HALF YEAR TO 31 JULY 2017

20 September 2017

 

Half year results and ONE Kingfisher update
for the 6 months ended 31 July 2017
(Year 2 of our 5 year transformation)

 

Financial highlights

  % Total
Change
% Total Change % LFL* Change
  2017/18
2016/17  Reported Constant currency Constant currency
Sales* £6,008m £5,749m +4.5% (1.3)% (1.3)%
Retail profit* £467m £464m +0.5% (4.6)%  
Underlying pre-tax profit* £440m £436m +0.9%    
Adjusted* pre-tax profit £394m £418m (5.7)%    
Underlying basic EPS* 14.5p 14.2p +2.1%    
Adjusted basic EPS 13.0p 13.6p (4.4)%    
Half year dividend 3.33p 3.25p +2.5%    
Net cash* £650m £898m n/a    

*Throughout this release ‘*’ indicates first instance of a term defined and explained in the Glossary (section 5). Not all of the figures and ratios used are readily available from the unaudited half year results included in part 2 of this announcement These non-GAAP measures, including constant currency and like-for-like sales growth, underlying and adjusted profit measures, management believes are both useful and necessary to better understand the Group’s results. Where required, a reconciliation to statutory amounts is set out in the Financial Review (Section 4).

 

5 year transformation continues at pace

  • Significant step up in level of transformation activity in H1, as planned
  • H1 group results reflect
    • c.2% LFL impact from business disruption, albeit with an overall improving trend, and continued weaker sales in France, offset by
    • continued solid growth at Screwfix and Poland, and self-help initiatives, including £10m Goods Not for Resale* (GNFR) benefits
  • Acting on root causes of business disruption, continue to adapt our approach e.g.
    • re-phasing rollout of unified IT platform prioritising larger OpCos to start H2 17/18 instead of FY 18/19 and enabling earlier launch of stronger digital offer
    • smoothing roll out of unified cost of goods sold for next 2 years whilst maintaining 90% target for FY 20/21
  • Plans in place to support overall FY 17/18 performance
    • remain comfortable with FY consensus underlying EPS expectations (1), though remain cautious on H2 backdrop

Transformation is being delivered, confident in benefits it will generate

  • For the second year in a row, on track to deliver strategic milestones
    • Unified & unique offer: positive early customer reaction to new ranges, now at 16% unified cost of goods sold, cost price reduction (CPR) and cost of change in line with expectations
    • Digital: unified IT platform now in all Castorama France stores with back office underway
    • Operational efficiency: encouraging delivery of GNFR benefits, FY 17/18 guidance now c.£25m (up from c.£20m previously)

Delivering shareholder returns

  • Returned £359m of cash to shareholders year to date
    • £159m via ordinary dividend
    • £200m via share buyback (completed £400m of the c.£600m, next tranche of up to £60m to commence shortly)

Statutory reporting:

  2017/18 2016/17 % Change
Statutory pre-tax profit £402m £427m (5.9)%
Statutory post-tax profit £295m £321m (8.1)%
Basic EPS 13.3p 14.1p (5.7)%

Véronique Laury, Chief Executive Officer, said:

“As planned, this first half has seen a significant increase in the level of transformation activity. Changes are now visible in our stores with new product ranges being well received by customers. We are also changing our ways of working alongside the continued rollout of our unified IT platform. The pace is quick and impactful and is reflected in our performance. We continue to have a flexible approach as our transformation progresses, adapting as necessary, and this will support the significant amount of change planned for the second half and beyond.

“Looking across our markets, we have seen solid growth at Screwfix and Poland, offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance. We are aware of and are acting on the causes of this disruption, which we are confident will ease. For the full year, we have self-help plans in place to support our overall performance and remain comfortable with full year profit expectations, though we remain cautious on the second half backdrop in the UK and France.

“We are on track to deliver our full year strategic milestones for the second year in a row. We understand the reality of our customers' lives and are creating a unified and unique offer based on their needs. We are buying as ONE and are starting to see the customer and financial benefits coming through. This is all underpinned by our IT rollout which remains on track, and efficiency benefits which continue to deliver.

“We remain confident in our ability to deliver our five year plan and in the benefits it will generate, supported by our great team of hard-working and enthusiastic colleagues.”

(1) Analyst consensus of underlying earnings per share* of 26p for FY 2017/18, see http://www.kingfisher.com/index.asp?pageid=79 at FX Euro GBP rate of 1.13

Contacts:

Investor Relations
+44 (0) 20 7644 1082
investorenquiries@kingfisher.com

Media Relations
+44 (0) 20 7644 1030
corpcomms@kingfisher.com

Teneo Blue Rubicon
+44 (0) 20 7260 2700
Kfteam@teneobluerubicon.com

This announcement can be downloaded from www.kingfisher.com. We can be followed on Twitter @kingfisherplc with the half year results tag #KGFHY. At 07.30 (UK time) on 20 September, a webcast covering the half year results will be available at www.kingfisher.com. At 10.00 (UK time), Kingfisher will host a Q&A conference call for analysts and investors only. To join the call please use the password already sent to you or email investorenquiries@kingfisher.com.

Our next announcement will be the Q3 trading update for the period ended 31 October 2017 on 21 November 2017.

Kingfisher American Depository Receipts are traded in the US on the OTCQX platform: (OTCQX: KGFHY) http://www.otcmarkets.com/stock/KGFHY/quote