3rd Quarter Results

RNS Number : 1242U

Kingfisher PLC

28 November 2013

 



Kingfisher reports Q3 retail profit of £271 million, up 1.7% in constant currencies, and sales of £2.9 billion, up 1.4% LFL

Group Financial Summary (13 weeks ended 2 November 2013)

	Sales	% Total Change	% Total Change	% LFL Change	Retail Profit	% Total Change	% Total Change
	2013/14 £m	Reported	Constant currency	Constant currency	2013/14   £m	Reported	Constant currency
France	1,173	+8.6%	+1.9%	Flat	140	0.2%	(5.6)%
UK & Ireland	1,095	+3.8%	+3.7%	+2.0%	63	+7.9%(1)	+8.3%(1)
Other International	653	+14.8%	+11.6%	+2.9%	68	+17.1%	+13.6%
Total Group	2,921	+8.0%	+4.6%	+1.4%	271	+5.8%(1)	+1.7%(1)

Note: Joint Venture (Koçtaş) and Associate (Hornbach) sales are not consolidated. Retail profit is operating profit stated before central costs, exceptional items, amortisation of acquisition intangibles and the Group's share of interest and tax of JVs and Associates. China, Romania, Russia and Turkey report for the quarter to 30 September 2013. Percentage movements based on unrounded figures.

⁽¹⁾2012/13 comparatives restated by £1m to reflect reclassification of pension administrative expenses from finance costs to retail profit, as per the amended IAS 19.

Highlights in constant currencies:

·       French total sales up 1.9% (flat LFL) in an on-going weak market. Retail profits impacted by a slightly lower gross margin percentage in a more price promotional environment

·       UK sales and profits both up driven by a very strong performance from Screwfix which opened its 300^th store in the quarter

·       Sales growth in each of our Other International markets. Profit growth reflects an improved gross margin percentage in Poland and a higher contribution from Hornbach in Germany

·          Progress continued with our 'Creating the Leader' programme of self-help initiatives

Ian Cheshire, Group Chief Executive, said:

"Following a mixed first half, we have seen growth in both sales and profits in our third quarter, one of our most significant trading periods in the year. Whilst we have delivered sales growth in each of our geographies our markets remain challenging, especially in France where consumer confidence is still weak and with no obvious signs of an imminent improvement.  

"Looking ahead, we remain ready to capitalise on any improvement in conditions or opportunities as they arise. In the meantime, our self-help plan, 'Creating the Leader', continues to progress well so I remain enthusiastic about our longer-term prospects."

ENQUIRIES

Ian Harding, Group Communications Director	020 7644 1029
Sarah Levy, Director of Investor Relations	020 7644 1032
Nigel Cope, Head of Media Relations	020 7644 1030
Matt Duffy, Investor Relations Manager	020 7644 1082
Brunswick	020 7404 5959

Further copies of this announcement can be downloaded from www.kingfisher.com or viewed on the Kingfisher IR iPad App available for free at the Apple App store. We can also be followed on twitter @kingfisherplc.  Kingfisher American Depository Receipts are traded in the US on the OTCQX platform:(OTCQX: KGFHY) http://www.otcmarkets.com/stock/KGFHY/quote

COMPANY PROFILE

Kingfisher plc is Europe's leading home improvement retail group and the third largest in the world, with 1,082 stores in nine countries in Europe and Asia. Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also operates the Koçtaş brand, a 50% joint venture in Turkey with the Koç Group, and has a 21% interest in Hornbach, Germany's leading large format DIY retailer.

FINANCIAL POSITION
No material events or transactions impacting the Group's financial position have taken place since the previously announced unaudited balance sheet as at 3 August 2013.

Q3 TRADING REVIEW BY MAJOR GEOGRAPHY

FRANCE

Sales £m	2013/14	2012/13	% Reported Change	% Constant Currency Change	% LFL Change
France	1,173	1,081	+8.6%	+1.9%	Flat

Retail profit £m	2013/14	2012/13	% Reported Change	% Constant Currency Change
France	140	140	+0.2%	(5.6)%

France includes Castorama and Brico Dépôt.

All trading commentary below is in constant currencies

Kingfisher France

Kingfisher France total sales grew by 1.9% (flat LFL) to £1,173 million in soft markets impacted by weak consumer confidence. Across the two businesses, one net new store was opened and two were revamped, adding around 3% new space.

