmark
28
Stark - business concept
Revenue by customer segment
Industry 12%
National
Contractors
2%
Public
Authorities 2%
Retailers 1%
Consumers
25%
Local
Builders 58%
RMI:
Top 10 customers:
>60%
~5.6%
Direct sales:
Number of SKUs:
32%
18,000 – 45,000
Stark primarily services the professional and high-end DIY segment
29
Starkki - market positioning
Professional
14%
Rautia
Semi-prof.
Starkki competitive strength
DIY
6%
18%
K-Rauta
18%
Puukeskus
16%
Puumerkki
9%
AGRI
Market
12%
Varitukku
7%
RTV
5%
Bauhaus
2%
30
Second largest distributor of building
materials in Finland (market share of 11%)
Nationwide chain concept with 20 stores
Stores located around growth centres in
major Finish cities
Superior customer relationships
Unique positioning of a mixed builders’
merchant and home improvement centre
Best customer service
Wide product range
High product availability
Leading service offering
Skilled workforce with particularly strong
experience in timber
Starkki - business concept
Public
Industry Authorities
15%
4%
National
Contractors
9%
Retailers
21%
Local
builders
28%
Consumers
23%
R&M
Top 10 customers:
>40%
8%
Direct sales:
Number of SKUs:
'One-stop-shop' for professionals and DIY customers
31
49%
7,000 – 18,000
Beijer - market positioning
Professional
Semi-prof.
DIY
11%
5%
Silvan
2%
Cheapy
1%
Optimera
Beijer competitive strength
~
8%
K-Rauta
1%
4%
Bauhaus
1%
8%
Interpares
(Woody)
18%
ByggTrygg
4%
8%
COOP
6%
BYGG MAX
4%
Hornbach
2%
No 1 building materials distribution company
in Sweden with 8% market share
Unique nationwide market coverage of more
than 60 stores across Sweden
particularly strong in the complex Stockholm area
Strong Customer relationships - supplier of
choice for largest contractors
Systemised store concept
Ability to act as building partner – material,
solution, logistics – nationwide or locally
Trimmed assortment to profile the concept
Centralised and standardised back-office
platform
Leading building materials distributor in Sweden
32
Beijer - business concept
National
contractors
17%
Retailers
4%
Public
authorities
2%
Consumers
31%
RMI:
Direct sales:
Industry
2%
Local builders
44%
>70%
25%
Standardised assortment: 12,000 SKU
Special orders: 15 – 20% of total sales
Targeting sales to professional segment with increasing DIY focus
33
Neumann - market positioning
Neumann competitive strength
Professional
Semi-prof.
3%
(1)
DIY
4%
11%
7%
10%
8%
Optimera(3)
4%
7%
COOP
2%
7%
Mestergruppen 6%
3%
NordEK
5%
(4)
E.A Smith
4%
Jernia
(1)
(2)
(3)
(4)
Market leader in most of the local
markets it is represented in
Increasing market share in local
markets
Able to leverage strong local positions
through planned geographical
expansion
Strong local customer relationships
Excellent reputation among local
builders
Able to deliver any component required
for a specific building project
Wide assortment of relevant products
Skilled and highly trained staff
Highly cost efficient operations
1%
Løvenskjold
(BM)
Norgros(2)
9%
7%
5%
Includes voluntary chain members
Figures include Norgros Kesko member stores
Figures include Montér (Optimera member stores)
Figure include Bygger’n member stores
34
Neumann - business concept
Industry
6%
Retailers
13%
National
contractors
5%
Public
authorities
3%
Consumers
19%
Local builders
54%
RMI:
Top 10 customers:
60%
16%
Direct sales:
Number of SKUs:
Regional market leader with strong relationship with local builders
35
26%
17,000
Silvan - market positioning
Silvan Denmark competitive strength
Professional
Semi-prof.
DIY
8%
Stark
25%
jem & fix
Leading DIY retailer with 8% market share
Best recognised brand
Best value for money (price guarantee)
Best locations
Broad product portfolio
Motivated personnel
9%
6%
Bauhaus
6%
XL-Byg
19%
professional skills
‘DIY yourself’
~
~
Silvan Sweden competitive strength
2%
Beijer
11%
Bauhaus
High customer satisfaction according to
customer surveys
Good locations
Strong DIY product range at competitive
price levels
Potential to repeat the success story of a
proven concept
1%
Cheapy
K-Rauta
5%
1%
1%
4%
8%
COOP
6%
Byggmax
4%
Hornbach
2%
Silvan is DIY
36
DT Trade – business overview
Division
Business
Machines and
Accessories
Niche supplier of
specialised tools,
machinery and
accessories
No 1
Market position
Sales split
EBITDA split
15%
17%
Wholesale of
Building Materials
Leading trader of
imported building
materials
No 1 – 3
36%
Fittings and
Fixtures
Largest Nordic
distributor of fitting and
fixtures to wood
consuming industries
No 1
28%
39%
Complementary business contributing 7% of total sales
37
Import, sales and
distribution of
hardwood, plywood,
and MDF
No 3 – 4
21%
33%
Hardwood and
Board Materials
11%
3. What we do
Value creation for customers and suppliers
This is where DT Group adds value
Customers demand that DT has thorough knowledge of products and
is able to deliver excellent advice and service. Local facilities/stores are
especially important to the skilled craftsmen and their daily planning.
