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Kingfisher on Monday said first-quarter sales were above pre-pandemic levels but had weakened year-on-year. The owner of the B&Q chain of DIY stores also unveiled a £300 million share buyback.
Kingfisher said group sales in the three months to April 30 fell 5.8% year-on-year to £3.25 billion. At constant currency, sales were down 4.2%. On a like-for-like basis, they were 5.4% lower.
The retailer said its quarterly performance was ‘in line with our expectations’.
Sales were 16% higher on a like-for-like basis compared to three years earlier, before the onset of the pandemic.
In the UK & Ireland unit alone, which includes B&Q and Screwfix, sales were down 14% yearly to £1.57 billion.
Chief Executive Thierry Garnier said: ‘While facing very strong comparatives in the prior year, our continued strategic progress has enabled us to retain a significant proportion of the increased sales during the pandemic.
‘Looking forward, we are reiterating our profit guidance for [financial year 2023]. We are focused on delivering on our strategic objectives and growth initiatives, including the growth of our scalable e-commerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, further increasing our trade customer base.’
Kingfisher expects adjusted pretax profit of £770 million for the current financial year, which runs to the end of January 2023. This would be a 4.5% improvement from £737 million in financial 2022.
Group sales for the two weekends ended May 14 were down 2.5% on a like-for-like basis. CEO Garnier said the company is managing ‘inflationary and supply chain pressures’.
The company also has more ‘surplus capital’, which in line with policy will be returned to shareholders.
‘Further to the ordinary dividend and the recently completed £300 million share buyback, the board is pleased to announce the return of a further £300 million of surplus capital via a share buyback programme. The first tranche of this programme will commence soon,’ Kingfisher said.
Kingfisher shares were up 1.3% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.8% at 7,450.44
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Hang Seng: down 1.4% at 20,430.55
Nikkei 225: closed up 1.0% at 27,001.52
S&P/ASX 200: closed marginally higher, up 3.30 points at 7,148.90
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DJIA: closed up 8.77 points at 31,261.90
S&P 500: closed flat at 3,901.36
Nasdaq Composite: closed down 0.3% at 11,354.62
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EUR: up at $1.0604 ($1.0547)
GBP: up at $1.2569 ($1.2463)
USD: soft at JP¥127.79 (JP¥127.86)
GOLD: up at $1,853.93 per ounce ($1,846.32)
OIL (Brent): up at $113.56 a barrel ($112.40)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's key economic events still to come
1000 CEST Germany Ifo business climate index
0830 EDT US Chicago Fed national activity index
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US President Joe Biden announced in Tokyo that 13 countries have joined a new, US-led Asia-Pacific trade initiative touted as a counterweight to China's aggressive expansion in the region. ‘The US and Japan, together with 11 other nations will be launching’ the Indo-Pacific Economic Framework for Prosperity, Biden said at a press conference alongside Japanese Prime Minister Fumio Kishida. Biden was due to make a formal rollout of the framework later Monday. He did not say which countries had already signed up to IPEF, which the White House is billing as a framework for what will ultimately become a tight-knit group of trading nations. Unlike traditional trade blocs, there is no plan for IPEF members to negotiate tariffs and ease market access a tool that has become increasingly unpalatable to US voters fearful of undermining homegrown manufacturing. Instead, the programme foresees integrating partners through agreed standards in four main areas: the digital economy, supply chains, clean energy infrastructure and anti-corruption measures.
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The US and Japan have ‘committed to work closely together to address security challenges,’ the White House said. Biden met Fumio in Tokyo to ‘advance cooperation’ on a range of bilateral, regional and global issues, a statement from the White House said. The two leaders committed to work closely on security challenges, including North Korea's nuclear and ballistic missile programmes and China's ‘increasingly coercive behaviour that runs counter to international law,’ the statement said. The US and Japan also agreed to deepen cooperation in areas such as emerging technologies, supply chain security, and clean energy.
