19th Sep 2018 08:15
LONDON (Alliance News) - Kingfisher PLC said Wednesday that difficult trading in France sent its half-year profit down by almost a third, despite "strong" performances in the UK and Polish markets.
Kingfisher shares were trading down 4.0% at 253.15 pence each, the worst performer in the FTSE 100 index at the open of trading in London.
For the six months to July 31, the home improvement and garden centres retailer posted pretax profit down 30% to GBP281 million from GBP402 million a year ago. On an adjusted basis, pretax profit also fell, by 18% to GBP323 million.
The reduction in profit was mainly due on administrative expenses surging 14% to GBP452 million from GBP395 million.
Meanwhile, revenue increased 1.2% to GBP6.08 billion compared to GBP6.01 billion a year prior.
The company said that a weak trading performance in France, where it operates Brico Depot and Castorama France, offset "solid performances" in the UK and Poland. The DIY retailer is now taking action to support trading in France in the second half.
Chief Executive Officer Veronique Laury said: "There is still much to do to improve our performance in France and to remove inefficiencies within the business as we continue to transform at pace. I am confident that we have the right plan and the opportunity for Kingfisher is significant."
By geography, sales in UK & Ireland increased 1.3% to GBP2.64 billion, with retail profit up 1.2% to GBP218 million. B&Q total sales declined 2.3% while online sales were up 8%. Meanwhile, tool store Screwfix's sales were up 10%, mainly driven by specialist trade desks exclusive to plumbers and electricians.
In France, sales dropped 2.1% to GBP2.26 billion. Castorama saw sales down 6% reflecting weaker footfall and the impact of transformation-related activity, the company explained. Meanwhile Brico Depot's were up 2.7%.
However, in France retail profit fell by 31% to GBP122 million.
"This reflected weaker sales, a decrease in gross margin and higher costs, including phasing of marketing investment at Brico Depot. Gross margin declined by 60 basis points reflecting a weak performance at Castorama France, including logistics & stock inefficiencies," Kingfisher said.
Other international markets - including Poland and Spain but excluding the UK, Ireland and France - saw sales up 4% but retail profit down 18% to GBP64 million.
Despite the profit tumble, the B&Q owner maintained its interim dividend at 3.33 pence per share.
Looking ahead, Kingfisher said it it on track to deliver on strategic milestones. However, it described its outlook as "mixed".
Laury added: "We firmly believe in the transformation plan benefits and maintain our ambition. The environment is making our task more difficult than expected and we will always take the right decisions for the company in the long-term."
In a separate release on Wednesday, Kingfisher said Chief Offer & Supply Chain Officer Arja Taaveniku will leave after three years and will be succeeded by Henri Solere.
Solere, who has been working with Kingfisher for 11 years, has led two of the seven offer and supply chain categories of the company, including the "highly successful" bathrooms product range development.
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