Kingfisher first half profits soar

Group sales grew 3.8% to £5.7bn, while like-for-likes were up 1.6%.

Retail profit jumped 17.6% to £473m.

In the retailer’s UK & Ireland arm, retail profits grew 6.1% to £182m, as it benefited from “ongoing sourcing and cost initiatives”.

B&Q UK & Ireland profit grew 4.5% to £165m despite, Kingfisher said, the “one off adverse impact of the Focus DIY stock clearance activity ahead of its closure”. Focus DIY collapsed into administration in May, and subsequently Closing Down Sales were launched to clear stock.

Gross margin at B&Q was up 20 basis points “against tough comparatives”.

However, like-for-likes slipped 2%, while total sales were also down 2%, to £2.1bn as sales of outdoor seasonal products dropped 4%, “impacted by less favourable summer season weather and the Focus DIY stock clearance activity”.

Kingfisher said the overall full year impact from the closure of Focus is expected to be retail profit neutral before exceptional charges, with the first half clearance disruption offset by second half trading benefit.

At Kingfisher’s trade arm, Screwfix, profits shot up 25.3%.

At Kingfisher’s French arm, retail profits surged 23.9% to £201m, “driven by excellent sales growth continuing margin initiatives”. Like-for-likes rose 4.5%.

Retail profits at Kingfisher’s ‘other’ international business surged 24.7% to £90m, “driven by good profit growth in Poland, Spain, Turkey and Germany and lower losses in Russia and China”.

Other International like-for-likes were up 2.5% while total sales increased by 6.9% to £1bn.

Kingfisher group chief executive Ian Cheshire said: “We have delivered very strong profit growth in what are difficult times for all retailers.

“With around two thirds of our profit coming from outside the UK, these results clearly show the value of geographic spread and the benefits of operating our market leading international businesses in a more unified way.

“Our concerted efforts over the last few years to strengthen our balance sheet are paying off dividends, reducing our financing costs and creating the flexibility to take opportunities as they arise, such as our purchase of 29 great new sites for B&Q from the administrators of Focus DIY.

“Looking ahead, economic uncertainty throughout Europe is likely to impact consumer confidence, meaning conditions will remain challenging for retailers.

“However, our plans already assumed little help from our markets and I am confident we will continue to outperform, benefiting from our well-established programme of self-help initiatives, international scale and breadth, and robust balance sheet.”

Kingfisher, which has 875 stores in eight countries in Europe and Asia, said that it will create more than 1,200 new jobs in the UK this year as it expands B&Q and Screwfix.

The retailer is to invest £130m in the UK this year, with plans to open 80 Screwfix and B&Q stores in 2011.

With the purchase of 29 former Focus stores, B&Q created an extra 230 jobs, in addition to 570 jobs saved at the time of the purchase.