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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Dixons Carphone    DC.   GB00B4Y7R145

DIXONS CARPHONE

(DC.)
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Dixons Carphone : Full Year Results 2019/20 Presentation

07/15/2020 | 03:11am EST

FULL YEAR RESULTS

2019/20

15 July 2020

1

Today's agenda

BUSINESS UPDATE

Alex Baldock

COVID-19 - RESPONSE &

OUTLOOK

Alex Baldock

FINANCIAL RESULTS

Jonny Mason

Q&A

Alex Baldock & Jonny Mason

2

3

OMNICHANNEL

Omnichannel accelerating

Easier to find

Easier to buy

Easier to get

Smartphone first

Exciting stores

2020/21

Larger range

Less friction

Supply Chain

Smartphone first

Exciting place to shop

development

Increase

Contact Centres

Services

personalisation

Search

121 Stores

+ 2k SKUs

Recommendation

Delivery CSAT

0.5m Transactional

remodeled

Site Speed

+9pts

App downloads

Online-in-stores sales

Price

Availability

+64%

4

OMNICHANNEL

Online share of business growing

ONLINE REVENUE

ONLINE SHARE OF BUSINESS

UK&I ELECTRICALS

+22%

+7pts

FY19

FY20

FY19

FY20

NORDICS

+20%

+3pts

GREECE

FY19

FY20

FY19

FY20

+56%

+3pts

FY19

FY20

FY19

FY20

5

CREDIT

Credit: making good progress

Credit Customer NPS

+18pts vs non-credit customers

Credit Adoption (% of Sales)

11.2%,+240bps yoy

Active Credit Customers

Almost 1.2m, +36% yoy

Credit Sales

+27% yoy

6

EASY / SERVICES

Services: focus on protection paying off

Delivery &

Set up &

Protect

Maintain

Repair

Trade

-

in

installation

connectivity

& upgrade

3.8m two-person

>250k laptop

Mobile insurance

Maintenance

Repair 1.3m

Shortening

deliveries per year

set-ups

almost 1m customers

products

product

Health

replacement

1m installations

10m protection plans

checks

Inc repair 550k

cycles

in homes

"Care & Repair"

phones

launched

7

EASY / SERVICES

Successful launch of Customer Club in Nordics

Successful rollout

+275%

May 19

May 20

0.9m

3.4m

customers

customers

40% of Swedish households

Customer benefit

Always discount on

Club deals every

month/week, as part of

Telecom accessories etc

main campaign

VIP

DAYS

50

VIP shopping

Extended Buy & Try

+1

Every X for free

Collaboration with

Accessories and essential

streaming services

Higher engagement

Revenue per customer

+30%

Non-Club Club

Gross profit per customer

+100%

Non-Club Club

8

EASY / SERVICES

Customer satisfaction improving end-to-end

+17pts

+20pts

+12pts

+9pts

+19pts

CSAT

Purchase in store

Purchase online

Collection

Delivery

Installation

2017/18

2018/19

2019/20

Source: Dixons Carphone internal data - Currys PC World CSAT based on purchases for 1H FY20 vs 1H FY19

9

MOBILE

Mobile was on track, impacted by Covid

Before Covid-19

Network renegotiations

Lower volume commitments

Wide range of connectivity O2 Virgin, VOXI, iD Mobile

Improved offer

Credit based bundles on track for 2020/21

Cost reduction

On track for £200m

531 standalone store closures

On track

For when unconstrained (2020/21)

To eliminate downside risk

To go after upside with new Mobile offer

Smaller, integrated, profitable, cash generating category

Covid-19

Enforced store closures

Lower sales transfer online

More prudent on new connection revenue recognition Online investment focussed on UK&I Electricals

Paused transformation

New Mobile offer

De-duplication of IT systems

Longer to breakeven

2019/20 losses worse than £90m 2020/21 losses slightly higher 6-12 months delay to breakeven FCF stronger than P&L

