ii view: B&Q owner Kingfisher offers sturdy dividend

A series of initiatives are being pushed including growing online sales. We assess prospects. 

Full-year results to 31 January

• Sales up 6.8% to £13.18 billion
• Pre-tax profit up 33% to £1 billion
• Final dividend of 8.6p per share
• Total dividend for the year up 50% to 12.4p per share
• Net debt up 13% to £1.57 billion

Chief executive Thierry Garnier said:

"We are now over two years into our new strategy and execution is ahead of schedule. With the business in a strong position, we are accelerating our investments for growth - through the launch of our scalable e-commerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, and our plans to increase our trade customer base. 

“Looking forward, we are confident that these investments, supported by continued strong execution and the new demand-drivers we are seeing in our industry, will drive faster growth in sales, profit and free cash flow."

ii round-up:

Kingfisher (LSE:KGF) is a multiformat home improvement retailer with over 1,450 outlets. 

It trades from eight European countries including the UK and Ireland, France and Poland and employs over 60,000 people. 

Group brands include B&Q, Castorama, Brico Dépôt, Screwfix, TradePoint and Koçtaş. 

For a round-up of these latest results, please click here.

ii view:

Under its former Carrefour chief executive, strategic priorities currently include growing ecommerce related sales, expanding its relationship with trade customers, testing compact store concepts, and adapting its store footprint and buying better and reducing costs. 

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For investors, growth in same store sales of 13.7% in the fourth quarter to January is down from 15% in the third quarter. Tough trading comparatives in the current first quarter to 19 March have left same store sales down 8.1% while elevated inflation and rising energy costs now leave many consumers facing a cost-of-living crisis.   

More favourably, ecommerce sales continue to grow, its Russian operations were sold prior to sanctions and the conflict in Ukraine, while Screwfix store numbers are still growing. Investments to push its strategic priorities are being made and a previously announced £300 share buyback programme remains ongoing. In all, and while some caution appears sensible given the tougher backdrop for consumers, a historic and estimated future dividend yield in the region of 4.5% looks to offer reason for existing shareholders to stay loyal. 

Positives: 

• Diversity of geographical locations and brand names
• Attractive dividend yield (not guaranteed)

Negatives:

• Net debt rose
• Uncertain economic outlook

The average rating of stock market analysts:

Hold