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Wolseley Strategic Planning template 200607 V1

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Title: Wolseley Strategic Planning template 200607 V1


1
The name the world builds on
Analyst and Investor Site Visit Leamington Spa,
18 April 2007
2
  • 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.

3
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)
  • QA
  • Break
  • Wolseley UK Nigel Sibley (Managing Director),
    Matt Neville (Finance Director), Angela Rushforth
    (Marketing Director) and Mark Harrison (Supply
    Chain Director)
  • QA
  • Lunch

4
Wolseley Europe leadership team
New since August 06
New since Jan 07
5
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

6
Activities during H1 in the other clusters
  • France
  • New management team in Wolseley France
  • New Management team in Brossette
  • One offs in the underlying comparators for 2006
  • Back to basics in Brossette
  • Investing in CDCs and branch refits in Brossette
  • Expansion from products to services in Wood
    Solutions
  • Developing the branded network for specialist and
    generalist
  • Central Eastern Europe
  • Established a CEE management team in Zurich
  • SAP pilot in ÖAG
  • DC implementation in Italy
  • Consolidation of the operating and reporting
    systems in Eastern Europe
  • Reorganising the credit control operation at MART
    in Hungary
  • Consolidation of the operational management and
    reporting systems in Benelux
  • Acquisitions to expand the product offering in
    Belgium and Netherlands

7
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

8
Making Wolseley a world class business
EARN
  • a higher margin through better cost control and
    achieving more profitable sales
  • our assets in a much more efficient way with
    particular emphasis on cash and working capital
  • the business at more than 10 from acquisitions
    and organic growth

TURN
GROW
9
Earn, turn, grow - priorities for 07/08
10
Financial targets7 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
11
  • DT Group
  • Steen Weirsoe CEO
  • Lars Hansen - Managing Director, Stark
  • Ole Michael Jenson - SVP Group Sourcing

12
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
13
  • 1. Who we are

14
DT Group
  • Sales and distribution of building materials
  • in the Nordic region

15
Primary target groups
Contractors, carpenters, brick layers, private
customers, industry and retailers
16
Revenue split by customers and market
Customers
Market
New building 21
Repair and maintenance 63
Private Consumers 34
Professionals 45
Industry sales 16
Industry and retailers 21
17
Evolution of DT Group
Historical development
Revenue and EBITDA, 1985 2007
Profitablegrowth
Focus
Strongexpansion
Operations
Expansion
Operations
  • Year Market entry Milestone

Sales CAGR
34
(1)
13
4
gt10
  • 1896 Denmark Founded in Århus, Denmark
  • 1933 Listing on CSE
  • 1968 Start-up of Silvan
  • 1989 Sweden Acquisition of Beijer
  • 1993 International hardwood activities
    discontinued
  • 1997 Norway Acquisition of Neumann
  • 1997 Start-up of Silvan in Sweden
  • 2000 Finland Acquisition of Starkki
  • 2002 Closure of ID 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
  • 2007 Greenland Acquisition of Superbyg

1
2
5
4
3
3
4
2
5
1
Jan-07
18
Divisions in DT Group
BUILDERS MERCHANTS
DIY STORES
TRADE
DT Group is a solutions provider
19
Divisional revenue and operating profit
Operating profit
Revenue
Starkki 13
Stark 42
Stark 50
Starkki 17
Beijer 15
Beijer 17
Neumann 5
Silvan 13
DT Trade 4
DT Trade 7
Neumann 5
Silvan 12
12 months to 31 January 2007
20
Organisation
1
1
3
32
70
10
3
2
No. of FTE employees
Total number of full time employees 7,183
(31/01/2007)
21
Group management committee
Jørgen Clausen
Steen Weirsøe
AGE
Years with DT
59
50
7
4
Lars Hansen
Michael Christiansen
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
22
  • 2. Where we are

23
The Nordic region and Greenland
3
8
24
Attractive future growth
sales split
Attractive growth rates, particularly within the
RMI segment
25
Building materials market share analysisThe
Nordic building materials market is estimated at
DKK183bn
Finland
Market Size DKK 33 billion
Norway
Market Size DKK 58 billion
  • ___________________________
  • Source Prognosenteret (Market size)

