Shares in Screwfix and B&Q owner Kingfisher (KGF) fell in response to these full-year numbers, despite 8 per cent growth in adjusted pre-tax profits for the reported period to £743m - 4 per cent ahead of company-collated consensus expectations. The reason? Most probably, concerns about the company's operations in France. Like-for-like sales there fell 2.7 per cent last year which, despite a tough home improvement market on the continent, were weaker than the broader 0.6 per cent contraction in the wider sector. That said, less promotional activity and good cost control allowed for a 20 basis point improvement in gross margins, which left local retail profits flat overall.
Kingfisher is only one year into a five-year 'One Kingfisher' recovery plan and is counting on this strategy to improve trading across the group's operations. In France, specific initiatives will include a new IT platform for the Castorama business, as well as price adjustments aimed at making home improvement "more affordable" for customers. More generally, key objectives for the coming year include clearing out old product ranges and re-merchandising new ranges in order to work on delivering £500m-worth of annual uplift in adjusted profits by the end of year five.
That's not to say plenty wasn't achieved during the first year. The company has streamlined its product range and supplier base and is reorganising nine buying and logistics teams into one central unit. Digital marketing and its e-commerce platforms have also received attention. On home soil, like-for-like sales rose 5.9 per cent, including 13.8 per cent growth at Screwfix. Total sales at B&Q fell 3.3 per cent following the closure of another 35 stores. Its digital sales are up 45 per cent during the period under review, while click-and-collect options are available on more than 31,500 products - up from 16,700 the year before.
Analysts at Credit Suisse trimmed their forecasts by 2 per cent, and now expects pre-tax profits of £841m in the year to January 2018, giving EPS of 28.1p (£787m and 25.8p in FY2017).
KINGFISHER (KGF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 329p | MARKET VALUE: | £7.37bn | |
| TOUCH: | 328.9-329.2p | 12-MONTH HIGH: | 391p | LOW: 300p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 302p* | NET CASH: | £641m | |
| Year to 31 Jan | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 10.6 | 691 | 24.1 | 9.5 |
| 2014 | 11.1 | 759 | 30.0 | 9.9 |
| 2015 | 11.0 | 644 | 24.3 | 10.0 |
| 2016 | 10.4 | 512 | 17.8 | 10.1 |
| 2017 | 11.2 | 759 | 27.1 | 10.4 |
| % change | +8 | +48 | +52 | +3 |
Ex-div: 4 May Payment: 19 Jun *Includes intangible assets of £2.7bn, or 121p a share | ||||
