Kingfisher records 11.4% fall in annual profit

Tuesday 26 March 2013 08.27
Kingfisher operates as B&Q in Ireland
Kingfisher operates as B&Q in Ireland

Kingfisher, Europe's largest home improvements retailer, has seen a 11.4% fall in annual profit that reflected unfavourable foreign exchange movements, weak economies and unhelpful weather.

The group, which runs B&Q in Britain and Ireland, said it expects market conditions to remain challenging but it is confident about its own prospects.

Kingfisher made an underlying pretax profit of £715 million (€844.7 million) in the year to 2 February.

That was in line with analysts' consensus forecast but down from £807 million in 2011-12.

There are currently nine B&Q outlets in Ireland, employing around 690 people. 

However an examiner was appointed to the Irish operation earlier this year, with the company blaming falling revenues and high rents on the move.

At the time the company said it would have to consider closing two of its Irish outlets – in Athlone and Waterford – in order to remain viable in the country.

Kingfisher is one of many retailers across Europe 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% 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, the world's No 3 home improvements retailer behind US groups Lowe's and Home Depot, 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% to 9.46 pence.

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