France and Germany’s emergence from recession is likely to benefit Kingfisher and Kesa, which both have big operations in the countries.
The two economies each grew by 0.3 per cent between April and June, prompting broker Singer to issue buy notes on the DIY and electricals groups.
France is home to Kingfisher’s Castorama chain and the store group also has a stake in German DIY outfit Hornbach. Singer said that French forecasts have been “very conservatively struck” given the backdrop and there ought to be scope for France, which is Kingfisher’s biggest profit contributor, to do better if GDP trends are sustained.
Singer observed: “Notwithstanding the upside that might yet exist in this stock if firm evidence of his turnaround starts to emerge, if French GDP trends are sustained Kesa’s biggest profit contributor ought to be able to recover part of the lost profits from the last two years on top.”