Kingfisher post 11.4% fall in profit

Kingfisher, Europe's largest home improvements retailer, met forecasts with an 11.4 per cent fall in annual profit that reflected unfavourable foreign exchange movements, weak economies and poor weather.

The results come as Kingfisher’s Irish B&Q stores went into liquidation in January this year after one third of its revenue was wiped out in the recession and its rent, of €11.6 million a year, remained stubbornly high.

The group, which runs market leader B&Q in Britain and trades as Castorama and Brico Depot in France, said today that it expects market conditions to remain challenging but it is confident about its own prospects.

Kingfisher made an underlying pretax profit of £715 million (€843 million), which was in line with analysts' consensus forecast but down from £807 million pounds in the previous year.

Retailers across Europe are battling a prolonged squeeze in consumer incomes and sellers of ‘big ticket’ items such as kitchens and bathrooms are particularly vulnerable.

Kingfisher, which trades from more than 1,000 stores in eight countries in Europe and Asia, is also being squeezed by a continuing low level of housing transactions, since moving house is often associated with spending on home improvements.

Group sales fell 2.4 per cent to £10.57 billion, with weak consumer confidence resulting in like-for-like sales declines in its three key markets of Britain, France and Poland.

It said that adverse foreign exchange movements when translating euro and Polish zloty overseas profits into sterling knocked £39 million off profit, while record wet weather in Britain cost it £25 million as less customers visited its stores.

Kingfisher is offsetting weak demand with a drive to improve profitability by buying more goods centrally from cheaper manufacturing centres such as China.

The company, which ended the year with net cash of £38 million, raised its dividend 7 per cent to 9.46 pence.

Shares in the group, down 9 per cent over the past year, closed at 283 pence yesterday, valuing the business at £6.72 billion.

Reuters