B&Q owner Kingfisher pre-tax profits drop to €523m

B&Q owner Kingfisher has made a big bet that households will continue to turn to tradesmen for home improvements instead of DIY, revealing plans to expand the size of its Screwfix chain rapidly.

Veronique Laury has certainly put a marker down since taking over as chief executive of FTSE 100 DIY group Kingfisher from the much-garlanded Sir Ian Cheshire in December. “We’ve started in London, with new stores in Wandsworth and Brixton and hope to roll it out elsewhere”.

The group’s larger United Kingdom business B&Q, aimed at the mass market, saw a 0.7 percent rise in underlying sales.

Kingfisher announced in a statement today that its adjusted pre-tax profit had fallen 2.3 percent year-on-year to £384 million, with adverse foreign exchange movements offsetting strong growth in the company’s United Kingdom operations.

But its trade-focused Screwfix business continued to power ahead, with like-for-like sales leaping 16.5 per cent higher thanks to a buoyant housebuilding sector.

She has previously stated that she wants to unify the company under her ONE Kingfisher plan, selling largely the same stuff to customers on both sides of the Channel.

Kingfisher shares dropped around 2% in early trading.

By contrast, the company is on track to close 15 percent of its underperforming B&Q stores by the first half of next year amid falling demand for do-it-yourself products.

‘This plan will unlock our potential through organising ourselves very differently in order to create a single, unified company where customer needs come first’.

‘Less positively and from an investment perspective, the dividend yield of 2.8 per cent is not particularly attractive in the current interest rate environment, although the policy is progressive and there is some support from the ongoing share buyback programme’.

Chief Financial Officer Karen Witts said, “In the short term, whilst we remain encouraged by the macroeconomic backdrop in the United Kingdom, we remain cautious on the outlook for France”. The restructuring is expected to cost the company approximately GBP350m over two years.

“We have been working at pace on our set of first “sharp” decisions”, Ms Laury said.