Most products are sold from stock. Other goods can be delivered on
very short notice
To suppliers the Group is an efficient distributor and has daily contact
with all its target groups through well-situated stores and skilled
employees. As regards logistics, stock keeping, administration etc., the
Group offers efficient solutions
39
Key target customer segments
Sales channel
Builders’
Merchant
(80%)
DIY
(13%)
Specialist
trade (7%)
Division
No. of
Semi- prof./
Industry
Ordinary DIY
Professionals
stores
high-end DIY
and retailers
Sales Split
Stark
87
42%
Starkki
20
17%
Beijer
65
17%
Neumann
11
5%
Silvan DK
39
10%
Silvan SE
11
2%
Cheapy
22
0%
DT Trade
17
Sales split
34%
= High focus
= Medium focus = Low focus
7%
45%
21%
100%
Primary customer area
DT Group serves both the professional and DIY segment
No. of stores as per 10 April 2007
40
Focus going forward
Our focus going forward is to develop our
business according to our customers needs
and wants
41
4. How we do it
Shareholder value
EBITDA
x
9
-
NET INTEREST
=
BEARING DEBT
SHAREHOLDER
VALUE
Continuing strong focus on shareholder value
43
Strategic agenda
Earn
Turn
Grow
V alue creation
to w ards su pp liers an d cu stom e rs
Efficiency
p lan 4 5 , 2 0 a an d 2 0 b
M anaged grow th
o rg an ic, a cqu isitio n s, h o rizon tal, n e w m ark e ts
44
Strategic focus
2001 – 2005
Strategic
focus
Capital
efficiency
2005 – 2011
Operational
efficiency
Strategic Plan 2002+
Strategic
initiatives
Maintain
efficiency
Growth
Plan 10
Plan
45
Staff costs < 45% of gross
profit
Like for like growth
Plan
20a
Adj. operating profit > 20% of
gross profit
Bolt-on acquisitions
Plan
20b
Adj. operating profit > 20% adj.
capital employed
Greenfields
Historical focus on efficiency has created an ideal platform to pursue growth
45
Development of strategic agenda targets
Adj. operating profit > 20% of
gross profit
Staff costs < 45% of gross profit
48%
23%
Plan 20a
Plan 45
22%
47%
46%
45%
21%
20%
19%
18%
17%
16%
15%
Adj. operating profit > 20% of adj.
capital employed
2006/07
2005/06
2004/05
2003/04
2002
2001
2006/07
2005/06
2004/05
2003/04
2002
14%
2001
44%
Growth of 10 % p.a.
120%
11%
Plan 10
100%
90%
80%
70%
60%
50%
9%
7%
5%
40%
30%
3%
20%
10%
46
2006/07
2005/06
2004/05
2003/04
2002
2001
2006/07
2005/06
2004/05
2003/04
2002
1%
2001
Plan 20b
110%
Development of working capital
WC%
19%
17%
15%
13%
11%
9%
7%
As at 31 January
47
2006/07
2005/06
2004/05
Working Capital = Inventory + Trade debtors – Trade creditors
2003/04
2002
WC% = WC/Revenue
2001
5%
5. Stark
Market
Market leader
• Good locations
• 3 concepts
• Customer oriented
• All kinds of building materials
• Large customer base
• Focused organisation
•
Builders Merchants
Combi stores
Specialist stores
49
Own the marketplace
As a clear no. 1 supplier to professionals, Stark is well positioned to target
the semi-pro. / top end DIY market
Professionals
Why:
Buy you solutions
at the same place
as the professionals do
Semi- prof./
High end DIY
Discount
Concepts
DIY
- Safe and high quality
- Advice and logistics
50
Customers mindset …..
Pioneers
• Walk the extra mile for
customers and colleagues
• Always one step ahead
• We are reliable
= Excellent Customer Service
51
Strategy 2002 + growth scenario
• Rebranding
• Clear mission
• Customer oriented
• New and ambitious goals
• More powerful organisation
• Reorganisation of sales
organisation
• Sales teams
• Clear no. 1 in every city
52
Potential
STARK
- Year ended 31 Jan 2007
DKK million
Revenue last period
Growth:
Existing customers
New customers
Revenue
Revenue
7.221
Number of accounts
228,410
2.143
1.155
10.519
Decline:
Existing customers
Lost customers
-1.611
-524
Revenue in this period
8.384
+ 66.418
+ 46%
- 55.714
+ 16%
239,114
Total number of accounts: 239,114
In addition to 3,109,617 number of cash sales transactions
total number of transactions 7,881,609
What is easiest?
To retain an existing customer or to attract a new customer?
53
Revenue, EBITDA and Plan 20b
Revenue, 2002 – 2006/07
EBITDA, 2002 – 2006/07
%
12.000
(DKK million)
8.328
6.000
7.140
5.456
Growth
05/06
16.6%
6.115
5.716
4.000
Growth
04/05
7.0%
2.000
10
1.000
(DKK million)
10.000
8.000
1.200
Growth
06/07
16.6%
8
766,2
800
394,1
400
391
448,5
4
2
200
0
2002
2003/04
2004/05
DIY
2005/06
0
2002
2006/07
2003/04
2004/05
2005/06
2006/07
Professional
EBITDA DEVELOPMENT EXCEEDS
REVENUE DEVELOPMENT
12.000
Plan 20B, 2002 – 2006/07
900
1.200
%
350
1.000
300
800
10.000
700
8.000
839
600
(DKK million)
(DKK million)
6
611
600
0
500
6.000
400
4.000
300
200
2.000
100
0
800
250
699
200
600
503
150
335
400
100
160
200
50
0
2002
2003/04
2004/05
2005/06
2006/07
0
0
2002
EBITDA
Revenue
54
Growth
06/07
25.4%
2003/04
2004/05
2005/06
2006/07
Growth
05/06
36.2%
Growth
04/05
14.7%
There is currently a video playing.
The full presentation will resume shortly.
55
Most importantly
STARK has just kick-started...
