Keep an eye on Kingfisher’s cash flow
Home improvement company Kingfisher (KGF)
saw its free cash flow evaporate to a mere £6m in the year to 31 January 2018, down from £459m a year earlier after investment in stock soaked up cash.
The B&Q-to-Screwfix brands owner’s operating cash flow (before tax and capital expenditure) plunged 45% to £557m.
Free cash flow should really fund the dividend, so Kingfisher, currently returning cash via a share buyback and a progressive shareholder reward, could be in a tricky situation going forward,
given a dividend bill of circa £230m a year.