Kingfisher expects further drop in annual net profit

The owner of the Castorama, Brico Dépôt, B&Q and Screwfix brands - 1.572 stores mainly located in the United Kingdom, Ireland, France and Poland - published net profit of 471 million pounds for its financial year ended on Tuesday, against 843 million in the previous year.

Its annual turnover is almost stable (-0,9%), at 13,05 billion pounds.

The group also indicates that it has reviewed "all its stores", an operation which resulted in write-downs of up to 139 million pounds, "mainly in the United Kingdom and France".

"In all the countries where we are present, our sales have proven to be resilient, both on the + do-it-yourself + market and on the + do-it-yourself + (professional) market, with an increase in turnover of 15,6% on a comparable surface compared to the level before the pandemic", puts forward Thierry Garnier, general manager of the group.

If the Covid-19 epidemic and the various confinements had boosted activity for two years thanks to the renewed importance of the home, DIY and gardening, the situation is no longer the same.

For 2023, Mr. Garnier points to "uncertainties about sales and cost increases, which mean that there is a drop in profit for analysts in their market simulations".

During a conference call with journalists, he cited in particular "the impact on (the) sales" of the group "of the energy crisis, possibly of the slowdown in the economy, and of certain cost lines which will be on the rise in 2023 as will salary costs taking into account the salary increases (...) granted". "We also continue to invest in the development of (the sign) Screwfix in France," he said.

Kingfisher thus takes on board an "analyst consensus" which expects adjusted pre-tax income of 633 million pounds for the current year, against 758 million in the previous one.

New store openings

However, the group says it is "well positioned to navigate" during its 2023/24 financial year.

In the medium term, Kingfisher indicates that its "priorities focus on growth, cash generation and higher returns for (its) shareholders". In particular, it expects free cash flow generation “between 400 and 500 million pounds in 2024/25, then more than 500 million each year from the 2025/26 financial year”.

On the store side, Kingfisher reports that a "record number" of 82 Screwfix stores - a brand dedicated to professionals - opened last year in the United Kingdom and Ireland, and that "up to 60 new stores are planned in 2023 / 24".

In France, where 5 Screwfix stores have recently opened, "we are planning up to 25 new openings this year", detailed Mr. Garnier.

In terms of the types of products sold, he reported "very good sales" for "insulation, products to reduce energy costs or save water".

The group also highlights the 146% increase in its online sales over the past three years. He wants to reach "eventually" 25% of sales made online, against 16,5% currently.

Regarding the proposed purchasing alliance between Kingfisher France and the French distributor Mr Bricolage, announced on Tuesday morning, Mr. Garnier refuted any idea of ​​​​reconciliation or merger, in allusion to their aborted marriage in 2015. "There is no nothing on the agenda on this point, we are focused in this joint venture on the purchase”, he assured.

"It makes sense to work together, Mr. Bricolage is a very big player on the French market, its store formats are very marginally competitive with ours," said the CEO.