Gross margins were down 10 basis points, with on-going self-help initiatives offset by higher price promotional activity across both businesses. Despite continued focus on cost control, overall costs were higher year on year resulting in retail profit of £140 million, down 5.6% year on year.

Castorama

Castorama total sales grew by 4.2% (+2.3% LFL) to £655 million. According to Banque de France data, sales from the home improvement market ⁽¹⁾ were up 0.2% in the quarter (Q3 2012/13: down 2.5%). Castorama benefited from its innovative 'Do-it-Smart' approach aimed at making home improvement projects easier for customers. Sales of indoor and outdoor seasonal products were up around 2% with sales of new indoor paint and storage ranges performing particularly well.

Brico Dépôt total sales declined by 0.9% (-2.6% LFL) to £518 million. In an on-going weak trade market Brico Dépôt benefited from new ranges introduced last year (e.g. kitchen and indoor lighting ranges) and more 'arrivages' (rolling programme of one-off special buys).

⁽¹⁾ Banque de France data includes relocated and extended stores 

UK & IRELAND

Sales £m	2013/14	2012/13	% Reported Change	% Constant Currency Change	% LFL Change
UK & Ireland	1,095	1,055	+3.8%	+3.7%	+2.0%

Retail profit £m	2013/14	2012/13	% Reported Change	% Constant Currency Change
UK & Ireland	63	58(1)	+7.9%	+8.3%

UK & Ireland includes B&Q in the UK & Ireland and Screwfix.

⁽¹⁾2012/13 comparatives restated by £1m to reflect reclassification of pension administrative expenses from finance costs to retail profit, as per the amended IAS 19.

All trading commentary below is in constant currencies

Kingfisher UK & Ireland

Total sales were up 3.7% (+2.0% LFL) to £1,095 million supported by a strong performance from Screwfix and encouraging early signs in the smaller tradesman market, offset by a slow underlying retail market.

Kingfisher UK & Ireland delivered retail profit growth of 8.3% to £63 million. Gross margins were down 30 basis points with the benefits from on-going self-help initiatives offset by investment in pricing across both businesses. A strong focus on operating cost efficiencies continued.

B&Q UK & Ireland's total sales were up 0.8% (+0.4% LFL) to £915 million. Sales of outdoor seasonal products were down around 8% following strong sales in Q2 (+17%). Sales of indoor products were up around 3% with new flooring and light bulb ranges performing particularly well. TradePoint continues to grow with sales up 7% compared to Q3 last year.

Screwfix grew total sales by 21.1% (+11.1% LFL) to £180 million benefiting from a strong promotional programme, extended opening hours, the continued roll out of new outlets and the successful introduction of a mobile 'click, pay & collect' offer last year. Nine outlets were opened during Q3, taking the total to 303.

OTHER INTERNATIONAL           

Sales £m	2013/14	2012/13	% Reported Change	% Constant Currency Change	% LFL Change
Other International	653	569	+14.8%	+11.6%	+2.9%

Retail profit £m	2013/14	2012/13	% Reported Change	% Constant Currency Change
Other International	68	58	+17.1%	+13.6%

Other International includes Poland, China, Romania, Russia, Spain, Turkey JV and Hornbach in Germany. Joint Venture (Koçtaş) and Associate (Hornbach) sales are not consolidated. China, Romania, Russia and Turkey report for the quarter to 30 September 2013.

All trading commentary below is in constant currencies

Other International total sales increased by 11.6% (+2.9% LFL) to £653 million driven by the inclusion of the acquisition in Romania, LFL growth in Russia and China and new store openings. Retail profit increased 13.6% to £68 million driven by Poland and a higher contribution from Hornbach ⁽¹⁾. During Q3, one net new store was opened in Spain. Including the acquisition of stores in Romania in H1, around 15% net new space was added compared to Q3 last year.

Sales in Poland were up 2.0% (-0.1% LFL) to £306 million reflecting new store openings. Gross margins were up 110 basis points benefiting from self-help initiatives. Productivity initiatives more than offset cost inflation resulting in an 18.2% increase in retail profit to £42 million.

In Russia sales were up 4.2% (+4.2% LFL) to £128 million in a slowing consumer environment. Retail profit was £9 million (2012/13: £9 million reported retail profit). In Turkey Kingfisher's 50% JV, Koçtaş, grew sales by 9.6% (+6.5% LFL) to £88 million benefiting from new store openings. Retail profit contribution was up 11.6% to £4 million. 

