Self-help pays off for Kingfisher

16th Sep 2010 07:02

Interim profits from DIY retailer Kingfisher were at the top end of the range of expectations as the group achieved strong growth in each of its three main operating divisions.Adjusted pre-tax profit for the 26 weeks ended 31 July 2010 rose 22.9% to £354m from £288m the year before, and was above the median forecast of analysts' projections of £342m.Sales were a tad higher than expectations at £5,454m, down 0.9% from last year's £5,502m. On a constant currency basis sales were down 0.1% year on year while like for like (LFL) sales were down 1.3%.Retail profit improved by 15.7% to £402m from £347m the year before. French profits were up 13.7% to £160m, benefiting from good sales growth and continuing margin initiatives.UK & Ireland profits were up 15.8% to £171m. LFL sales were down 3.7%, versus market expectations of a 3.5% fall-off. B&Q's retail profit margin continued to improve benefiting from margin and cost initiatives. Other International profits rose 21.0% to £71m. Profit growth in Spain and Turkey, and a halving of China losses more than offset a slight profit decline in Poland.The company is now cash positive, with net cash at the end of July of £19m, compared to net debt of £250m at the end of January. The turnaround reflects the company's continued focus on cash management and the weighting of capital expenditure towards the second half of this year."We have traded well with profit again strongly ahead and financial debt reduced. Our Delivering Value programme of self-help initiatives is working well, meaning Kingfisher now generates significantly higher profits and cash flow from its operations and a much better return on capital for its shareholders," said group chief executive Ian Cheshire. The interim dividend has been maintained at 1.925p. The interim pay-out is now being automatically calculated as 35% of the prior year's total dividend. Subject to final approval in March when the board considers the group's performance, outlook and capital needs, the current year's full year dividend will rise broadly in line with adjusted earnings, the company said.