Kingfisher gets new boss as French woe hits profits

10th Sep 2014 07:18

B&Q and Brico Depot owner Kingfisher has decided to replace its chief executive as it reported flat profits due to currency volatility, although it said the buoyant UK housing market had lifted demand for DIY products.French sales were only slightly higher as the group took a hit from the country's ongoing slow economy and declining housing market.Kingfisher said the chief executive of its French Castorama business, Véronique Laury, would take over from Ian Cheshire before the end of this financial year.The group said it had reached the decision in regular succession talks with Cheshire and in view of the fact that the next five years would need leadership commitment.Kingfisher plans to improve its IT systems, expand its Screwfix and Brico Dépôt operations into new markets, complete a brand streamlining programme and integrate recent acquisition Mr Bricolage with its French businesses.Chairman Daniel Bernard said: "Following a rigorous review of candidates, internally and externally, the board believes Ms Laury is uniquely qualified to lead the business on the next leg of its journey. She is an outstanding retailer, with 26 years' experience of home improvement retailing in France and the UK."Cheshire said: "My primary aim on becoming group chief executive almost seven years ago was to deliver a step change in the value of the business for our shareholders and I am delighted that this aim has been achieved."Kingfisher said first-half total sales rose 0.9%, with like-for-likes up 1.8%, and flat adjusted pre-tax profits of £364m after the negative impact of currency translation. Group retail profit was 3.3% up in constant currencies.Total sales in France rose 0.4% and profit was flat. The ongoing slow economy and declining housing market impacted performance, particularly in the group's more construction-orientated Brico Dépôt business.UK & Ireland sales were up 6.6%, or 4.4% on a like-for-like basis, and retail profit lifted 17.7%, benefiting from initiatives to improve B&Q and better demand for trade products as housing construction and activity improved.Other international markets sales grew 8.8% but profit growth in Poland, Turkey and Spain was offset by new country development costs and higher losses in China.The previously announced multi-year capital return programme to shareholders, starting with £200m in 2014/15 started in the first half, with £100m being returned as a special dividend and £35m via a share buyback. The rest of the programme will resume as a share buyback.Cheshire said: "This was a difficult first half with demand in our largest and most significant market, France, remaining particularly weak with a sharp market downturn experienced in our second quarter. We did though deliver flat profits in France, a resilient performance despite the difficult backdrop. However, conditions in the UK were more favourable with better weather and encouraging signs in the smaller tradesman market."Whilst our French business saw an improvement in August, we remain cautious about the economic backdrop."