Despite challenging markets which saw its like-for-like sales dip by 1.3 per cent, international DIY group Kingfisher managed to grow its underlying profits by 23 per cent to £354m.
Chief executive Ian Cheshire pointed to a good contribution from its so-called self-help programmes, although was keen to stress that these were more than just cost-cutting exercises. "We see self help as a complete package", he said, pointing to top-line growth initiatives such as product, range and store improvements, while acknowledging that the process was more advanced in France than in the UK. French like-for-like sales climbed 1.4 per cent versus a 3.7 per cent drop in the UK and Ireland.
However, cost cutting remains important, although Mr Cheshire stressed that this was as much about improving productivity rather than just reducing the absolute level of costs. Profits were also boosted by the continuing shift to direct sourced products, and further working capital reductions meant the group swung to a net cash position, although capital expenditure will increase in the second half.
After stronger than expected UK profits and lower than forecast Chinese losses, which halved to £12m, broker Seymour Pierce has upped its full-year pre-tax profit forecast by £15m to £645m, giving EPS of 19.2p (2000: 16.3p).
KINGFISHER (KGF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 221p | MARKET VALUE: | £5.23bn | |
| TOUCH: | 221-222p | 12-MONTH HIGH: | 255p | LOW: 197p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 216p* | NET CASH: | £19m | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 5.50 | 288 | 8.5 | 1.925 |
| 2010 | 5.45 | 351 | 10.6 | 1.925 |
| % change | -1 | +22 | +25 | - |
Ex-div: 6 Oct Payment: 12 Nov *Includes intangible assets of £2.46bn, or 104p a share | ||||
