Shares in Kingfisher (LSE: KGF) slipped by around 3% in early trade this morning, following third-quarter results that spoke of a difficult trading period.
While the B&Q and Screwfix owner saw its UK & Ireland division post impressive results — a 2.6% increase in like-for-like (LFL) sales and retail profit up 11.2% at constant currency — this was more than offset by a 4% and 8.4% decline in LFL sales and retail profit respectively in its French operations, which is suffering from an ongoing weak market currently.
The two regions dominate Kingfisher’s markets, with the smaller ‘Other International’ area seeing total sales lift marginally (1.1%) but retail profit dropping by 26.3% due to a slower market in Poland, new country development costs and adverse foreign exchange movements in Russia.
Outgoing CEO Sir Ian Cheshire highlighted the positive performance of Screwfix in particular, but warned: “We remain cautious on the outlook, especially in France, and continue to focus on margin and cost initiatives to support our performance.”
Despite certain European countries weighing on the company’s profits this year, Kingfisher still expects to lift its dividend up to yield a FTSE 100 average-beating 3.9% next year, from 3.3% currently. The eurozone bulls might see this as a buying opportunity for a large-cap income stock, then, though the bears are likely to steer clear at least until we see improvement in the likes of France and Poland.