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Biden is on his first trip to Asia as US president and is set to take part in a Quad meeting on Tuesday with the leaders of Japan, Australia and India.
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Beijing has extended orders for workers and students to stay home and ordered additional mass testing as cases of Covid-19 again rose in the Chinese capital. Numerous residential compounds in the city have restricted movement in and out, although conditions remain far less severe than in Shanghai, where millions of citizens have been under varying degrees of lockdown for two months. Beijing on Monday reported an uptick in cases to 99, rising from a previous daily average of around 50. In total, China reported 802 new cases on Monday, marking a steady decline interrupted only by small-scale localised outbreaks. Despite that, the government has hewed to strict quarantine, lockdown and testing measures under its ‘zero-Covid’ approach.
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BROKER RATING CHANGES
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Deutsche Bank cuts Burberry price target to 1950 (2280) pence - 'hold'
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SocGen raises Shell price target to 2700 (2200) pence - 'buy'
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SocGen raises BP price target to 540 (500) pence - 'buy'
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COMPANIES - FTSE 100
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AstraZeneca said its Covid-19 vaccine Vaxzevria has been granted approval in the EU by the European Medicine Agency as a third-dose booster in adults. The approval, which followed a positive recommendation by the EU's Committee for Medicinal Products for Human Use, means that adults who had been given earlier shots of either Vaxzevria or an EU-approved mRNA COVID-19 vaccine can now be given the Astra vaccine as a third booster. Astra noted that while 65% of all people in the world have received at least one Covid-19 vaccine jab, there remains a challenge to ensure people receive both their primary vaccine schedule - normally two shots - and the third dose booster.
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COMPANIES - FTSE 250
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Kainos said revenue in the year that ended March 31 climbed 29% to £302.6 million from £234.7 million. The figure topped a £297 million forecast from Shore Capital Markets. Pretax profit declined 8.6% to £46.0 million from £50.3 million. Adjusted pretax profit inched up 3.0% to £58.8 million from £57.1 million. The Belfast-based company provides digital services to the public sector, healthcare market and commercial customers. In addition, it is a partner of Pleasanton, California-based enterprise software provider Workday. CEO Brendan Mooney said: ‘Our latest business results outline the consistency of our long-term performance, as we recorded our twelfth consecutive year of growth - in terms of people, customers, revenue and profitability.’ Operating expenses rose 37% to £93.6 million. Kainos lowered its payout 21% to 22.2 pence from 28.2p.
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COMPANIES - SMALL CAP
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Luxury retailer Ted Baker said it has reviewed a number of non-binding takeover proposals. It has picked a ‘preferred counterparty’, which it didn't name, and will now move into a ‘process of confirmatory due diligence’. ‘This process is likely to take several weeks. There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made,’ the company said. Ted Baker kicked off a formal sales process in April. At the time, it had said that Sycamore Partners Management, the New York-based private equity firm whose spurned approaches had triggered the sales process, was participating. On Monday, however, Ted Baker said Sycamore is no longer participating in the sales process.
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COMPANIES - GLOBAL
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Siemens Energy said it has launched a tender offer to buy up the remaining stake in wind power subsidiary, Spain-based Siemens Gamesa Renewable Energy. Siemens Energy, a subsidiary of Munich-based Siemens, already owns some two-thirds of Gamesa shares. The offer - for €18.05 per share, up from its closing price of €16.75 on Friday in Madrid - will see Gamesa delisted in Madrid, where it currently is an IBEX 35 index constituent, and integrated into Siemens Energy. The deal is expected to total €4.3 billion. Siemens Energy noted it plans to finance up to €2.5 billion of the deal ‘with equity or equity like instruments’.
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Monday's shareholder meetings
Brewin Dolphin Holdings PLC - GM re acquisition by RBC Wealth Management
Digital 9 Infrastructure PLC - AGM
Empiric Student Property PLC - AGM
TMT Investments PLC - AGM
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