- First-half sales slip 4.1%
- Profit down 30% year-on-year
- Dividend maintained
The owner of DIY chain B&Q Kingfisher (KGF) saw profit drop 30% year-on-year in the first half of its current financial year as it faced a very tough comparison with the same period in 2021.
Management efforts to get the market to focus on the strong performance relative to pre-pandemic levels were in vain as the shares fell 3.6% to 238.5p.
Kingfisher performed strongly during the pandemic as people looked to improve and expand their living space and as they were one of the few areas of retail able to stay open more or less throughout lockdown.
Strong demand for energy efficiency products wasn’t enough to prevent sales in the six months to 31 July from falling 4.1% year-on-year to £6.81 billion.
Pre-tax profit slumped 30% year-on-year to £474 million reflecting pressure on margins thanks to supply chain issues and rising costs.
DIVIDEND MAINTAINED
The dividend was maintained at the same level of 3.8p per share. CEO Thierry Garnier said the company was focused on ‘delivering value to our customers at a time when they need it most’.
‘You can expect continued strong execution, with a focus on growing sales and market share, effective management of our gross margin, and alignment of our costs and inventories to market conditions,’ he added.
AJ Bell investment director Russ Mould commented: ‘Not unfairly, the B&Q-owner Kingfisher is keen to point investors in the direction of pre-pandemic sales when it comes to its first-half results. Unfortunately, the market is having absolutely none of it.
Mould pointed out that the ‘positive tailwinds’ created by the pandemic have disappeared, adding that ‘at the same time the powerful headwind of a cost-of-living crisis has made it extremely difficult for Kingfisher to make any headway’.
‘CEO Thierry Garnier may be right when he describes the results as resilient, but the message that ‘last year was a tough ask to follow’ isn’t really one investors want to hear, no matter how reasonable an excuse it might be,’ he concluded.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Tom Sieber) owns shares in AJ Bell.
