Final results for year ended 31 January 2018

21 March 2018

 

Financial highlights

      % Total Change % Total Change % LFL* Change
  2017/18
 
2016/17
 
Reported
 
Constant currency*
 
Constant currency
 
Sales* £11,655m £11,225m +3.8% (0.3)% (0.7)%
Gross margin 36.9% 37.2% (30)bps (20)bps  
Retail profit* £849m £847m +0.3% (3.6)%  
Underlying* pre-tax profit £797m £787m +1.3%    
Adjusted* pre-tax profit £683m £743m (8.1)%    
Underlying basic EPS(1) 25.5p 25.9p (1.5)%    
Adjusted basic EPS(1) 21.8p 24.4p (10.7)%    
Lease adjusted ROCE*(1) 10.4% 12.5% (210)bps    
Full year dividend 10.8p 10.4p +4.0%    
Net cash* £68m £641m n/a    

(1) Includes c.£20m corporate tax surcharge in France

FY 17/18: 5 year transformation continues at pace

  • Delivered key strategic milestones for the second year in a row
    • Unified & unique offer: unified 23% of product (cost of goods sold). Sales outperforming non-unified ranges, gross margins up 180 basis points (pre-clearance)
    • Digital: now over 50% of Group sales operating on new unified IT platform, Group digital sales* now at 6% (4% last year)
    • Operational efficiency: delivered £28m of benefits from Goods Not for Resale* (GNFR) programme (£58m to date), further efficiencies starting to be unlocked
  • FY group results reflect
    • continued good growth at Screwfix and Poland, and self-help initiatives, including GNFR benefits, offset by:
    • c.1.5% LFL impact from business disruption, continued weaker and volatile sales in France and softer Q4 sales in the UK reflecting weaker demand for big ticket items
  • Delivered step up in level of transformation activity
  • Acting on root causes of business disruption, adapting our approach as we progress
  • Balance sheet remains strong
    • Returned £491m of cash to shareholders
      • £231m via ordinary dividend; £260m via share buyback
    • Lower net cash reflects higher levels of stock driven by changes to our operating model and to improve product availability

 

FY 18/19 and beyond

  • FY 18/19 another big year of implementation, aware of challenges ahead
    • Unified & unique offer: unify 40% of product (cost of goods sold) and deliver sales growth; Group gross margin to grow (post clearance)
    • Digital: complete final year of unified IT roll out
    • Operational efficiency: deliver £30m of benefits (GNFR and other efficiencies)
  • Remain confident in ability to deliver FY 20/21 transformation plan benefits

 

Additional statutory reporting

  2017/18 2016/17 % Change  
Statutory pre-tax profit £682m £759m (10.1)%  
Statutory post-tax profit £485m £610m (20.5)%  
Basic EPS 22.1p 27.1p (18.5)%  

*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 final results included in part 2 of the announcement. These non-GAAP measures (also known as alternative performance 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).

Véronique Laury, Chief Executive Officer, said:

“We have made good progress in this second year of our ambitious five-year transformation after a significant step up in the level of activity. For the second year in a row, all our key strategic milestones have been met and I am really pleased to say that we are starting to see tangible delivery of our plan. The changes are now visible across our stores and online. Over a third of our ranges have now been unified and they are being well received by customers. We are buying as ONE and are starting to see the customer and financial benefits coming through, both in sales and gross margins. Our digital initiatives are gaining momentum as we enter the final year of roll out of our unified IT platform. I am also pleased to see that our operational efficiency initiatives, focusing initially on goods not for resale, continue to deliver and are now gathering pace as we start to unlock further opportunities.

“Our performance this year has been mixed, however, with 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 acting on the causes of this disruption, however next year will be another big year in our transformation plan. The pace of change is quick and impactful but necessary as we build the new ONE Kingfisher engine to support our ambition to be the leading home improvement company, based on putting customer needs first. The outlook for our main markets is also mixed. The UK is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive.

“Given our good progress so far, and supported by our highly engaged teams, I remain confident in our ability to deliver our plan and in the customer and financial benefits it will generate.”

 

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 full year results tag #KGFFY. At 08.00 (UK time) on 21 March, a webcast covering the full year results will be available at www.kingfisher.com. At 09.30 (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.

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

Our next announcement will be the Q1 trading update for the period ended 30 April 2018 on 24 May 2018.