Results will reflect tough trading for B&Q
Kingfisher, Europe's biggest home improvement retailer, is expected to unveil a steep decline in profits tomorrow when it posts its half-year results.

Analysts forecast that the figures will show a 35 per cent to 45 per cent fall in pre-tax profits. The results are likely to reflect a tough trading period for Kingfisher's UK business B&Q, on the back of the weak DIY market and pressure on gross margins.

Evolution analyst Nick Bubb forecast a decline of 40 per cent in pre-tax profits to£160 million, on sales up 7 per cent to£4.3 billion for the group. B&Q's EBIT is expected to slump from about£144 million to£65 million.

Bubb said that, although like-for-like sales are expected to be down, some recovery is in sight. 'We look for B&Q like-for-like sales to be down 2.5 per cent, but that will imply some recovery from the first quarter and management will point to the favourable comments on its new store concept at Wednesbury,' he said.

Kingfisher has launched a new-look store in Wednesbury which is expected to show an improvement in sales densities and is indicative of B&Q's new strategy under chief executive Ian Cheshire, according to broker Credit Suisse.

'Our recent visits to new format stores and our discussions of these with B&Q management suggest that B&Q's preferred strategy has been decided. It will focus on re-establishing B&Q's range credentials, rather than trying to make the best of existing ranges through retail engineering techniques. We expect this discussion to dominate the interim profit announcement,' said Credit Suisse analysts.

Credit Suisse forecasts first-half profits before tax to come in at£168 million - a decline of 34 per cent from£254 million last year.

The company is expected to report stronger growth in profitability in Poland, Italy and China, which collectively account for 20 per cent of total profits.