6. Group sourcing
Achievements
Direct spend totaling €2 billion
80
28%
70
26,1%
50
25,3%
24,6%
25,5%
26%
24,8%
24,2%
40
24%
64
30
58
49
20
22%
43
10
12
(Gross margin %)
(Creditor days)
60
22
0
20%
dec-01
dec-02
Jan-04
jan-05
jan-06
jan-07
The launch of the group sourcing strategy has led to substantial purchasing term improvements
58
Actions
Up-lift in last 5 years: margin +1.9%, trade creditors +52 days
Efficiency focus
Product management
Higher value added
Customer mix
Shrinkage programmes
Logistics efficiency
Supplier structure rationalisation
Direct imports
Own brands
Adverse effect: some cash rebates lost
59
Sourcing
Approach
Sourcing
Group
2
1
Division
Group
sourcing
initiated
Divisional purchasing
departments strengthened
Imports and
Own Brands
Preferred Supplier Programme
Lead Buyer
Groups
established
Store and
divisional
purchasing
Pre 2000
2001 – 2003
2003 – 2004
Post 2005
DT Group is increasingly benefiting from its group-wide sourcing
60
Organisation
Close to customers
Sourcing organisation
Imports and own brands
Lead buyer groups 1-5
Strategy
Design
Operations
Logistics
Category strategies/
Management
Analysis
Contracts
Implementations
28 FTE employees
Stark
Legal issues
Trademarks
Policies
Analysis
Systems
3 FTE employees
23 FTE employees
Starkki
Silvan
Central support
Beijer
Cheapy
61
Neumann
DT Trade
Backbone
• Same language
• Same systems and procedures
• Aligned organisation structures and clear roles
• Clear targets
• Stepwise approach
• Resources
62
1
Nordic preferred supplier programme
Current
Target (2011)
% of total
sourcing
30% + 5%
75%
No of
suppliers
50
100
Criteria
Process
Benefits
90 days credit
No minimum volumes
Incentives ensured through
purchasing bonus
Negotiated by Lead Buyer Group (4 months to implement)
Improved credit terms
Higher service level
Significant purchasing terms improvements
63
Cost savings/best prices
2
Own brands
Current
% of total
sourcing
Total
Of this Low Cost Country
5%
3%
Volume
(DKKm)
Impact
Target (2011)
10%
700
Higher gross
margin
2,000
Operating costs
Increase in
stock days
Reduction in
creditor days
Benefit of higher gross margins of Direct Imports outweighs adverse impact on working capital
64
Sourcing integration Wolseley – DT Group
Sourcing work teams have been
established with over 50
representatives from Wolseley UK,
PBM, PBM Imports, DT and SBS
dealing with 70 selected suppliers
Team
kick off
meeting
Quick wins
• Listed agreements
• Growth rebate
• Payment days extension
Strategic opportunities
• Price / rebate harmonisation
• Development of approved / preferred supplier
status
• Identify opportunities for LCC supply
Phase 1
Phase 2
65
Project structure
Sourcing Steering
Group
Sourcing Project
Team
Sourcing Systems
Integration
Plasterboard &
Insulation
Tools & Hardware
Softwood
Heavy Building
Materials
Product Workshops
LCC Projects
(Sourcing / Projects /
Process Integration
Global Contracts
Rebate Collection
Structure Alignment
Panels
Hardwood
Flooring & Joinery
Roofing
66
Tiles
Plumbing
7. Wolseley / DT integration
Integration
“As-is” situation
“Analysis & Options”
“Future state proposition”
“Decision to proceed”
Business as usual
Wolseley / DT Group integration
kick -off
&
Focus on:
• A number of workstream projects
• Many fruitful workshops and discussions
Plumbing
• All “just do’s” done
Sourcing
68
8. Plan for growing the business
Plan 10: attractive future growth
Sales growth initiatives
Committed to
growth
initiatives
70
•
Increased spending on marketing
to expand customer base
•
Significant sales staff hires to
support growth
•
Developing new brands and
concepts
•
Private brands
•
'Icebreaker' ideas
•
Greenfield opportunities
•
Bolt-on acquisitions
9. Q & A
Break
Wolseley UK
Nigel Sibley – Managing Director
Matt Neville – Finance Director
Angela Rushforth – Marketing Director
Mark Harrison – Supply Chain Director
Introduction
Nigel Sibley, Managing Director
Agenda
•
Background
•
•
Who we are
What we do
•
Our journey….so far
•
Financial summary
•
Market overview
•
Broadening our product range
•
Supply chain strategy
•
Summary
75
Background
Who we are
Wolseley UK
The UK & Ireland’s leading distributor of heating and
plumbing products to the professional market and a
major supplier of building materials
77
Wolseley UK
78
•
1,926 branches
•
15,681 employees
•
2,500 commercial
vehicles
•
Nationwide coverage
Wolseley UK leadership team
The leadership team has
responsibility for the long-term
direction of the business
Nigel Sibley
Managing Director
Steve Ashmore
Director – Core Brands
Matt Neville
Finance Director
Grant Richardson
Brand Director
Plumb / Parts
The senior management team
(key members highlighted in
grey)
Angela Rushforth
Marketing Director
Paul Gordon
Brand Director
Build / Drain
Bob Mason
HR Director
Mark Harrison
Supply Chain Director
Darran Rickards
Product Director
Ian Tillotson
Commercial Development Director
Derek Robb
Logistics Director
Tony Morris
Brand Director
Pipe / Climate
Mark Eburne
Director – Development Brands
79
Background
Leadership team
Matt Neville
Finance Director
•
•
•
•
Commercial Finance
Financial Services
Acquisitions
Property
Background
Joined the company in May 2001,
having previously held senior
executive positions with
Price Waterhouse Coopers.
80
Background
Leadership team
Steve Ashmore
Director – Core Brands
•
Core Brands
Background
Joined Wolseley UK in 2005.
