Kingfisher reports fiscal H1 adjusted pretax earnings of £365M, down 1.6% from a year ago, sales of £5.72B, up 4.3%; CEO says weak consumer confidence in chain's three major markets hurt results

Cindy Allen

LONDON , September 11, 2013 (press release) –

Kingfisher reports half year sales up 4.3%, up 1.5% (-0.8% LFL) in constant currencies, adjusted pre-tax profits down 1.6% to £365 million. Statutory post-tax profit up 69.9% including the £145 million exceptional credit from resolution of French tax case

Group Financial Summary

26 weeks ended 3 August 2013

			% Total Change	% Total Change	% LFL Change
	2013/14	2012/13	Reported	Constant currency	Constant currency
Sales ⁽¹⁾	£5,716m	£5,478m	+4.3%	+1.5%	(0.8)%
Retail profit ⁽²⁾⁽³⁾	£394m	£401m	(1.8)%	(4.8)%
Adjusted pre-tax profit ⁽⁴⁾	£365m	£371m	(1.6)%
Adjusted basic EPS ⁽⁴⁾	11.3p	11.5p	(1.7)%
Statutory pre-tax profit	£401m	£364m	+10.2%
Statutory post-tax profit	£440m	£259m	+69.9%
Basic EPS	18.7p	11.1p	+68.5%
Interim dividend	3.12p	3.09p	+1.0%
Net cash	£259m	£29m	n/a

(1) Joint Venture (Koçtaş) and Associate (Hornbach) sales are not consolidated.
(2) Retail profit is operating profit stated before central costs, exceptional items, amortisation of acquisition intangibles and the Group’s share of interest and tax of JVs and Associates.
(3) 2012/13 comparatives restated by £2m to reflect reclassification of pension administrative expenses from finance costs to retail profit, as per the amended IAS 19.
(4) Adjusted measures are before exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and tax on prior year items. A reconciliation to statutory amounts is set out in the Financial Review (Section 4).

Highlights (in constant currencies):

Sales and profit impacted by:
- On-going weak consumer confidence in our three major markets
- Volatility a key feature across H1
  - Record cold weather in Q1 followed by better weather in Q2 (outdoor products down 10% in Q1, up 9% in Q2)
  - Retail profit down 29.2% in Q1 and up 10.8% in Q2
‘Creating the Leader’ programme progressing well
- 2013/14 milestone delivery on track
- On-going self-help initiatives supporting short term performance in challenging markets
- Completed the acquisition of 15 stores in Romania
- Accelerating the UK expansion of Screwfix, announcing 2014 Germany trials
Balance sheet
- £145 million exceptional provision release relating to the successful resolution of the Kesa demerger French tax case
- Moving annual lease adjusted net debt/EBITDAR at 2.3 times, broadly in line with year end

Ian Cheshire, Group Chief Executive, said:

“After a difficult first quarter, in which sales and profits were affected by record bad weather, we were able to capitalise on the better weather in the second quarter particularly in the UK, to grow quarterly profits and so deliver a broadly flat result across the half. However, underlying consumer confidence remains weak in our major markets, so we continue to focus hard on our self-help initiatives to drive growth, margin and cost efficiencies.

“Looking ahead, we remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick up in the UK housing market. In the meantime, our self-help plan, ‘Creating the Leader’, continues to progress well, including the acquisition of 15 stores in Romania, our first new country entry in seven years. I am also delighted to have received final resolution of the Kesa demerger French tax case, after nine years. Overall, we remain confident in our future prospects.”

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