European DIY Leader Kingfisher's Profit Falls
Kingfisher, Europe's biggest home-improvements retailer, said on Thursday it suffered an 11% drop in annual profit as debt-laden British shoppers limited spending and competition in France intensified.
Kingfisher, which owns market leaders B&Q in Britain and Castorama in France, said profit before tax, goodwill and one-off items was 396.6 million pounds ($779.2 million) in the year ended Feb. 3, in line with forecasts.
Forecasts ranged from 392 million to 412 million pounds, with an average of 399 million, according to a poll of 20 analysts by Reuters Estimates.
But the DIY group said better weather had helped trading in its new financial year.
"Trading conditions for our biggest businesses continue to be challenging," Kingfisher said in a statement. "Ahead of the key Easter trading period, early 2007/08 trading has been stronger in our major markets, supported by better weather."
Traders said Kingfisher shares were expected to open around 1% higher. They closed at 271 pence on Wednesday, valuing the business at about 6.4 billion pounds.
Slowdown in Spending
B&Q has been cutting prices and refurbishing stores as it battles a drop in U.K. housing market transactions and a slowdown in spending on big purchases such as kitchens, as face higher interest rates. Castorama has also faced problems, with stiff competition hampering growth.
Kingfisher shares have underperformed the DJ Stoxx European retail index by 10% over the past year, but have climbed to two-year highs in recent days on speculation it could be the next bid target for private equity firms.
Private equity groups are already pursuing supermarket group J. Sainsbury and health and beauty retailer Alliance Boots, attracted in part by their rich property assets.
Kingfisher said the market value of its properties had risen 9% at constant exchange rates to 3.2 billion pounds.
The firm, which operates more than 700 stores in 11 countries, kept its dividend at 10.65 pence a share for the third year in a row.