Home improvement company Kingfisher (KGF) is undergoing a makeover if its own. Management said the ONE Kingfisher transformation plan helped save around £14m in operational efficiencies during the first half, with the business on track for £30m-worth of cost savings by the year-end. But analysts at Stifel are less positive, arguing that visibility around the transformation needs to improve to retain shareholder support. Underlying pre-tax profit of £375m missed the broker's expectations of £401m, and represents a 14.8 per cent decline on last year, while the gross margin contracted from 36.8 per cent to 36.4 per cent.
France continues to be a difficult market for Kingfisher, especially for its Castorama brand. Operating profit in France fell by a third to £122m, well short of the £131m analysts had expected. Some of Castorama’s weakness was due to disruption from the transformation programme, as well as customer’s perception of the brand, but bosses "remain convinced" the plan is tackling the root causes of this underperformance – namely price, proposition and digital.
Analysts at Stifel expect pre-tax profit of £788m during the year to January 2019, giving EPS of 26.7p, compared with £797m and 25.4p in FY2018.
| KINGFISHER (KGF) | ||||
| ORD PRICE: | 251p | MARKET VALUE: | £5.35bn | |
| TOUCH: | 251-251.2p | 12-MONTH HIGH: | 366p | LOW: 242p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 322p* | NET CASH: | £99m | |
| Half-year to 31 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 6.01 | 402 | 13.3 | 3.33 |
| 2018 | 6.08 | 281 | 9.7 | 3.33 |
| % change | +1 | -30 | -27 | |
| Ex-div: | 4 Oct | |||
| Payment: | 9 Nov | |||
| *Includes £2.81bn of intangible assets, or 132p a share | ||||
