Home improvement drive good news for Kingfisher

Sep 9 2009 by Iain Laing, The Journal

RETAILER Kingfisher racked up better-than-forecast half-year profits as householders continued to shell out on home improvements rather than moving.

Kingfisher brought forward trading figures for the period to August 1 after an administrative error caused the release of some draft figures.

Europe’s biggest DIY retailer, which also operates as Castorama and Brico Depot in France, said it expected adjusted pre-tax profits in the range of £285m and £290m, higher than forecasts in the City.

Matthew McEachran, an analyst at Singer Capital Markets, said full-year expectations in the City were likely to rise by up to 5%.

He added: “We believe that many of the factors behind today’s strong update are continuing in nature and not necessarily one-off or driven by the seasonal trading conditions, although the spring weather has clearly helped.”

Kingfisher said in July that the trend for households to improve, not move was helping its business amid the property slump. And sales of B&Q kitchens, bathrooms and bedrooms did well over the summer quarter, helped by new ranges and the collapse of competitors such as MFI.

Kingfisher’s statement, issued ahead of interim results due on September 17, revealed trading profits in the UK and Ireland of around £148m. The surplus in France is likely to be in the region of £146m. Investec Securities said the estimated half-year profits were much better than the City’s forecast for a figure of around £268m.

Analyst David Jeary added: “This will undoubtedly drive increases to full year pre-tax profit forecasts, despite Kingfisher pointing to what is expected to be a challenging trading environment over the balance of the year.”