Brico Dépôt Spain grew sales by 14.9% (-1.4% LFL) to £72 million reflecting new store openings offset by a challenging market. Retail profit was breakeven (2012/13: £1 million reported retail profit). Hornbach, in which Kingfisher has a 21% economic interest, contributed £16 million to retail profit, up 12.2% compared to Q3 last year reflecting better weather conditions in their Q2 ⁽¹⁾. Bricostore Romania, in its first full quarter of trading since acquisition, contributed sales of £35 million and retail profit of £1 million.

B&Q China sales grew by 12.5% (+13.2% LFL) to £112 million driven by additional promotional activity and an improving domestic property market ⁽²⁾. Retail loss was £4 million (2012/13: £3 million reported retail loss) including £1 million relating to the new format store trial which opened in March this year. Industrial action in some of our Decoration Centres disrupted our trading during the key October 'Golden Week' holidays impacting sales in Q3 and into Q4. 

⁽¹⁾ Due to non-coterminous year ends, Hornbach's Q2 (June-August 2013) is accounted for in Kingfisher's Q3

⁽²⁾ New property transaction sales +12.5% YOY 12 months to September for 17 cities in which B&Q China operates according to the China Real Estate Exchange

SUMMARY Q3 2013/14 DATA BY GEOGRAPHY

Data tables for Q1, Q2 and H1 and Q3 are available for download in excel format at http://www.kingfisher.com/index.asp?pageid=59

Note that China, Romania, Russia and Turkey report for the quarter to 30 September 2013.

As at 2 November 2013		Store numbers	Selling space (000s m2)	Employees (FTE)
Castorama		105	1,113	11,530
Brico Dépôt		107	596	6,957
France		212	1,709	18,487
B&Q UK & Ireland		359	2,567	21,304
Screwfix		303	21	4,124
UK & Ireland		662	2,588	25,428
Poland		72	529	10,366
China		39	319	4,014
Romania		15	151	1,286
Russia		19	170	2,555
Spain		24	142	1,243
Turkey JV		39	205	3,375
Other International		208	1,516	22,839
Total Group		1,082	5,813	66,754
	Sales (1)	% Total Change	% Total Change		% LFL Change
	£m 2013/14	Reported	Constant currency		Constant currency
Castorama	655	+11.1%	+4.2%		+2.3%
Brico Dépôt	518	+5.5%	(0.9)%		(2.6)%
France	1,173	+8.6%	+1.9%		Flat
B&Q UK & Ireland	915	+0.9%	+0.8%		+0.4%
Screwfix	180	+21.1%	+21.1%		+11.1%
UK & Ireland	1,095	+3.8%	+3.7%		+2.0%
Poland	306	+6.0%	+2.0%		(0.1)%
China	112	+17.4%	+12.5%		+13.2%
Romania	35	n/a (2)	n/a (2)		n/a (2)
Russia	128	+1.7%	+4.2%		+4.2%
Spain	72	+22.6%	+14.9%		(1.4)%
Other International	653	+14.8%	+11.6%		+2.9%
Total Group	2,921	+8.0%	+4.6%		+1.4%

⁽¹⁾ Joint Venture (Koçtaş JV) and Associate (Hornbach) sales are not consolidated. ⁽²⁾ Acquisition of 15 stores in Romania completed during Q2 2013/14 therefore not applicable

	Retail Profit	% Total Change	% Total Change	Operating Margin	Operating Margin
	£m 2013/14	Reported	Constant currency	% 2013/14	% 2012/13
France	140	0.2%	(5.6)%	12.0%	13.0%
UK & Ireland (1)	63	+7.9%	+8.3%	5.8%	5.5%
Poland	42	+23.0%	+18.2%	13.7%	11.8%
China	(4)	(43.2)%	(37.2)%	(3.4)%	(2.8)%
Romania	1	n/a (2)	n/a (2)	4.5%	n/a (2)
Russia	9	(5.8)%	(4.9)%	6.8%	7.3%
Spain	-	n/a	n/a	(0.2)%	1.2%
Turkey JV	4	+3.3%	+11.6%	n/a(3)	n/a(3)
Hornbach	16	+18.9%	+12.2%	n/a(3)	n/a(3)
Other International	68	+17.1%	+13.6%	10.4%	10.2%
Total Group(1)	271	+5.8%	+1.7%	9.3%	9.5%

⁽¹⁾ 2012/13 comparatives restated by £1m to reflect reclassification of pension administrative expenses from finance costs to retail profit, as per the amended IAS 19