10

CAPABLE & COMMITTED

ONE BUSINESS

STRONGER

COLLEAGUES

INFRASTRUCTURE

Capable & committed colleagues

NEW HIRE

NEW HIRE

Jonny Mason

Erik Sønsterud

Mark Allsop

Chief Financial Officer

CEO International

Chief Operating Officer

NEW HIRE

NEW HIRE

Paula Coughlan

Ed Connolly

Nigel Paterson

Chief Human

Chief Commercial

General Counsel &

Resources Officer

Officer

Company Secretary

NEW HIRE

Antreas

Assad Malic

Lindsay Haselhurst

Athanassopoulos

Corporate Affairs and

Chief Supply

Chief Customer Officer

Strategy Director

Chain Officer

One Business

IT & other central costs

Supply

Org

Chain

structure

Other

Contact

Centres Repairs

Stronger Infrastructure

Upgradedleadership

Customer facing colleague tools

Pricingtechnology

Improved routing softwarefor deliveries

LaunchedMobile App

SAP basedNext Generation

Retailin Nordics

Omnichannel innovation

Expected in 2020/21

Restart paused projects

Agile approach for technology innovation and delivery

11

Progress reflected in increased customer satisfaction…

UK&I ELECTRICALS

UK&I MOBILE

STORES

ONLINE

+1pts

NPS

+11pts

+12pts

FY19

FY20

FY19

FY20

FY19

FY20

NORDICS

GREECE

+1pts

+1pts

HAPPY OR NOT

FY19

FY20

FY19

FY20

12

…and strengthening market leading positions

UK&I ELECTRICALS

UK&I MOBILE

22.5%

24.2%

25.1%

25.2%

25.8%

26.5%

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

20.6%

24.6%

23.8%

21.9%

18.9%

16.0%

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

NORDICS

GREECE

24.2%

25.0%

25.5%

26.0%

26.3%

28.7%

32.2%

34.4%

35.0%

35.3%

21.1%

0.0%

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

Sources: GfK. DC internal analysis and supplier data. Nordics data unavailable on same basis for 2014/15

13

Guidance and results for 2019/20

UK&I Electricals & International growth low single digit UK Mobile expect loss of up to £90m

Group Headline PBT expected to be around £210m Capex of ~£200m (from £275m)

Exceptional cash cost of c£80m

Dividend broadly flat*

Net debt lower (2018/19: £265m)

UK +1% / International +4% £104m loss

£166m

£191m

£79m

Final dividend not declared

Adjusted net debt £284m

14

COVID-19 -

RESPONSE & OUTLOOK

COVID-19 - RESPONSE & OUTLOOK

Focused on three priorities

Keeping colleagues and

Helping our customers

Securing our future

customers safe

Focus on colleagues leaving homes

International: Largely unaffected

Protected livelihoods

New standards in hygiene and social

UK: Successful pivot to online pureplay

Increased cash headroom

distancing

Focus on vulnerable customers and NHS

Raised gaze beyond crisis

Permission to keep helping customers

16

COVID-19 - RESPONSE & OUTLOOK

Sales impacted by enforced closures

Like for like sales

UK&I

3%

UK&I

ELECTRICALS

ONLINE

Pre-Covid

Post-Covid

-16%

NORDICS

24%

NORDICS

ONLINE

3%

Pre-Covid

Post-Covid

GREECE

5%

GREECE

Pre-Covid

Post-Covid

ONLINE

-40%

Pre Covid refers 47 weeks to 21 March 2020. Post Covid refers to 5 weeks to 25 April 2020

166%

10%

Pre-CovidPost-Covid

98%

14%

Pre-CovidPost-Covid

597%

19%

Pre-Covid

Post-Covid

17

COVID-19 - RESPONSE & OUTLOOK

Resilient to expected downturn

Technology increasingly important

  • Connected
  • Productive
  • Healthy
  • Entertained

Group well positioned

Market leading positions

Unambiguous price promise

  • Strong supplier relationshipsDiversified revenue

PRICING RELATIVE TO COMPETITORS

130%

125%

Competitor 1

120%

Competitor 2

115%

110%

Competitor 3

105%

Competitor 4

100%

95%

Competitor 5

90%

85%

80%

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Dixons Carphone Competitor Price Index. Curry PC world price = 100

18

COVID-19 - RESPONSE & OUTLOOK

Strongly positioned for Online growth….

