Shedding its underperforming UK business, Comet, was supposed to leave Kesa free to build on the strength of its iconic Darty brand in Europe. Unfortunately, the rapid deterioration of the eurozone economy means it hasn't quite worked out as planned.
With no end in sight to heavy losses in developing businesses, Kesa has been forced to slash its dividend and, although the board says it will return to a progressive dividend policy as soon as results improve, that's not likely to be any time soon. Retail profits on continuing operations fell by a massive 40 per cent over the year to €70m (£56m), as losses in Spain, Turkey and Italy widened from €30.8m to €41.1m, and profits at the core Darty France business plunged by over €42m to €106.8m, as sales of TVs slumped by a fifth.
Analysts are worried that sales will come under further pressure this year, and that the ongoing cost-reduction programmes won't be enough to offset this. Worryingly, while underlying sales across the group fell 3.5 per cent, the deterioration in France was even more marked at 5.8 per cent. What's more, the disposal of Comet cost Kesa €175m and means the group swung from a net cash position last year to a heavy net debt.
Broker Panmure Gordon expects pre-tax profits of €49.7m and EPS of 5.5¢ in the year to April 2013, down from €59m and 6.2¢ last year.
KESA ELECTRICALS (KESA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 50.75p | MARKET VALUE: | £269m | |
| TOUCH: | 50-50.75p | 12-MONTH HIGH: | 148p | LOW: 45p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | €127m | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 4.51 | 129.0 | 15.6 | 14.4 |
| 2009 | 4.95 | -82.0 | -21.7 | 5.0 |
| (€bn) | (€m) | (¢) | (¢) | |
| 2010 | 5.79 | 77.8 | 8.8 | 6.6 |
| 2011 | 4.11 | 85.6 | 9.9 | 7.0 |
| 2012 | 4.03 | -17.0 | -7.2 | 3.5 |
| % change | -2 | - | - | -50 |
Ex-div:12 Sep Payment: 5 Oct *Negative equity shareholders' funds | ||||
