- Interim profit surprises analysts
- Core businesses performing well
- Full-year range of forecasts raised
Investors responded positively to a mixed half-year trading update from home improvement retailer Kingfisher (KGF) which included weaker-than-expected sales in France but higher-than-hoped pre-tax profit.
The shares gained 17p or 6% to 307p making them the biggest riser on the FTSE 100 large-cap index.
BOTTOM LINE TOPS FORECASTS
For the six months to the end of July, the B&Q and Screwfix owner posted revenue of £6.75 billion, a decrease of 1.8% on the previous year, as flat sales in the UK, Ireland and Poland were offset by a 7.2% decline in sales in France reflecting a weak market.
Highlights were market share gains in the core UK and Irish markets as well as Poland, a higher gross margin, a recovery in seasonal sales towards the end of the half and a strong performance from the online arm including Tradepoint, which now accounts for over 18% of revenue against 16.7% a year ago.
The firm said its pricing was ‘competitive’ while promotional activity was ‘disciplined’, which contributed to the increase in gross margins, while it reduced its inventory level by £134 million and was on track to cut full-year operating costs by £120 million.
Most pleasing for investors was the fact first-half pre-tax profit came in almost flat at £334 million, significantly ahead of the £286 million consensus, and the company raised its full-year target range from £490 million to £550 million to £510 million to £550 million.
Moreover, trading in the current quarter is running ahead of expectations at -0.3% on a like-for-like basis, with UK and France ahead of their second-quarter run rate.
WHAT DID THE CEO SAY?
‘Trading overall in the first half was in line with our expectations, underpinned by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends in our core product categories’, commented chief executive Thierry Garnier.
‘Reflecting our performance in the first half and our current view of the trading environments in our markets, we have tightened our profit guidance and upgraded our free cash flow guidance for the year. We remain focused on continuing to manage our costs and cash effectively and driving further market share gains by delivering on our key strategic priorities.
‘With positive early signs of a housing market recovery, notably in the UK, Kingfisher is strongly positioned for growth in 2025 and beyond.’
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