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Kingfisher Plc on track to deliver strategic milestones

Kingfisher Plc (LON:KFG), today announced half year results for the 6 months ended 31 June (year 3 of our 5 year transformation)

 

Financial highlights

 

% Total

Change

 

% Total Change

 

% LFL* Change

2018/19

 

2017/18

 

Reported

Constant currency*

Constant currency

Sales*

£6,080m

£6,008m

+1.2%

+0.6%

(1.1)%

Gross margin*

36.4%

36.8%

(40)bps

(40)bps

Retail profit*

£404m

£467m

(13.5)%

(14.3)%

Underlying pre-tax profit*

£375m

£440m

(14.8)%

Adjusted pre-tax profit*

£323m

£394m

(18.0)%

Underlying basic EPS*

12.8p

14.5p

(11.7)%

Adjusted basic EPS*

11.0p

13.0p

(15.4)%

Half year dividend

3.33p

3.33p

Net cash*

£99m

£650m

n/a

At halfway point of 5 year transformation plan – continuing to deliver on strategic milestones

· Unified & unique offer: unified 42% of product (cost of goods sold). H1 sales (+2.2%) and gross margin continued to grow

· Digital: Rollout of new unified IT platform now underway in all remaining operating companies, digital sales* now 6% of Group (5% last year)

· Operational efficiency: £14m of benefits in H1, (£72m to date), on track for £30m in FY18/19

H1 18/19 Group results:

· Solid performances in the UK and Poland offset by significant weakness in France*

· H1 Group gross margin -40bps impacted by logistics & stock inefficiencies mainly in France; Q2 gross margin ahead of Q1

· Balance sheet remains strong:

o Working capital inflow of £77m with mitigation stock reducing by c.£90m

o Returned £250m of cash to shareholders (£160m via ordinary dividend; £90m via share buyback)

FY 18/19 and beyond:

· For the third year in a row, on track to deliver strategic milestones

· Actions to support H2 performance in France underway

· Expect to grow Group gross margin after clearance in FY18/19

· Remain committed to delivering ONE Kingfisher transformation benefits

Statutory reporting

2018/19

 

2017/18

% Change

Statutory pre-tax profit

£281m

£402m

(30.1)%

Statutory post-tax profit

£208m

£295m

(29.5)%

Basic EPS

9.7p

13.3p

(27.1)%

 

*Throughout this release ‘*’ indicates first instance of a term defined and explained in the Glossary (Section 5). Not all of the figures and ratios used are readily available from the unaudited half year results included in part 2 of the announcement. These non-GAAP measures (also known as alternative performance measures), including constant currency and like-for-like sales growth, underlying and adjusted profit measures, management believes are both useful and necessary to better understand the Group’s results. Where required, a reconciliation to statutory amounts is set out in the Financial Review (Section 4).

 

Kingfisher Plc, Véronique Laury, Chief Executive Officer, said:

“The extent and pace of change in the retail sector is profound. We saw these changes and acted early. We’re now halfway through our ONE Kingfisher transformation and we are well on our way to becoming a truly customer led, digital, and efficient business.

“Transformation on this scale is tough, and there are challenges that we’re working through. There is still much to do to improve our performance in France and to remove inefficiencies within the business as we continue to transform at pace. I am confident that we have the right plan and the opportunity for Kingfisher is significant.

“Our H1 results reflect a solid performance in the UK and Poland whilst France remains difficult. Looking to the full year we remain on track to deliver our strategic milestones for the third year in a row and have put actions in place to support our performance. The outlook for our main markets continues to be mixed.

“We firmly believe in the transformation plan benefits and maintain our ambition. The environment is making our task more difficult than expected and we will always take the right decisions for the company in the long-term.”