Capital Markets Day Stockholm, 28 November 2007
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Capital Markets Day
Stockholm, 28 November 2007
2 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
3 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
4 28 November 2007
Five-fold increase in Nobia’s net sales in 10 years
Övrig försäljning
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1995/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Net sales, SEK m
Organic growth
Acquired growth
Bath
Other sales
5 28 November 2007
Operating profit (EBIT) from negative to plus SEK 1.3 bn
-400
-200
0
200
400
600
800
1,000
1,200
1,400
1,600
SEK m
1,327
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
6 28 November 2007
Nobia is the leading kitchen company in Europe
Net sales EUR bn Business model Segment Countries Ownership
Nobia 1.8 Integrated Low to high Nordics, UK, Germany, France, Austria, Switzerland, Netherlands Public
Mandemakers 1.0(Kitchens 0.7) Retail Low to high Netherlands + Culinoma 50% Private
Galiform 1.0 Integrated Low to middle UK Public
MFI 0.8 Retail Low UK Private equity
Alno 0.6 Production Low to high Germany and exports to bordering countries Public
Nobilia 0.6 Production Low to middle Germany and exports to bordering countries Private
SALM (Schmidt, Cuisinella)
0.25 Integrated Low to high France, Germany Private
Fournier (Mobalpa) 0.25 Integrated Low to high France Private
Ballingslöv(Kvik) 0.25 Integrated Low to high Nordics and UK Public
IKEA not included due to lack of official statistics. We estimate their retail sales to be approx. EUR 2 billion.
7 28 November 2007
Mature market with steady growth
0%
1%
2%
3%
4%
5%
6%
7%
2003 2004 2005 2006
Annual volume growth in the European kitchen market
Source: CSIL
8 28 November 2007
Driving forces in the market
Economic factors Consumer confidence New-build and renovation Interest rates
Needs and desires Kitchens don’t break – you want a new one
9 28 November 2007
Housing completions – UK region
source: Prognoscentret
0
50 000
100 000
150 000
200 000
250 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 E2007 E2008
10 28 November 2007
Housing completions – Nordic region
source: Prognoscentret
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 E2007 E2008
SEDKNOFI
11 28 November 2007
Housing completions – Continental European region
source: Prognoscentret
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 E2007 E2008
DENLATFR
12 28 November 2007
Housing completions per capita
source: Prognoscentret
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 E2007 E2008
AT
DE
DK
FI
FR
NL
NO
SE
UK
13 28 November 2007
Driving forces in the market
Economic factors Consumer confidence New-build and renovation Interest rates
Needs and desires Kitchens don’t break – you want a new one
14 28 November 2007
Trends in the European kitchen market
Strong interest in interior decorating
Kitchens largely a consumer product
Fashion and design influence choice of materials and rate of replacement
15 28 November 2007
Kitchen design increasingly international
16 28 November 2007
Consumer trends
Larger, more individualised kitchens with designed white goods and accessories
Larger portion of disposable income spent on the kitchen, resulting in rising average order values
Consumers more demanding – store location, store environment – want a shopping experience!
17 28 November 2007
Consumer trends
18 28 November 2007
Growth in demand for complete kitchens expected to continue
Cabinets & frontsWorktops
White goods
Accessories Installation and services
Customer offer package
19 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
20 28 November 2007
Market situation November 2007
Nordic region– The favourable market trend continues,
although with a slight weakening in the new-build segment (excluding Sweden)
UK region– Market remains stable
Continental European region– Mixed picture with a decline in Germany
and Netherlands
21 28 November 2007
Net sales Jan-Sep Operating profit Jan-Sep Operating margin Jan-Sep
SEK m 2007 Change 2007 Change 2007 2006
UK 4,541 9% 387 27% 8.5% 7.3%
Nordic 4,289 7% 528 -7% 12.3% 14.1%
Continental Europe 3,580 4% 188 -10% 5.3% 6.1%
Other Group adjustments -86 -99
Group 12,324 7% 1,004* 2% 8.1% 8.5%
Performance by region January-September
* Hygena joined the Group Mid February 2006
22 28 November 2007
Earnings per share
SEK
Nobia’s goal for profit growth:
Earnings per share shall increase over a business cycle by an average of 12 per cent annually.