26
Market leader - Nordic region and Greenland
27
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

28
Stark - market positioning
29
Stark - business concept
Revenue by customer segment
RMI gt60 Top 10 customers 5.6
Direct sales 32 Number of SKUs 18,000 45,000
Stark primarily services the professional and
high-end DIY segment
30
Starkki - market positioning
31
Starkki - business concept
Revenue by customer segment
RM gt40 Top 10 customers 8
Direct sales 49 Number of SKUs 7,000 18,000
'One-stop-shop' for professionals and DIY
customers
32
Beijer - market positioning
33
Beijer - business concept
Revenue by customer segment
RMI gt70 Direct sales 25
Standardised assortment 12,000 SKU Special
orders 15 20 of total sales
Targeting sales to professional segment with
increasing DIY focus
34
Neumann - market positioning
(BM)
35
Neumann - business concept
Revenue by customer segment
RMI 60 Top 10 customers 16
Direct sales 26 Number of SKUs 17,000
Regional market leader with strong relationship
with local builders
36
Silvan - market positioning
37
DT Trade business overview
38
  • 3. What we do

39
Value creation for customers and suppliers
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
40
Key target customer segments
Industry and retailers
Professionals
Semi- prof./ high-end DIY
Ordinary DIY
Division
Sales channel
Sales Split
No. of stores
??
???
???
??
Stark
Builders Merchant(80)
42
87
??
???
???
??
17
Starkki
20
?
???
???
??
Beijer
17
65
??
???
???
?
Neumann
5
11
??
???
Silvan DK
DIY(13)
10
39
??
???
Silvan SE
2
11
?
???
Cheapy
0
22
???
???
DT Trade
Specialist trade (7)
7
17
100
21
45
34
Sales split
Primary customer area
??? High focus ?? Medium focus ? Low
focus
DT Group serves both the professional and DIY
segment
No. of stores as per 10 April 2007
41
Focus going forward
Our focus going forward is to develop our
business according to our customers needs and
wants
42
  • 4. How we do it

43
Shareholder value
Continuing strong focus on shareholder value
44
Strategic agenda
Earn
Turn
Grow
45
Strategic focus
Historical focus on efficiency has created an
ideal platform to pursue growth
46
Development of strategic agenda targets
47
Development of working capital
WC
WC WC/Revenue
Working Capital Inventory Trade debtors
Trade creditors
As at 31 January
48
  • 5. Stark

49
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
50
Own the marketplace
As a clear no. 1 supplier to professionals, Stark
is well positioned to target the semi-pro. / top
end DIY market
  • Why
  • Buy you solutions
  • at the same place
  • as the professionals do
  • Safe and high quality
  • - Advice and logistics

51
Pioneers
Customers mindset ..
  • Walk the extra mile for customers and
    colleagues
  • Always one step ahead
  • We are reliable
  • Excellent Customer Service

52
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

53
Potential
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?
54
Revenue, EBITDA and Plan 20b
Revenue, 2002 2006/07
EBITDA, 2002 2006/07

Growth 06/07 16.6
Growth 06/07 25.4
Growth 05/06 16.6
Growth 05/06 36.2
Growth 04/05 7.0
Growth 04/05 14.7
Plan 20B, 2002 2006/07
EBITDA DEVELOPMENT EXCEEDS REVENUE DEVELOPMENT

55
  • There is currently a video playing.
  • The full presentation will resume shortly.

56
Most importantly STARK has just kick-started...
57
  • 6. Group sourcing

58
Achievements
Direct spend totaling 2 billion
The launch of the group sourcing strategy has led
to substantial purchasing term improvements
59
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

Sourcing
60
Approach
DT Group is increasingly benefiting from its
group-wide sourcing
61
Organisation
Close to customers
Sourcing organisation
Imports and own brands
Central support
Lead buyer groups 1-5
Legal issues Trademarks Policies Analysis Systems
3 FTE employees
Category strategies/ Management Analysis Contracts
Implementations 23 FTE employees
Strategy Design Operations Logistics 28 FTE
employees
Stark
Neumann
Starkki
Beijer
Silvan
Cheapy
DT Trade
62
Backbone
  • Same language
  • Same systems and procedures
  • Aligned organisation structures and clear roles
  • Clear targets
  • Stepwise approach
  • Resources