Previously at Exel Logistics where
he was Managing Director for Exel’s
industrial business across UK/Europe.
81
Background
Leadership team
Ian Tillotson
Brand and Commercial
Development Director
•
•
•
•
William Wilson Plumbing & Heating
Electric Center
IT
Business Change
Background
Founder Partner of Heating Replacement
Parts & Controls (HRPC). With Wolseley UK
since 1993.
82
Background
Leadership team
Mark Eburne
Director – Development Brands
•
•
Ireland
Brandon Hire
Background
Previously chief operating officer for National
Grid Metering.
83
Background
Leadership team
Mark Harrison
Supply Chain Director
•
•
•
•
Logistics
Sourcing
Supply chain development
Transport
Background
Previously with PepsiCo, both
in the UK & Ireland and internationally.
Prior to that with British Sugar (ABF)
and Mars.
84
Background
Leadership team
Bob Mason
HR Director
• HR
• Communications
Background
Has held senior executive positions within
a number of blue chip British companies, including
BT and London underground
85
Background
Leadership team
Angela Rushforth
Marketing Director
Strategic Marketing
• Marketing Services
• E-commerce
• Range Management
• Unifix
• BCGM
Background
•
Previously at Screwfix, helping grow
the original family business to be a
market-leading company.
86
Background
Leadership team
Nigel Sibley
Managing Director
Background:
Joined Wolseley UK in 2005 responsible for Ireland
and acquisition and integration of Brandon Hire.
Appointed Managing Director in October 2006.
Previously with Rank Group and Bass.
87
Background
What we do
Turnover c£900m
565 branches
No. 1 in the market
Key competitors:
PTS
City Plumbing
Plumbase
Grahams
Independent Merchants
Key products:
Boilers, radiators, pumps,
sanitaryware
Customer groups:
Plumbers, central heating engineers
gas installers, local government
bathroom fitters
89
Turnover c£500m
260 branches
No. 3 in the market
Key competitors:
Travis Perkins
Jewson
Buildbase
Grahams
BPS
Local Independents
Key products:
Bricks, blocks, cement, aggregates
timber, insulation
Customer groups:
Builders, contactors and developers
jobbing builder, self build
90
Turnover c£120m
111 branches
No. 1 in above ground
Key competitors:
Ashworths, BSS,
Frazer, Burdens,
Frazer, JDP
Key products:
Above & below ground drainage
products
Customer groups:
Utility contractors, plumbers, builders
roofing contractors, drainage specialists
civil engineers/contractors
91
Turnover c£120m
200 branches
No. 1 in the market
Key competitors:
PTS
Curzon Heating
FHSS (Buying Group).
Regional independents
Key products:
Valves, heating spares,
commercial catering spares
Customer groups:
Heating engineers, plumbers
social housing, catering
facilities managers
92
Turnover c£200m
95 branches
No. 1 in the market
leader in pipe
fabrication
Key competitors:
BSS
Ashworths
Key products:
Pipes, valves & fittings
fire protection
specialist valves
Customer groups:
Mech engineers, H&V, building services
industrial engineers
93
Turnover c£75m
56 branches
No. 1 in refrigeration
No. 3 in air con
Key competitors:
Dean & Wood
HRP
RPW
NRW
United
Key products:
Air conditioning & refrigeration
components, cellar cooling
Customer groups:
Refrigeration contractors, H & V
mechanical engineers
94
Turnover c£100m
64 branches
Market entrant
No. 5
Key competitors:
Hagemeyer
Edmundsons
City Electrical Factors
Local Independents
Key products:
Cable, switches, consumer units
lamps
Customer groups:
Electrical engineers, plumbers, builders
contractors
95
Turnover c£140m
22 branches
No. 2 in market
Key competitors:
SIG
CCF (Travis)
Minster (Jewson)
Key products:
Foam, fibre and drywall insulation
ceilings & partitions
Customer groups:
Contractors / developers, builders
merchants
96
Turnover c£100m
270 branches
No. 3 in market
Key competitors:
Speedy
Hewden
HSS
Local independents
Key products:
Access equipment, generators,
tools
Customer groups:
Contractors / developers, builders
all trades
97
Turnover c£70m
26 branches
12 showrooms
No. 1 “independent”
in Scotland
Key competitors:
Independent Merchants
PTS
City Plumbing
Plumbase
Grahams
Key products:
Boilers, radiators, pumps,
sanitaryware
Customer groups:
Plumbers, central heating engineers
gas installers, local government
bathroom fitters
98
Turnover c£80m
3 distribution centres
No.2 in market
Key competitors:
F & P / AHED (BSS)
Only other national
distributor
Waterline
Key products:
Boilers, white goods, bathroom
suites, kitchens
Customer groups:
Independent kitchen & bathroom retailers
merchants
99
Turnover c£10m
1 distribution centre
2 call centres
No.3 in market
Key competitors:
Screwfix Direct
Tool Station
Key products:
Cable clips, fixings, screws, tools
Customer groups:
Tradesmen
fixing specialists
merchants
100
Turnover c£170m
23 branches
No.1 timber
merchant
No.2 builders
merchant
Key competitors:
Chadwicks
Heiton Buckey
McMahons
Buying Groups
Independents
Key products:
Timber & building materials
Customer groups:
Builders
Flooring contractors
Self build/RMI/DIY
101
Turnover c£90m
50 Branches
No.1 in market
Key competitors:
Chadwicks
Buying Groups
Independents
Key products:
Heating & plumbing products, gas fires,
renewable energy systems
Customer groups:
Plumbers, heating engineers
self build
102
Turnover c£30m
25 branches
No.1 in market
Key competitors:
BTW
Right Price Tiles
Tilestyle
Buying Groups
Independents
Key products:
Tiles, bathroom suites, wood flooring
Customer groups:
Retail
Tilers
Commercial projects (hotels, pubs etc)
103
Turnover c£70m
115 stores
Rapid expansion plan
No of Stores
B&Q
Homebase
Independents
Revenue (£m)
Key competitors:
2001/2
104
2002/3
2003/4
2004/5
2005/6
Forecast 2006/7
Core brand competitors
WUK brand
Primary Competitor
Jewson
PTS
Burdens
BSS
Curzon Heating Components
Dean & Wood
Newey & Eyre
SIG
Speedy Hire
105
Our Journey….so far
2004
•
Highly successful trading divisions
But….