Average increase 2001-2007 is 15%
+ 34%3.67
4.93
0
1
2
3
4
5
2005 Jan-Dec
2006 Jan-Dec
2006/2007Oct-Sep
Earnings per share after dilution and split 3:1
5.18
+5%
*
*) Earnings per share were SEK 4.72 in 2006 for comparable units.
23 28 November 2007
Financial position
SEK m 2007Jan-Sep
2006Jan-Sep
Investments 446 342
Operating cash flow 853 737
SEK m 200730 Sep
200630 Sep
Net debt 2,261 2,635
Net debt/equity, % 59 73
24 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
25 28 November 2007
Presentation topics
Market indicators Risk management Nobia’s exposure to the new-build segment Structure of product costs Financial position
26 28 November 2007
Consumer confidence in the UK
-15
-10
-5
0
5
10
2002
.1
2002
.2
2002
.3
2002
.4
2003
:1
2003
:2
2003
:3
2003
:4
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
Octobe
r
UK
source: Prognoscentret
27 28 November 2007
Housing transactions in the UK (rolling 4q)
source: Prognoscentret, BoE
0
500 000
1 000 000
1 500 000
2 000 000
1999
:4
2000
:1
2000
:2
2000
:3
2000
:4
2001
:1
2001
:2
2001
:3
2001
:4
2002
:1
2002
:2
2002
:3
2002
:4
2003
:1
2003
:2
2003
:3
2003
:4
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
Housing transactionsMortage approvals
28 28 November 2007
UK housing transactions vs. Nobia’s organic growth
-30%
-15%
0%
15%
30%
45%
60%
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
Housing transactions, YoY Organic growth, UK region
29 28 November 2007
Consumer confidence in the Nordics
-20
-10
0
10
20
30
40
2002
.1
2002
.2
2002
.3
2002
.4
2003
:1
2003
:2
2003
:3
2003
:4
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
Octobe
r
SENODKFI
source: Prognoscentret
30 28 November 2007
Housing transactions in the Nordics (rolling 4q)
0
25 000
50 000
75 000
1999
:4
2000
:1
2000
:2
2000
:3
2000
:4
2001
:1
2001
:2
2001
:3
2001
:4
2002
:1
2002
:2
2002
:3
2002
:4
2003
:1
2003
:2
2003
:3
2003
:4
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
SENODKFI
source: Prognoscentret
31 28 November 2007
Consumer confidence in Continental Europe
-40
-30
-20
-10
0
10
20
30
2002
.1
2002
.2
2002
.3
2002
.4
2003
:1
2003
:2
2003
:3
2003
:4
2004
:1
2004
:2
2004
:3
2004
:4
2005
:1
2005
:2
2005
:3
2005
:4
2006
:1
2006
:2
2006
:3
2006
:4
2007
:1
2007
:2
2007
:3
Octobe
r
DENLATFR
source: Prognoscentret
32 28 November 2007
Nobia’s risk management focus
Operating risks– Raw material prices– Market development– Competitor activity– Currency effects
Financial risks– Commercial exposure– Financial exposure– Pensions– Funding risks
33 28 November 2007
Operational leverage – cost allocation
MaterialFreightBonuses
Salaries/wagesMarketingMaintenance
DepreciationRent & ratesInsurance
Examples
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Nordics Cont. Eur UK
Variable Semi-variable Fixed
34 28 November 2007
Nobia’s sales to the new-build segment differ by region
0%
20%
40%
60%
80%
100%
Nordic Cont. Eur. UKNew build Renovation
35 28 November 2007
Structure of purchasing costs divided into thirds
Components forprocessing
Assembly components
Tradedproducts
36 28 November 2007
Directly operated stores as of 30 September
No. stores No. of employees Approx. size (m2) Consumer sales
Hygena: Retail park 112 ~4 380 100%
Hygena: Mall store 28 ~4 150 100%
Magnet: Retail 30 ~4 500 100%
Poggenpohl 27 ~4 250 ~95%
Magnet: Mixed 134 ~5 1,200 ~50%
Magnet: Trade 31 ~6 1,100 0%
Norema 20 ~5 360 ~35%
Sales through directly operated stores amount to roughly 40% of Nobia’s sales
37 28 November 2007
Strong financial position
SEK m Jan-SepJan-Dec
20062007 2006
Operating cash flow 853 737 881
In % of sales 6.9 6.4 5.7
SEK m Sep 2007 Dec 2006
Net debt 2,261 2,460
Equity 3,833 3,734
Net debt/equity 59% 66%
Available funds 4,701 4,653
38 28 November 2007
Solid platform for further growth
Decentralised organisation in close proximity to local markets Strong presence in the main channels in most markets Healthy spread of geographical risk Favourable visibility in the new-build segment Continuous coordination of supply to support competitiveness
39 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
40 28 November 2007
Nobia’s business direction 2008-2012Continuation of set strategy
A. Organic growth through increased market focus and new and better stores. Nobia will achieve organic growth within existing operations and by opening new stores with focused and scalable concepts.
