Kingfisher recovery plan starts well

Kingfisher, Europe’s largest home improvement retailer, beat forecasts for first-half profit thanks to strong demand in Britain and Poland and said its five-year plan to transform the business had got off to a good start.

The company, which runs the B&Q and Screwfix chains in Britain and Ireland and Castorama and Brico Depot in France and other countries, said the UK’s decision to leave the EU had not hurt demand, though it remains cautious on the outlook for French operations.

Chief executive Veronique Laury outlined the transformation plan in January, looking to boost Kingfisher’s profit by £500m (€580m) a year from 2021.

The plan involves unifying the product offering across the group to improve e-commerce capabilities and efficiency, though implementation costs of £800m over the five years raised a few eyebrows among investors.

The company also intends to return £600m to shareholders over the next three years through share buybacks. It has so far returned £160m.

Kingfisher made under-lying pre-tax profits of £436m in the six months to the end of July, up 13.5% and ahead of a consensus analysts’ forecast of £430m.

Total sales rose 2.7% to £5.75bn on a constant currency basis.

“Performance has been driven by Poland and the UK, especially Screwfix, and a stable profit performance in France,” said Ms Laury.

“In France, we remain cautious on the short-term outlook,” she added, citing weak market conditions in the country.