NORDIC - ONLINE SHARE OF

BUSINESS

GROUP ONLIINE ELECTRICAL SALES

UK&I ELECTRICALS - ONLINE MARKET SHARE

30%

28%

26%

24%

+25%

+240bps

+100bps

£2.3bn

22%

20%

18%

16%

14%

12%

10%

Jan

Feb

Mar

Apr

May

+12%

£1.8bn

£1.6bn

FY18 FY19 FY20

+1040bps

20202019

FY18 FY19 FY20

April 2019

April 2020

Source: GfK

19

COVID-19 - RESPONSE & OUTLOOK

…but customers prefer Omnichannel

20%

ONLINE

38%

ONLY

BOTH ONLINE

AND IN-STORE

IN-STORE

ONLY

42%

Source: Dixons Carphone Consumer Insight Survey. Purchase channel used

in L12M. Base: All L12M purchasers April '18 to April '19 (n=10,376)

NORDIC STORES FOOTFALL - RECOVERED QUICKLY

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

-30%

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Source: Year on year store footfall recorded using Viametrics.

20

COVID-19 - RESPONSE & OUTLOOK

Shift to Online is margin dilutive, but modestly…

Product margin

Marketing

Service adoption

Delivery &

Installation

1/4 of store sales

delivered to home

1/4 of online sales

collected in-store

Note: Gross margin is defined as revenue less COGS, Services costs, marketing and delivery & installation

21

COVID-19 - RESPONSE & OUTLOOK

…and we're narrowing the gap

Increasing Online adoption rates

UK&I ELECTRICALS - ONLINE CREDIT

ADOPTION RATE

+3.7%pts

April 2019

April 2020

UK&I ELECTRICALS - ONLINE SERVICE

ADOPTION RATE

+1.5%pts

April 2019

April 2020

Source: Management data systems

Increasingly Omnichannel colleagues

25,000 Expert store

colleagues

UPSIDES

  • Sales
  • Product margin
  • Services adoption
  • Colleague productivity

22

COVID-19 - RESPONSE & OUTLOOK

Meanwhile, costs are more flexible and reducing

Cost flexibility

Low average lease lengths

UK: 5 years

Nordics : 4 years

ELECTRICALS LEASES BY DATE OF

EXPIRY

120

100

80

60

40

20

0

Source: Management data. Greek stores shown to next lease break.

Cost reduction

One Business

UK 3-in-1 Leases

IT & other central costs

-30%

Supply

Org

Chain

structure

Other

Contact

Centres Repairs

23

SUMMARY

Summary

Strong progresson Omnichannel, Credit, Services, Easy and Mobile Gainsin customer satisfaction and market leadingpositions

Robust financial performance delivering on guidanceup until Covid-19 Pivoted quicklyin crisis to safely serve customer needs on vital technologyOver £1bn of liquidityprovides confidence

Trading strong butoutlook uncertain and we are cautiousOmnichannel is right model for customers and for our economics

Group wellpositioned to deliver on transformation

24

FINANCIAL

RESULTS

Jonny Mason

Group Chief Financial Officer

FINANCIAL RESULTS

Group financial highlights 2019/20

2019/20

2018/19

YoY

Revenue

£10,170m

£10,433m

(3)%

Electricals LFL

+2%

+3%

Adjusted EBIT

£194m

£363m

£(169)m

Adjusted EBIT %

1.9%

3.5%

(160)bps

Adjusted PBT

£166m

£339m

£(173)m

Statutory PBT

£(140)m

£(259)m

£119m

Free cash flow

£109m

£153m

£(44)m

Net debt

£(284)m

£(265)m

£(19)m

26

FINANCIAL RESULTS

Estimated impact of COVID-19

IMPACT ON UK&I ELECTRICALS

IMPACT ON MOBILE

£162m

£(104m)

