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Company overview Kingfisher is a major home improvement retail business with operations across the UK, Ireland, Continental Europe and Asia. It operates over 950 stores in eight countries across Europe and Asia (including China). Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also has a 50% joint venture business in Turkey with the Koç Group, and a 21% interest in, and strategic alliance with, Hornbach, Germany's leading large format DIY retailer. The group employs over 65,000 staff and is and is a constituent of the FTSE 100 Index.
After years of defying the downturn in consumer spending and the financial crisis, in the end the bad summer of 2012 finally took its toll on the bottom line at DIY specialist Kingfisher (KGF). The September announcement showed sales in the half-year to end July were down 3.3% to £5,478m from £5,662m at the interim stage last year. Although this was in line with market forecasts, the like-for-like sales drop of 2.8% effectively ended the fundamental bull run. While the weather may have improved, it is difficult to see how Kingfisher can pull any fresh positive drivers out of the hat in the forthcoming trading announcement.
Panmure admits that with the uncertainty surrounding the stock, shares are unlikely to be outperformers for the remainder of the year. "We remain buyers on the view that the long term outlook for earnings remains good. Also, at some stage, there might be some help from the UK economy and, in the meantime, self-help opportunities should support profits and therefore the shares."
Third-quarter profits at B&Q and Screwfix owner Kingfisher are expected to fall when its reports next Thursday but Panmure Gordon remained upbeat today with a 'buy' rating and 350p target price. The broker expects like-for-like sales to fall across the board in the third quarter. As for the bottom line, retail profits are expected to decline by 6% to £256m largely due to currency. On a constant currency basis, this will be a flat reading. Profits are predicted to drop by 10% in France and by 7% in International, led by Poland. In the UK, profits are forecast to rise by 7% as a result of the stock clearance in the second quarter and a continued improved performance from Screwfix. "It is not difficult to be bearish on the profit outlook for Kingfisher. Clearly, with 50% of profits earned in France, if the consumer economy was to take a further turn for the worse, then there are more downgrades to come. We view the worst case outlook as a 30% downgrade to profits in France, which translates into a 15% fall at the group level.," Panmure said. "However, it is possible to look more favourably at the outlook. For instance, the French government has announced its intention to reduce social security costs that companies pay by 6%. If this were to be implemented (which is far from certain), then it would be worth €30m to the bottom line."
Kingfisher: Seymour Pierce keeps sell rating and 240p target
Seymour Pierce maintained its "sell" recommendation on home improvement retailer Kingfisher (KGF) with a target price of 240p. The broker believes that the company's stores are too large, difficult to shop in and not aligned to the new trend for convenience. The broker is also cautious that earnings in the UK and France have peaked and believes the firm's property portfolio requires restructuring. The shares slipped by 1.3p to 290.50p.
Surely over the November - March season we should see KGF price top 300p? 2012 has just been a grim year with a shakey recovery all-round. Not too many fears over my investment here at 275p in (plus small divi after today).
Has dropped like a rock in the past three weeks. From sort of 6.6B to 6.2B. Even more if you think that around seven months ago, it was just under 7B.
Seymour Pierce retained its "sell" stance on Kingfisher (KGF) with a target price of 240p. The broker said that the new French budget, which includes a 75% tax on earners over 1 million euros (0.8 million pounds) and 45% on earners over 150,000 euros (119,427 euros) is likely to have a significant impact on the DIY and home improvement specialist's sales. Seymour Pierce noted that the country accounts for 50% of the group's total sales believes that the new tax rates will reduce the amount of luxury spending and sale of "big ticket" items.
It is entirely appropriate that Kingfisher’s 1,000th store to open should be in Poland, because this is the only part of the retailer to be showing any growth, declares Tempus in The Times. A note from Numis Securities suggests that prospects for Kingfisher in the UK, where it also has the Screwfix chain, may be improving as it gains ground from rivals. It also has the advantage of the disappearance of Focus DIY in spring last year and the increasing concentration by another rival, Home Retail’s Homebase, on home furnishings. Market forecasts suggest a sharp rebound in Kingfisher's profits, weather willing, from an expected £740m in the year to end-January to perhaps £820m in 2013-2014. This would put them on about 10.5 times earnings for that year. The shares have lost about 15% of their value since April. Hardly a raging buy, Tempus concedes, but an interesting long-term punt.