B. Internal efficiency will increase through coordinated supply and simplified structures.
C. Nobia will also continue to grow through acquisitions.
41 28 November 2007
A. Structuring customer offers to improve EBIT margins
Main principles: Continue to develop selected competitive concepts and strong market positions
in Europe Prioritise customer-friendly and attractive concepts with strong influence on the
offer– Wholly owned stores and strong franchise concepts– Scalable
Direct concepts and brands towards distinct price and style segments, as well as sales channels
This approach aims to support the reduction of assortment, improve market communication and reduce costs.
42 28 November 2007
Nobia’s main principles for kitchen offers
Under development
HIGH
MIDDLE
ECONOMY
Local/regional complementary brands or channels
Scalable complete kitchen offers
LOCAL BRAND
LOCAL BRAND
43 28 November 2007
StylePrice Young Contem-
porary Basic Classic Traditional
High
Medium
Economy
The range matrix – a tool to optimise the brand portfolio
Style
Pric
e Under development
44 28 November 2007
Nobia’s business direction 2008-2012Continuation of set strategy
A. Organic growth through increased market focus and new and better stores. Nobia will achieve organic growth within existing operations and by opening new stores with focused and scalable concepts.
B. Internal efficiency will increase through coordinated supply and simplified structures.
C. Nobia will also continue to grow through acquisitions.
45 28 November 2007
B. Reduced product costs a key issue
Continue to coordinate supply Target supply and production towards more co-ordinated assortments Rationalise production
The supply chain aims to become less dependent of channels and brands.
46 28 November 2007
C. Acquired growth is part of our strategy
This applies to both Nobia and Culinoma.
47 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
48 28 November 2007
Presentation topics
A. From purchasing to efficient supply chain – measures taken 2005-2007
B. Strategic direction 2008-2012
49 28 November 2007
Past acquisitions have led to a large assortment
Example: fronts (cabinet doors) Nobia sources and manufactures
more than 13 million fronts per year Nobia has a total of 1,049 types Top 10 in volume represent 15% of
the total volume
50 28 November 2007
Product cost is 65* per cent of Nobia’s total sales
The single largest cost within Nobia Products becoming more pan-European due to harmonisation of
consumer preferences
* Direct materials and production costs
51 28 November 2007
From purchasing to supply chain management since 2005
Few products / suppliers on central contracts. Local purchasing with local suppliers.
Decentralised product development and assortment management
No central product database and information system
Group wide SQP with defined process for supplier selection, product evaluation and supplier performance.
Group-wide product life cycle (PLC) process. Coordinated product development. Core-range products. Centrally coordinated assortment.
Central strategic sourcing on defined product categories. First-tier suppliers.
Central product database including classifications and technical information
From To
Local Supplier Quality Process(SQP)
Purchasing focused on “price”Central resourses managing a focused cost-improvement process. Analysing all cost drivers (TCO) including design, logistics, etc.