⁽²⁾ Acquisition of 15 stores in Romania completed during Q2 2013/14 therefore not applicable

⁽³⁾ Joint Venture (Koçtaş JV) and Associate (Hornbach) sales are not consolidated therefore not applicable

Year to date average FX rates vs £ Sterling	2013/14	2012/13
Euro	1.17	1.24
Polish Zloty	4.92	5.16
Chinese Renminbi	9.52	10.02
Romanian Leu	5.21	n/a (1)
Russian Rouble	49.29	49.10
Turkish Lira	2.93	2.85

⁽¹⁾ Acquisition of 15 stores in Romania completed during Q2 2013/14 therefore not applicable

YEAR TO DATE BY MAJOR GEOGRAPHY - 39 weeks ended 2 November 2013

	Sales	% Total Change	% Total Change	% LFL Change	Retail Profit	% Total Change	% Total Change
	2013/14 £m	Reported	Constant currency	Constant currency	2013/14   £m	Reported	Constant currency
France	3,479	+5.9%	+0.4%	(1.6)%	331	Flat	(5.2)%
UK & Ireland	3,365	+1.4%	+1.3%	(0.1)%	204	+1.3%(1)	+1.5%(1)
Other International	1,793	+13.7%	+9.5%	+2.9%	130	+4.0%	+0.1%
Total Group	8,637	+5.6%	+2.5%	(0.1)%	665	+1.1%(1)	(2.2)%(1)

Note: Joint Venture (Koçtaş) and Associate (Hornbach) sales are not consolidated. Retail profit is operating profit stated before central costs, exceptional items, amortisation of acquisition intangibles and the Group's share of interest and tax of JVs and Associates. Percentage movements based on unrounded figures.

⁽¹⁾2012/13 comparatives restated by £3m to reflect reclassification of pension administrative expenses from finance costs to retail profit, as per the amended IAS 19

CREATING THE LEADER

Progress continued with the next phase of our medium term development under the following eight steps:

EASIER

1.   Making it easier for our customers to improve their home

2.   Giving our customers more ways to shop

COMMON

3.   Building innovative common brands

4.   Driving efficiency and effectiveness everywhere

EXPAND

5.   Growing our presence in existing markets

6.   Expanding in new and developing markets

ONE TEAM

7.   Developing leaders and connecting people

8.   Sustainability: becoming 'Net Positive'

Further details on progress will be given with the preliminary results for the year ended 1 February 2014, on 25 March 2014.

Financial reporting calendar

Following a review of the financial reporting calendar Kingfisher plc has concluded that the historic practice of making six announcements a year, regardless of the significance of individual quarters, is no longer appropriate. Following this review the Q4 sales update in February (typically the least significant quarter of the year and very close to the Preliminary Results update in March) will cease. At Q1 (also a less significant quarter and too early into the key outdoor spring/summer season) the results announcement will continue but the conference call will cease. We will continue to update on the lease adjusted net debt position twice a year but will cease providing just the cash element of this at each quarter. Going forward the full annual schedule of updates will be:

	Detail	Communication
Q1	Sales and retail profit	Announcement; no conference call
Q2	'Pre-close' sales update	Announcement; no conference call
Interims	Full announcement	Announcement; presentation/webcast
Q3	Sales and retail profit	Announcement; conference call
Prelims	Full announcement	Announcement; presentation/webcast

Forward-looking statements

This press release contains certain forward-looking statements, which should be considered, amongst other statutory provisions, in light of the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements, including, without limitation, statements regarding the Company's intentions, beliefs or current expectations concerning, amongst other things, the Company's results of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "may", "will", "should", "could", "would", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Such statements involve and are subject to risks, assumptions and uncertainties that could cause actual events, results or performance to differ materially from those expressed or implied by such forward-looking statements because they relate to future events. We urge you to read our annual report and other company reports, including the risk factors contained therein, for a more detailed discussion of the factors that could affect our future results, performance or achievements and the industry in which we operate. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on any forward-looking statement. All forward-looking statements in this press release are based on information known to the Company as of the date of this press release and speak only as of the date of this press release. Other than in accordance with its legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), the Company undertakes no obligation to update, revise or correct any forward-looking statement publicly, whether as a result of new information, future events or otherwise. No statement in this press release should be construed as a profit forecast or relied upon as a guide to future performance.

Please refer to page 116 of the Annual Report and Accounts 2012/13 for further details and definitions concerning forward-looking statements and how they should be considered.

 

END

 

 

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