19th Sep 2023 11:03
(Alliance News) - Kingfisher PLC's UK arm provided investors some reason to be cheerful while dissecting an otherwise disappointing first-half report.
The B&Q and Screwfix owner cut annual guidance, though the unveiling of a new share buyback is a sign that it expects to shine across the board, and not just in the UK, when market conditions improve.
For the six months to July 31, Kingfisher reported that sales rose 1.1% to GBP6.88 billion from GBP6.81 billion a year earlier.
However, pretax profit slumped by a third year-on-year to GBP317 million from GBP474 million. Adjusted pretax profit was 29% lower at GBP336 million from GBP472 million. Selling and distribution expenses were 5.0% higher at GBP1.63 billion from GBP1.55 billion.
Kingfisher said sales in the first half were "slightly ahead of expectations", falling 1.0% at constant currency over the six months. Like-for-like sales declined 2.2% on-year, having fallen 1.2% in the second quarter and 3.3% in the first.
However, it noted a weaker July than a year prior, "affected by unseasonably poor weather".
Kingfisher now expects adjusted pretax profit for the full year of GBP590 million, its guidance cut from GBP634 million previously. The new outlook would represent a 22% fall from the GBP758 million achieved in the year ended January 31.
Edison analyst Neil Shah commented: "Kingfisher's recent announcement of a 7% reduction in its annual profit forecast raises concerns, especially considering the diminished sales in France and Poland. Notably, sales in the Polish market decreased by 10.9%, and low consumer confidence led to a 3.8% slide in the French market.
"However, it's not all negative news for Kingfisher. The UK and Ireland markets displayed resilience with a 1.7% increase in underlying sales while the sharpest tool in its toolbox has been the expansion of Screwfix's market share. Further, Kingfisher's decision to bolster this brand's online footprint across Europe demonstrates confidence in its potential."
Shah added: "From a wider viewpoint, despite the current challenges, Kingfisher remains optimistic about the future of the home improvement sector."
That optimism was underscored by Kingfisher's announcement of a new GBP300 million share buyback programme, which it expects to begin in early October. Kingfisher also maintained its interim dividend at 3.80 pence per share.
By Eric Cunha, Alliance News news editor
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