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1. Company Snapshot

1.a. Company Description

Howden Joinery Group Plc, a trade kitchen supplier, provides various products across kitchens, joinery, and hardware in the United Kingdom, France, and Belgium.It offers kitchen cabinets, surfaces, fittings, storages, fitted kitchens, kitchen doors, sinks, and taps, as well as appliances; joinery products, such as sliding wardrobe doors, door fittings, stairs and parts, floors, skirting boards, mouldings, doors, and architrave products; and appliances, such as cooking, refrigerator, dishwasher, and laundry products, as well as coffee machines.The company was incorporated in 1987 and is based in London, the United Kingdom.

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1.b. Last Insights on HWDN

Howden Joinery Group's recent performance was negatively impacted by flat revenue in FY 2024, despite robust financial health. The company's revenue stagnated at £2.32b, a decline from expectations. Additionally, the contracting kitchen market posed a challenge, but the company's strategic investments and new share buyback program may help mitigate this issue. The increase in dividend to £0.163 on May 23rd suggests confidence in the company's financial health.

1.c. Company Highlights

2. Howden's Strong H1 Performance: Growth and Margin Resilience

Howden's 2025 interim results presentation highlighted a strong performance in a challenging marketplace, with group sales increasing by 3.2% to £998 million, and 4.3% when adjusted for fewer trading days. The company's gross margin remained industry-leading at 62.1%, and profit before tax was £117 million, up from £112 million in 2024. Earnings per share (EPS) came in at 0.2655, slightly below estimates of 0.27. Operating costs rose by £28 million due to investments in strategic initiatives and higher labor costs.

Publication Date: Jul -29

📋 Highlights
  • Group Sales Growth: Increased by 3.2% to £998 million, with a 4.3% rise when adjusted for fewer trading days.
  • Gross Margin Leadership: Maintained an industry-leading gross margin of 62.1%, despite a 1% impact from price changes in H1.
  • Profit Before Tax: Rose to £117 million, up from £112 million in 2024, driven by strong operational performance.
  • Strong Cash Position: Reported £321 million in cash, with an additional £100 million share buyback program expected by end-2025.
  • Dividend Increase: Announced a 5p interim dividend, reflecting a 2% increase, alongside robust cash flow generation.

Financial Highlights

Key financial highlights include a strong operating cash flow, a robust balance sheet with £321 million in cash at the end of the period, and an interim dividend of 5p, a 2% increase. The company invested £43 million in capital expenditure, focusing on depot expansion and reformat programs, and announced plans to complete a £100 million share buyback program by the end of 2025.

Strategic Initiatives

Howden's strategic initiatives include evolving the depot model, improving range and supply management, developing digital capabilities, and expanding international operations. The company is progressing with plans to develop its Runcorn factory, increasing capacity by around 15%. The digital platform is used to reinforce local relationships between depots and customers, with 58% of customers having an online account and 84% of users regularly logging in to view their confidential pricing.

Valuation Metrics

Using the provided valuation metrics, we can assess what's priced into Howden's stock. The company's P/E Ratio stands at 19.88, P/B Ratio at 4.39, and P/S Ratio at 2.13. The EV/EBITDA ratio is 11.61, Dividend Yield is 1.73%, and Free Cash Flow Yield is 5.73%. ROIC is 13.98%, and ROE is 23.41%. These metrics suggest a relatively stable and profitable business model.

Operational Performance

The company's operational performance was driven by strong new product sales, with 23% of U.K. product sales coming from products introduced in the last 2 calendar years. The business has launched 22 new kitchens this year and has a total offering of 60 decors for solid surface worktops. The in-house manufacturing capability is a source of competitive advantage, and recent investments have increased manufacturing capacity and added new capabilities.

Outlook

The outlook for 2025 remains positive, with expectations of delivering growth ahead of the market while generating strong cash flows and attractive returns for shareholders. Analysts estimate next year's revenue growth at 5.7%, indicating a continued upward trajectory for the company. With a robust balance sheet and a focus on strategic initiatives, Howden is well-positioned to navigate the challenging marketplace and achieve its goals.

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.70%)

6. Segments

Howden Joinery

Expected Growth: 5.5%

The expected growth rate is slightly below the global revenue growth hypothesis of 5.7% due to the competitive nature of the market and potential fluctuations in housing market trends. However, the segment's diversified product range and strong customer base are expected to support steady growth. The company's focus on delivering high-quality products will also contribute to its revenue growth.

7. Detailed Products

Kitchens

Howden Joinery Group Plc offers a wide range of kitchen products, including kitchen cabinets, worktops, appliances, and accessories.

Joinery

The company provides a variety of joinery products, including doors, windows, staircases, and moldings.

Bathrooms

Howden Joinery Group Plc offers a range of bathroom products, including bathroom furniture, sanitaryware, and accessories.

Bedroom Furniture

The company provides a variety of bedroom furniture products, including bedroom cabinets, wardrobes, and accessories.

Building Materials

Howden Joinery Group Plc offers a range of building materials, including timber, roofing, and insulation products.

Decorative Products

The company provides a variety of decorative products, including flooring, tiling, and decorative accessories.

8. Howden Joinery Group Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Howden Joinery Group Plc is moderate due to the presence of alternative kitchen and joinery products available in the market.

Bargaining Power Of Customers

The bargaining power of customers for Howden Joinery Group Plc is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Howden Joinery Group Plc is moderate due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for Howden Joinery Group Plc is low due to the high barriers to entry in the industry, including high capital requirements and established distribution networks.

Intensity Of Rivalry

The intensity of rivalry for Howden Joinery Group Plc is high due to the presence of several established competitors in the market, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.16%
Debt Cost 3.95%
Equity Weight 58.84%
Equity Cost 9.06%
WACC 6.95%
Leverage 69.96%

11. Quality Control: Howden Joinery Group Plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
De'Longhi

A-Score: 6.2/10

Value: 5.4

Growth: 5.7

Quality: 6.8

Yield: 6.9

Momentum: 6.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
DS Smith

A-Score: 5.7/10

Value: 8.3

Growth: 3.7

Quality: 3.8

Yield: 4.4

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
NEXT

A-Score: 5.6/10

Value: 1.8

Growth: 5.7

Quality: 6.7

Yield: 4.4

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Howden Joinery

A-Score: 5.4/10

Value: 4.6

Growth: 5.7

Quality: 6.9

Yield: 4.4

Momentum: 3.5

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
Redrow

A-Score: 4.9/10

Value: 6.7

Growth: 3.8

Quality: 7.4

Yield: 4.4

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

View Full Report
Stock-Card
SEB

A-Score: 3.6/10

Value: 5.8

Growth: 3.3

Quality: 2.3

Yield: 6.9

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.24$

Current Price

8.24$

Potential

-0.00%

Expected Cash-Flows