Essential reading for retailers and suppliers in the home improvement market

Kingfisher releases half year results for the six months ended 31 July 2021

Published: 8 October 2021 - Neil Mead

Highlights include strong financial performance and improved competitive position in key markets; effective management of product availability, logistics and inflation pressures; rapid progress made with ‘fixing’ issues from previous years; delivery against ‘Powered by Kingfisher’ strategic priorities ahead of schedule; new longer-term industry trends creating growth opportunities; accelerating investments for growth; and £300 million to be returned to shareholders via share buyback programme, reflecting strong cash generation and confidence in outlook.

 

H1 21/22 Group results:

  • Sales up 22.2% in constant currency, driven by strong demand for home improvement across retail and trade channels
  • LFL sales up 22.8% and corresponding 2-year LFL* up 21.3% - _Strong performances in the UK & Ireland*, France*, Iberia* and Romania; Poland impacted by COVID-related temporary store closures in Q1 21/22
  • Transaction volume and average basket value both up on 1-year and 2-year basis
  • LFL sales down 0.8% in Q2 21/22 and corresponding 2-year LFL up 20.0%
  • E-commerce sales* up 21% (2-year growth up 216%) driven by continued strong demand - _E-commerce sales 19% of Group sales (H1 20/21 and H1 19/20: 19% and 7%, respectively)
  • Retail profit up 45.1% in constant currency, driven by strong UK & Ireland profit growth and France profit growth of over 100%
  • Statutory pre-tax profit up 70.6%, reflecting higher operating profit, and lower net finance costs and adjusting items* before tax
  • Adjusted pre-tax profit up 61.6%, reflecting higher retail profit and lower net finance costs
  • Free cash flow of £723 million, down 30.6% (H1 20/21: £1,042 million; H1 19/20: £204 million), largely reflecting reversal of working capital inflow in prior year related to inventory
  • Net debt to last twelve months’ EBITDA* of 0.5x (0.9x as of 31 January 2021)
  • Interim dividend per share declared of 3.80p (FY 20/21 interim dividend: 2.75p)

Thierry Garnier, Chief Executive Officer, said: “We have had a very strong first half of the year, with growth across all our categories and channels, particularly e-commerce. This is a testament to the rapid progress being made against our strategic priorities which continue to drive customer engagement and an improved competitive position in our key markets. For this, I remain extremely grateful to all our colleagues for their continuous effort and outstanding customer service.

“Our commitment to ‘do the right thing’ remains a key priority. During the period we announced ambitious carbon reduction targets, continued to support the wellbeing and development of our colleagues, and created over 5,300 new roles across the Group.

“We have navigated well through the challenging operational impacts of the pandemic, retaining good product availability at competitive prices and operating safely. We have addressed many of Kingfisher’s past issues, with ‘fixes’ now complete in the UK and Poland. We are also on track in France, with positive results from our ongoing programme to repair our ranges and optimise the logistics network. Retail profit in France more than doubled in the first half.

“The ‘Powered by Kingfisher’ strategy is moving forward at pace. Key progress has included a new one-hour delivery proposition at Screwfix, the successful introduction of our new OEB kitchen ranges, and many mobile-led and service innovations, including a new and enhanced Screwfix app, the ongoing roll-out of our NeedHelp marketplace, and a new installation offer at B&Q.

“With the business in a strong position, we are now ready to accelerate our investments to capitalise on the attractive growth opportunities available to us. We are accelerating Screwfix’s expansion in the UK & Ireland, and will open our first Screwfix stores in France in 2022. We are accelerating our digital investments with new initiatives enabling faster fulfilment and broader choice. We are also moving faster with our expansion plans for Castorama Poland. While we are prioritising growth in our capital allocation, we are also delivering attractive returns to shareholders. Alongside an increased interim dividend, we announced today a £300 million share buyback programme.

“Our industry is benefiting from new trends that we believe will be supportive over the long term. These include people spending more time working from home, the emergence of a new generation of DIY’ers, the need for greener homes, and a strong housing market. Kingfisher is well placed to capitalise on these trends and deliver sustained outperformance.”

Outlook for FY 21/22

  • The following guidance applies in the event of no adverse change in COVID-related confinement measures (e.g. new lockdown restrictions resulting in store or showroom closures)
  • Good start to the second half of the year, with resilient demand across all markets - _Q3 21/22 LFL sales (to 18 September)(2) down 0.6%, with 2-year LFL up 16.1%
  • Remain mindful of continued uncertainty relating to COVID
  • Increasing our H2 21/22 sales expectations – now planning for LFL scenarios of -7% to -3% (previously -15% to -5%), with corresponding 2-year LFLs of +9% to +13%
  • Anticipate full year adjusted pre-tax profit in the range of c.£910 million to £950 million
  • Strategic execution and supportive market trends provide opportunity for sustained long-term growth

 

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