British Kingfisher has taken a serious beating on the London stock exchange, dropping 6.5 percent. It has been the largest drop since 2009 and is the result of a profit drop in the past quarter in France. Adding to the misery is that Kingfisher in Great Britain has largely failed to live up to analysts’ expectations.
Huge problems in France
The good news was that the quarterly profit on group level rose 5.8 % to 271 million pounds (325 million euro). The total turnover was 2.921 billion pounds (3.5 billion euro), which meant an 8 % increase. Considering like-for-like exchange rates, the impressive numbers were not as impressive: +1.7 % profit and +4.6 % turnover (and +1.4 % on a like-for-like basis).
Kingfisher is struggling in France, which is a serious problem as Castorama and Brico Depot still represent 50 % of the group profit. French consumer trust “is still weak, with no obvious signs of an imminent improvement”, says CEO Ian Cheshire. “Whilst we have delivered sales growth in each of our geographies our markets remain challenging, especially in France.”
The French quarterly turnover (on a like-for-like basis) remained level and profit also remained stable at nearly 168 million euro. If exchange rate fluctuations are excluded, profit dropped 5.6 %. In order to keep sales numbers up to par, Castorama and Brico Depot had to resort to discounts, impacting the profit margin.
British turnover below expectations
Kingfisher, Europe’s largest DIY group, is not in the clear in its home territory either. The British like-for-like turnover grew only 0.4 %. B&Q, which had a management reshuffle in October, did manage a 7.9 % increase profit-wise (to 75 million euro), but analysts had expected a 1.2 % turnover increase, triple of what was actually achieved.
Screwfix, focusing on professionals, had an 11 % like-for-like turnover growth, thanks to “encouraging early signs in the smaller tradesman market”. Kingfisher believes the British housing market has passed its lowest point, now that the government has announced a plan to support people who purchase a house.
(Translated by Gary Peeters)