63
Nordic preferred supplier programme
1
Significant purchasing terms improvements
64
Own brands
2
Benefit of higher gross margins of Direct Imports
outweighs adverse impact on working capital
65
Sourcing integration Wolseley DT Group
66
Project structure
Tools Hardware
67
  • 7. Wolseley / DT integration

68
Integration
Business as usual Focus on
  • A number of workstream projects
  • Many fruitful workshops and discussions
  • All just dos done

Plumbing
Sourcing
69
  • 8. Plan for growing the business

70
Plan 10 attractive future growth
Sales growth initiatives
  • 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

Committed to growth initiatives
71
  • 9. Q A

72
  • Break

73
  • Wolseley UK
  • Nigel Sibley Managing Director
  • Matt Neville Finance Director
  • Angela Rushforth Marketing Director
  • Mark Harrison Supply Chain Director

74
  • Introduction
  • Nigel Sibley, Managing Director

75
Agenda
  • Background
  • Who we are
  • What we do
  • Our journey.so far
  • Financial summary
  • Market overview
  • Broadening our product range
  • Supply chain strategy
  • Summary

76
  • Background
  • Who we are

77
Wolseley UK
  • The UK Irelands leading distributor of heating
    and plumbing products to the professional market
    and a major supplier of building materials

78
Wolseley UK
  • 1,926 branches
  • 15,681 employees
  • 2,500 commercial vehicles
  • Nationwide coverage

79
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
The senior management team (key members
highlighted in grey)
Matt Neville Finance Director
Grant Richardson Brand Director Plumb / Parts
Angela Rushforth Marketing Director
Bob Mason HR Director
Mark Harrison Supply Chain Director
Darran Rickards Product Director
Ian Tillotson Commercial Development Director
Derek Robb Logistics Director
Mark Eburne Director Development Brands
80
BackgroundLeadership team
  • Commercial Finance
  • Financial Services
  • Acquisitions
  • Property
  • Background
  • Joined the company in May 2001,
  • having previously held senior
  • executive positions with

Matt Neville Finance Director
81
BackgroundLeadership team
  • Steve Ashmore
  • Director Core Brands
  • Core Brands
  • Background
  • Joined Wolseley UK in 2005.
  • Previously at Exel Logistics where
  • he was Managing Director for Exels
  • industrial business across UK/Europe.

82
BackgroundLeadership team
  • Ian Tillotson
  • Brand and Commercial
  • Development Director
  • William Wilson Plumbing Heating
  • Electric Center
  • IT
  • Business Change
  • Background

83
BackgroundLeadership team
  • Mark Eburne
  • Director Development Brands
  • Ireland
  • Brandon Hire
  • Background
  • Joined Wolseley UK in 2006.
  • Previously chief operating officer for National

84
BackgroundLeadership team
  • Mark Harrison
  • Supply Chain Director
  • Logistics
  • Sourcing
  • Supply chain development
  • Transport
  • Background
  • Joined Wolseley UK in 2006.
  • Previously with PepsiCo, both

85
BackgroundLeadership team
  • Bob Mason
  • HR Director
  • HR
  • Communications
  • Background
  • Joined Wolseley UK in 2005.
  • Has held senior executive positions within
  • a number of blue chip British companies,
    including BT and London underground

86
BackgroundLeadership team
  • Angela Rushforth
  • Marketing Director
  • Strategic Marketing
  • Marketing Services
  • E-commerce
  • Range Management
  • Unifix
  • BCGM

87
BackgroundLeadership team

Nigel SibleyManaging 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.
88
  • Background
  • What we do