  • Overall impact on PBT estimated to be £50m
  • Overall impact on cashflow estimated to be c.£40m, as lost sales were offset by delayed tax payments, rent deferrals and lower capital expenditure

27

FY FINANCIAL RESULTS

UK&I Electricals

H2 2019/20

FY 2019/20

Revenue

£2,559m

£4,538m

YoY (inc 53wk)

+3%

+1%

LFL (ex 53wk)

+2%

+1%

Online revenue

+32%

+22%

(52 wk)

Adj EBIT

£131m

£162m

YoY

(5)%

(10)%

Adj EBIT %

5.1%

3.6%

YoY

(50)bps

(40)bps

  • Overall market share grew +0.7%, gains both online andin-store, consistent gains throughout H2 until store closures
  • Strong sales in large screen TVs, computing, gaming and smart tech
  • White goods saw solid performance until sales were impacted by lockdown
  • In 11 months preCovid-19 online revenue+10%, accelerated to +166% in April
  • Online share of business 35% ,+7%pts higher than last year, boosted by growth in April

28

FINANCIAL RESULTS

UK&I Electricals EBIT margin - H2

  • Full year underlying gross margin down 80bps. Investment in customer offer (delivery, price) and channel shift
  • Full year underlying cost ratio improved by 120bps.

29

FINANCIAL RESULTS

International

H2 2019/20

FY 2019/20

Revenue

£2,138m

£4,043m

YoY

+3%

+2%

YoY (local ccy)

+7%

+5%

LFL

+6%

+4%

Online revenue

+22%

+22%

(52 wk)

Adj EBIT

£82m

£136m

YoY (local ccy)

+7%

+8%

Adj EBIT %

3.9%

3.4%

YoY

(10)bps

-

Nordics LFL +4%, H2 LFL +7%

  • Overall market share growth +0.5% YoY
  • Strong sales in kitchens, headphones, wearables and cordless vacuums
  • In 11 months preCovid-19 online revenue +14%, accelerated to +98% in April
  • Online share of business 19% (+3%pts higher than last year)

Greece LFL +2%, H2 -3%

  • Good sales in TVs, laundry and cooling equipment. Pre- COVID LFL was +5%
  • In 11 months preCovid-19 online revenue +19%, accelerated to +597% in April
  • Online share of business 8% (+3%pts higher than last year)

30

FINANCIAL RESULTS

UK&I Mobile

H2 2019/20

FY 2019/20

Revenue

£759m

£1,589m

YoY

(23)%

(20)%

Adj EBIT

£(55)m

£(104)m

Adj EBIT %

(7.2)%

(6.5)%

  • Losses reflect declining sales due to constrained offer on
  • Large legacy cost base includes
    c.£200m of store operating cost and c.£200m of central operating costs
  • First onerous legacy contract rolled off in March, enabling stores closure

31

FINANCIAL RESULTS

Other adjusting items

£m

P&L

Non-cash

Cash

Cash

(in period)

(future)

Mobile network debtor revaluation

47

47

Acquisition and disposal related

26

26

Strategic change programme

121

48

30

43

Regulatory costs

30

16

14

Impairment and onerous leases

18

18

Impact of IFRS16

(20)

(20)

Total before interest and tax

222

72

46

57

Prior Exceptional Items

33

Exceptional FCF

79

32

FINANCIAL RESULTS

Free cash flow - Full Year

FCF before

Dep. &

Working

Network

Tax / Int /

Exceptional

Exceptional

Free cash

Headline EBIT

Amort.

capital

Debtor

Capex

Other

items

items

flow

£134m

£(191)m

£(26)m

£128m

£(51)m

£(79)m

£194m

£188m

£109m

Prior Yr

363

146

(236)

219

(166)

(66)

260

(107)

153

YoY

(169)

(18)

210

(85)

(25)

15

(72)

28

(44)

