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(Alliance News) - Kingfisher PLC on Monday targeted cost savings and more stores as it attempts to stem a drop in profitability which it predicted would fall again in the new financial year.
Shares in Kingfisher fell 2.4% to 228.00 pence each in London on Monday morning.
In the year to December 31, the company, which owns B&Q and Screwfix, reported statutory pre-tax profit of GBP475 million, down 22%, from GBP611 million. On an adjusted basis pretax profit fell 25% to GBP568 million from GBP758 million.
In the current financial year, Kingfisher expects adjusted pretax profit to fall further to a range of GBP490 million to GBP550 million.
Kingfisher said positive UK & Ireland sales, alongside consistent market share gains, was offset by a "more challenging" consumer backdrop in France and Poland which impacted trading.
Like-for-like sales fell 3.1% to GBP12.98 billion from GBP13.06 billion with retail profit down 20% to GBP749 million from GBP923 million. Retail profit margin dropped to 5.8% from 7.1%.
Basic earnings per share decreased 24% to 18.2p from 23.8p.
Kingfisher said it was planned 40 new Screwfix stores in the UK & Ireland in the new financial year and 15 more in France.
In Poland, a further 75 medium-box and compact store openings over next 5 years are expected for Castorama Poland.
The increase in selling space is predicted to drive an uplift in sales of between 1.5% to 2.5% per annum over the medium term.
Kingfisher said like-for-like sales in the first quarter to date were down 2.3%, with an improved sales trend in the UK & Ireland, France and Poland, compared to the fourth quarter.
Volume trends improved in all three categories, core, 'big-ticket' and seasonal.
Kingfisher expects repairs, maintenance and renovation on existing homes to provide resilience in the new financial year, but is cautious on the overall market outlook given lag between housing demand & home improvement demand.
It expects around GBP120 million of additional cost reductions and productivity gains to partially offset higher pay rates and technology investments.
Free cash flow is forecast between GBP350 million to GBP410 million.
Looking further ahead, Kingfisher struck a more optimistic tone, believing it to be "strongly positioned for growth in 2025 and beyond."
Kingfisher is targeting free cash flow of GBP450 million in the financial year ending January 2026, followed by more than GBP500 million in the following year.
The dividend was unchanged at 12.4p per share.
By Jeremy Cutler, Alliance News reporter
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