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(Alliance News) - DIY store chain Kingfisher on Thursday raised its profit guidance as the pandemic-spurred demand for home-improvement supplies continues.
The positive results contrasted starkly with those of low-cost airline easyJet, which also reported Thursday, showing the uneven economic impact of Covid-19. easyJet sank deeper into loss as it flew only 15% of its capacity due to government restrictions.
Kingfisher said it delivered strong sales growth in the first quarter, with positive momentum continuing into the second quarter.
For the three months to April 30, Kingfisher reported total group sales of GBP3.44 billion, up 64% on a like-for-like basis, supported by strong demand in the UK and France as well as continued e-commerce sales progress.
In the UK & Ireland, where Kingfisher has B&Q and Screwfix stores, first-quarter sales were GBP1.83 billion, up 65% on a like-for-like basis. In France, where the company operates Castorama and Brico Depot, like-for-like sales were up 102% to GBP1.18 billion.
Kingfisher said the second quarter has started well with like-for-like sales to May 15 up 8.2%, which continues to reflect strong demand.
Following the upbeat performance, Kingfisher raised its first-half like-for-like sales growth view to mid-to-high teens from low double-digit. It also anticipates first-half adjusted pretax profit to be ahead of previous expectations, in the range of GBP580 to GBP600 million. Kingfisher posted adjusted pretax profit of GBP415 million in the first half of last year.
Kingfisher expects financial 2022 adjusted pretax profit growth ahead of sales, from previously 'in line with', as it maintained its original guidance for the second half of the year, which faces a strong annual comparable.
"We continue to see high levels of demand from both new and existing customers, with clear progress made on our 'Powered by Kingfisher' strategic priorities, especially in four key areas. Firstly, e-commerce continues to be our fastest-growing channel with two-year growth of over 250%, now accounting for 21% of group sales. During the quarter, we established a new agile operating model for our technology and digital teams, and further strengthened these teams with multiple new hires," said Chief Executive Officer Thierry Garnier.
"Secondly, we are excited to have launched Screwfix as a pure-play online retailer in France in late April. Thirdly, our new own exclusive brand kitchen range is now available in all key markets, with very positive results despite lockdown restrictions," Garnier added.
Kingfisher shares were up 1.6% early Thursday, while easyJet shares were down 2.3%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,975.40
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Hang Seng: down 0.6% at 28,418.15
Nikkei 225: closed up 0.2% at 28,098.25
DJIA: closed down 164.62 points, or 0.5%, at 33,896.04
S&P 500: closed down 12.15 points, or 0.3%, at 4,115.68
Nasdaq Composite: closed down 3.90 points at 13,299.74
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EUR: down at USD1.2192 (USD1.2216)
GBP: down at USD1.4128 (USD1.4155)
USD: up at JPY109.07 (JPY108.68)
Gold: down at USD1,874.92 per ounce (USD1,883.00)
Oil (Brent): up at USD66.93 a barrel (USD66.06)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 BST UK CBI industrial trends survey
1000 CEST EU euro area balance of payments
1100 CEST EU construction output
1200 CEST France OECD GDP growth
0830 EDT US unemployment insurance weekly claims report
1000 EDT US advance quarterly services
1000 EDT US leading indicators
1030 EDT US EIA weekly natural gas storage report
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The creation of a new public sector body to oversee Britain's railways will simplify a system that is "too complicated", UK Transport Secretary Grant Shapps said. Great British Railways will own and manage rail infrastructure, issue contracts to private firms to run trains, set most fares and timetables, and sell tickets. It will absorb Network Rail in a bid to end what the Department for Transport branded a "blame-game system" between train and track operations when disruption occurs. Shapps said during the 2018 timetable fiasco there was no "Fat Controller" in charge of the system, referencing the Thomas The Tank Engine stories.
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BROKER RATING CHANGES
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BERENBERG CUTS BT GROUP TO 'HOLD' (BUY) - PRICE TARGET 175 (165) PENCE
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RBC RAISES NATWEST TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 240 (190) PENCE
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COMPANIES - FTSE 100
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National Grid said it delivered good operational progress during its recently ended financial year, with high levels of network reliability across all service territories, despite the "significant challenges" throughout the year from Covid-19. For the year ended March 31, revenue was GBP14.78 billion, up 1.7% from GBP14.54 billion in financial 2020, and pretax profit was GBP2.08 billion, up 19% from GBP1.75 billion. National Grid declared a final dividend of 32.16 pence per share, bringing the total dividend to 49.16p, up 1.2% from 48.57p last year. Looking ahead, National Grid expects GBP30 billion to GBP35 billion in capital expenditure over the next five years and annual earnings per share growth 5% to 7% over next five years.
