Kingfisher plc, one of Europe's main DIY chains, announced excellent half year results yesterday. In the February-July period, operational profits rose 18% to £473 million (almost 550 million euro), while global sales went up 3.8% to £5.662 billion (€6.6 billion). The figures do not include Hornbach and Koçtaş, two companies in which Kingfisher is an important shareholder.
Worldwide +20% profit growth spoiled by B&Q figures
The group posted excellent or improving results around the world, but the huge majority of its profits and sales still come from the UK, Ireland and France – Kingfisher's core markets with subsidiaries like B&Q, Screwfix, Castorama and Brico Dépôt. The fastest growing operational profits were achieved by the International branch (+24.7% to £90 million or €104 million), just before Kingfisher France (+23.9% to €233 million), which has now become Kingfisher's biggest branch. The French branch passes the British, whose operational profits grew only 6.1% and stranded at £182 million (€211 million).
The relatively small profit growth in the UK was, much like its sales figure, slowed down by competitor Focus DIY's stock clearance ahead of its closure. B&Q's profit grew 4.5%, while the other brand in Kingfisher's British branch, Screwfix, saw its profit more in line with the French and International branches: the tool and accessory supplier saw its profits go up 25.3% to £17 million (€20 million), profiting from an important sales growth (+7.7%) and improved distribution efficiency.
Excellent results make CEO Cheshire happy
Kingfisher's two main French brands, Castorama and Brico Dépôt, both grew significantly faster than the whole French DIY market (+4.2% and +7.1% compared to +2.8% for the whole market). Brico Dépôt Spain did even better (+11.4%), while Castorama Poland added 6.3% to its sales. Both Brico Dépôt Spain and Castorama Poland also saw significantly higher profits. B&Q China saw both its sales figure and its losses decrease.
“We have delivered very strong profit growth in what are difficult times for all retailers. With around two thirds of our profit coming from outside the UK, these results clearly show the value of geographic spread and the benefits of operating our market leading international businesses in a more unified way”, as CEO Ian Cheshire stated.
68 new stores in the UK, 1 in France, 10 in Eastern Europe
The group also announced its expansion intentions for the second half of 2011, including 68 new stores in the UK. 28 former Focus DIY stores are to open as new B&Q stores, while Screwfix will open 10 larger and 30 smaller stores on the British Isles. The 30 smaller stores (1200 m²) follow the pilot project of 13 smaller stores that opened earlier this year and were deemed very successful.
Kingfisher France would see one new store, while the International branch is opening ten: four in Turkey, four in Poland and two in Russia, adding 17% to the available floor space in Eastern Europe. B&Q China is limiting itself to repositioning – and trying to reach the break-even point. “I am confident we will continue to outperform, benefiting from our well-established programme of self-help initiatives, international scale and breadth, and robust balance sheet”, as CEO Cheshire concluded confidently.