Kingfisher Plc (LON:KGF) has announced its half year results for the six months ended 31 July 2024 (unaudited).
H1 24/25 highlights
· Overall sales in line with our expectations; market share gains in the UK and Poland
– Total sales -1.4% and LFL -2.4%. Q2 LFL -3.8%
– UK & Ireland (LFL -0.2%) and Poland (LFL -0.2%) both resilient despite weather-impacted seasonal sales; market share gains in all banners
– France sales (LFL -7.2%) broadly in line with the market, reflecting the soft consumer backdrop throughout the period
– Resilient core category sales, supported by repairs, maintenance and existing home renovation activity. Recovery in seasonal sales since early July and weak ‘big-ticket’ sales as expected
· Solid and focused execution against key objectives
– Strong results from our e-commerce marketplace (Group GMV +80.0%) and trade propositions (including TradePoint LFL +7.1%). E-commerce sales penetration now 18.3% (H1 23/24: 16.8%)
– Rapid progress in Castorama France store restructuring and modernisation plan, with works completed or in motion on 13 low-performing stores. Operating costs down 3.0% in France in H1
· Strong management of gross margin, costs and inventory
– Maintaining competitive price indices and disciplined promotional activity in all markets (with gross margin % +40bps); retail price inflation flat YoY
– Fully on track to achieve c.£120m of cost reductions for the full year, weighted towards H1
– Strong management of net inventory, down £134m (4.3%) YoY
· Adjusted PBT down 0.5% to £334m, including c.£25m of one-off business rates refunds at B&Q. Statutory PBT up 2.3% to £324m
· Free cash flow of £421m, supported by phasing of inventory purchases over the year
Outlook and guidance (see Section 1 for further details)
· Current trading: Q3 24/25 LFL sales (to date)(2) -0.3%
· FY 24/25 adjusted PBT: range tightened to c.£510m to £550m(3) (previously c.£490m to £550m)
· FY 24/25 free cash flow: range upgraded to c.£410m to £460m (previously c.£350m to £410m)
· Share buybacks: accelerating pace of current £300m share buyback programme (c.£150m completed to date), now expecting to complete the programme in March 2025
· Strongly positioned for growth in 2025 and beyond: more agile, significant structural cost taken out across the Group, and confidence in multiple profitable growth drivers over the medium term
Thierry Garnier, Chief Executive Officer, said:
“Trading overall in the first half was in line with our expectations. This was underpinned by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends in our core product categories. As expected, demand for ‘big-ticket’ categories has remained weak, in line with the broader market, while seasonal category sales trends have improved since early July. Against this backdrop we maintained a strong focus on effectively managing our costs and inventory.
“Our UK & Ireland banners continued to gain market share, supported by strong e-commerce sales and our progress in addressing trade customer needs. Screwfix delivered positive LFL sales and TradePoint achieved strong LFL sales growth of 7.1%, now representing 22% of B&Q’s sales. Sales in France were broadly in line with the market, reflecting the soft consumer backdrop. Notwithstanding this, we are making rapid progress with our actions to simplify the French organisation and improve the performance and profitability of Castorama France over the medium term. In Poland, we gained market share and our sales trend was supported by an improved consumer environment.
“I am proud of the unwavering focus of our teams in executing against our strategic priorities, with two key highlights. First, our e-commerce sales penetration improved by 1.5 points to 18.3% and B&Q’s e-commerce marketplace reached a 40% share of its online sales. We have also successfully launched Castorama France’s marketplace, with Poland to follow in H2. And second, in trade, we are extending the successes we have seen in the UK to other markets, with trade sales penetration growing strongly in France, Iberia and Poland.
“Reflecting our performance in the first half and our current view of the trading environments in our markets, we have tightened our profit guidance and upgraded our free cash flow guidance for the year. We remain focused on continuing to manage our costs and cash effectively, and driving further market share gains by delivering on our key strategic priorities.
“With positive early signs of a housing market recovery, notably in the UK, Kingfisher is strongly positioned for growth in 2025 and beyond.”
