The hammering into shape of home improvement company Kingfisher (KGF) should create a more unified business if new chief executive Veronique Laury gets her way. The maxim 'One Kingfisher', which was a major feature of the interim results statement, evokes a wide range of strategic objectives, including using the scale of the business to improve buying power and develop its online and in-store customer experience. The renovation is under way, although Ms Laury tantalisingly claimed a further strategy update would be revealed next year.
The standout performer in the half-year was undoubtedly the Screwfix chain, which supplies tradespeople. It saw like-for-like sales rise 16.5 per cent to £494m, thanks in part to its specialist trade desks for plumbers and electricians. The rollout of new outlets lifted the top line further, and the company said it remained on track to open 60 in the current financial year. Management sees potential for 600 stores, from 412 now.
But the hacksaw is being taken to its DIY chain B&Q, which saw like-for-like sales rise just 0.7 per cent. Ms Laury said she wanted to reduce its floor space by roughly 15 per cent - equivalent to 60 stores - by February 2017. The company has also pulled out of China, having sold its 70 per cent stake in B&Q China to Wumei Holdings last December. The deal crystallised an exceptional gain of £143m.
As part of its overhaul, Kingfisher has already started tackling the £1.2bn cost of 'goods not for resale' (office supplies, shopping trolleys and the like) and proposed consolidating the range of products it sells across its operating companies, which also include Castorama and Brico Dépôt in France. For example, it will drop to 36 types of battery from four ranges, as opposed to 338 batteries across 13 ranges now. A new IT platform, currently being piloted in Ireland, will also be key.
Analysts at Cantor Fitzgerald expect pre-tax profits of £720m for 2015-16, leading to EPS of 22.6p, up from £675m and 21p in FY2015.
| KINGFISHER (KGF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 354p | MARKET VALUE: | £8.1bn | |
| TOUCH: | 353-356p | 12-MONTH HIGH: | 386p | LOW: 283p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 263p* | NET CASH: | £435m | |
| Half-year to 01 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 5.77 | 393 | 12.3 | 3.15 |
| 2015 | 5.49 | 386 | 13.6 | 3.18 |
| % change | -5 | -2 | +11 | +1 |
Ex-div: 8 Oct Payment: 13 Nov *Includes intangible assets of 117p a share | ||||
