Soaring B&Q UK and Ireland profit helps propel Kingfisher

In the 13 weeks to October 31, B&Q UK and Ireland’s like-for-like sales grew 5.7% while total sales increased 6.3% to £970m. Retail profit rocketed 45.2% to £43m.

Sales of DIY and decorative products remained “resilient”, supported by increasing consumer interest in DIY. Sales of big-ticket projects and outdoor products were up 11%.

Screwfix sales declined 3.8% to £122m. Like-for-likes in the retailer’s international arm lifted 2%, while revenue rose 4.8% to £486m, helped by a solid performance in Poland, with retail profit up 18.4% to £43m.

At its underperforming B&Q China division, sales declined 12% to £95m, with like-for-likes rising 4.7%. Losses were “significantly reduced” from £17m to £7m.

Group chief executive Ian Cheshire said: “It’s a good set of results, all the bits of the business showed solid progress in what could’ve been a really tough year.”

He added that this quarter “reminds people how international Kingfisher is”, with 80% of the retailer’s profit in the quarter earned outside the UK and Ireland.

Cheshire said he was “pleased we made progress on cash”, with a reduced working capital and a one-off tax refund of E169m (£152.7m).

He added that “China is on track – so far so good”.

Investec analyst David Jeary said: “Kingfisher has delivered another strong quarterly performance. While Kingfisher’s impressive earnings momentum looks to have been sustained with the third-quarter results, we believe the market has largely priced in most of the self-help measures, particularly ahead of economic and demand uncertainties in 2010 and much tougher weather-related like-for-like trading comparatives from next Easter.”

Charles Stanley analyst Sam Hart said the update was “right at the top-end of market expectations” and highlighted “good cost control” that led to a “sharp rise in profitability”.

He added: “The balance sheet now looks extremely sound, with guidance for year-end net debt reduced to about £300m.”

Cheshire said uncertainty around likely tax rises and unemployment may dampen spending. “People might sit on their hands,” he said.

He also added that the Irish government’s decision to ban upward-only rent reviews in new leases was “very interesting news” that would be “very good for retailers”. He added: “It’s harder to do in the UK, but it’s something we should be looking at.”