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Ladbrokes owner Entain is mulling making an offer for some assets belonging to William Hill, which was recently acquired by Caesars Entertainment, Bloomberg reported on Wednesday. Entain Chief Executive Jette Nygaard-Andersen told Bloomberg that the company is "looking at whether this could be an interesting opportunity". Earlier in May, the Telegraph reported that Caesars put unwanted William Hill assets up for sale. This included UK high street shops. An Entain deal to buy the assets would further consolidate the UK gambling market. Bloomberg noted Entain has a 40% share of the market. The company also owns brands such as Coral, PartyPoker and Sportingbet.
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BAE Systems has started its search for a successor to Chair Roger Carr, as it looks to fill one of the most senior positions in the company, Sky News reported. The defence contractor has begun speaking to advisers about assisting the recruitment process, which is expected to last up to two years before Carr leaves the firm in 2023, Sky News noted. The news follows BAE's trading statement release on Wednesday, highlighting "good" operational performance so far in 2021, underlining overall confidence in its full-year outlook. The company said it expects sales to grow in the 3% to 5% range in 2021 year-on-year and overall growth to be between 5% and 7%.
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COMPANIES - FTSE 250
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easyJet said its half-year revenue to March 31 fell by 90% from a year before to GBP240 million from GBP2.38 billion, sending the airline to a GBP645 million loss, widened from GBP353 million. Passenger numbers dropped by 89% and capacity was cut by 85% in response. The budget carrier said it expects to fly just 15% of 2019 capacity in the third quarter to June 30, with capacity starting to be increased from June onwards as travel restrictions are eased. "We know there is pent-up demand - we saw this again when Green list countries were released and added more than 105,000 seats - and so we look forward to being able to help many more people to travel this summer supported by our industry-leading flexible customer policies which means they can book with confidence," said Chief Executive Johan Lundgren.
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Plastic piping systems maker Genuit Group said Martin Payne plans to step down as CEO and from the board. Payne will leave the company during the first half of 2022, after leading the business for five years. Genuit said it is commencing a process to appoint a successor and will provide an update when appropriate. The company, formerly known as Polypipe, also said revenue for the four months ended April 30, was GBP193 million, up 32% from GBP146.6 million a year ago. Genuit said it has seen a robust start to the year and now expects underlying operating profit to be close to the top end of the current consensus because of the stronger-than-anticipated revenue growth in the period to April 30. Underlying operating profit consensus is GBP85 million, with a range of GBP80 million to GBP88 million.
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COMPANIES - GLOBAL
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The GBP31 billion mega-merger between Virgin Media and O2 has been given the green light by UK regulators. The Competition & Markets Authority waved through the deal following an in-depth investigation, concluding that concerns customers would see price hikes from the telecoms deal were unfounded. Officials had provisionally cleared the deal last month and on Thursday confirmed the tie-up, which was first announced a year ago.
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Thursday's Shareholder Meetings
888 Holdings PLC - AGM
Adriatic Metals PLC - AGM
Bakkavor Group PLC - AGM
Capital & Regional PLC - AGM
Computacenter PLC - AGM
Essentra PLC - AGM
Fevertree Drinks PLC - AGM
Gamma Communications PLC - AGM
Genuit Group PLC - AGM
H&T Group PLC - AGM
Henry Boot PLC - AGM
Highcroft Investments PLC - AGM
Kape Technologies PLC - AGM
Legal & General Group PLC - AGM
Lloyds Banking Group PLC - AGM
Marshall Motor Holdings PLC - AGM
McColl's Retail Group PLC - AGM
Mercantile Investment Trust PLC - AGM
Network International Holdings PLC - AGM
Next PLC - AGM
S&U PLC - AGM
Secure Income REIT PLC - AGM
Seplat Petroleum Development Co PLC - AGM
Smart Metering Systems PLC - AGM
Team PLC - AGM
Telit Communications PLC - AGM
Tyman PLC - AGM
Venture Life Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