89
Turnover c900m 565 branches No. 1 in the market
Key competitors PTS City Plumbing Plumbase Graha
ms Independent Merchants
Key products Boilers, radiators, pumps,
sanitaryware Customer groups Plumbers, central
heating engineers gas installers, local
government bathroom fitters
90
Turnover c500m 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
91
  • Turnover c120m
  • 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
92
  • Turnover c120m
  • 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
93
  • Turnover c200m
  • 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, HV, building
services industrial engineers
94
  • Turnover c75m
  • 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
95
  • Turnover c100m
  • 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
96
  • Turnover c140m
  • 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
97
  • Turnover c100m
  • 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
98
Turnover c70m 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
99
  • Turnover c80m
  • 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
100
  • Turnover c10m
  • 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
101
  • Turnover c170m
  • 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
102
  • Turnover c90m
  • 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
103
  • Turnover c30m
  • 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)
104
  • Turnover c70m
  • 115 stores
  • Rapid expansion plan
  • Key competitors
  • BQ
  • Homebase
  • Independents

105
Core brand competitors
Primary Competitor
WUK brand
Jewson
PTS
Burdens
BSS
Curzon Heating Components
Dean Wood
Newey Eyre
SIG
Speedy Hire
106
  • Our Journey.so far

107
Our journey.so far2004
  • Highly successful trading divisions
  • But.
  • Customers and suppliers in silos
  • Duplication of resources
  • Limited sharing of sitesor best practice
  • Sub-optimal supply chain
  • Gaps in product offer
  • Inefficient platform for growth

108
Our journey.so far2004/05
  • 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

109
Our journey.so far2005/06
  • 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

110
Our journey.so far2006/07
  • 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

111

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

112
Wolseley UK TodayStrategy
  • 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

Earn
Turn
Grow
113
In more detail
  • Financial Summary Matt Neville
  • Market Overview Angela Rushforth
  • Broadening our Product Range Angela Rushforth
  • Supply Chain Strategy Mark Harrison

114
  • Financial summary
  • Matt Neville, Finance Director

115
Financial summaryHistoric growth UK Ireland
116
Financial summaryOrganic and acquisitive growth
117
Financial summaryInvestment 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
118
Financial summaryDiversification impact on
customer segmentation
119
Financial summaryH1 2006/7
Trading margin down on prior year
120
Financial summaryOperational efficiency
  • Working capital
  • Labour efficiency
  • Property utilisation
  • Own brand development

121
Own brand
  • 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

122
  • Market overview
  • Angela Rushforth, Marketing Director

123
Market overview
  • Improvement in RMI market seen in second half
    of 2006 expected to continue driven by
    strong housing market
  • Future prospects dependent on consumer
    reaction to recent and future interest rate
    rises
  • market share
  • 7 of building
  • materials market

Bathroom/ Kitchen specialists 1.0bn
124
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

125
Market overview Housing statistics - Ireland
126
Market overview Housing statistics - Ireland
  • Housing completions
  • latest forecast of 60/65k

127
Market overviewOutlook 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

128
Market overviewOpportunity 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
Market size
Source Management best estimates
Wolseley UK
129
  • Broadening our product range

130
Broadening our product range
131
Broadening our product range
  • Filling the gaps
  • William Wilson / AC Electrical
  • Encon
  • Brandon Hire
  • Bathstore expansion programme

132
Acquisitive growthBroadening our product range
133
Acquisitive growthGeographical expansion
134
  • Broadening our product range
  • Electric Center

135
Broadening our product rangeElectric 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 c100m

136
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138
Broadening our product rangeElectric Center
  • Launched new Electric Center brand September
    2006
  • All branches now re-branded

139
Broadening our product rangeElectric 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
  • .

140
  • Broadening our product range
  • Encon

141
Broadening our product rangeEncon
  • Encon Insulation purchased October 2005
  • 22 branches nationwide
  • 500 employees
  • Clear 2nd in market
  • Only National competitor to SIG

SIG 27
SIG 27
Encon 10
DIY 5
Others 5
Other Specialist Distributors 28
DIY 5
Builders Merchants 25
142
Broadening our product rangeEncon
Market value c.1.4bn
  • Insulation market strong growth prospects
    driven by government regulation

Fibre Insulation 250m
Foam Insulation 220m
Others 80m
Ceilings/ Partitions 250m
Other Insulation 80m
Drywall 500m
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Broadening our product rangeEncon
Fibre Foam Drywall

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
144
Broadening our product rangeEncon
  • Encon expanded further its product
  • range and geographical spread with
  • acquisitions
  • Neville Long Ceilings Partitions
  • Morris Ireland
  • Compound annual growth 2002to 2006 of 19.7

