Price pressures, supply fears clip Kingfisher’s wings By Reuters
By James Davey
LONDON (Reuters) -British home improvement retailer Kingfisher (LON:) reported a 62% jump in first-half profit as it rode a do-it-yourself (DIY) boom during the pandemic but concerns over inflation and product availability pushed its shares down almost 5%.
The group, which owns B&Q and Screwfix in the United Kingdom and Castorama and Brico Depot in France and other markets, said it was seeing higher than normal cost price inflation arising from certain raw materials and freight costs.
“We anticipate inflationary pressures will persist through H2 because higher-cost inventory is sold through, but as we demonstrated in H1, we are committed to keeping our strong competitive pricing position,” CEO Thierry garnier said to reporters Tuesday.
According to Garnier, the availability of products for the company is higher than it was in January despite disruptions in supply chains. But stocks of timber and cement as well as some products that have semiconductor chips were below the target level.
Kingfisher’s shares fell 4.9% to 0950 GMT. The loss of 2021 gains was reduced by 30% due to concern about inflationary and supply outlook.
On Tuesday, SIG, a British supplier of building materials warned that the industry will face a shortage this year.
Kingfisher posted an adjusted pretax profit in excess of guidance at 669 million pounds ($914.3million) for six months ending July 31, which beats the previous 415 million pounds.
Many have rediscovered or discovered DIY since the COVID-19 crisis, when they had to spend less time at work.
Kingfisher saw its sales rise 22.2% to 7.1 million pounds on a constant currency, while like-for-like sales increased 22.8%.
While the company said that it made a great start to its second quarter, thanks to strong demand from all markets and like-for–like sales up 22.2%, in third quarter ended Sept. 18, like-for–like sales dropped 0.6% due to high numbers last year.
Kingfisher has raised its outlook for the second half, predicting like-for-like sales falling 7% to 3.3%, compared to previous guidance that was down 15 to 5%.
The adjusted pretax profit for 2021-22 is 910-995 million pounds. This compares to 786 million for 2020-21.
It also announced a 38% increase in the interim dividend to 3.8 pence and plans to give 300 million pounds back as part of an offer to buy back shares.
Garnier stated that he has addressed Kingfisher’s issues in the past with “fixes”, now completed in Poland and the UK, and good results in France as a result of a strategy for repair ranges.
It plans to increase Screwfix’s growth in Ireland and the UK, with over 1000 stores being targeted from 900. In France, it will also open its first Screwfix store in 2022. Castorama Poland will also be expanded.
($1 = 0.7317 pounds)
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