Kingfisher Share News (KGF)

(ShareCast News) - Kingfisher, owner of B&Q, Screwfix and France's Castorama, saw pre-tax profits fall slightly less than feared in the first half of the year, thanks to strong UK growth and encouraging like-for-like sales.A strategic update from chief executive Véronique Laury also included plans to accelerate the roll-out of an important new store IT system and the potential for a huge increase of the UK Screwfix estate with 200 more outlets.In the half year ended 1 August, like-for-like sales improved by 2% at constant currencies but total adjusted sales fell 4% at the statutory level to £5.38bn, worse than predicted, as the retailer continued with Laury's plans to close roughly 15% of B&Q surplus store space by the end of the next financial year.The UK beat expectations with LFL sales up 3.3% and EBIT storming up 16.8% to £194m, but France missed with a LFL fall of 0.3% and EBIT down 5.7% to £167m versus consensus of £175.The majority of the 30 B&Q closures planned for this year will take place in the second half, which will result in a full year exceptional onerous lease charge of around £350m, £151m of which was booked in the first half.Adjusted pre-tax profit of £384m were down 2.3%, with adjusted earnings per share flat at 12.3p, versus consensus expectations of 12.1p.The interim dividend was lifted by 1% to 3.18p per share, which management said was a reflection of its confidence in medium-term prospects.Laury was pleased with the solid performance and claimed good early progress with her 'ONE Kingfisher' plan, which will see first results of a new supply and buying strategy in stores next year, with 'core essentials' products that represent a third of total company buying scale centrally sourced and distibuted to stores in all geographies.The pilot of a unified IT system - a "key enabler" of ONE Kingfisher - has gone live in seven stores in Ireland, and Laury has decided to accelerate the roll-out across Kingfisher "given the success so far" that will see it complete by the end of full year 2018/19 versus the original plan of 2020/21.At Screwfix, Laury now believes there is potential for around 600 outlets versus the 412 today, as well as a well received German trial that will see another five outlets opened this year to take the total to nine.Chief financial officer Karen Witts added that while management have been encouraged by the macroeconomic backdrop in the UK, they remain cautious on the outlook for France.Investors and analysts were rather disappointed, with the results felt to be somewhat hit and miss as the recent weakness in the EUR/GBP and European economic challenges continue to impact performance. "Falling profits is never good so flat EPS is good to see, but not when it's merely the product of illusionary and corporate remuneration metric benefiting share buybacks," spat Mike van Dulken of Accendo Markets. "A dividend hike is also usually good news, and I suppose a good show when profits are down, however, a mere 1% is nothing to write home about when your yield is already sub 3%."Investec's Kate Calvert reiterated her 'sell' rating and said the CEO was "getting stuck in" as expected."Timelines are starting to be fleshed out and appear to confirm our view that much of the global sourcing and group synergies are unable to be delivered until the IT systems upgrade programme nears completion (FY18/19). Meanwhile, Kingfisher remains a play on the European consumer and we note management's caution on the core French market."