B&Q owner Kingfisher colours its results with warning

Published on Thursday 18 September 2008 10:11

KINGFISHER, parent company of B&Q, has predicted tough times ahead, despite a rise in profits.

The DIY firm announced pre-tax profits of 206m for the 26 weeks to August 2, up 3.7 per cent from 214m the previous year.

Despite describing the half-year results as "solid", the company said it would have to work hard to maintain that in a declining UK home improvement market.

Ian Cheshire, group chief executive, said: "We have delivered a solid set of results in a difficult period for consumers. We have grown sales and our profits have benefited from actions to improve margin and manage costs.

"We continue to anticipate very tough times ahead, especially in the UK, but remain focused on providing the best choice and value to our customers whilst managing our costs and working capital tightly."

The total UK home improvement market declined by around 2 per cent over the first half of the year as the UK economic environment worsened, impacting consumer spending. However, Kingfisher said its UK businesses had "outperformed" the market.

Group sales grew 11.1 per cent to 5.1 billion, up from 4.6 billion the previous year, while total reported sales for B&Q, which has four stores in Edinburgh and one in Livingston, were 2bn, down 2.5 per cent.

The firm said good sales growth from revamped large stores and new ranges helped offset a weak outdoor season, slower consumer expenditure and disruption from the ongoing renewal activity.

As part of a major own-brand development and renewal programme, B&Q updated 60 per cent of its overall product ranges during last year and a further 20 per cent is being updated this year, including joinery and indoor lighting which were completed during the first half of the year.

Mr Cheshire added: "The first half has also been a busy period of change at Kingfisher with good progress.

"Kingfisher has real strength in its UK and international business. I remain convinced that by running the group in a more unified way we can improve our profit, cashflow and investment returns."

There will be greater focus on generating higher cash returns from the retail businesses, and plans for stretching sales growth targets, margin improvement and cost reduction will be drawn up.

The company says, having already made "significant progress" with updating ranges and revamping stores, the emphasis will shift towards improving in-store service.

Since his arrival and appointment to the retail board in June, chief executive of Kingfisher UK, Euan Sutherland, has been developing a co-ordinated approach across the company's three UK businesses, B&Q, Screwfix and Trade Depot. which he hopes will accelerate the firm's profitable growth in the sector.