LONDON (Alliance News) - Shares in DIY retailer Kingfisher PLC fell on Wednesday after it said profit declined in its recently ended financial year though revenue rose, as it warned its outlook by country for the year ahead is a "mixed picture", with Poland looking good but the UK and France more uncertain.
Shares in Kingfisher were down 9.5% at 305.50 pence on Wednesday, the worst performer in the FTSE 100.
Total sales for the year ended January 31 rose 3.8% to GBP11.66 billion from GBP11.23 billion the year before, though fell 0.3% on a constant currency basis, as pretax profit fell to GBP682 million after exceptional items from GBP759 million the year prior.
Adjusted pretax profit fell to GBP682 million from GBP742 million, though underlying pretax profit rose 1.3% to GBP797 million. Retail profit rose 0.3% to GBP849 million in the period.
Like-for-like sales at constant currency for the year fell 0.7%. Kingfisher's gross margin slipped 30 basis points in the period to 36.9% from 37.2% the year before.
Kingfisher UK & Ireland sales were up 0.4%, or up 0.6% on a like-for-like basis, to GBP5.00 billion reflecting a strong Screwfix performance and modest price inflation, offset by the impact of B&Q store closures last year and transformation business disruption.
The company raised its full-year dividend slightly to 10.82p from 10.40p.
The outlook by country for the new financial year is a "mixed picture", Kingfisher said.
In the UK it is "more uncertain" as both B&Q and Screwfix experienced softer sales in the fourth quarter of its financial year.
In the fourth quarter, B&Q like-for-like sales slipped 5.1%, while Screwfix like-for-like sales rose 7.1%. The softer trading reflected weaker demand for big ticket categories, such as kitchens.
B&Q's fourth quarter like-for-like fall marked a significant downward acceleration from the 1.9% fall in like-for-like sales reported during the third quarter of its financial year. Screwfix had posted like-for-like growth of just over 10% in the third quarter.
Over the whole of the year, B&Q total sales declined by 5.3% to GBP3.49 billion, reflecting annualisation of the completed store closure programme. Like-for-like sales declined by 2.8%.
B&Q's total digital sales, including home delivery, continued to make good progress, with sales growing by 11% and now representing 4% of total sales, Kingfisher said.
Screwfix total sales increased by 17%, or 10% on a like-for-like basis, to GBP1.52 billion for the year, driven by strong growth from the specialist trade desks exclusive to plumbers and electricians, digital growth, and the continued roll out of new outlets.
In France, Kingfisher said it is "encouraged" by the market backdrop although it is volatile, whilst in Poland the market remains supportive.
Over the year, Kingfisher France sales decreased by 3.0% to GBP4.39 billion, down 3.5% on a like-for-like basis, reflecting continuing weaker performance versus the market and the impact of business disruption caused by the company's transformation programme.
French home improvement retailer Castorama saw total sales decline by 1.9%, with like-for-likes down 2.4%, to GBP2.41 billion. Brico Depot total sales declined by 4.2%, down 4.8% like-for-like, to GBP1.98 billion.
Overall retail profit in France decreased by 15% to GBP320 million, reflecting the weaker sales and broadly flat gross margins after price investment, partly offset by "continued focus" on cost control.
Sales in Poland during the year were up 6.3%, or 5.3% higher on a like-for-like basis, at GBP1.38 billion, benefiting from a supportive market and strong performance from new ranges.
Kingfisher said its current financial year is "another big year of implementation", and it is aware of the challenges ahead. The company said it remains confident in its ability to deliver its transaction plan benefits for the year ending in 2021.
The retailer is in the second year of its five-year restructuring programme, known as the 'ONE Kingfisher' transformation plan, which aims to improve profit and sales by forming a unified business from multiple brands which will share IT systems and buying infrastructure, while closing underperforming stores.
The goal is to achieve a GBP500 million annual profit uplift by the end of the fifth year, on top of profit generated from its normal business, with one-time transformation costs to total GBP800 million over the five years.
For its recently commenced financial year, the combination of Goods Not For Resale savings and net savings from operational efficiencies are expected to be around GBP30 million. The company said it delivered GBP28 million in savings during 2017, exceeding its target of GBP20 million.
"Our performance this year has been mixed, however, with solid growth at Screwfix and Poland, offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance," said Chief Executive Veronique Laury.
"We are acting on the causes of this disruption, however next year will be another big year in our transformation plan," Laury added.
Kingfisher (KGF)