52 28 November 2007
No. of suppliersNo. of articles No. of brands
~ 10,000 35
20
6146 6
Creation of core range reduced the number of active articles, brands and suppliers
Previously Today
Sourcing and product management has become less complicated Example: White goods
53 28 November 2007
Presentation topics
A. From purchasing to efficient supply chain – measures taken 2005-2007
B. Strategic direction 2008-2012
54 28 November 2007
Towards a brand- and channel-independent supply chain
Stores
Projects
DIY chains
CustomerManufacturing & sourcing
Various channels
Assortment
High-end
Middle
EconomySupply
Internal&
External
Distribution and logistics
Service contracts
Supply
55 28 November 2007
Examples of existing co-ordinated supply chain
EWE/FM in Austria Two separate supply organisations merged into one Assortment and channel segmentation between brands (EWE, FM) Same carcass standard for all brands Supply chain optimised to supply several brands and channels within a
defined geographical area (EWE, FM, project market, Nobia internal components)
Novart in Finland One supply organisation Assortment and channel segmentation between brands
(Parma, A la Carte, Petra) Same carcass standard for all brands Supply chain optimised to supply several brands and channels within a
defined geographical area (project market)
56 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.15 Lunch
13.15-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Shifting positions: from manufacturer to retailer- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
57 28 November 2007
Organic growth through scalable, proven concepts
As reported in Q2: Better market coverage by expanding Magnet network in UK and Hygena network in France. Enter Spain with Hygena concept in 2008.
58 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
59 28 November 2007
Nobia’s sales to the new-build segment differ by region
0%
20%
40%
60%
80%
100%
Nordic Cont. Eur. UKNew build Renovation
60 28 November 2007
Two brands serving two different customer groups
Small, local buildersUpper/middle market consumers
61 28 November 2007
Two brands with two different service offerings
Price-led, in stockFull service offering: design, home delivery & installation
62 28 November 2007
Two brands and two strategies for growth
Investment in people to grow the customer base
Refurbish the outdated showroom network
63 28 November 2007
Our objective for retail
The best showroom in town Appropriate investment for the location & catchment area
Crawley
64 28 November 2007
Our objective for retail
The best showroom in town
Appropriate investment for the location & catchment area
Doncaster
Before
65 28 November 2007 Doncaster
After
66 28 November 2007 Eastleigh
Before
67 28 November 2007 Eastleigh
After
68 28 November 2007 Loughborough
Before
69 28 November 2007 Loughborough
After
70 28 November 2007 Kidderminster
Before
71 28 November 2007 Kidderminster
After
72 28 November 2007
Reducing the cost of refurbishmentAverage capex spend £000s
0
50
100
150
200
250
300
350
400
450
2004 2005 2006 2007
73 28 November 2007
Store refurbishment programme follow-up
Current status 94 branches refurbished– By Christmas 20– Plan for 2008 31Total 145
74 28 November 2007
Our objective for Trade
Investment in new colleagues to grow and service our trade account base
(Not just that though)– The right products available from stock– Pricing to suit the local market– Competitive advantage– Central and local marketing
75 28 November 2007
From generalists to specialists
Sales generation
Stock management
Lead generaton/local marketing
Kitchen Design
New Account Prospecting
Managing the business
Sal
espe
rson
a
Sal
espe
rson
b
Sal
espe
rson
War
ehou
se P
erso
n
Inte
rnal
Rep
Kitc
hen
Des
igne
r
Ext
erna
l Rep
Man
ager
Man
ager
76 28 November 2007
All focused on servicing and developing the account base
77 28 November 2007
12 month active accounts
0
10 000
20 000
30 000
40 000
50 000
60 000
2003 2004 2005 2006 2007
78 28 November 2007
Minimising the profit dip
Dip in profit caused by immediate increase in overheads – more colleagues– higher branch operating costs (marketing, reps costs etc)
Initial unfavourable product mix Sales growth slowest in the first few months
79 28 November 2007
Minimising the profit dip
Months following conversion
Original Trial
New
Profit impact
80 28 November 2007
Current store network
81 28 November 2007
New stores
Currently 195 Magnet branches 30 Retail solus 31 Trade solus 134 Mixed sites (Retail & Trade under one roof)
So far in 2007 1 unprofitable store closed 8 branches opened 3 further branches to open before Christmas
Gaps in key markets Maximise usage of national media advertising Enable more small local builders to access Magnet Trade
82 28 November 2007
Some gaps in key markets
83 28 November 2007
Our objective: 300 branches
84 28 November 2007
4 different types of branches in the futureEach split by target market
A. Trade Solus
C. Retail Solus
B. Mixed site
D. Trade+
85 28 November 2007
A. Trade Solus
Industrial estate/trade park
Approx. 10,000 sq ft
£60k-£80k pa rent
Trade counter, very basic showroom
May already have a successful retail business but no trade presence
Further opportunity within a large city where another retail-facing branch may not be desirable
86 28 November 2007
B. Mixed site
Solus location
Approx. 15,000 sq ft 2,000 sq ft showroom minimum 10,000 sq ft warehouse
£100k-£150k pa rent but appropriate to town
No current Magnet branch in town or relocation of existing site
Limited availability due to planning consents
87 28 November 2007
C. Retail Solus
Retail park/High Street
2,000-5,000 sq ft
£60k-£120k pa rent
Size appropriate to opportunity
May already have a successful trade solus/trade-based business but no/minimal retail presence
88 28 November 2007
D. Trade +
Industrial estate/trade park
Trade counter plus trade showroom showcasing trade kitchen offer to the builder’s customer.
