30th Nov 2005 07:02
Kingfisher PLC30 November 2005 EMBARGOED UNTIL 0700 HOURS Wednesday 30 November 2005 Kingfisher plc Q3 results for the 13 weeks ended 29 October 2005 Group Financial Highlights 2005/06 2004/05 Change Constant CurrencyRetail sales £2,068.1m £1,937.2m +6.8% +6.1% LFL sales - 0.3% +2.6% Retail profit (1) £157.1m £199.8m -21.4% -21.8% Net debt £1,103.3m (£841.1m as at 29 January 2005) (1) Retail profit is stated before central costs, exceptional items and share ofjoint venture and associate interest and tax Q3 Highlights (all figures are in constant currency) • Group retail profit down £42.7 million to £157.1 million. International profit growth more than offset by lower profits in the UK;• B&Q sales down 4% in a weakening home improvement market;• In France, Kingfisher outperformed the market with sales up 9%;• Rest of Europe performed strongly with sales up 27%;• In Asia, sales up 48% boosted by the OBI acquisition and new store openings. Gerry Murphy, Group Chief Executive, said: "The UK retail environment continues to weaken, significantly impacting B&Q'ssales and profits. We have taken firm action to support sales and manage costsand to ensure that B&Q is well placed for market recovery. Outside the UK, whereKingfisher generates half its sales, strong growth and development continuedwith sales up 15% and profits up 9%." UK For the 13 weeks ended 29 October 2005 Retail Sales £m % Total % LFL Retail Profit £m % Total Change Change Change 2005/6 2004/5 2005/6 2004/5 UK(1) 1,024.5 1,044.5 -1.9% -6.2% 53.3 105.5 -49.5% (1) UK includes B&Q in the UK and Screwfix Direct. It excludes B&Q Ireland,which is now reported within 'Rest of Europe'. UK Retail Market - Continued weakening consumer demand for housing-relatedproducts, together with widespread price promotion and rising costs, isseriously impacting UK retail performance. In the three months to October,British Retail Consortium data showed 'other non-food' like-for-like salesdeclining for the fourth consecutive quarter, and ONS data for the value ofhousehold goods retail sales showed a fall of 5.8%. Fewer customer shoppingtrips (lower footfall) continued to be the main contributor to weakening sales,with consumers requiring a promotional stimulus to consider discretionary,higher ticket purchases like major household projects. B&Q's total sales fell 3.9% to £952.7 million (-8.4% LFL). During the quarter B&Q lowered prices for customers, for example in ranges of paint, light-bulbs andentry level kitchens. In addition, the new 'Real Deal' marketing campaign andincreased event activity, including a '10% off' weekend and a 'Big Project'weekend, were successful in attracting more customers into stores, drivingmarket share and reducing overall stock levels below those of last year. Retail profit was £50.3 million (2004/05: £106.7 million). Gross margins weretwo percentage points lower, reflecting price reductions, promotional activityand stock clearance. LFL cost inflation was driven by increases in store rents,rates and energy costs. LFL cost inflation of 4% is expected for the full year.If current market conditions persist, retail profit margin will fall furtherin the fourth quarter. Store development - B&Q opened two new Warehouse stores in the third quarter.One of these (Gloucester), is showcasing new 'room set' merchandising techniquesand new ranges targeted at increasing B&Q's share of customers' project spend.B&Q also opened two new mini-Warehouses and converted eight Supercentres to themini-Warehouse format. B&Q now has 115 Warehouse stores, 80 mini-Warehouses and142 of the original Supercentres. One Warehouse store and one mini-Warehousewill open in the remainder of the year. 18 of the 22 store closures announced at the interim results in September willbe completed during the fourth quarter with the remainder of the storerationalisation programme due to commence next year. UK TRADE Screwfix Direct has recovered strongly from last year's operational disruption,with sales up 34.5% to £71.8 million, with new ranges of radiators and own-brandpower tools performing well. The six trial 'Trade Counters' are trading welland 15 more will be opened during 2006. Retail profit of £4.7 million was £5.9million higher than last year