Shares in multinational retailer Kingfisher (KGF), which owns the brands B&Q and Screwfix, jumped over 6% this morning on the news it has delivered half-year results in line with expectations. This came despite a sales slowdown in France.
Shares in the blue-chip stock are now trading at £3.09.
The business reported that its adjusted pre-tax profit decreased by half a percentage point to £334 million. Kingfisher also saw its overall top-line sales drop by 1.4%.
"Management raised the low-end of its profit-before-tax guidance by £20 million, largely due to the one-off business rate refund at B&Q," says Matthew Donen, senior equity analyst at Morningstar, in a note.
"We forecast £516 million in profit before tax for the full-year, in line with management’s upgraded guidance of between £510 million to £550 million.
"Free cash flow grew 22% to £421 million, benefiting from the unwinding of inventory and reduced capital expenditure. Free cash flow guidance for the year was lifted to between £410m and £460m from between £350m and £410m."
Donen also said that the firm's management team has done well, although Morningstar will maintain the firm's fair value estimate at this stage.
"Management has done a commendable job at keeping costs in check despite a 2% decline in first half organic sales (including a 0.6% positive impact from more trading days). Sales in big ticket items and seasonal products, collectively accounting for 36% of group sales, fell 7% and 3%, respectively," he says.
"With a lot of pessimism having been baked into the share price at the start of the year, we believe the stock is now reasonably valued to our 290p fair value estimate, which we maintain."
Kingfisher also reported strong results from its e-commerce offering, with sales penetration reaching 18.3% up from the 16.8% recorded in the H1 of 23/24.
However, sales in France fell by 7.2%, which offset a margin expansion in both the UK and Poland.
Thierry Garnier, chief executive of Kingfisher, said in a statement that trading for the first half of 2024 aligned with the firm’s expectations.
"This was underpinned by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends in our core product categories," he said.
"As expected, demand for 'big-ticket' categories has remained weak, in line with the broader market, while seasonal category sales trends have improved since early July.
"Against this backdrop we maintained a strong focus on effectively managing our costs and inventory."
The group added that it is strongly positioned for growth in 2025 because of "structural costs taken out of the group," as well as Kingfisher's multiple avenues for growth over the medium term.
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