• Customers and suppliers in silos
• Duplication of resources
• Limited sharing of sites
Light
Light
or best practice
side
side
• Sub-optimal supply chain
• Gaps in product offer
Inefficient platform for growth
107
Heavy
Heavy
side
side
Commercial
Commercial
&
& Industrial
Industrial
Spares
Spares
2004/05
•
Closure of 13 regional offices
•
New leadership team
•
Opening of Leamington Spa office
•
Establishment of shared services
•
Commencement of new supply chain strategy
•
Implants & multi-brand sites
Transition to a single operating company
108
2005/06
•
•
•
•
•
Electrical acquisitions – William Wilson & AC Electrical
Insulation acquisition – Encon
Brandon Hire acquisition
Re-development of Ripon office
Further insulation acquisitions – Neville Long & Morris
Strong acquisitive growth
109
2006/07
•
•
•
•
•
•
Opening of national distribution centre
Bathstore accelerated opening programme
Completion of head office restructuring
Integration of Irish management structure
Electrical acquisition in Ireland
North West regional distribution centre
under construction
Continued growth
110
Strategy
2006/07
•
Our strategy is to…
•
•
•
•
•
Be the most efficient route to market for our suppliers
Offer the best product availability, fill rates and service to our customers
Offer the broadest range of product of any distributor in the UK & Ireland
Be the closest merchant to our local customer through our branch network
Be the supply chain partner of choice to our regional and national
customers
111
Wolseley UK Today
Strategy
Earn
•
•
•
•
Turn
•
•
•
•
Grow
•
•
•
Distribution costs
Product sourcing
Own brand sales
Labour efficiency
Inventory management
Supplier terms
Collection of payables
Property utilisation
Like for like growth
Continued, focussed acquisitions
Branch expansion
112
In more detail…
•
•
•
•
Financial Summary
Market Overview
Broadening our Product Range
Supply Chain Strategy
Matt Neville
Angela Rushforth
Angela Rushforth
Mark Harrison
113
Financial summary
Matt Neville, Finance Director
Financial summary
Historic growth UK & Ireland
3,000
250
2,500
Revenue (£m)
2,000
150
1,500
100
1,000
50
500
0
0
2001/02
2002/03
2003/04
2004/05
Year
Revenue
115
TPBI
2005/06
Trading Profit (£m)
200
Financial summary
Organic and acquisitive growth
16.0%
14.0%
12.0%
%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2001-02
Revenue Trading
Profit
2002-03
2003-04
Revenue Trading
Profit
Revenue Trading
Profit
Acquisition
116
2004-05
Revenue Trading
Profit
Organic Growth
2005-06
Revenue Trading
Profit
Financial summary
Investment in people
•
•
•
•
•
•
•
Built a new leadership team
Strengthened succession capability
Introduced performance management
Increased management development
Six-fold increase in graduate recruitment (2006 intake: 88)
Transformed employee communications
Significant reduction in accident rate
Aim: To significantly improve the engagement of all our
employees
117
Financial summary
Diversification impact on customer segmentation
Wolseley UK Segmentation 2005/06
Wolseley UK Segmentation 2003/04
Utilities
Plumbing
Building Contractor
Electrical
HVAC
Industrial
Mechanical Engineers
Retail
118
Financial summary
H1 2006/7
Trading margin down on prior year
Sales Growth
Acquisitions
New Branches
- Bathstore (33)
- Electric Center (11)
- Other (24)
Like for Like Growth
Costs associated with growth
£m
%
156
12.4%
9
1
6
0.7%
0.1%
0.4%
120
9.5%
-
Investment in Supply Chain
New Branch Dilution
Acquisition Integration costs
Investment in management resource
Capital Expenditure
Revenue Costs
Underlying Margin pressure
292
23.1%
119
£26m
£5m
Financial summary
Operational efficiency
•
Working capital
•
Labour efficiency
•
Property utilisation
•
Own brand development
120
Own brand
121
•
DC network allows
increased own brand
sourcing
•
c19,000 product portfolio
•
Opportunity to grow
significantly from our
existing 10%+
•
Own brand to become
a major component of
our customer offer
Market overview
Angela Rushforth, Marketing Director
Market overview
Merchant
Market
£14.2bn
Building
Materials
£37.0bn
Bathroom/
Kitchen specialists
£1.0bn
TP 16%
•
Future prospects dependent
on consumer reaction to recent
and future interest rate rises
•
market share:
7% of building
materials market
Grafton
8%
WUK 19%
Merchant
£14.2bn
Improvement in RMI market
seen in second half of 2006
expected to continue driven by
strong housing market
Saint
Gobain
16%
DIY £9.6bn
Direct
£12.2bn
•
BSS 8%
Others
33%
123
Market overview
Housing statistics - UK
•
UK housing market has
enjoyed a sustained recovery
during 2006
•
Lack of supply set against firm
levels of demand is providing
impetus for house prices
•
Increase in capital investment