H1 24/25 results summary
· Total sales -1.4% (constant currency) and -1.8% (reported)
· LFL sales -2.4% including a +0.6% leap year impact(4)
– Q2 LFL sales -3.8%, including a -0.5% calendar impact(4)
– Q1 LFL sales -0.9%, including +0.8% calendar impact and +1.1% leap year impact
· Sales by region:
– UK & Ireland* LFL -0.2%: market share gains at B&Q supported by strong e-commerce and TradePoint sales; market share gains and positive LFL at Screwfix
– France* LFL -7.2%: reflecting the broader market. Castorama and Brico Dépôt performed broadly in line with market
– Poland LFL -0.2%: sales trend supported by improved consumer environment and trade customer initiatives; performance ahead of the market
· Sales by category:
– Core* (64% of sales): continued resilience (LFL -1.1%) driven by repair, maintenance and renovation activity on existing homes
– ‘Big-ticket’* (14% of sales): weak sales as expected (LFL -6.8%) reflecting trends across the broader market
– Seasonal* (22% of sales): lower sales (LFL -3.1%) given unfavourable weather conditions across much of April to June
· Retail price inflation flat year-on-year (YoY); negative mix impact on average selling price from lower ‘big-ticket’ sales. Overall volume lower YoY, with stable underlying volume trends in core categories between Q1 and Q2
· Total e-commerce sales* +8.4%, driven by growth in the UK & Ireland
– E-commerce sales penetration* of 18.3% (H1 23/24: 16.8%)
– Continued strong growth of e-commerce marketplace sales at B&Q and Brico Dépôt Iberia*; Group marketplace GMV* +80.0% YoY
· Gross margin % +40 basis points to 36.7% (H1 23/24: 36.3%) reflecting effective management of product costs, retail prices and supplier negotiations, and lower clearance costs and stock provisions
· Retail profit -2.7% in constant currency to £420m (H1 23/24: £433m), reflecting lower profits in France and higher losses from our joint venture in Turkey; partially offset by higher profits in the UK & Ireland and Poland
· Statutory PBT +2.3% to £324m (H1 23/24: £317m), reflecting higher operating profit (including lower adjusting items* YoY)
· Adjusted PBT -0.5% to £334m (H1 23/24: £336m), reflecting lower retail profit, largely offset by lower central costs* and share of JV interest and tax
· Free cash flow of £421m, up £75m (H1 23/24: £346m), reflecting working capital inflow and lower capital expenditure
· Net increase in cash of £124m (H1 23/24: £51m), reflecting higher free cash flow
· Net debt down to £1,952m (31 January 2024: £2,116m), including £2,324m of lease liabilities under IFRS 16 (31 January 2024: £2,367m), reflecting the net increase in cash. Net debt to last twelve months’ EBITDA* of 1.5x (31 January 2024: 1.6x)
· Interim dividend per share declared of 3.80p (FY 23/24 interim dividend: 3.80p)
Footnotes
(1) Net debt includes £2,324m of lease liabilities under IFRS 16 in H1 24/25 (H1 23/24: £2,398m).
(2) ‘Q3 24/25 LFL sales (to date)’ represents the period from 28 July to 14 September 2024 compared against the equivalent period in the prior year (i.e., 30 July to 16 September 2023). The figures are provisional and exclude certain non-cash accounting adjustments relating to revenue recognition.
(3) Guidance assumes current exchange rates.
(4) Leap year impact reflects the impact of an extra day of trading on Thursday 29 February 2024. The estimated impact of the leap year on Q1 24/25 LFL sales was +1.1%, carrying through to an impact on H1 24/25 LFL sales of +0.6%. Calendar impact represents the impact of the annual calendar shift on LFL sales growth due to different days of the week falling into or out of the current period compared to the prior period. For example, historically, higher trading is seen on a Friday and Saturday as compared to a Sunday. This includes the impact of national public holidays falling on different days of the week compared to the prior period. The estimated impact of the annual calendar shift on Q1 24/25 LFL sales was +0.8%, and for Q2 24/25 LFL sales was -0.5%, carrying through to an overall impact on H1 24/25 LFL sales of nil.
Half year results announcement and data tables
This announcement and data tables for H1 24/25 can be downloaded from the Investors section of our website at www.kingfisher.com/investors.
Results presentation and Q&A
A pre-recorded analyst and investor presentation will be broadcast via the Investors section of our website at www.kingfisher.com at 08.30 (UK time), which will be immediately followed by a live virtual Q&A session with management.