33

FINANCIAL RESULTS

Net debt

Opening

Closing

Net debt

Free cash flow

Dividend

Pension

Other*

Net debt

£(265)m

£(284)m

£(78)m

£109m

£(46)m

£(4)m

Prior Yr

(249)

153

(116)

(46)

(7)

(265)

YoY

(16)

(44)

38

-

3

(19)

Dividend

  • Final 2018/19 and interim 2019/20 dividend paid in year
  • Board has decided not to pay a final dividend for 2019/20

Pension

  • IAS 17 Net obligation £550
  • Actuarial review as at 31 March 2019 showed £645m deficit
    • Recovery plan agreed
    • Payments moved to monthly instalments
    • Contributions increase to £78m pa from 2020/21

* TY Other includes Net issue of new shares and purchase of own shares £(12)m and Other items £8m

PY Other includes Acquisition/disposals £(1)m and FX £(6)m

34

FINANCIAL RESULTS

Net debt

Liquidity, £m

Facility

Expiry date

Amount

Year end

Headroom

Revolving Credit Facility

Oct-22

£800m

£280m

£520m

Revolving Credit Facility

Nov-22

£250m

-

£250m

Revolving Credit Facility

Apr-21

£266m

-

£266m

€50m term loan

Oct-20

£44m

£44m

-

£1,360m

£324m

£1,036m

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2019 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020 2020

0

(100)

(200)

(300)

(400)

(500)

(600)

(700)

(800)

(900)

(1000)

(1100)

(1200)

(1300)

(1400)

(1500)

Liquidity

Total Committed Facilities

35

FINANCIAL RESULTS

Guidance

Group

  • Over £1bn of unutilised committed debt facilities
  • £46m annual pension contribution will rise to £78m from 2021/22
  • Exceptional transformation cash costs to be c.£175m, mainly related to Mobile restructuring
  • Due to the delay to transformation projects, we would expect 2020/21 expenditure to be closer to run rate of £175m than the previously expected £240m.

Mobile

  • Adjusted EBIT losses to be slightly worse in 2020/21 and breakeven6-12 months later than previously expected
  • 2020/21 cashflow from Mobile to be slightly negative as operating losses and restructuring costs will be offset by net working capital unwind
  • Total positive cashflow from Mobile will be£125m-175m (previous guidance of c.£200m)

36

SUMMARY

Summary

Strong progresson Omnichannel, Credit, Services, Easy and Mobile Gainsin customer satisfaction and market leadingpositions

Robust financial performance delivering on guidanceup until Covid-19 Pivoted quicklyin crisis to safely serve customer needs on vital technologyOver £1bn of liquidityprovides confidence

Trading strong butoutlook uncertain and we are cautiousOmnichannel is right model for customers and for our economics

Group wellpositioned to deliver on transformation

37

Disclaimer

Dixons Carphone plc published this content on 15 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 July 2020 07:10:03 UTC


© Publicnow 2020
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Financials
Sales 2021 9 903 M 13 605 M 13 605 M
Net income 2021 58,5 M 80,3 M 80,3 M
Net Debt 2021 473 M 649 M 649 M
P/E ratio 2021 -46,6x
Yield 2021 1,57%
Capitalization 1 282 M 1 761 M 1 762 M
EV / Sales 2021 0,18x
EV / Sales 2022 0,16x
Nbr of Employees 32 500
Free-Float 93,9%
Chart DIXONS CARPHONE
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Dixons Carphone Technical Analysis Chart | MarketScreener
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Technical analysis trends DIXONS CARPHONE
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 9
Average target price 141,13 GBX
Last Close Price 110,90 GBX
Spread / Highest target 57,8%
Spread / Average Target 27,3%
Spread / Lowest Target -45,9%
EPS Revisions
Managers and Directors
NameTitle
Alexander Lewis Baldock Group Chief Executive Officer & Director
Ian Paul Livingston Non-Executive Chairman
Mark Allsop Chief Operating & Digital Officer
Jonathan Peter Mason Group Chief Financial Officer & Director
Gerry Murphy Independent Non-Executive Director
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