B&Q group builds higher profits

B&Q parent company Kingfisher hailed a near 50 per cent jump in annual profits today amid a strong performance for its UK DIY business.

Kingfisher saw adjusted pre-tax profits leap to £547 million in the year to January 30, compared with £368 million in the previous 12 months.

Profits at the UK and Ireland arm soared 64.5 per cent, benefiting from total sales growth in the year as the home improvement market remained resilient despite the recession.

Kingfisher said its UK division, which also includes Screwfix, saw total sales increase 1.2 per cent to £4.4 billion during the year, with retail profit growing to £217 million.

A brighter spring last year and the trend for customers to "improve not move" helped offset the economic downturn.

B&Q saw same-store sales improve 1.3 per cent as better weather drove demand for outdoor products, while kitchen, bathroom and bedroom sales grew about 7 per cent.

The retailer said improved merchandising, new ranges and competitor withdrawal helped to drive B&Q's market share at a time of weak demand for "big ticket" purchases.

Customers looking to spruce up their homes cheaply offset the lower home moving activity, meaning DIY and decorative products remained "relatively resilient", with a 2 per cent sales fall.

B&Q has driven an improvement in margins by making fewer price cuts, driving through supply chain savings and better sales of high-margin products.

This helped the DIY chain to grow retail profit by 79.4 per cent to £195 million.

The division said it completed a revamp programme for nine large and eight medium-sized stores last year and added around 1 per cent of new space.

It now has 119 large stores and 211 medium outlets in UK and Ireland.

Kingfisher said its other UK business, trade supplier Screwfix, saw sales decline 4.3 per cent to £471 million.

It estimated the trade market declined by 15 per cent last year as recession halted building projects.

The firm has successfully trialled "TradePoint" areas within B&Q stores for professional tradesmen, which have their own separate entrances and dedicated staff.

Kingfisher said national coverage in 118 large B&Q stores is expected by late summer.

"This offer is unique in the UK and is expected to boost Kingfisher's low share in the professional trade market," the firm said.

The company's French division saw profits rise 3.7 per cent to £322 million, while the international division grew 77.8 per cent to £125 million, helped by strong growth in Poland and Turkey and resilient trading in Russia, Spain and Germany.

Its struggling China operation saw losses almost halve amid a turnaround effort.

Group chief executive Ian Cheshire said the business had seen a "strong improvement in performance", with profitability growing across most of the business.

"In generally weak consumer markets, our self-help initiatives underpinned our robust performance, driving a higher gross margin, more cost-efficiency and lower working capital," he said.

Mr Cheshire added: "Looking ahead, we remain cautious on the outlook for consumer demand across Europe.

"However, we are confident that our experienced management team, successful international strategy and buying scale mean we will be able to drive continued growth through our own actions."

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