Kingfisher profits fall 75 per cent as Chinese woes takes their toll

By James Thompson
Friday 27 March 2009 01:00

Kingfisher, the global DIY group and owner of B&Q, expects to endure another tough year in the UK home- improvement market, despite grabbing bathroom and kitchen sales from the collapse of the defunct furniture retailer MFI.

City analysts have pencilled in a 6 per cent decline in like-for-like sales at B&Q in the UK this financial year, as shoppers are hit by a continuing fall in house prices, rising unemployment and deteriorating confidence. For the year to 31 January 2009, B&Q like-for-like sales in the UK fell by 6.1 per cent.

Kingfisher, which has operations in eight countries including Poland, Turkey, China and France, posted a 75.4 per cent drop in annual pre-tax profits to £90m, after £230m of exceptional charges related to its troubled operation in China. Kingfisher will slash its capital expenditure by 23 per cent to £300m this financial year.

In the UK, B&Q and its trade business Screwfix delivered total sales of £4.28bn – down by 2.6 per cent – and like-for-like sales 6.5 per cent lower. At B&Q, sales of core DIY and room makeover products fell by just 3 per cent, but garden furniture, kitchen and bathroom ranges struggled.

Euan Sutherland, the chief executive of Kingfisher's UK division, said: "DIY is becoming cool again as people look to save money. They are not paying for people to do it for them." B&Q's retail profit fell £25m to £106m over the year.

The company has also picked up kitchen and bathroom sales from MFI, which collapsed into administration in November, and the disappearance of smaller independent retailers.

Ian Cheshire, Kingfisher's group chief executive, said: "There are a lot of pockets of [market] share being freed up that we will absolutely go after." B&Q UK completed 16 large store revamps over the year, which it now does for less than £1m instead of £2.5m.

He said Kingfisher had considered pulling out of China, but vowed to return the unit to profitability in 2010 with initiatives that include closing one-third of its stores, to leave 41, and rationalising its range of products.

Sales in China fell by 24 per cent to £431m over the year. Group retail sales jumped by 10.8 per cent to £10.03bn.

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