Kingfisher, the group which owns B&Q and Screwfix, has posted a set of extremely positive results. According to the group’s annual report, group profits rose by 9.8 per cent to reach £759 million in the 12 months to the end of January, with B&Q’s UK and Ireland stores contributing a total sales sum of £3.6 billion. Meanwhile, Screwfix achieved a 17.6 per cent climb in total sales, bringing the annual earnings in this category to £665 million.
Kingfisher claims that the impressive result garnered by Screwfix is largely due to the programme of store openings which took place during the last financial year – a total of 60 new outlets were launched, expanding the brand’s commercial property portfolio significantly. As a result, the group is now intending to expand Screwfix further and has revealed plans to open four outlets in Germany in the coming months.
The group will also be seeking a strategic partner for the Chinese arm of B&Q. Although the home improvements store remains popular in the UK, Chinese consumers seem less enamoured and Kingfisher believes the solution to turning around the loss-making business may be to replicate the partnership scheme which worked well for it in Turkey.
Group chief executive, Sir Ian Cheshire, remains cautiously optimistic about future results, although points out that consumers are still wary of spending excessively.
He says; “Our prospects remain bright, giving us confidence to invest in the business and actively manage our portfolio.
“Looking ahead we are well placed to benefit from a pick-up in consumer spending as Europe’s economies return to growth.”
Unsurprisingly, shares in Kingfisher leapt upwards upon the news breaking, with analysts partly attributing this to the group’s sale of its 21.2 per cent stake in German home improvement brand Hornback which gave a return of £195 million. Shareholders have further reason to celebrate, though, as the group announced a near 5 per cent rise in annual dividend and a programme of cash returns, which will begin this year with a sum of around £200 million going back to investors.
Head of equities at Hargreaves Lansdown Stockbrokers, Richard Hunter, says; “The early share price spike is in reaction to better than expected profit numbers, accompanied by robust growth in key metrics such as earnings per share and a continuation of Kingfisher’s progressive dividend policy.
“In particular, the announcement of a return to surplus capital signifies both growth in cash generation and confidence in further prospects whilst, operationally, the market share gains in its key UK, French and Polish markets were achieved in a tough environment.”
