In the second year of a five-year turnaround plan, Kingfisher's (KGF) results have become an exercise in managing expectations. In August, the home improvements retailer had warned that French sales continued to slip during the second quarter and that, apart from Poland, turnover in the home improvement retailer’s other international markets had also fallen. Over the first half, like-for-like sales in France were down 4.6 per cent, with the worst of the fall in Brico Dépôt. Overall, group sales fell 1.3 per cent at constant currency, but the translation benefit of foreign operations pushed statutory revenues higher (see table).
Despite tougher trading on the other side of the English Channel, shares in Kingfisher were up 5 per cent by the time of writing on results day. Investors had been forewarned of the pain in foreign markets, and underlying pre-tax profit of £440m beat the consensus forecast of £426m.
Again, Screwfix was the standout operation, with comparable sales growth of 11.7 per cent and total sales growth of 18.7 per cent to £727m. That was helped by more customers buying via mobile, and more opting for click-and-collect, along with the popularity of specialist trade desks for plumbers and electricians. This helped to compensate for the 2.3 per cent fall in like-for-like sales at bigger brother B&Q. Overall, comparable sales in the UK and Ireland grew by 1.1 per cent.
The One Kingfisher turnaround plan is designed to streamline the company by removing overlaps among its various businesses. Chief executive Véronique Laury said that efforts to unify product offerings are on track to reach 20 per cent of ranges by volume before the end of the financial year, and are currently at 16 per cent. There has been no change to the five-year target of a £500m uplift to cash profits. The retailer has also moved from nine different buying teams to one internationally.
Analysts at Stifel expect pre-tax profits of £770m in the year to January 2018, giving EPS of 27.4p (from £787m and 26.3p in FY2017).
| KINGFISHER (KFG) | ||||
| ORD PRICE: | 315.6p | MARKET VALUE: | £6.87bn | |
| TOUCH: | 315.5-315.7p | 12-MONTH HIGH: | 391p | LOW: 285p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 313p* | NET CASH: | £650m | |
| Half-year to 31 July | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 5.75 | 427 | 14.1 | 3.25 |
| 2017 | 6.01 | 402 | 13.3 | 3.33 |
| % change | +5 | -6 | -6 | +2 |
| Ex-div: | 05 Oct | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £2.7bn, or 125p a share | ||||
