After last year's write-down spattered horror show, these results seemed like a return to form for electricals retailer Kesa - indeed, retail profit climbed 28 per cent to £98.6m and there was a huge free cash flow of £147.4m.
But the improvement on the cash front largely reflected lower investment rather than a major trading improvement. In fact, operating cash flow fell 10 per cent to £225m and, at £77.2m, net capital expenditure and investment was well below the £131.3m spent last year. That was due to a constrained programme of store openings and refurbishment, but activity is likely to increase this year, particularly in the UK, where 40 stores are earmarked for refurbishment, after success at the first seven sites.
That investment looks much needed, judging by the wafer thin margins at Comet - up just 10 basis points to 0.7 per cent - and slipping like-for-like sales, down 1.4 per cent over the year. And with big-box electrical discounter Best Buy now launched in the UK and DSG's transformation well underway, generating any significant uplift is likely to be challenging.
The French Darty chain remains much stronger, though, with margins up 30 basis points to 4.8 per cent and profits up 14 per cent to £118.4m. But that was offset by continuing losses in its developing businesses, albeit reduced from £43.2 to £29.1m thanks to the sale of Darty Switzerland and store closures in Spain. Tough trading also meant profits slumped 28 per cent to £14.4m in its established businesses in Holland and the Czech Republic.
Broker Seymour Pierce expects pre-tax profits of £100m for 2011 and EPS of 11.8p (2011: £81.9m/9.8p).
KESA ELECTRICALS (KESA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 121p | MARKET VALUE: | £641m | |
| TOUCH: | 120-121p | 12-MONTH HIGH: | 162p | LOW: 98p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 39p* | NET CASH: | £79.3m | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 4.10 | 143 | 17.8 | 12.1 |
| 2007 | 4.50 | 165 | 20.7 | 13.3 |
| 2008 | 4.51 | 129 | 15.6 | 14.4 |
| 2009 | 4.95 | -82.0 | -21.7 | 5.00 |
| 2010 | 5.12 | 69.6 | 8.00 | 5.90 |
| % change | +3 | - | - | +18 |
Ex-div: 15 Sep Payment: 8 Oct *Includes intangible assets of £110m, or 21p a share | ||||