SIG 27
SIG 27
DIY 5
Others 5
2002
2003
2004
2005
2006
2007
145
  • Broadening our product range
  • Brandon Hire

146
Broadening our product rangeBrandon Hire
  • The UK hire market as a whole is estimated to
    be worth 3bn
  • Tool hire sector estimated at 831m
  • Brandon Hire addressable market 1.2bn
  • Market experienced steady growth (4 per
    annum)
  • A growing, complementary business sector where we
    had little penetration

147
Broadening our product rangeBrandon Hire
  • Early business wins through leveraging existing
    Wolseley customer relationships
  • Margin enhancing product offer Brandon Hire
    11.1 trading profit (Dec 2005)

SIG 27
SIG 27
DIY 5
Others 5
Other Specialist Distributors 28
Builders Merchants 25
148
Broadening our product rangeBrandon 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


149
  • Broadening our customer base
  • Bathstore - expansion

150
Broadening our customer baseBroadening customer
appeal
Bathstore heartland style chasers with money
4
29
Growth opportunity style chasers on a budget
151
Broadening our customer baseCustomer promise
values
Bathstore Customer Promise
We make
dream bathrooms
an affordable
reality
We make bathroom buying a pleasure
We live and breathe stylish bathrooms
We make dream bathrooms affordable and
accessible for everyone
Bathstore Values
1
2
3
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Broadening our customer baseDriving 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

153
Broadening our product rangeRevenue and store
number growth
154
Supply chain strategy Mark Harrison, Supply Chain
Director
155
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

156
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 (DCs to branches),
    secondary transport (branches to customers)
    efficiencies such as pooling, better fleet
    utilisation

157
Delivering a World-Class Supply Chain
Supply chain strategy
  • 100m investment plan to..
  • Facilitate product range expansion
  • Enhance customer service
  • Cost efficiency

158
Delivering a World-Class Supply Chain
Supply chain strategyTo 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

159
Delivering a World-Class Supply Chain
Supply chain strategy3 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

160
Supply chain strategyDistribution model
  • NDC (slow moving single stocking point)
  • Supplies products direct to branch e.g. 100
    parts (3rd party carriers)
  • Supplies products to RDCs 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)

161
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
162
Supply chain strategyDC infrastructure delivers
service enhancement and Cost efficiency
10.7
10.3
9.6
9.5
2003/04
2004/05
2005/06
2006/07
DCs to branch core range
Total Supply Chain Costs Supply Chain Costs as
of COGS
Branch availability of CBR lines
163
Supply chain strategyNational distribution centre
164
Supply chain strategyNorth 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

165
Supply chain strategyCentral 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 DCs (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

166
Supply chain strategyCurrent transport operations
  • 2,360 branch vehicles
  • 160 DC commercial vehicles
  • Low utilisation
  • lt6 deliveries per day
  • Branches operate independently

167
Supply chain strategyTransport 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

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Supply chain strategy Category focused
consolidated UK Ireland sourcing
  • 400,000 product range
  • 6,500 suppliers
  • 630 UK preferred suppliers
  • Acquisition synergies
  • Additional creditor value
  • COGS gt 2bn

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Supply chain strategySourcing 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

170
Supply chain strategySourcing 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

171
Supply chain strategySummary
  • DC Infrastructure
  • Optimise cost Earn
  • Improve service platform Grow
  • Expansion for growth Grow
  • Inventory Management
  • Service improvement to customers Grow
  • Lower inventory Turn
  • Branch management focused on customers Grow
  • Transport
  • Improved fleet utilisation Turn
  • Lower operating costs Earn
  • Service enhancement Grow
  • Sourcing
  • Driving margin enhancement Earn
  • Increasing creditor days improved working capital
    Turn
  • Supplier compliance, e.g. on time, in
    full Turn

172
  • Summary
  • Nigel Sibley, Managing Director

173
Wolseley UK todayThe 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

174
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

175
Wolseley UK todayStrategy
Earn
Drive profits faster than sales Improve working
capital Improve property utilisation Continued,
focussed growth
Turn
Grow
176
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