Kingfisher says prospects are bright after posting profit rise
Kingfisher, the owner of B&Q and Screwfix, has reported a pre-tax profit of £759 million for its 2013/14 financial year, which was a 9.8% increase on the previous year.
Group sales rose by 3.5% on a constant currency basis to reach £11.13 billion. As a result, the group will return about £200 million to shareholders this year.
Kingfisher said it had made good progress in the year after experiencing an “extremely challenging” first quarter.
Group chief executive Sir Ian Cheshire said: “We finish a challenging year in good shape, with our self-help programme meaning we have grown profit and economic return, improved our balance sheet strength whilst also investing in lower prices for our customers and improved convenience. The economic backdrop was generally soft across Europe for much of the year, particularly in France, our most significant market.”
In the UK and Ireland, like-for-like sales edged up 1.1% with total sales rising by 2.7% to £4.36 billion. The growth was supported by a strong performance from Screwfix which benefited from early signs of improvement in the smaller tradesman market. Retail profits in the UK and Ireland climbed 3.4% to £238 million.
Never Miss a Retail Update!DIY chain B&Q saw its like-for-like sales rise by 0.1% with total sales increasing by 0.4% to £3.7 billion. While sales of outdoor products grew by 2%, indoor products fared less well with sales down by around 1%.
In Ireland, following the conclusion of the Examinership process in May 2013, one store was closed with rent reductions were secured across the remaining stores. The business returned to break even in the second half of the year.
Meanwhile, Screwfix grew its total sales by 17.6% to £665 million and saw like-for-like sales climb by 7.3%. Kingfisher said trade had benefited from a range of factors including strong promotional programme, extended opening hours, the continued roll out of new outlets and the introduction of a mobile ‘Click, Pay & Collect’ offer last year. Sixty outlets were opened in the year which took the total to 335.
In France, where Kingfisher operates the Castorama and Brico Dépôt chains, sales grew by 0.8% to £4.42 billion although like-for-like sales dropped by 1.2% as trade was impacted by weak consumer confidence.
In other international markets like-for-like sales grew by 3.4% with total sales rising by 10.5% to £2.34 billion. The performance was driven by an acquisition in Romania, like-for-like growth in Poland, Russia and China, and new store openings. Retail profit increased by 11.4% to £171 million.
B&Q China sales increased its like-for-like sales by 8.7% with total sales climbing by 8% to £421 million. However, the division made a retail loss of £6 million, down from £9 million in the previous year, which was mainly due to costs relating to a new format store trial which opened in March 2013. Kingfisher is now seeking a strategic partner for B&Q China now that the business is stable with core business broadly breaking even.
Cheshire added: “Looking ahead we are well placed to benefit from a pick-up in consumer spending as Europe’s economies return to growth. Our prospects remain bright, giving us confidence to invest in the business and actively manage our portfolio, including expanding into new markets, whilst also commencing a programme of returning surplus capital to our shareholders, alongside the healthy annual dividend.”