About 6 sets on display, mainly trade ranges
Approx. 12,000 sq ft, 60,000-80,000 pa rent
Trade-only with consumer sales via the builder
No Magnet retail or trade presence in town
Large population but not economically strong enough to support full retail presence
Morley/Luton shot
89 28 November 2007
Sales growth from new sites
Months following conversion
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Retail
Trade
90 28 November 2007
Magnet retail development
91 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
Hygena Kitchen Retail Business
les Cuisines, l´Electroménager et les Salles de Bains
93
Hygena in brief
DSO
94
0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1Kitchen price index
Serv
ice
offe
r ind
ex
Generalists
+
–
Specialists
Source: Market Audit - June 2005 and Company information
dedicated services affordable prices + =
A competitive environment in a fragmented market
Unique positioning
DSO
95
Vital stats
Hygena was formed 27 years ago by MFI UK In the beginning it was a pure cash-and-carry
furniture business Now it is a business with 142 stores,
EUR 220 m selling more than 60,000 kitchens a year
Number 1 in volume in France, number 3 in sales
96
Snaidero
SALM
Pricing
Affordable Expensive
100%
Fitt
edD
IYFi
tting
Hygena’s unique hybrid business model increases freedom of maneuver and limits vulnerability to the competition.
A strong competitive position
DSO
97
Hygena covers only 56% of the French population and is absent from Paris intra-muros
Current geographic coverage of Hygena
142 stores– 32 stores in shopping malls– 110 stores in retail parks
142 stores– 18 in Ile de France– 124 outside Ile de France
98
What happened since we joined Nobia February 2006?
We adjusted our sales organisation We started to move from external sourcing to internal (70% of
products transferred to date) We started to revisit our overall supply chain We started to revisit our product range We reduced the number of depots We launched Spain entry
99
Hygena logistics organisation26 depots throughout France
100
Business vision and customer service objectives for the next 3 years
Maintain and strengthen our current marketing mix in order to grow our market share in France and enter new export markets by: Extending our store network in France and Spain Simplifying and securing our order fulfillment processes in order to :
– Reach 98% customer service ratio Revisiting our procurement processes in order to:
– Deliver a range of present products on stock– Deliver a range of present products within 3 weeks lead time– Deliver a range of present products within 6 weeks lead time
101
Extend our store network in France by 50-75 new stores in 3 years
35 identified locations outside Paris region
15 identified locations in greater Paris region
10 identified locations in downtown Paris
DSO
102
No. of storesMobalpa 13Arthur Bonnet 6 Schmidt 4 Chabert Duval 5 Independent kitchen stores 70
Our first high-street store in Paris is a successParis: an important market where Hygena has just mad an imprint in 2007! 2 million inhabitants (20% of the population of Ile de France) Total Paris region population : 10 million inhabitants A potential market of EUR 120 million only for downtown Paris
DSO
Chabert DuvalMondial KitArthur BonnetLapeyreSchmidtMobalpaVogica
103
Entering Spain 2008
Traditional route to market is changing from small joineries to specialised retail. Retail industry is booming in Spain.
French retail community is rather strong in Spain. This gives us good opportunities for opening stores and hiring.
Our marketing mix seems to be very competitive compared with local suppliers.
