Release Date: December 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Currys PLC (DSITF, Financial) reported a 1% year-on-year increase in total group sales, reaching GBP3.9 billion.
- Adjusted EBIT rose by 52% to GBP41 million, indicating strong profitability improvements.
- The company achieved a significant increase in free cash flow, up GBP4 million from last year to GBP50 million.
- The UK and Ireland segment showed strong performance with a 5% revenue increase on a like-for-like basis and a 53% rise in adjusted EBIT.
- Currys PLC (DSITF) successfully reduced its pension deficit by GBP47 million year-on-year to GBP143 million, strengthening its financial position.
Negative Points
- The Nordics market faced a challenging environment with a market decline of over 3%, resulting in a 2% drop in like-for-like revenue.
- Operating cash flow in the Nordics remained flat, and segmental free cash flow experienced an outflow of GBP4 million due to negative working capital.
- The company anticipates a GBP30 million year-on-year impact from the UK government budget changes, including national living wage and national insurance increases.
- Currys PLC (DSITF) faces unwelcome headwinds, including inflationary pressures that may lead to inevitable price rises across the retail sector.
- Despite improvements, the company still needs to mitigate half of the anticipated cost impacts from the recent budget changes.
Q & A Highlights
Q: Can you provide more color on the UK market share growth and profitability improvements?
A: Alexander Baldock, CEO: Our UK sales grew by 5% in a market that declined by 1.4%, driven by growth in AI laptops and mobile phones, SME customer services, and improvements in both store and online channels. We've also enhanced our marketing strategies, leading to significant returns on investment.
Q: How are you managing the shift from CapEx to OpEx in your project investments?
A: Bruce Marsh, CFO: We're reducing total CapEx by GBP10 million, with some costs shifting to OpEx. This includes mid-single-digit millions in incremental project costs absorbed by our outperformance. We're more efficient in managing spend, which helps maintain profit growth expectations.
Q: What are the implications of the recent budget on your cost structure, and do you expect it to be inflationary?
A: Alexander Baldock, CEO: We plan to mitigate about half of the GBP72 million cost impact through efficiency improvements and automation. While some price rises across the sector are inevitable, we will maintain our price match promise to customers.
Q: Can you discuss the impact of electronic shelf edge labeling on your operations?
A: Bruce Marsh, CFO: We've implemented electronic shelf edge labeling in six stores, with plans to expand to 40 more. It offers a healthy payback by saving time and materials, and allows us to adjust prices quickly in response to online competitors.
Q: How do you view the outlook for the UK appliances market, and what are the expected impacts of housing activity?
A: Alexander Baldock, CEO: Small domestic appliances are seeing innovation and growth, with air fryers and hair care products performing well. Major appliances remain driven by replacement cycles and housing market activity. The government's commitment to house building could provide a tailwind for appliances.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
