Kingfisher shares rise despite slowing sales in France

The company reported that its adjusted pre-tax profit fell by half a percentage point to £334m. Kingfisher also saw its overall sales decline by 1.4%.

“Management boosted its low pre-tax profit by £20m, largely due to the one-off business rate refund at B&Q,” Matthew Donen, senior equity analyst at Morningstar, said in a note .

“We forecast full-year pre-tax profit of £516m, in line with management’s updated guidance of £510m to £550m.

“Free cash flow increased by 22% to £421m, benefiting from reduced inventories and reduced capital expenditure. Free cash flow guidance for the year has been raised to £410m from £350m to £410m.”

Donen also said the firm’s management team has done well, although Morningstar will maintain the company’s fair value estimate at this stage.

“Management has done a commendable job of keeping costs under control despite a 2% decline in organic sales in the first half of the year (including a positive 0.6% impact from more trading days). group sales were down 7% and 3%, respectively,” he says.

“With much pessimism entering the share price at the start of the year, we believe the stock is now reasonably valued at our estimated fair value of 290p, which we maintain.”

Kingfisher also reported strong results from its e-commerce offering, with sales penetration reaching 18.3% up from 16.8% in the first half of 23/24.

However, sales in France fell by 7.2%, which offset a margin expansion in both the UK and Poland.

Kingfisher chief executive Thierry Garnier said in a statement that the transactions for the first half of 2024 were in line with the company’s expectations.

“This was supported by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends across our core product categories,” he said.

“As expected, demand for ‘big-ticket’ categories remained weak, in line with the broader market, while seasonal category sales trends have improved since early July.

“In this context, we have maintained a strong focus on efficient cost and inventory management.”

The group added that it is strongly positioned for growth in 2025 due to “structural costs taken out of the group” as well as Kingfisher’s multiple growth paths over the medium term.