104 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
105 28 November 2007
From manufacturing to retail focus
AcquisitonsPoggenpohl, Pronorm, Goldreif, Optifit
50/50 joint-venture Culinoma founded and acquiresPlana, Marquardt, Asmo
Closure Star Beka
Modified strategy
2000 2001 2002 2003 2004 2005 2006 2007
Closure Goldreif
106 28 November 2007
Specific for the German market
Manufacturers
Customers
Furniture stores Take away/DIY
Constructioncompanies
Mail orderLarge kitchen
specialist
SmallKitchen
specialists
Buying associations
Buying associations play a dominant role in distributionwith about 70-80% of total kitchen sales.
Size of market 7% Size of market 32% Size of market 49% Size of market 9%
From CMD 2006
107 28 November 2007
CE regional objectives
A. Improve and develop present business and strengthen the overall organisation and structure
B. Increase total sales turnover and develop margins by acquiring kitchen retailers and kitchen manufacturers with controlled distribution
Strategic decision Oct 2006
108 28 November 2007
Gradually changing our German business units
Optifit doing many things for many customers
Pronorm both producing and supporting marketing activities for many
Poggenpohl producing and selling worldwide through both project sales and independent dealers
Specialised production of kitchens for the economy segment, primarily internal Nobia customers
Focus on producing kitchens for the middle segment, primarily for few, large and strategic customers
Poggenpohl to intensify sales in directly operated stores with a clear concept
From To
When targeting increased sales and improved margins, top-notch supply is more vital than own manufacturing.
109 28 November 2007
Culinoma: an essential part of the retail strategy
Fragmented retail Consolidated business by1. Co-ordinating the assortment/concept2. Co-ordinating back-office3. Common supply chain4. Improve the store network
Scalable business That can grow organically and attract more dealers to join.
Further growth through acqusitions…
110 28 November 2007
Culinoma is a strategic 50/50 joint venture for kitchen retail
Joint forces improve potential synergies in supply, marketing, logistics and distribution in Germany
Jointly managed, leverage of both parties’ know-how High level of retail know-how in DMG
50/50
111 28 November 2007
DeMandemakersGroep in brief
The leading Dutch kitchen, furniture and bathroom retailer
Headquartered in Waalwijk, Netherlands Privately owned by Ben Mandemakers,
president and CEO
112 28 November 2007
40% market share in the Dutch kitchen retail market
Strong and well-known retail brands in the Dutch kitchen market
Approx. 4,500 employees Approx. 200 kitchen and
bathroom stores The total sales of Ben
Mandemakers’ companies is approx. EUR 1 billion
40%
113 28 November 2007
Culinoma, founded in February 2007, currently operates 77 kitchen stores from north to south with retail annual sales of approximately EUR 180 million.
Culinoma leads the kitchen retail sector
114 28 November 2007
A closer view of Culinoma
Plana
Marquardt
Asmo
115 28 November 2007
Culinoma’s channel- and brand-independent supply chain
Stores
E-commerce
CustomerInternal production
Various channels
Assortment
Plana
Asmo
MarquardtBuy
Pronorm andother manufacturers
Distribution and logistics
center
Transport
Service contracts
Buy
116 28 November 2007
Nobia’s customer offering in Germany
In principle
Poggenpohl
Plana
B to B
Local/regional complementary kitchen offers
Scalable, complete kitchen offers
Asmo
Marquardt
B to B
117 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
118 28 November 2007
Presentation topics
1. Poggenpohl: Well-positioned in the premium segment PAST2. Recent development: Co-branding with Porsche Design
PRESENT3. Outlook: Expansion of own store network FUTURE
119 28 November 2007
7 years of preparation
We have redesigned our product portfolio Two distinctive design languages: modern purism and
modern classic Three innovative modern design concepts that are the
recipients of numerous awards
Solid basis for growth: differentiating, modern and appealing for a large number of premium customers
We have introduced a consistent design concept for all our studios worldwide (+Studioconcept)
We have significantly reduced the total number of stores and thereby achieved a consistent high-class PoS-appearance throughout the world
We have continuously increased the number of own stores and now run 27 own stores
Continuous improvements in both sales and earnings performance
Now Poggenpohl is ready for a more substantial take-off
120 28 November 2007
Poggenpohl is well positioned for growth
Premium
Mass
Customcabinets
Price level
Designlanguage
Customcabinets
Niche brands
121 28 November 2007
Poggenpohl offers three award-winning modern design concepts
+SEGMENTO +INTEGRATION PLUSMODO
122 28 November 2007
Increasingly successful in the project business
Poggenpohl will supply 1,600 luxury kitchens for the City of Arabia in Dubai
123 28 November 2007
100
153165
237
2003 2004 2005 2006
+ 137 %
Source: Verband der Deutschen Küchenmöbelindustrie, Statistisches Bundesamt, HDM/ VDM, own calculations
Net sales performance(Indexed, 2003 = 100)
Earnings performance
(Indexed, 2003 = 100)
German kitchen manufacturers global net sales volume Poggenpohl global net sales
100
119132
163
100 104 104116
2003 2004 2005 2006
2002: Earnings = 0
Poggenpohl combines growth and investments
124 28 November 2007
1. Poggenpohl: Well-positioned in the premium segment PAST
2. Recent development: Co-branding with Porsche Design PRESENT
3. Outlook: Expansion of own store network FUTURE
125 28 November 2007
Poggenpohl lifts the kitchen to a new level and triggers a lot of attention.