driven by the strong sales growth and £2 millionof one-off costs in the prior year comparatives. Trade Depot - The first Trade Depot branch was opened on 3 November, after thequarter ended. Development costs of £1.7 million were incurred in the quarter. FRANCE For the 13 weeks ended 29 October 2005 Retail sales £m 2005/6 2004/5 % Change % Change % LFL (Reported) (Constant) ChangeFrance 735.6 671.3 9.6% 9.3% 6.0% Retail profit £m 2005/6 2004/5 % Change % Change (Reported) (Constant)France 76.6 66.1 15.9% 15.2% 2005/06 £1 =1.4639 euro: 2004/05 £1 = 1.4870 euro French Market - According to Banque de France, comparable DIY store sales growthin France was 3.6% in the three months to October, a return to growth followingthe impact of adverse weather and general uncertainty in the first six months ofthe year. Kingfisher continued to outperform the market with LFL sales up 6.0%. Totalsales in France grew 9.6% (+9.3% constant currency) to £735.6 million, withretail profit of £76.6 million up 15.9% (+15.2% constant currency). CASTORAMA sales grew by 4.8% (+4.6% constant currency) to £416.4 million (+3.7%LFL), driven by growth in both footfall and average transaction values. Saleswere strongest in the Showroom category which benefited from new ranges ofkitchens and bathrooms, supported by a new catalogue. New ranges of lighting,paint and textiles performed well. Retail profit of £46.7 million grew by 14.2% (+13.6% constant currency). Theretail profit margin benefited from Kingfisher's Strategic Supplier Management(SSM) programme and other cost-productivity savings which more than offset lowerprices and higher marketing costs. Store development - Two stores were relocated, taking the total of new formatCastorama stores to 24. The performance of these new format stores continues toimprove. BRICO DEPOT sales grew 16.5% (+16.1% constant currency) to £319.2 million (+9.4%LFL) against strong comparatives. Sales growth was strong in all categoriesdriven by improved product ranges and promotional catalogues. Retail profitincreased 18.7% (+17.7% constant currency) to £29.9 million. Retail profitbenefited from improving scale efficiencies and SSM buying synergies which morethan offset £2 million additional pre-opening costs and investment in newdistribution and IT systems. Store development - Brico Depot opened three new stores and one new store isplanned for the remainder of the year. REST OF EUROPE For the 13 weeks ended 29 October 2005 Retail sales £m 2005/6 2004/5 % Change % Change % LFL (Reported) (Constant) ChangeRest of Europe(1) (2) 220.3 164.0 34.3% 27.0% 9.8% Retail profit £m 2005/6 2004/5 % Change % Change (Reported) (Constant)Rest of Europe(1) 29.7 26.6 11.7% 7.6% (1) Rest of Europe includes Castorama Poland, Castorama Italy, Brico DepotSpain, Koctas in Turkey, B&Q Ireland, Castorama Russia and Hornbach in Germanyand central Europe. (2) Joint Venture sales are not consolidated. Rest of Europe sales increased 34.3% (+27.0% constant currency) to £220.3million (+9.8% LFL), and profits increased 11.7% (+7.6% constant currency) to£29.7 million. This was after £2 million additional pre-opening costs and £3million additional investment in Spain and Russia. Castorama Poland sales increased 40.2% (+26.4% constant currency) to £117.8million (+13.2% LFL) against weak comparatives in the wake of the introductionof higher VAT rates last year. Retail profit increased 57.1% (+45.5% constantcurrency) to £17.6 million. Strong sales growth and good cost control more thanoffset the impact of lowering prices. One new store opened, taking the total to29. Castorama Italy sales increased 13.6% (+13.2% constant currency) to £72.0million (+6.9% LFL). This strong performance in a challenging market wassupported by new catalogues and additional promotional activity. Retail profitincreased 9.3% (+9.3% constant currency) to £8.2 million after £1.0 millionhigher pre-opening costs. Castorama Italy opened one new store in the quarter, taking the total to 24. Itwill open two new stores in the remainder of the year. B&Q Ireland opened three mini-Warehouse stores, taking the total to seven.Brico Depot in Spain opened one further store in the quarter. Developmentcontinued at Castorama in Russia, with the first stores expected