in social housing
•
Pick-up in property
transactions during 2006
is forecast to generate a
small rise in private
housing RMI during 2007
Housing Completions: Great Britain
250
Units 000's
200
150
100
50
0
2001
2002
2003
2004
2005
2006
2007f
2008f
124
Market overview
Housing statistics - Ireland
Change in Registrations Jan-Feb
500
CORK
LOUTH
DONEGAL
CAVAN
TIPPERARY
OFFALY
KILDARE
WATERFORD
0
CARLOW
KERRY
CLARE
N o. of R e gis tra tions
-500
LIMERICK
LEITRIM
LAOIS
LONGFORD
KILKENNY
GALWAY
MAYO
ROSCOMMON
MONAGHAN
WESTMEATH
WICKLOW
SLIGO
MEATH
WEXFORD
-1,000
-1,500
-2,000
DUBLIN
-2,500
Housing Registrations
125
Market overview
Housing statistics - Ireland
1,253
1,360
1,617
100 1,607
90 1,350
52,602
Housing47,727
Completions: Ireland
51,932
62,686
71,808
75,398
57,695
68,819
76,954
80,957
93,419
80
70
12,940 (note a)
60
50
Housing completions –
latest forecast of 60/65k
•
40
30
20
10
0
2001
2002
2003
2004
2005
2006
2007f
126
Market overview
Outlook UK
Key drivers – 2006/07
•
Commercial rose 27% vs. 2005 - lifted by office, PFI health & education work
•
New social housing output up 35% vs 2005
•
Private new housing modest increase up 3% vs 2005
•
Energy & water industries driving anticipated recovery in infrastructure investment
(+8.1% in 2007)
•
Part L Building Regulations anticipated to drive growth in insulation market from
summer 2007 onwards
127
Market overview
Opportunity in UK
Plumbing, Heating & Air
Conditioning
Building Materials
£900m (4%)
£1.4bn (30%)
£24.3bn
£4.7bn
Civils/Waterworks, Industrial
Commercial PVF
Electrical
£200m (13%)
£100m (3%)
£2.9bn
£1.8bn
Source: Management best estimates
Wolseley UK
128
Market size
Hire
Civils Ind.
Comm PVF
BM
Elec
P+H
2003
Civil construction contractors
Commercial new build contractors
Electricians – Commercial
Plumbers – Commercial
General Builders – Commercial RMI
HVAC Installers
Large Housebuilders
Small Housebuilders
Self-Build (Housing)
General Builders – Housing RMI
Roofers
Windows/ Conservatory fitters
Carpenters/Joiners
Electricians – New Housing
Electricians - RMI
Plumbers – New Housing
Plumbers - RMI
Home Product Installers/Fitters
Decorators
Landscapers
Facilities Management / Janitorial
Institutions (eg armed forces)
Light industry
Workshops/ Repairshops
Skilled DIYers/hobbyists
General Public
130
Hire
Civils Ind.
Comm PVF
BM
Elec
P+H
2006
•
Civil construction contractors
Filling the gaps
Commercial new build contractors
Electricians – Commercial
Plumbers – Commercial
General Builders – Commercial RMI
HVAC Installers
William Wilson / AC Electrical
Encon
Brandon Hire
Bathstore expansion programme
Large Housebuilders
Small Housebuilders
Self-Build (Housing)
General Builders – Housing RMI
Roofers
Windows/ Conservatory fitters
Carpenters/Joiners
Electricians – New Housing
Electricians - RMI
Plumbers – New Housing
Plumbers - RMI
Home Product Installers/Fitters
Decorators
Landscapers
Facilities Management / Janitorial
Institutions (eg armed forces)
Light industry
Workshops/ Repairshops
Skilled DIYers/hobbyists
General Public
131
Acquisitive growth
22/
22/10/0
10/055
Encon
Insulation:
Foam, Fibre, Drywall
Ceilings& Partitions
15,000 SKUs
31/10/05
31/03/06
21/04/06
2/05/06
William
Wilson
Neville
Long
AC
Electrical
Brandon
Hire
Hireplc
Plumbing &
Heating:
New Heating &
Bathroom products /
suppliers
Electrical:
Cable, lamps,
Consumer units,
Switches
Insulation:
Ceilings&
Partitions
Drywall
3,800 SKUs
Electrical:
Cable, lamps,
Consumer units,
Switches
Industrial
Brandon
Tool Hire:
Access equipment
Generators
HVAC
Toilet Hire
Survey equipment
10,000 SKUs
3,000 SKUs
15,000 SKUs
132
Acquisitive growth
Geographical expansion
01/
01/09/0
09/044
Brooks
Group
Ireland
18 Branches
19/
19/09/0
09/066
Morris
Insulation
Ireland
Insulation
4 Branches
30/09/05
19/04/06
31/05/06
11/08/06
HGH
Plumbing
K&R
Building
Supplies
Ivybridge
Building
Supplies
Brandon
Lunts
Hire plc
Heath
Kent
1 Branch
Cornwall
1 Branch
Cornwall
1 Branch
2/10/06
22/02/06
19/02/07
Murdock
Hosking
Conlon
Quinn
NW
England
3 Branches
Cornwall
1 Branch
133
Ireland
Electrical
3 Branches
Widnes
1 Branch
Electric Center
Electric Center
William Wilson purchased October 2005
• 26 branches in Scotland, NE/NW England and
the Midlands
AC Electrical Wholesalers purchased in April 2006
• 40 branches mainly in southern England
Combined turnover at point of acquisition
c£100m
135
136
137
Electric Center
138
•
Launched new Electric Center
brand September 2006
•
All branches now re-branded
Electric Center
•
85 branches by end of April
•
Sales growth is over 20% up
versus previous year
•
Major orders now being secured
due to national branch coverage
9 branches opened in shared sites
.