Exchange rate movements did not help matters either, with the group taking a £25m hit from translating the euro and Polish zloty back into sterling for reporting purposes. Just last week Kingfisher beefed up its board with the appointment of three new executive directors. Karen Witts, who was named as Group Finance Director in July, will take a seat on the board on October 1st when she joins the company. Sitting around the table she will find new boys Euan Sutherland and Philippe Tible. Sutherland is Kingfisher's Group Chief Executive, while Tible is the firm's Divisional Chief Executive Officer, Castorama and Brico Depot responsible for Kingfisher's businesses in France, Poland, Russia and Spain
Kingfisher's Chief Executive Officer, Ian Cheshire, has exercised options over 164,144 shares and subsequently sold 143,040 of them less than a fortnight after the B&Q owner admitted that miserable weather in the UK and northern Europe had a serious impact on footfall in the first half of its financial year. Cheshire sold the shares for 269.62p each, pocketing a total of £385,664, leaving him with 1.15m shares in the company. The firm put the impact on profits of the soggy weather at more than £30m, as it reported a 15.5% decline in adjusted pre-tax profit to £371m in the 26 weeks to July 28th from £439m the year before. That was some way below the £395m broker Charles Stanley had been expecting and a bit shy of the £280m Credit Suisse had forecast. Reported profit before tax was down 16.9% to £364m from £438m.
DIY retailer Kingfisher has beefed up its board with the appointment of three new executive directors. Karen Witts, who was named as Group Finance Director in July, will take a seat on the board on October 1st when she joins the company. Sitting around the table she will find new boys Euan Sutherland and Philippe Tible. Sutherland is Kingfisher's Group Chief Executive while Tible is Kingfisher Divisional Chief Executive officer, Castorama and Brico Depot. responsible for Kingfisher's businesses in France, Poland, Russia and Spain. The appointments are part of a planned evolution of the Kingfisher board, following the announcement of the new senior management structure in February and the launch of the group's "Creating the Leader" plan in March. "These changes mean that all five of Kingfisher's Group Executive will now be on the main board," noted Ian Cheshire, Kingfisher's Chief Executive Officer.
Seymour Pierce has downgraded its rating for B and Q owner Kingfisher from 'hold' to 'sell' and trimmed its target price from 290p to 240p following the group's first-half results which were significantly affected by the weather and foreign exchange losses. "Despite downgrades in recent weeks, interim results to end of July are disappointing and at the bottom end of market expectations," said analyst Freddie George. George added: "The stock has held up well over the last quarter despite a steady trickle of downgrades and on the basis of our revised forecasts is more than fairly valued. On the basis of our forecast it is valued at 12.0x FY13 earnings which we believe is too demanding giving the difficult outlook, with a prospective yield of 3.5%."
Wet weather and adverse exchange rates put a dampener on the first half performance of do-it-yourself retailer Kingfisher. Sales in the 26 weeks to July 28th were down 3.3% to £5,478m from £5,662m at the interim stage last year. That was in line with market forecasts. On a constant currency basis, sales were up 1.0% but on a like-for-like (LFL) basis were off 2.8%. Adjusted pre-tax profit slumped 15.5% to £371m from £439m the year before, with the company sizing the impact of wet weather in the UK and Northern Europe at more than £30m, which might account for why the profit figure was £24m shy of the forecast by Charles Stanley. Statutory profit before tax fell 16.9% to £364m from £438m the year before. The interim dividend has been hiked by 25.1% to 3.09p from 2.47p last year.
Positive Points: Management reinforced confidence in its programme of self-help initiatives, 'Creating the Leader', will see the company emerge as "a world class retailer at helping customers have better, more sustainable homes" Unlike UK rivals, the group enjoys geographical diversification, including Emerging Markets such as China, Poland and Russia. The retailer is seeking growth in countries including Poland and Russia to help offset declines in Britain. Sales in Poland were up 2.3% to £513 million and in Russia where it benefited from new store openings, sales were up 48% to £198 million. Kingfisher has a successful track record with dominant strategic positions in the UK and France. The group has been offsetting weak demand in many of its markets with a drive to improve profitability by buying more goods centrally, and directly, from cheaper manufacturing centres such as China. The interim dividend was raised 25.1% to 3.09p.
