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20 Mar 2019 | 07:32

Kingfisher profits hammered amid weak retail backdrop in UK, social unrest in France

DIY group Kingfisher saw annual profits more than halve as a weaker retail backdrop in the UK and social unrest in France hurt performance. For the 12 months to 31 December, statutory profit before tax fell 52.8% to £322m and Underlying pre-tax profit, which excludes the impact of transformation P&L costs and exceptional items, decreased by 13.0%, to £693m.

Total sales rose 0.3% to £11.69bn from a year earlier, while like-for-like sales fell 1.6%, while gross margin was flat for the year . Total sales were hurt by ongoing weakness in France, where total sales fell 2.6%, like-for-like sales dropped by 3.7% and profits fell 35.2% to £209m.

Kingfisher France sales decreased by 3.4%, and 3.7% on like-for-like basis, to £4.3bn with improved sales performance at Brico Depot offset by a weak performance in Castorama.

'Both businesses were impacted by national demonstrations in Q4 which resulted in difficulty accessing stores and some temporary store closures,' the company said.

Castorama total sales declined by 7.3%, or 7.1% LFL to £2.25bn.

Kingfisher UK & Ireland sales were up 1.1%, but down 0.8% LFL to £5,061m amid weak consumer backdrop. B&Q total sales declined by 2.8% to £3,390m and Screwfix total sales increased by 10.3%, up 4.1% LFL to £1,671m

The company said it transformation plan, which was now in its third year of implementations, remained on track, but admitted the benefits from the plan had been outweighed by weakness in 'our base business,' due to a combination of 'internal' factors and external' challenges.'

To date, transformation costs (P&L, exceptional and capex) had totalled £490m, and 'we anticipate the total cash cost of the transformation over the five-year period will be less than the £800m guidance,' it added.

The company proposed a final dividend of 7.49p, taking the full year dividend to 10.82p, unchanged from last year.

'As we enter FY 19/20, the outlook by country is mixed. The UK market remains uncertain and we are mindful of softer housing market activity in France,' the company said. 'In Poland the market remains supportive. We are positive about the longer term outlook for the home improvement sector and we are focused on delivering growth in sales, margin and returns.'

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