139
Encon
Encon
SIG
27%
Encon
10%
SIG
27%
Others 5%
Other
DIY 5%
Specialist
Distributors Builders
28%
Merchants
25%
Encon Insulation purchased October 2005
• 22 branches nationwide
• 500 employees
• Clear 2nd in market
DIY 5%
Only National competitor to SIG
141
Encon
Market value
c.£1.4bn
Fibre
Insulation
£250m
Foam
Insulation
£220m
Other Insulation
£80m
Insulation market – strong
growth prospects driven
by government regulation
Others
£80m
Ceilings/
Partitions
£250m
Drywall
£500m
142
Encon
Fibre
High value market
Recent strong growth
Future strong growth
- legislation driven
Supply / demand in balance
→ modest price inflation
Trends favour specialist distribution
Encon major presence
143
Foam
Drywall
Encon
SIG
27%
SIG
27%
DIY 5%
Others 5%
2002
2003
2004
2005
2006
2007
Encon expanded further its product
range and geographical spread with
acquisitions
• Neville Long – Ceilings & Partitions
• Morris – Ireland
Compound annual growth 2002
to 2006 of 19.7%
144
Brandon Hire
Brandon Hire
100%
589
277
522
Ot her
Access Equipment
Mini Plant
60%
-
ding
Handling
•
Brandon Hire addressable market –
£1.2bn
•
Market experienced steady growth (4+%
per annum)
A growing, complementary
business sector where we had
little penetration
Cleaning/ Floor Pr ep
Carpent r y/ Woodwor king
Concr eting/
Compacti ng
Heat ing/ Cool
ing/ Drying
0%
Tool hire sector – estimated at £831m
Lif t ing/ Mat er ials
Gardening/ Landscaping
Pumps
20%
•
Light ing/ Wel
Cut t ing/ Grinding
Pipewor k/ Plumbing
40%
The UK hire market as a whole is
estimated to be worth £3bn
Generat ors/ Compr essors
80%
Dr illing/ Br eaking
•
20%
40%
146
Brandon Hire
UK Tool Hire – Current Annual Turnover
Value (£m)
%
Speedy Hire
280
22
HSS
165
13
Brandon Hire
95
Hewden (Tools)
91.5
7
55
4
Jewson
Hire Station
SIG
27%
SIG
47
27%
A-Plant
40
TP Hire
37
Other
GAP
31.5
Specialist
JG
Distributors
Martin
9.7
Builders
28%
Merchants
Others
400
25%
Total
1,251
• Early business wins through
leveraging existing Wolseley
customer relationships
• Margin enhancing product
offer – Brandon Hire 11.1%
trading profit (Dec 2005)
8
DIY
4 5%
3
Others 5%
3
3
1
32
100
Source: Executive Hire News Jan 2007
147
Brandon Hire
National network - 260 branches
• All operating on Brandon IT system
• All Hire Centers re-branded as
Brandon Hire
• New management team
• Integration of HR, property, marketing
& fleet management
•
8 new branches
opened 2006/07
148
Broadening our customer base
Bathstore - expansion
Broadening customer appeal
4%
Bathstore
heartland:
style chasers with
money
29%
Growth
opportunity:
style chasers on a
budget
150
Customer promise & values
Bathstore
Customer
Promise
We make
dream
bathrooms
1
Bathstore
Values
We live and
breathe stylish
bathrooms
an affordable
reality
2
3
We make dream
bathrooms
affordable and
accessible for
everyone
We make
bathroom buying a
pleasure
151
Driving footfall
Catalogue
Approximately 220 pages
• Full price visibility
• Full range – key customer reference point
• Updated quarterly
•
3 core sales per year
Supplemented by seasonal promotional
activity & local support
• Distributed in national press & via
door drop
•
National television support
commenced January 2007
152
Revenue and store number growth
No of Stores
Revenue (£m)
Stores
115
77
58
32
26
2001/2
2002/3
2003/4
2004/5
153
2005/6
Forecast 2006/7
Mark Harrison, Supply Chain Director
The supply chain
•
Our suppliers manufacture or obtain the products
•
Our sourcing team source the products direct from
a supplier
•
Our teams receive the products and store them in
our warehouses and distribution centres
•
Our sales force sells the products to our customers
•
Our customers buy the products
•
Our distribution teams ship the products to our
customers or our customers pick up the products
from our centres or stores
155
Supply chain Wolseley UK – what is it?
Logistics
• Optimisation of product and information flow, from the supplier gates to the
customer delivery point
Product Sourcing
•
Maximising growth and margin through product and supplier management by
being the preferred route to market for our suppliers
Inventory
•
Centralised and optimised management of core branch range; lower inventory
and positive impact on working capital
Transport
• Integrated primary network (DC’s to branches), secondary transport (branches
to customers) efficiencies such as pooling, better fleet utilisation
156
Delivering a World-Class Supply Chain
£100m investment plan to..