Negative Points: Kingfisher estimated that the unprecedented wet weather in the UK and Northern Europe cost the group £30 million in lost profit as demand for gardening and leisure products plummeted during the key spring and summer seasons. Retailers are suffering as consumers' disposable incomes are squeezed by inflation, muted wages growth and government austerity measures. The implications of the Euro zone crisis remain a concern. The group’s French business has faced uncertainty because of the Euro debt crisis and unemployment in that country which is running at a 13 year high. Potential moves into new markets, a target in the group's next growth self help programme, pose risks. A weaker UK housing market is likely to directly affect DIY demand patterns. Changes in retail planning legislation could restrict Kingfisher's store opening ambitions.
Financial Highlights: Adjusted profit before tax in the period fell 16% to £371 million, down from £439 million a year ago. Overall sales for the first half dropped 3.3% to £5.48 billion. Kingfisher UK & Ireland saw total sales down 1.7% to £2.3 billion in a continuing challenging consumer environment. Screwfix grew total sales by 8.9% to £273 million. Adverse foreign exchange movements cost the group £25 million. A figure around £10 million was spent accelerating the national roll out of new common own brands in the UK. Kingfisher ended its half year with a net cash position of £29 million.
Interim results: Set against a backdrop of record wet weather and European austerity, Kingfisher has fared as well as could have been expected. In particular, the difficulties arising from these factors seem to have been managed deftly, as action was taken to clear excess stocks whilst highlighting indoor product sales. In addition, the company’s increasing reputation as being on top of its costs was also evidenced during the period by prudent cash management and an acceleration of the self-help programme. Kingfisher’s international presence has, in part, mitigated what could otherwise have been damaging effects from other parts of its portfolio, whilst the outlook comments were both realistic and confident. Less positively, the numbers were light of market expectations whilst the environment is unlikely to improve in the short to medium term either in terms of fierce competition or indeed the strained economic situation. Amidst the turmoil, the shares have held up strongly. Over the last year Kingfisher has added 17%, as compared to an 11% rise in the wider FTSE100. The challenges have been identified and accepted,
Company overview Kingfisher is a major home improvement retail business with operations across the UK, Ireland, Continental Europe and Asia. It operates over 950 stores in eight countries across Europe and Asia (including China). Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also has a 50% joint venture business in Turkey with the Koç Group, and a 21% interest in, and strategic alliance with, Hornbach, Germany's leading large format DIY retailer. The group employs over 65,000 staff and is and is a constituent of the FTSE 100 Index.
resilience shown to date by B&Q owner Kingfisher (KGF) will once again be called on to reassure the markets, notwithstanding the double dip recession background at home. The last we heard from Kingfisher in July, rain had effectively stopped play, as its customers suffered the effects of record breaking bad weather. Given that the meteorological position hasn’t materially improved since then, like for like sales growth will probably be at or even below the -0.4% level for Q2. Much will depend on whether B&Q can continue its outperformance in the UK & Ireland where the last gain was +5% on LFL growth.
Kingfisher: UBS cuts target from 320p to 310p, buy rating kept.
Almost 5 shares sold for every 1 bought... Price decreased very little... Someone building up a large trade? Same thing happened last week too.
maybe you should ask some employees what they think
Positive Points: Management remains confident that its programme of self-help initiatives, 'Creating the Leader', will see the company emerge as "a world class retailer at helping customers have better, more sustainable homes" Unlike UK rivals, the group enjoys geographical diversification, including Emerging Markets such as China, Poland and Russia. Additional marketing and promotional activity helped encourage customers to switch some of their activity to internal repairs and projects, partially offsetting the weather-related weakness, particularly in the UK, reported management. The retailer is seeking growth in countries including Poland and Russia to help offset declines in Britain. Sales in Poland rose 1.5% and revenue increased 48.5% in Russia. Kingfisher has a successful track record with dominant strategic positions in the UK and France.