Kingfisher Reports Results for First Half of Fiscal 2024

Kingfisher, the renowned home-improvement retailer, recently released its financial results for the first half of fiscal 2024. Let's take a closer look at the key highlights:

Sales Performance

During this period, Kingfisher recorded sales of 6.88 billion pounds ($8.52 billion). While this figure reflects a slight decline from GBP6.81 billion in the first half of fiscal 2022, it exceeded the consensus forecast of GBP6.86 billion provided by Visible Alpha. Analyzing the data on a like-for-like basis, sales experienced a 2.2% decrease, slightly better than the anticipated 2.6% drop according to the company-collected average.

Pretax Profit Decrease

The FTSE 100-listed company's pretax profit for the period ending on July 31 declined to GBP317 million, compared to the previous year's figure of GBP447 million. This result fell short of market expectations, which projected a pretax profit of GBP355.8 million based on Visible Alpha's consensus data. On an adjusted basis, pretax profit stood at GBP336 million, a decrease from the previous year's GBP472 million and below the company's compiled consensus of GBP359 million.

These financial results offer valuable insights into Kingfisher's performance during the first half of fiscal 2024.

PERFORMANCE IN KEY MARKETS

Lower gross profit in France and Poland, along with additional operating costs in the U.K. and Ireland due to higher pay and energy rates, have negatively impacted trading, according to Interactive Investor Head of Markets Richard Hunter. Kingfisher's half-year results were particularly affected by poor performance in Poland, with a decline of 11% in like-for-like sales. Meanwhile, consumer confidence in France is at a ten-year low.

FREE CASH FLOW

Despite the disappointing results, Kingfisher is maintaining its expectation of generating over GBP500 million in free cash flow for the full fiscal year.

SHAREHOLDER RETURNS

In line with AJ Bell Investment Director Russ Mould's suggestion, Kingfisher has initiated a GBP300-million buyback program. This move demonstrates the company's confidence in the long-term growth potential of the home improvement industry. RBC Capital Markets analysts Richard Chamberlain and Manjari Dhar highlight the possibility of home improvement trends being more resilient than anticipated by the market. Kingfisher has also announced a stable dividend of 3.8 pence.

Outlook for the Company

The company's full fiscal-year outlook for adjusted pretax profit has been revised due to the mostly weaker-than-expected results. The previous estimate of GBP634 million has been reduced to GBP590 million.