to open in2006. Koctas in Turkey, a 50% joint venture, continued to improveprofitability, benefiting from the Kingfisher SSM programme. Hornbach, theleading German and central European DIY warehouse retailer in which Kingfisherhas a 21% economic interest, contributed £0.4 million less to retail profit thanlast year. ASIA For the 13 weeks ended 29 October 2005 Retail sales £m 2005/6 2004/5 % Change % Change % LFL (Reported) (Constant) ChangeAsia(1) (2) 87.7 57.4 52.8% 48.4% 4.7% Retail profit £m 2005/6 2004/5 % Change % Change (Reported) (Constant)Asia(1) -2.5 1.6 n/a n/a (1) Asia includes B&Q China, B&Q Taiwan, and B&Q Home South Korea. (2) Joint Venture sales are not consolidated. Asia sales increased 52.8% (+48.4% constant currency) to £87.7 million (+ 4.7%LFL). Expansion costs offset underlying profit growth in China and Taiwan. B&Q China sales were £85.3 million, up 48.6% (+44.3% in constant currency). LFLwas 4.7% despite adverse weather and temporary government restraints on theShanghai housing market early in the quarter. Retail losses of £1.3 millioninclude £2 million post-acquisition trading losses from the 13 stores acquiredfrom OBI in June and £1 million higher pre-opening costs. Excluding these, theunderlying B&Q China stores delivered retail profit of £1.7 million. During the quarter, five stores were opened, taking the total to 43. Fivefurther stores are expected to open before the end of this financial year. Theprogramme to integrate the 13 stores acquired from OBI in June is proceeding inline with expectations. Ex-OBI stores have been re-branded B&Q and thetransition to B&Q's systems, merchandising and product offer has begun. It isestimated this conversion process will be completed in the first half of nextyear. B&Q Taiwan, a 50% joint venture, delivered retail profits of £1.7 million, up30.8% (+30.8% constant currency), driven by good sales growth, benefits of theKingfisher SSM programme and strong cost control. One new store will open inthe remainder of the year. Enquiries: Ian Harding, Group Communications Director 020 7644 1029 Nigel Cope, Head of Communications 020 7644 1030 Heather Ward, Head of Investor Relations 020 7644 1032 Further copies of this announcement are available at www.kingfisher.com or byapplication to: The Company Secretary, Kingfisher plc, 3 Sheldon Square, London,W2 6PX. Company Profile Kingfisher plc is Europe's leading home improvement retail group and the thirdlargest in the world, with over 650 stores in 10 countries in Europe and Asia.Its main retail brands are B&Q, Castorama, Brico Depot and Screwfix Direct.Kingfisher also has a 21% interest in, and strategic alliance with, Hornbach,Germany's leading DIY Warehouse retailer, with 121 stores in Germany andneighbouring countries. DATA BY COUNTRY as at 29 October 2005 Store numbers Selling space Employees (000s sq.m.) (FTE)B&Q 337 2,328Screwfix Direct 7 1Total UK 344 2,329 27,670Castorama 102 983Brico Depot 70 364Total France 172 1,347 17,405Castorama Poland 29 254Castorama Italy 24 153Brico Depot Spain 7 32Koctas, Turkey 5 24B&Q Ireland 7 47Total Rest of Europe 72 510 8,655B&Q China 43 475B&Q Taiwan 19 95B&Q Home, South Korea 1 7Total Asia 63 577 10,872Total 651 4,763 64,602 NINE MONTHS - 39 weeks to 29 October 2005 Retail Sales £m % Total % LFL Retail Profit £m % Total 2005/06 2004/05 Change Change 2005/06 2004/05 Change (Reported) (Reported)B&Q 3,049.4 3,143.3 -3.0% -7.5%Screwfix Direct 200.0 176.6 13.3% 13.3%Total UK 3,249.4 3,319.9 -2.1% -6.3% 202.5 330.6 (38.7)% Castorama 1,234.4 1,224.5 0.8% -1.0%Brico Depot 882.9 737.4 19.7% 8.7%Total France 2,117.3 1,961.9 7.9% 2.8% 178.6 168.1 6.2% Castorama Poland 298.4 242.1 23.3% -7.1%Castorama Italy 201.9 173.6 16.3% 6.1%Other Europe(1) 81.5 45.7 78.3%Rest of Europe (1) 581.8 461.4 26.1% -2.3% 68.0 68.0 0.0%(3) B&Q China 196.0 141.9 38.1% 6.9%Other Asia(2) (3) 3.0 - - -Asia 199.0 141.9 40.2% 6.9% (2.9) 0.4 n/aTotal 6,147.5 5,885.1 4.5% -2.6% 446.2 567.1 (21.3)% (1) Other Europe includes Brico Depot Spain, Koctas in Turkey, B&Q Ireland,Castorama Russia and Hornbach in Germany and central Europe. (2) Other Asia includes B&Q Home South Korea. (3) Joint venture sales are not consolidated. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kingfisher