DIY giant Kingfisher has reported a rise in full-year profits as it plots further overseas expansion and seeks a partner for its Chinese business.
The B&Q owner is poised to enter two new territories. It has plans for two Brico Dépôt shops in Portugal and four Screwfix stores in Germany, where it has disposed of its stake in local DIY retailer Hornbach for £195m. It acquired the stake for £90m.
Kingfisher is also seeking a strategic partner for its loss-making business in China as it aims to “replicate the successful partner approach in Turkey” where the Koçtaş business is run as a joint venture.
Kingfisher posted adjusted group pre-tax profits up 4.1% to £744m on group sales ahead 3.5% to £11.13bn in the 52 weeks to February 1. Group retail profit edged up 0.7% to £805m, at constant currency.
The retailer said it increased share in all its major markets of France, the UK and Poland.
Kingfisher group chief executive Sir Ian Cheshire said: “We finish a challenging year in good shape, with our self-help programme meaning we have grown profit and economic return, improved our balance sheet strength whilst also investing in lower prices for our customers and improved convenience. The economic backdrop was generally soft across Europe for much of the year, particularly in France, our most significant market.
“Looking ahead we are well placed to benefit from a pick-up in consumer spending as Europe’s economies return to growth. Our prospects remain bright, giving us confidence to invest in the business and actively manage our portfolio, including expanding into new markets, whilst also commencing a programme of returning surplus capital to our shareholders alongside the healthy annual dividend.”
In France, the group’s biggest market, sales rose by 0.8% to £4.43bn but like-for-likes fell 1.2%, hit by weak consumer confidence. Retail profit was down 4.7% to £396m.
At B&Q UK & Ireland total sales were up 0.4% to £3.7bn. Like-for-likes were flat. Across Kingfisher UK & Ireland, which includes B&Q and Screwfix and is Kingfisher’s second biggest business, retail profit was up 3.4% to £238m.
Following an examinership process in Ireland in May 2013, one store was closed and “significant rent reductions achieved across the remaining stores”. The business returned to break-even in the second half.
Screwfix increased total sales by 17.6% to £665m. Like-for-likes were up 7.3%.
Total sales at Kingfisher’s other international businesses, which include Poland, Russia, Spain, Turkey, China and Romania, increased by 10.5% to £2.34bn while like-for-likes were up 3.4%. Retail profit increased by 11.4% to £171m, primarily driven by Poland.
At B&Q China sales advanced by 8% to £421m. Like-for-likes jumped 8.7%. The retail loss was £6m, against the previous year’s £9m, and largely related to costs of a new format store trial which began in March 2013. Kingfisher said B&Q China, which has been under review for a number of years following underperformance, is “stable” and that the core business “broadly” broke even in the year.
Kingfisher will this year embark on a four year group-wide IT programme.
The retailer revamped B&Q’s website and introduced 20,000 extra products for home delivery in the year. It also tried out click and collect in Castorama France and in Turkey.
B&Q is seeking planning permission to downsize a further 16 UK stores as part of its ‘rightsizing’ strategy after completing its first freehold deal with Asda last year on its 120,000 sq ft Belvedere shop.
Kingfisher opened a net 84 stores, including 62 in the UK, principally under the Screwfix fascia. It also opened a handful of stores in France, Poland, Russia, Spain and Turkey.
In the year Kingfisher entered Romania after acquiring 15 stores in the country, adding an additional 2% of space. The group operates 1,124 stores globally.