CRH: Kingfisher Q3 results come in lower than forecast
Kingfisher, a leading player in the European DIY market has reported Q3 results this morning that came in shy of consensus estimates as the challenging performance in France and the UK continue to weigh on performance. For the quarter, group sales amounted to £2.921 billion (+1.4% LfL). Kingfisher B&QW sales in the UK and Ireland increased by 40bps LfL (est. +120bps LfL) while in France Castorama recorded a sales increase of 2.3% (est. +.5%) but this was offset by Kingfisher’s other large French business, Brico Depot that reported a LfL sales decline of 2.6% (est. -1%).
As a result of the lower than expected sales, retail profits also came in lower than forecast for the group’s largest geographies. Retail profit in the UK amounted to £63 million (est. £64.6 million) while in France retail profit was £140 million (est. 147 million). Total retail profit for the group increased to £271 million (+1.7% YoY at constant currency).
Management note that while the group has experienced an increase in trading levels in the important Q3 period of the group, Kingfisher’s end markets remain “challenging, especially in France”. Management note that in France, consumer sentiment remains low and they do not anticipate any imminent improvement to this.
Overall, it is not surprising to see continuing weakness in the French market but given that Kingfisher has among the highest levels of exposure to the country in the sector, any renewed weakness, as has been the case in Q3, becomes problematic for Kingfisher in terms of profitability generation.
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