Kingfisher Profits Fall 15.5%

Published in Company Comment on 12 September 2012

Kingfisher (LSE: KGF) announces its interim results.

Kingfisher (LSE: KGF), Europe's largest home improvement retailer, issued its half-time results this morning, and with it the announcement that its pre-tax profits were down 15.5% to £371m from 2011/12's figure of £439m.

Half-year sales were down 3.3% at the B&Q owner, from £5,662m at the same stage last year to £5,478m, with retail profit decreasing by 14.7% to £403m compared to 2011/12's £473m.

A significant drop-off in footfall was blamed on record wet weather in the UK and northern Europe, as BBQs were largely overlooked, with management explaining that "seasonal product sales were down 7%, resulting in higher seasonal markdowns to clear excess seasonal stocks and additional marketing to drive footfall".

Elsewhere, the results were impacted by £25 million' worth of "adverse foreign exchange movements when translating euro and [Polish] zloty overseas profits into sterling for reporting purposes", which lessens the blow brought by the interim report somewhat, but perhaps not significantly enough.

Group chief executive Ian Cheshire commented: "Whilst we were unable to offset fully the adverse weather impacts, our efforts meant we exited the first half in as good shape as possible and with net cash on the balance sheet... Whilst an uncertain economic backdrop has been a feature of our markets for some time, we recognise that this is unlikely to improve for a while."

The share price has remained around the same, neither rising nor falling dramatically, settling at 272p at the time of writing, and with an adjusted earnings per share down to 11.5p  for the period from 13.5p at the same stage last year, combined with Cheshire's warnings for the future, the announcements in today's results haven't done the stock any favours...

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> Sam does not own shares in Kingfisher.

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