Kingfisher wallows in ‘wet weather’

12 Sep 2012 | News - Comment now

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Kingfisher wallows in ‘wet weather’

The owner of B&Q, Kingfisher (LON:KGF), has blamed its soggy sales and profits on ‘unprecedented wet weather’.

In the six months to 28 July 2012, the group’s sales sagged 3.3 per cent to £5.5 billion, but pre-tax profit plummeted 15.5 per cent to £371 million.

Ian Cheshire, Kingfisher’s chief executive, complained that the inclement spring and summer in Europe had ‘affected footfall and demand for outdoor maintenance, gardening and leisure products, which normally account for a significant proportion of our first-half sales.’

However, Cheshire maintained that the retailer had ‘exited the first half in as good shape as possible and with net cash on the balance sheet.’ He acknowledged that the poor economy was ‘unlikely to improve for a while’, but maintained that Kingfisher would ‘focus on trading effectively, whatever the market conditions.’

Kingfisher was also hit by the appreciating pound, as the company booked an adverse impact of £25 million when translating euro and zloty overseas profits into sterling. The firm spent a further £5 million on ‘streamlining support offices’, and £10 million rolling out new brands across the UK.

The group hopes that this expenditure on brands will offset a dwindling market for home improvement. According to GfK, a research company, the UK DIY retail market declined by 6 per cent in the first half of the year. The market for smaller tradesmen fell by 1 per cent.

One ray of light for Kingfisher was that sales of indoor decorations rose as people moved their activities inside the house.

Investors will be more cheered by the group’s decision to boost its interim dividend by 25.1 per cent, to 3.09p. Kingfisher’s share price was stable on the news, up less than 1 per cent to 274.5p.

Sheridan Admans, research manager at The Share Centre, was equally unmoved by the results. ‘We continue to recommend Kingfisher as a hold for investors, as uncertainties remain on consumer spending power and we believe that economic growth in some regions will be low and challenging for some time to come.’

Related topics: Consumer, Currencies, Dividends, UK equities B&Q, Kingfisher

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