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LONDON (Alliance News) - Europe's largest home improvement retailer Kingfisher PLC Tuesday delivered an increase in profits and revenues for its recent financial year, while announcing the start of a multi-year capital return programme to shareholders this year and plans for a joint venture partner for B&Q China.
Kingfisher said that this year it will start a multi-year programme of additional capital returns to shareholders, starting with around GBP200 million during the current financial year. It also declared a ful-year dividend of 9.9 pence per share, a 4.7% increase on the 9.46 pence a year earlier.
Kingfisher shares opened higher Tuesday, touching an intraday high of 432.10 pence. Its shares are currently trading 3.4% higher at 420.20 pence per share.
In a conference call with journalists, Chief Executive Ian Cheshire didn't go into detail about an overall target for the programme, or how it will be divided, such as share buybacks or special dividends, but said the group will each time be looking at a six month balance sheet review.
"Realistically we will use both, however we will play it fairly quietly. We don't want to give the market too much notice," Cheshire told journalists Tuesday.
The retailer made several other big announcements Tuesday, including that it plans to take its successful UK Screwfix business internationally, starting in Germany, and that it is currently looking for a strategic partner for B&Q China, now that the business is stable with the core business broadly break even.
Some analysts had been seeing a potential China exit on the cards, weighing up whether the group would pull the plug on the whole business.
However, Kingfisher said that it is looking for a strategic partner for B&Q China to replicate "the successful partner approach in Turkey", where its operates the Koçtas brand, a 50% joint venture in Turkey with the Koç Group.
"The business is now stabilising, and it is now a business we can use as a platform going forward, which four or five years ago was not the case. We want to combine local knowledge with international expertise," said Cheshire.
Cheshire said the group already has potential partners knocking on the door, but would not elaborate.
After an "extremely challenging" start to the year, Kingfisher said it grew market share in France, UK and Poland, its key non-UK markets. It said profits and sales in the year ended February 1 were boosted by a strong performance from its Screwfix business in the UK, as well as improving operations in Poland and Russia, despite continued weakness in its French business, where it said it is seeing signs of stabilisation.
France is the leading profit contributor for the group, followed by the UK and Poland, although its French business has been a drag on the group for some time, citing weak consumer confidence as the main problem.
"In France it might be stabilising or at least has stopped getting worse, but it is not getting better yet," said Cheshire.
For the year ended February 1, Kingfisher reported pretax profit of GBP759 million, up from GBP691 million a year earlier, driven by a 5.2% increase in revenue to GBP11.13 billion for the year, in line with analyst expectations and an increase on the GBP10.57 billion in revenues reported a year earlier. On a like-for-like basis, group sales were up 0.7%.
"The economic backdrop was generally soft across Europe for much of the year, particularly in France, our most significant market," said Chief Executive Ian Cheshire in a statement.
Cheshire said the business is well placed to benefit from a pick-up in consumer spending as Europe's economies return to growth.
"Our prospects remain bright, giving us confidence to invest in the business and actively manage our portfolio, including expanding into new markets," said Cheshire.
Kingfisher said it is now taking its profitable Screwfix business in the UK abroad, and announced a four-store pilot in Germany in summer this year, with the launch of a country-wide website with next day delivery.
During the year, the group completed the disposal of its German business Hornbach, in which it had a 21% economic interest, and contributed GBP26 million to retail profit in the year.
Kingfisher said it opened a net additional 91 new stores during the year,, including 60 Screwfix outlets and 15 acquired stores in Romania, taking the store network to 1,079 stores, excluding its 45 Turkey joint venture stores.
Kingfisher said it held net cash of GBP238 million at the end of the year, compared with GBP38 million a year earlier.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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