Financial News

  • 25 March 2014, 19:06

B&Q Owner To Reward Investors As Profits Rise

The owner of the B&Q DIY chain and Screwfix brand has announced its first return of cash to investors in its 32-year history.

Kingfisher confirmed group pre-tax profits of £759m - a rise of 9.8% on its previous year - and said it would return £200m to shareholders this year and more cash over following years but the details were yet to be finalised.

The news helped its share price climb more than 7% in morning trading on the FTSE 100 to its highest level this century.

Like for like sales in the UK and Ireland were up 1.1% over the 12 months and Kingfisher, which is Europe's biggest home improvement retailer, said it expected consumer spending to improve as Europe's economies return to growth.

The performance was a big improvement on 2012/13 when a soggy summer combined with a cold winter to hit profits.

The weather boosted sales in the fourth quarter at B&Q in the UK, with sales of fence panels rising more than 100% after the Autumn storms.

Flooding in the same period saw B&Q sell 750 times more sandbags than usual while water pump sales at trade supplier Screwfix leapt 143% in January alone.

Kingfisher said that after a tough first quarter, trading conditions for the group got better through the year, with the exception of a persistent weak economic backdrop in France, its most profitable market.

It offset weak demand in many countries through a scheme designed to improve profitability.

Measures included buying more goods centrally and directly from places like China.

Kingfisher also confirmed it was searching for a local strategic partner for its loss-making B&Q China business.

B&Q China, which trades from 39 stores, made a loss of £6m in 2013-14.

Chief executive Ian Cheshire said: "We believe there is a long-term home improvement market in China which is going to be very big", adding there had already been some expressions of interest.

He planned expansion of the Screwfix business in Germany and said the future of its Russian operations, which currently produce 5% of group sales, would be influenced by further economic sanctions, trade and currency issues.