•
Facilitate product range expansion
•
Enhance customer service
•
Cost efficiency
157
To date
42% of investment spent
•
Enable business planned growth
•
Define and raise service standards
•
More efficient operating cost
•
Increased barrier to entry due to capital requirements
•
Scaleable and flexible solution
•
Opportunity for more DC-sourced product
•
Enable branches to focus on customer service and sales
•
Leverage best practice in supply chain management
158
3 key areas
DC Infrastructure
• Optimise cost
• Improve service platform
• Expansion for growth
Inventory Management
•
•
•
Service improvement to customers
Lower inventory
Branch management focused on customers
Transport
• Improved fleet utilisation
• Lower operating costs
• Service enhancement
159
Distribution model
NDC (slow moving single stocking point)
• Supplies products direct to branch e.g. 100% parts (3rd party carriers)
• Supplies products to RDC’s e.g. 15% slow moving plumb (WUK primary fleet)
RDC (faster moving high volume)
• Supplies products to branches e.g. 80% Plumb (WUK primary fleet)
Branch (point of sale)
• Supplies product to customer locations (WUK secondary fleet)
• Customer collection point
• Receives non DC products for onward delivery e.g. bricks and blocks (WUK
secondary fleet)
160
Distribution Centres Vision
Future DC infrastructure (42% Complete)
Executing through common global WMS
Timeline
Today
Cumbernauld
Start
Complete
Melmerby
Athlone
Chorley
NDC
Naas
Marston Gate
South East RDC
NDC as hub of distribution
Worcester
Distribution spokes to
RDCs, then to branches
161
DC infrastructure delivers service enhancement and Cost efficiency
Sevice enhancement
96.8
100
88
10.7%
94
10.3%
80
90
9.6%
80
9.5%
% f u lf ilm e n t
70
60
50
40
30
20
10
0
2003
2007 Current
2003/04
DC’s to branch – core range
2004/05
2005/06
2006/07
Total Supply Chain Costs
Branch availability of CBR lines
Supply Chain Costs as % of COGS
162
National distribution centre
163
North West RDC
Site::
• Revolution Park, Chorley (M6 J28)
• 24 Acres (phases 1 & 2)
Building (Approx sq. ft.):
• Warehouse
310,000
• Main office block 21,000
Handling & Storage:
• 15 level entry loading doors
• 14 dock levellers
• 15 van loading doors
• c27,000 pallets
164
Central branch replenishment
Central control of stock, targeting the top lines
Improve customer order fill
• Top 1500 lines is 80% of transactions
• Branch availability improved from 88% to 94%
• DC to branch improved from 80% to 97%
Improve inventory turns
• 18% improvement year-on-year in days cover of stock in the DC’s (05/06 v 06/07)
driving down working capital
Branch Customer Focus
• Automatic central replenishment of core range saves 7000 man hours per week
and allows branches to focus on the customer and hence sales
165
Current transport operations
2,360 branch vehicles
• 160 DC commercial vehicles
•
166
•
Low utilisation –
<6 deliveries per day
•
Branches operate
independently
Transport achievements
•
•
•
•
•
•
•
•
Originally managed manually, focusing on KPIs and best practice
155 vehicles removed; 54 fewer drivers required; reduction of 1 million miles
Now moving into systematisation of the branch and network transport routes
Initial indications from pilot work in Derby are that there is a further optimisation
benefit of at least 5%
Supplier backhauling concentration on key DC suppliers - 62 suppliers targeted
New revenue stream
Out of area delivery reductions in progress
Further savings if we always delivered from nearest branch
167
Category focused consolidated UK & Ireland sourcing
PVF Aircon and Spares
Heavyside
Hardware
Timber
•
•
400,000 product range
6,500 suppliers
•
•
•
630 UK preferred suppliers
Acquisition synergies
Additional creditor value
•
COGS > £2bn
Drainage
Heating,
Bathrooms
168
Sourcing key driver of Wolseley business model
Global sourcing
• Managing trans-continental relationships and negotiations
European sourcing
• European supplier relationships
• Facilitates the development of the product strategy in conjunction with the OpCos and
business functions
• Negotiates European programmes and facilitates implementing action plans with OpCos and
the suppliers
UK sourcing
• Negotiates national and local conditions and rebates with support of EU sourcing
• Implementation of supplier strategies and action plans
• Product pricing and project or contract pricing
• Promotions to drive supplier growth
• Supports development of appropriate product range to serve customer needs
169
Sourcing strategy
Local deals
Optimise EU suppliers
LCC/OB sourcing
Price and terms harmonisation
Commodities buying
Today
Benefits:
• Driving margin enhancement
• Improving working capital creditor days increased
• Supplier compliance, e.g. ‘on time, in full’
170
Summary
DC Infrastructure
• Optimise cost
• Improve service platform
• Expansion for growth
Earn
Grow
Grow
Inventory Management
•
•
•
Service improvement to customers
Lower inventory
Branch management focused on customers
Grow
Turn
Grow
Transport
• Improved fleet utilisation
• Lower operating costs
• Service enhancement
Turn
Earn
Grow
Sourcing
• Driving margin enhancement
• Increasing creditor days improved working capital
• Supplier compliance, e.g. ‘on time, in full’
Earn
Turn
Turn
171
Summary
Nigel Sibley, Managing Director
Wolseley UK today
The key changes
•
•
•
•
•
•
•
•
New leadership team
Integrated operating company
Broader product offer
More branches
Greater utilisation of sites
Professional support services (HR, Marketing, Supply Chain)
More cost efficient central overhead
Supply chain to support business growth
= Infrastructure to deliver future earnings growth
173
Wolseley UK today
Significant change and investment
• People
• Acquisitions
• Supply chain
• New branches
• Systems
Continuing culture change from a product re-seller to a
distribution and service provider
174
Wolseley UK today
Strategy
Earn
Turn
Grow
Drive profits faster than sales
Improve working capital
Improve property utilisation
Continued, focussed growth
175
Q&A

Wolseley UK and DT Group Webcast to analysts analyst

Transcription

Similar documents

(SPEC) Multani Mitti - Natural Sourcing, LLC

TRIMEDX-1864 TriMedx Procurement Sales Sheet FINAL.indd

Dates set for Italy`s fabulous Modena Cento Ore

Envisioning DIY learning in primary and secondary schools

At Wolseley, our success lies in the trusting relationships that our

June - BRG

Online Casino Games Mega Jack

Wolseley Canada - Wolseley Express

(SPEC) Kukui Nut OIl - Natural Sourcing, LLC

Wolseley UK Site Visit analyst presentation