Poggenpohl goes one step further
+ =
126 28 November 2007
Unveiling in Leipzig 13 September 2007
127 28 November 2007
First press reactions overwhelmed us
Bild-Zeitung
Handelsblatt
derStandard
Möbel Kultur
Welt am Sonntag
128 28 November 2007
Poggenpohl Porsche Design Kitchen P‘7340
“Kitchen for men”: The exclusive co-branding between Poggenpohl and Porsche
Available Spring 2008
129 28 November 2007
1. Poggenpohl: Well-positioned in the premium segment PAST2. Recent development: Co-branding with Porsche Design
PRESENT3. Outlook: Expansion of own store network FUTURE
130 28 November 2007
Organic growth of a proven concept
40-60 new wholly owned stores will be opened by 2011
Reasons for vertical integration Access to the end consumer Better control over customer interaction Possibilities to display the full product range Increased growth potential Flagship stores create lighthouse effects
131 28 November 2007
Why focus on expanding our own store network? Some best-practice examples:
132 28 November 2007
Own stores are a clear trend in premium goods
Sales share Royalties
Sales share Wholesale
67%78%
63%70%
60%70%
33%43% 39% 41%
27%39%
7% 13%
24%
19%34%
30%40%
30%
56%46%
61% 59%73%
61%
93%87%
9% 11%11%
100%
3%3%
# Own Storesin 2005
(1) Including Eluxury.com (2) Status 31.03.2006; 65 Stores, 165 Concessions and 30 Outlets (3) Status 31.03.2006, excl. Hacket und Old England (4) Status annual report 2006(5) Status annual report 2006 Source(s): JP Morgan - The Luxury Goods Handbook (2000); Mintel - Luxury Goods Retailing; Retail Intelligence (2004) und (2006); Annual reports of companies; BCG analysis
Louis Vuitton(1) Gucci RichemontBurberryHermès
345
Dior
194 207 246 610(3) 260(2)
Sales share Own Retail
Bang & Olufsen
733(4)
BOSS
210(5)
2000
2005
00/0
1
03/0
4
00/0
1
05/0
6
00/0
1
05/0
6
2000
2005
2000
2005
01/0
2
05/0
6
2000
2006
133 28 November 2007
Often coincides with increasing margins (Sample premium-goods manufacturers)
Revenue share of own retail
0%
10%
20%
30%
0% 20% 40% 60% 80% 100%
OperatingMargin(1)
LV(2) '00
LV(2) '05
Dior '00
Dior '05
Burberry '05 Hermès '00Hermès '05
Gucci '00
Gucci '05
Burberry '00
B&O'05/'06
B&O '01/'02
BOSS '06
BOSS '00
(1) Operating Margin = Operating income/net sales (%) (2) Including Eluxury.com; # own stores und share Own Retail of Louis Vuitton, Operating Margin of LVMHSource: JP Morgan - The Luxury Goods Handbook (2000); Mintel - Luxury Goods Retailing, Retail Intelligence (2004) und (2006); Companies' annual reports; BCG analysis
134 28 November 2007
Higher margins through wholly owned stores
Source(s): Thomson Financial Datastream; Bloomberg; Company Information, Annual Reports; BCG analysis
CAGR: 8.7%EBIT (%)
CAGR: 8.8%
14,55613,201
8,758
11,867 12,56713,168
12,466
11.7%
18.0%17.6%
9.3%13.3%
15.6%18.0%
02,0004,0006,0008,000
10,00012,00014,00016,000
1999 2000 2001 2002 2003 2004 20050.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%
EBIT (%)
CAGR: 7.3%
1,332 1,427 1,515
9271,159 1,227 1,242 1,230
26.3% 27.4%
21.6%26.1% 26.8% 28.0%
25.9% 27.3%
0
500
1,000
1,500
2,000
1999 2000 2001 2002 2003 2004 2005 20060%
10%
20%
30%
40%
EBIT (%.)CAGR: 23.7%
1,0841,041
