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* Targets 500 mln stg profit uplift in 5 years
* Says plan will cost 800 mln pounds
* Will return 600 mln pounds to shareholders
* Shares fall up to 4.8 pct (Adds CEO, analyst comment, shares)
By James Davey
LONDON, Jan 25 (Reuters) - Kingfisher, Europe'slargest home improvement retailer, announced a plan on Monday toboost profit by 500 million pounds ($712 million) a year from2021 that will cost 800 million pounds over the next five yearsto deliver.
In a strategy update, Kingfisher, which trades as B&Q andScrewfix in Britain and Castorama and Brico Depot in France andother countries, also said it planned to return 600 millionpounds to shareholders over the next three years through sharebuybacks, in addition to annual dividend payments.
Kingfisher sees a huge opportunity in Europe's 235 billionpound home improvement market but says it needs to become a moreunified company to take advantage of it.
Shares in the group fell up to 4.8 percent as investorsbaulked at the cost of the plan, which entails improving thecompany's operational and ecommerce capabilities and drivingefficiencies across the group.
"The issue here is the credibility of the plan and themarket's view of the likelihood of successful execution," saidHaitong Research analyst Tony Shiret.
"We remain sellers because we do not believe that Kingfisherwill deliver this plan."
Analysts also said Kingfisher Chief Executive VéroniqueLaury's assessment that the company's "pre-transformationperformance" would be broadly in line with the macroeconomicbackdrop in its respective markets, was pretty downbeat.
Laury succeeded Ian Cheshire as CEO in December 2014 and inMarch detailed plans to reshape Kingfisher, including closing 60B&Q stores while opening more Screwfix outlets, cutting productlines, developing unified garden and bathroom businesses andrevitalising its big stores across Europe.
"With a clear roadmap now in place alongside clear long-termtargets, the size of the five-year opportunity is significant,"said Laury.
Kingfisher made a pretax profit of 675 million pounds in the2014-15 financial year and prior to Monday's update analystswere on average forecasting 667 million pounds for 2015-16.
The company, the world's No. 3 home improvement playerbehind U.S. firms Lowe's and Home Depot, said itsfive-year plan would hit profits in the first year by about 50million pounds and by about 70-100 million pounds in the second.
The 800 million pound cost of the plan was made up of profitand loss costs of 220 million pounds, one off costs of 270million pounds and capital expenditure of 310 million pounds.
Chief Financial Officer Karen Witts said the recent sale ofB&Q rival Homebase by Home Retail to Wesfarmers, which intends to rebrand the chain as Bunnings, wouldhave no bearing on B&Q's strategy.
Kingfisher shares were down 14.5 pence at 330.4 pence at0947 GMT, valuing the business at 7.6 billion pounds.($1 = 0.7018 pounds) (Editing by Kate Holton and David Clarke)