359 699 766842 955
14.8%
22.3%
19.6%
18.1%20.5%
23.1% 23.1%
0
200
400
600
800
1,000
1,200
2000 2001 2002 2003 2004 2005 20060%
5%10%
15%20%
25%30%
35%
EBIT (%) Annual sales (Mio. €)
Annual sales (Mio. €)
Annual sales (Mio. €)
Annual sales (Mio. €)
12,62313,910 15,306
11,96212,69312,22911,581
8,547
12.8%
19.4% 20.8%19.2%18.2%15.8%16.9%18.1%
02,0004,0006,0008,000
10,00012,00014,00016,000
1999 2000 2001 2002 2003 2004 2005 20060%
10%
20%
30%
40%
135 28 November 2007
Flagship mission: staging the brand
Apple, NYC Gucci FlagshipGinza Road, Tokyo
Louis Vuitton, Shanghai Nokia, NYC
136 28 November 2007
Flagships also inspire the independent retail partners
Brand experience
Visual merchandising
Customer service concept
Assortment breadth
137 28 November 2007
The Poggenpohl path to own store expansion
138 28 November 2007
Identified potential locations for own stores by 2011
40-60 new own stores, 45% in Europe
BerlinCologneMunich
Birmingham
Philadelphia
Paris I & IILyon
Milan
Madrid
Barcelona
RotterdamVienna
Athens
Toronto
Boston IIWashington, DC
Chicago II
AmsterdamBrussels
Rome
GlasgowDublin
Los Angeles IISan Francisco
Miami II
Detroit
DallasHouston
San Diego
Seattle
LasVegas
Montreal
Minneapolis
Tampa
Brisbane
Tokyo I
Nagoya
YokohamaKobe/Osaka
New York III
Moscow
139 28 November 2007
Consistent store design a key success factor
Nokia Esprit
Blue color combined with large plasma screens
White logo on red surface, combined with light wooden floor
Poggenpohl
Light colors combined with materials of glass & steel
140 28 November 2007
A closer look at Poggenpohl
Stuttgart & Düsseldorf
141 28 November 2007
The rocket has lifted – now we will start the second rocket stage
142 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
143 28 November 2007
Nobia’s business direction 2008-2012Continuation of set strategy
A. Organic growth through increased market focus and new and better stores. Nobia will achieve organic growth within existing operations and by opening new stores with focused and scalable concepts.
B. Internal efficiency will increase through coordinated supply and simplified structures.
C. Nobia will continue to grow through acquisitions.
144 28 November 2007
Agenda CMD 28 November 200709.00-09.15 Welcome! Fredrik Cappelen, CEO
09.15-10.15 The European kitchen market Nobia January-September 2007
Fredrik Cappelen, CEO
10.15-10.45 Cost structure and risk management Jan Johansson, CFO
10.45-11.15 Break
11.15-11.45 A more coordinated kitchen offer… Fredrik Cappelen, CEO
11.45-12.15 … with a more coordinated supply Bo Johansson, EVP Supply Chain
12.15-13.30 Lunch
13.30-14.30 Store expansion to reach full potential with better market coverage- Magnet from 200 to 300 stores- Hygena expands in France and enters Spain
Preben Bager, EVP Operations UKDaniel Souissi, BU Manager, Hygena
14.30-15.00 Break
15.00-16.00 Nobia in Germany- Increased focus on retail- Spotlight on Culinoma- Poggenpohl ready to expand
Fredrik Cappelen, CEOFredrik Cappelen, CEOElmar Duffner, BU Manager, Poggenpohl
16.00-16.30 Q & A session and wrap-up
16.30-17.30 Cocktail hour
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